| |||||
| x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||||
| For the quarterly period ended | |||||
| |||||
| ☐ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _________ to _________ | ||||
|
| |
| Delaware | 83-1825597 | |||||||
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||
| 1211 Avenue of the Americas |
| |||||||||||||||
New York, | New York | 10036 | ||||||||||||||
| (Address of Principal Executive |
| |||||||||||||||
| Title of Each Class | Trading Symbols | Name of Each Exchange | ||||||
Class A Common Stock, par value $0.01 per share | FOXA | The Nasdaq Global Select Market | ||||||
Class B Common Stock, par value $0.01 per share | FOX | The Nasdaq Global Select Market | ||||||
| Large accelerated filer |
| Accelerated filer |
| ||||||||
Non-accelerated filer |
| Smaller reporting company |
| ||||||||
Emerging growth company |
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| Page | |||||||||||||
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|
| For the three months ended March 31, |
|
| For the nine months ended March 31, |
| For the three months ended September 30, | ||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| 2021 | 2020 | |||||||||||||||||||||||||
Revenues |
| $ | 3,215 |
|
| $ | 3,440 |
|
| $ | 10,019 |
|
| $ | 9,885 |
| Revenues | $ | 3,045 | $ | 2,717 | ||||||||||||||||||
Operating expenses |
|
| (1,885 | ) |
|
| (2,061 | ) |
|
| (6,399 | ) |
|
| (6,620 | ) | Operating expenses | (1,571) | (1,168) | ||||||||||||||||||||
Selling, general and administrative |
|
| (437 | ) |
|
| (464 | ) |
|
| (1,267 | ) |
|
| (1,247 | ) | Selling, general and administrative | (415) | (388) | ||||||||||||||||||||
Depreciation and amortization |
|
| (78 | ) |
|
| (57 | ) |
|
| (216 | ) |
|
| (164 | ) | Depreciation and amortization | (79) | (68) | ||||||||||||||||||||
Impairment and restructuring charges |
|
| 0 |
|
|
| 0 |
|
|
| (35 | ) |
|
| (9 | ) | Impairment and restructuring charges | — | (35) | ||||||||||||||||||||
Interest expense |
|
| (98 | ) |
|
| (89 | ) |
|
| (296 | ) |
|
| (269 | ) | |||||||||||||||||||||||
Interest income |
|
| 0 |
|
|
| 8 |
|
|
| 3 |
|
|
| 33 |
| |||||||||||||||||||||||
| Interest expense, net | Interest expense, net | (97) | (98) | ||||||||||||||||||||||||||||||||||||
Other, net |
|
| 61 |
|
|
| (632 | ) |
|
| 752 |
|
|
| (345 | ) | Other, net | 69 | 519 | ||||||||||||||||||||
Income before income tax expense |
|
| 778 |
|
|
| 145 |
|
|
| 2,561 |
|
|
| 1,264 |
| Income before income tax expense | 952 | 1,479 | ||||||||||||||||||||
Income tax expense |
|
| (196 | ) |
|
| (55 | ) |
|
| (632 | ) |
|
| (347 | ) | Income tax expense | (244) | (362) | ||||||||||||||||||||
Net income |
|
| 582 |
|
|
| 90 |
|
|
| 1,929 |
|
|
| 917 |
| Net income | 708 | 1,117 | ||||||||||||||||||||
Less: Net income attributable to noncontrolling interests |
|
| (15 | ) |
|
| (12 | ) |
|
| (32 | ) |
|
| (40 | ) | Less: Net income attributable to noncontrolling interests | (7) | (11) | ||||||||||||||||||||
Net income attributable to Fox Corporation stockholders |
| $ | 567 |
|
| $ | 78 |
|
| $ | 1,897 |
|
| $ | 877 |
| Net income attributable to Fox Corporation stockholders | $ | 701 | $ | 1,106 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
EARNINGS PER SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| EARNINGS PER SHARE DATA | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Weighted average shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
| Weighted average shares: | Weighted average shares: | ||||||||||||||||||||||||||||||||||||||
Basic |
|
| 589 |
|
|
| 608 |
|
|
| 595 |
|
|
| 615 |
| Basic | 575 | 603 | ||||||||||||||||||||
Diluted |
|
| 593 |
|
|
| 612 |
|
|
| 598 |
|
|
| 619 |
| Diluted | 578 | 605 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Net income attributable to Fox Corporation stockholders per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
| Net income attributable to Fox Corporation stockholders per share: | Net income attributable to Fox Corporation stockholders per share: | ||||||||||||||||||||||||||||||||||||||
Basic |
| $ | 0.96 |
|
| $ | 0.13 |
|
| $ | 3.19 |
|
| $ | 1.43 |
| Basic | $ | 1.22 | $ | 1.83 | ||||||||||||||||||
Diluted |
| $ | 0.96 |
|
| $ | 0.13 |
|
| $ | 3.17 |
|
| $ | 1.42 |
| Diluted | $ | 1.21 | $ | 1.83 | ||||||||||||||||||
|
| For the three months ended March 31, |
|
| For the nine months ended March 31, |
| For the three months ended September 30, | ||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| 2021 | 2020 | |||||||||||||||||||||||||
Net income |
| $ | 582 |
|
| $ | 90 |
|
| $ | 1,929 |
|
| $ | 917 |
| Net income | $ | 708 | $ | 1,117 | ||||||||||||||||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
| Other comprehensive income, net of tax: | Other comprehensive income, net of tax: | ||||||||||||||||||||||||||||||||||||||
Benefit plan adjustments |
|
| 9 |
|
|
| 5 |
|
|
| 25 |
|
|
| 17 |
| Benefit plan adjustments | 6 | 9 | ||||||||||||||||||||
Other comprehensive income, net of tax |
|
| 9 |
|
|
| 5 |
|
|
| 25 |
|
|
| 17 |
| Other comprehensive income, net of tax | 6 | 9 | ||||||||||||||||||||
Comprehensive income |
|
| 591 |
|
|
| 95 |
|
|
| 1,954 |
|
|
| 934 |
| Comprehensive income | 714 | 1,126 | ||||||||||||||||||||
Less: Net income attributable to noncontrolling interests(a) |
|
| (15 | ) |
|
| (12 | ) |
|
| (32 | ) |
|
| (40 | ) | Less: Net income attributable to noncontrolling interests(a) | (7) | (11) | ||||||||||||||||||||
Comprehensive income attributable to Fox Corporation stockholders |
| $ | 576 |
|
| $ | 83 |
|
| $ | 1,922 |
|
| $ | 894 |
| Comprehensive income attributable to Fox Corporation stockholders | $ | 707 | $ | 1,115 | ||||||||||||||||||
| |||||
| (a) | Net income attributable to noncontrolling interests includes | ||||
FOX CORPORATION
|
| As of March 31, 2021 |
|
| As of June 30, 2020 |
| As of September 30, 2021 | As of June 30, 2021 | |||||||||||
|
| (unaudited) |
|
| (audited) |
| (unaudited) | (audited) | |||||||||||
ASSETS |
|
|
|
|
|
|
|
| ASSETS | ||||||||||
Current assets |
|
|
|
|
|
|
|
| Current assets | ||||||||||
Cash and cash equivalents |
| $ | 5,765 |
|
| $ | 4,645 |
| Cash and cash equivalents | $ | 5,411 | $ | 5,886 | ||||||
Receivables, net |
|
| 2,153 |
|
|
| 1,888 |
| Receivables, net | 2,192 | 2,029 | ||||||||
Inventories, net |
|
| 685 |
|
|
| 856 |
| Inventories, net | 1,135 | 729 | ||||||||
Other |
|
| 91 |
|
|
| 97 |
| Other | 137 | 105 | ||||||||
Total current assets |
|
| 8,694 |
|
|
| 7,486 |
| Total current assets | 8,875 | 8,749 | ||||||||
Non-current assets |
|
|
|
|
|
|
|
| Non-current assets | ||||||||||
Property, plant and equipment, net |
|
| 1,626 |
|
|
| 1,498 |
| Property, plant and equipment, net | 1,656 | 1,708 | ||||||||
Intangible assets, net |
|
| 3,156 |
|
|
| 3,198 |
| Intangible assets, net | 3,155 | 3,154 | ||||||||
Goodwill |
|
| 3,403 |
|
|
| 3,409 |
| Goodwill | 3,532 | 3,435 | ||||||||
Deferred tax assets |
|
| 3,853 |
|
|
| 4,358 |
| Deferred tax assets | 3,653 | 3,822 | ||||||||
Other non-current assets |
|
| 2,175 |
|
|
| 1,801 |
| Other non-current assets | 2,290 | 2,058 | ||||||||
Total assets |
| $ | 22,907 |
|
| $ | 21,750 |
| Total assets | $ | 23,161 | $ | 22,926 | ||||||
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
| LIABILITIES AND EQUITY | ||||||||||
Current liabilities |
|
|
|
|
|
|
|
| Current liabilities | ||||||||||
Borrowings |
| $ | 749 |
|
| $ | 0 |
| Borrowings | $ | 750 | $ | 749 | ||||||
Accounts payable, accrued expenses and other current liabilities |
|
| 2,236 |
|
|
| 1,906 |
| Accounts payable, accrued expenses and other current liabilities | 2,119 | 2,253 | ||||||||
Total current liabilities |
|
| 2,985 |
|
|
| 1,906 |
| Total current liabilities | 2,869 | 3,002 | ||||||||
Non-current liabilities |
|
|
|
|
|
|
|
| Non-current liabilities | ||||||||||
Borrowings |
|
| 7,201 |
|
|
| 7,946 |
| Borrowings | 7,203 | 7,202 | ||||||||
Other liabilities |
|
| 1,412 |
|
|
| 1,482 |
| Other liabilities | 1,357 | 1,336 | ||||||||
Redeemable noncontrolling interests |
|
| 225 |
|
|
| 305 |
| Redeemable noncontrolling interests | 302 | 261 | ||||||||
Commitments and contingencies |
|
|
|
|
|
|
|
| Commitments and contingencies | 0 | 0 | ||||||||
Equity |
|
|
|
|
|
|
|
| Equity | ||||||||||
Class A common stock(a) |
|
| 3 |
|
|
| 3 |
| Class A common stock(a) | 3 | 3 | ||||||||
Class B common stock(b) |
|
| 3 |
|
|
| 3 |
| Class B common stock(b) | 3 | 3 | ||||||||
Additional paid-in capital |
|
| 9,555 |
|
|
| 9,831 |
| Additional paid-in capital | 9,327 | 9,453 | ||||||||
Retained earnings |
|
| 1,912 |
|
|
| 674 |
| Retained earnings | 2,409 | 1,982 | ||||||||
Accumulated other comprehensive loss |
|
| (392 | ) |
|
| (417 | ) | Accumulated other comprehensive loss | (312) | (318) | ||||||||
Total Fox Corporation stockholders' equity |
|
| 11,081 |
|
|
| 10,094 |
| Total Fox Corporation stockholders' equity | 11,430 | 11,123 | ||||||||
Noncontrolling interests |
|
| 3 |
|
|
| 17 |
| Noncontrolling interests | — | 2 | ||||||||
Total equity |
|
| 11,084 |
|
|
| 10,111 |
| Total equity | 11,430 | 11,125 | ||||||||
Total liabilities and equity |
| $ | 22,907 |
|
| $ | 21,750 |
| Total liabilities and equity | $ | 23,161 | $ | 22,926 | ||||||
| |||||
| (a) | Class A common stock, $0.01 par value per share, 2,000,000,000 shares authorized, | ||||
| |||||
| (b) | Class B common stock, $0.01 par value per share, 1,000,000,000 shares authorized, | ||||
|
| For the nine months ended March 31, |
| For the three months ended September 30, | |||||||||||||||
|
| 2021 |
|
| 2020 |
| 2021 | 2020 | |||||||||||
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
| OPERATING ACTIVITIES | ||||||||||
Net income |
| $ | 1,929 |
|
| $ | 917 |
| Net income | $ | 708 | $ | 1,117 | ||||||
Adjustments to reconcile net income to cash provided by operating activities |
|
|
|
|
|
|
|
| Adjustments to reconcile net income to cash provided by operating activities | ||||||||||
Depreciation and amortization |
|
| 216 |
|
|
| 164 |
| Depreciation and amortization | 79 | 68 | ||||||||
Amortization of cable distribution investments |
|
| 17 |
|
|
| 19 |
| Amortization of cable distribution investments | 5 | 5 | ||||||||
Impairment and restructuring charges |
|
| 35 |
|
|
| 9 |
| Impairment and restructuring charges | — | 35 | ||||||||
Equity-based compensation |
|
| 112 |
|
|
| 101 |
| Equity-based compensation | 15 | 31 | ||||||||
Other, net |
|
| (752 | ) |
|
| 345 |
| Other, net | (69) | (519) | ||||||||
Deferred income taxes |
|
| 528 |
|
|
| 255 |
| Deferred income taxes | 168 | 391 | ||||||||
Change in operating assets and liabilities, net of acquisitions and dispositions |
|
|
|
|
|
|
|
| Change in operating assets and liabilities, net of acquisitions and dispositions | ||||||||||
Receivables and other assets |
|
| (382 | ) |
|
| (395 | ) | Receivables and other assets | (174) | (193) | ||||||||
Inventories net of program rights payable |
|
| 257 |
|
|
| 167 |
| Inventories net of program rights payable | (499) | (440) | ||||||||
Accounts payable and accrued expenses |
|
| 88 |
|
|
| (178 | ) | Accounts payable and accrued expenses | (171) | (62) | ||||||||
Other changes, net |
|
| (182 | ) |
|
| (59 | ) | Other changes, net | (33) | (166) | ||||||||
Net cash provided by operating activities |
|
| 1,866 |
|
|
| 1,345 |
| Net cash provided by operating activities | 29 | 267 | ||||||||
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
| INVESTING ACTIVITIES | ||||||||||
Property, plant and equipment |
|
| (333 | ) |
|
| (192 | ) | Property, plant and equipment | (53) | (117) | ||||||||
Acquisitions, net of cash acquired |
|
| 0 |
|
|
| (611 | ) | Acquisitions, net of cash acquired | (75) | (1) | ||||||||
Proceeds from dispositions, net |
|
| 93 |
|
|
| 45 |
| Proceeds from dispositions, net | 82 | — | ||||||||
Sale of investments |
|
| 0 |
|
|
| 349 |
| |||||||||||
Purchase of investments |
|
| (86 | ) |
|
| 0 |
| Purchase of investments | (29) | (31) | ||||||||
Other investing activities, net |
|
| (3 | ) |
|
| 12 |
| |||||||||||
Net cash used in investing activities |
|
| (329 | ) |
|
| (397 | ) | Net cash used in investing activities | (75) | (149) | ||||||||
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
| FINANCING ACTIVITIES | ||||||||||
Repurchase of shares |
|
| (713 | ) |
|
| (600 | ) | Repurchase of shares | (250) | (267) | ||||||||
Non-operating cash flows from (to) The Walt Disney Company |
|
| 113 |
|
|
| (70 | ) | |||||||||||
Settlement of Divestiture Tax prepayment |
|
| 462 |
|
|
| 0 |
| |||||||||||
| Non-operating cash flows from The Walt Disney Company | Non-operating cash flows from The Walt Disney Company | — | 152 | ||||||||||||||||
| Settlement of Divestiture Tax Prepayment | Settlement of Divestiture Tax Prepayment | — | 462 | ||||||||||||||||
Dividends paid and distributions |
|
| (182 | ) |
|
| (321 | ) | Dividends paid and distributions | (150) | (15) | ||||||||
Purchase of subsidiary noncontrolling interest |
|
| (67 | ) |
|
| 0 |
| |||||||||||
Other financing activities, net |
|
| (30 | ) |
|
| 5 |
| Other financing activities, net | (29) | (34) | ||||||||
Net cash used in financing activities |
|
| (417 | ) |
|
| (986 | ) | |||||||||||
Net increase (decrease) in cash and cash equivalents |
|
| 1,120 |
|
|
| (38 | ) | |||||||||||
| Net cash (used in) provided by financing activities | Net cash (used in) provided by financing activities | (429) | 298 | ||||||||||||||||
| Net (decrease) increase in cash and cash equivalents | Net (decrease) increase in cash and cash equivalents | (475) | 416 | ||||||||||||||||
Cash and cash equivalents, beginning of year |
|
| 4,645 |
|
|
| 3,234 |
| Cash and cash equivalents, beginning of year | 5,886 | 4,645 | ||||||||
Cash and cash equivalents, end of period |
| $ | 5,765 |
|
| $ | 3,196 |
| Cash and cash equivalents, end of period | $ | 5,411 | $ | 5,061 | ||||||
|
| Class A |
|
| Class B |
|
| Additional |
|
|
|
|
|
| Accumulated Other |
|
| Total Fox Corporation |
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Common Stock |
|
| Common Stock |
|
| Paid-in |
|
| Retained |
|
| Comprehensive |
|
| Stockholders' |
|
| Noncontrolling |
|
| Total |
| Class A | Class B | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Fox Corporation Stockholders' Equity | Noncontrolling Interests(a) | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Earnings |
|
| Loss |
|
| Equity |
|
| Interests(a) |
|
| Equity |
| Common Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2020 |
|
| 335 |
|
| $ | 3 |
|
|
| 257 |
|
| $ | 3 |
|
| $ | 9,655 |
|
| $ | 1,657 |
|
| $ | (401 | ) |
| $ | 10,917 |
|
| $ | 4 |
|
| $ | 10,921 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Fox Corporation Stockholders' Equity | Noncontrolling Interests(a) | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | Balance, June 30, 2021 | 324 | $ | 3 | 252 | $ | 3 | $ | 9,453 | $ | 1,982 | $ | (318) | $ | 11,123 | $ | 2 | $ | 11,125 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 567 |
|
|
| 0 |
|
|
| 567 |
|
|
| 10 |
|
|
| 577 |
| Net income | — | — | — | — | — | 701 | — | 701 | 8 | 709 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 9 |
|
|
| 9 |
|
|
| 0 |
|
|
| 9 |
| Other comprehensive income | — | — | — | — | — | — | 6 | 6 | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| (134 | ) |
|
| 0 |
|
|
| (134 | ) |
|
| 0 |
|
|
| (134 | ) | Dividends | — | — | — | — | — | (138) | — | (138) | — | (138) | ||||||||||||||||||||||||||||||||||||||||||||||||
Shares repurchased |
|
| (6 | ) |
|
| 0 |
|
|
| (3 | ) |
|
| 0 |
|
|
| (146 | ) |
|
| (160 | ) |
|
| 0 |
|
|
| (306 | ) |
|
| 0 |
|
|
| (306 | ) | Shares repurchased | (5) | — | (2) | — | (114) | (136) | — | (250) | — | (250) | ||||||||||||||||||||||||||||||||||||||||||||||||
Other |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 46 |
|
|
| (18 | ) |
|
| 0 |
|
|
| 28 |
|
|
| (11 | ) |
|
| 17 |
| Other | 2 | — | — | — | (12) | — | — | (12) | (10) | (22) | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 |
|
| 329 |
|
| $ | 3 |
|
|
| 254 |
|
| $ | 3 |
|
| $ | 9,555 |
|
| $ | 1,912 |
|
| $ | (392 | ) |
| $ | 11,081 |
|
| $ | 3 |
|
| $ | 11,084 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2019 |
|
| 347 |
|
| $ | 3 |
|
|
| 264 |
|
| $ | 3 |
|
| $ | 9,849 |
|
| $ | 775 |
|
| $ | (296 | ) |
| $ | 10,334 |
|
| $ | 19 |
|
| $ | 10,353 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 78 |
|
|
| 0 |
|
|
| 78 |
|
|
| 8 |
|
|
| 86 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 5 |
|
|
| 5 |
|
|
| 0 |
|
|
| 5 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| (139 | ) |
|
| 0 |
|
|
| (139 | ) |
|
| 0 |
|
|
| (139 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares repurchased |
|
| (4 | ) |
|
| 0 |
|
|
| (3 | ) |
|
| 0 |
|
|
| (79 | ) |
|
| (94 | ) |
|
| 0 |
|
|
| (173 | ) |
|
| 0 |
|
|
| (173 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 40 |
|
|
| (31 | ) |
|
| 0 |
|
|
| 9 |
|
|
| (8 | ) |
|
| 1 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2020 |
|
| 343 |
|
| $ | 3 |
|
|
| 261 |
|
| $ | 3 |
|
| $ | 9,810 |
|
| $ | 589 |
|
| $ | (291 | ) |
| $ | 10,114 |
|
| $ | 19 |
|
| $ | 10,133 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2021 | Balance, September 30, 2021 | 321 | $ | 3 | 250 | $ | 3 | $ | 9,327 | $ | 2,409 | $ | (312) | $ | 11,430 | $ | — | $ | 11,430 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2020 |
|
| 344 |
|
| $ | 3 |
|
|
| 261 |
|
| $ | 3 |
|
| $ | 9,831 |
|
| $ | 674 |
|
| $ | (417 | ) |
| $ | 10,094 |
|
| $ | 17 |
|
| $ | 10,111 |
| Balance, June 30, 2020 | 344 | $ | 3 | 261 | $ | 3 | $ | 9,831 | $ | 674 | $ | (417) | $ | 10,094 | $ | 17 | $ | 10,111 | ||||||||||||||||||||||||||||||||||||||||
Net income |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 1,897 |
|
|
| 0 |
|
|
| 1,897 |
|
|
| 19 |
|
|
| 1,916 |
| Net income | — | — | — | — | — | 1,106 | — | 1,106 | 7 | 1,113 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 25 |
|
|
| 25 |
|
|
| 0 |
|
|
| 25 |
| Other comprehensive income | — | — | — | — | — | — | 9 | 9 | — | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| (272 | ) |
|
| 0 |
|
|
| (272 | ) |
|
| 0 |
|
|
| (272 | ) | Dividends | — | — | — | — | — | (138) | — | (138) | — | (138) | ||||||||||||||||||||||||||||||||||||||||||||||||
Shares repurchased |
|
| (17 | ) |
|
| 0 |
|
|
| (7 | ) |
|
| 0 |
|
|
| (393 | ) |
|
| (332 | ) |
|
| 0 |
|
|
| (725 | ) |
|
| 0 |
|
|
| (725 | ) | Shares repurchased | (7) | — | (3) | — | (161) | (109) | — | (270) | — | (270) | ||||||||||||||||||||||||||||||||||||||||||||||||
Other |
|
| 2 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 117 |
|
|
| (55 | ) |
|
| 0 |
|
|
| 62 |
|
|
| (33 | ) |
|
| 29 |
| Other | 1 | — | — | — | (2) | (8) | — | (10) | (9) | (19) | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 |
|
| 329 |
|
| $ | 3 |
|
|
| 254 |
|
| $ | 3 |
|
| $ | 9,555 |
|
| $ | 1,912 |
|
| $ | (392 | ) |
| $ | 11,081 |
|
| $ | 3 |
|
| $ | 11,084 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2019 |
|
| 354 |
|
| $ | 4 |
|
|
| 266 |
|
| $ | 3 |
|
| $ | 9,891 |
|
| $ | 357 |
|
| $ | (308 | ) |
| $ | 9,947 |
|
| $ | 11 |
|
| $ | 9,958 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 877 |
|
|
| 0 |
|
|
| 877 |
|
|
| 24 |
|
|
| 901 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 17 |
|
|
| 17 |
|
|
| 0 |
|
|
| 17 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends |
|
| - |
|
|
| 0 |
|
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| (282 | ) |
|
| 0 |
|
|
| (282 | ) |
|
| 0 |
|
|
| (282 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares repurchased |
|
| (12 | ) |
|
| (1 | ) |
|
| (5 | ) |
|
| 0 |
|
|
| (273 | ) |
|
| (326 | ) |
|
| 0 |
|
|
| (600 | ) |
|
| 0 |
|
|
| (600 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other |
|
| 1 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 192 |
|
|
| (37 | ) |
|
| 0 |
|
|
| 155 |
|
|
| (16 | ) |
|
| 139 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2020 |
|
| 343 |
|
| $ | 3 |
|
|
| 261 |
|
| $ | 3 |
|
| $ | 9,810 |
|
| $ | 589 |
|
| $ | (291 | ) |
| $ | 10,114 |
|
| $ | 19 |
|
| $ | 10,133 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2020 | Balance, September 30, 2020 | 338 | $ | 3 | 258 | $ | 3 | $ | 9,668 | $ | 1,525 | $ | (408) | $ | 10,791 | $ | 15 | $ | 10,806 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||
| (a) | Excludes Redeemable noncontrolling interests which are reflected in temporary equity (See Note 4—Fair Value under the heading “Redeemable Noncontrolling Interests”). | ||||
The outbreak of the COVID-19 pandemic has resulted in widespread and continuing negative impacts on the macroeconomic environment and disruption to the Company’s business. Weak economic conditions and increased volatility and disruption in the financial markets pose risks to the Company and its business partners, including advertisers whose expenditures tend to reflect overall economic conditions. The COVID-19 pandemic has caused some of the Company’s advertisers to reduce their spending, and future declines in the economic prospects of advertisers or the economy in general could negatively impact their advertising expenditures further. Depending on the duration and severity of the weak economic environment, it could lead to changes in consumer behavior, including increasing numbers of consumers canceling or foregoing subscriptions to multi-channel video programming distributor (“MVPD”) services, that adversely affect the Company’s affiliate fee and advertising revenues. In addition, the Company’s business depends on the volume and popularity of the content it distributes, particularly sports content. Following the COVID-19 outbreak, sports events to which the Company has broadcast rights were cancelled or postponed and the production of certain entertainment content the Company distributes was suspended. In particular, the college football 2020 season was impacted by COVID-19, and as a result had an abridged schedule that included games that were shifted from the first quarter to the second quarter of fiscal 2021, but had fewer live games overall due to cancellations. Although most sports events and productions have resumed, there may be additional content disruptions in the future, and depending on their duration and severity, these disruptions could materially adversely affect the Company’s future advertising revenues and, over a longer period, its future affiliate fee revenues. To the extent the pandemic further negatively impacts the Company’s ability to air sports events, it could result in a significantly greater adverse effect on the Company’s business, financial condition or results of operations than the Company has experienced thus far. In addition, shifting sports schedules may negatively impact the Company’s ability to attract viewers and advertisers to its sports and entertainment programming.
The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the best estimates of the future impacts of COVID-19 as of March 31, 2021. The accounting matters assessed included, but were not limited to, the Company’s valuation allowances, programming rights and the carrying value of the goodwill and other long-lived assets. While there was not an impact to the Company’s consolidated financial statements as of March 31, 2021, the Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to the Company’s consolidated financial statements in future reporting periods.
6
FOX CORPORATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
advances to entities or joint ventures in which the Company has significant influence, but less than a controlling financial interest, are accounted for using the equity method. Significant influence generally exists when the Company owns an interest between 20% and 50%. In accordance with Accounting Standards Codification (“ASC”) 321 “Investments—Equity Securities” (“ASC 321”), equity securities in which the Company has no significant influence (generally less than a 20% ownership interest) with readily determinable fair values are accounted for at fair value based on quoted market prices. Equity securities without readily determinable fair values are accounted for either at fair value or using the measurement alternative method, which is at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.issuer. All gains and losses on investments in equity securities are recognized in the Unaudited Consolidated Statements of Operations.
Pursuant to the merger agreement relating to the merger of Twenty-First Century Fox, Inc. (“21CF”) and The Walt Disney Company (“Disney”), the Company made a prepayment of approximately $700 million which represented the Company’s share of the estimated tax liabilities resulting from the anticipated divestitures by Disney of certain assets (the “Divestiture Tax”), principally the FOX Sports Regional Sports Networks (“RSNs”). During the first quarter of fiscal 2021, the Company and Disney reached an agreement to settle the majority of the prepaid Divestiture Tax and the Company received $462 million from Disney as reimbursement of the Company’s prepayment based upon the sales price of the RSNs. This reimbursement was recorded in Other, net in the Statement of Operations (See Note 11—Additional Financial Informationunder the heading “Other, net”). The balance of the prepaid Divestiture Tax is subject to adjustment in the future, but any such adjustment is not expected to have a material impact on the results of the Company.
Operations.
Adopted
In June 2016, the Financial Accounting Standards Board (“FASB”)
In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). On July 1, 2020, the Company adopted ASU 2018-15 on a prospective basis. The amendments in ASU 2018-15 require implementation costs incurred in a hosting arrangement that is a service contract to be capitalized using the same guidance for capitalizing implementation costs incurred to develop or obtain internal-use software. In addition, ASU 2018-15 provides guidance regarding the term over which capitalized implementation costs are to be amortized and requires specific financial statement presentation and disclosures. The adoption of ASU 2018-15 did not have a material impact on the Company’s Financial Statements.
In March 2019, the FASB issued ASU 2019-02, “Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials” (“ASU 2019-02”). On July 1, 2020, the Company adopted ASU 2019-02 on a prospective basis and reclassified entertainment programming rights, with a contract duration of longer than a year, that were previously classified as the current portion of inventories, net to non-current inventories, net on the Balance Sheet. The amendments in ASU 2019-02 align the accounting treatment for production costs of episodic television series with the accounting treatment for production costs of films. In addition, ASU 2019-02 modifies certain aspects of the amortization, impairment, presentation and disclosure requirements in ASC 926-20 and the impairment, presentation and disclosure requirements in ASC 920-350, including eliminating the
7
FOX CORPORATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
balance sheet classification guidance. The adoption of ASU 2019-02 did not have a significant impact on the Company’s Financial Statements (See Note 3—Inventories, net for additional information).
Fiscal 2021
Acquisitions
Outkick Media Acquisition
In May 2021, the Company entered into a binding term sheet to acquire Outkick Media, LLC, a digital media company focused on the intersection of sports, news and entertainment.
Disposals
Sports Marketing Businesses Divestiture
In March 2021, the Company sold its sports marketing businesses for cash consideration subject to post-closing adjustments and recorded a gain in Other, net in the Statement of Operations.
Fiscal 2020
Acquisitions and Disposals
Television Stations Acquisition and Divestiture
In March 2020, the Company acquired 3 television stations (FOX-affiliate KCPQ and MyNetworkTV-affiliate KZJO located in Seattle, Washington and FOX-affiliate WITI located in Milwaukee, Wisconsin) for approximately $350 million in cash from Nexstar Media Group, Inc. (“Nexstar”). As part of this transaction, the Company sold Nexstar 2 television stations (FOX-affiliate WJZY and MyNetworkTV-affiliate WMYT located in Charlotte, North Carolina) for approximately $45 million in cash. The consideration transferred of approximately $350 million for the stations the Company acquired has been allocated, based on a final valuation, as follows: approximately $210 million to intangible assets, of which approximately $110 million has been allocated to Federal Communications Commission licenses with indefinite lives and approximately $100 million to amortizable intangible assets, primarily retransmission agreements with useful lives of eight years; approximately $30 million to property, plant and equipment; and the balance to goodwill. The estimated goodwill, which is tax deductible, reflects the increased synergies and market penetration expected from combining the operations of the 3 television stations with those of the Company. The Company finalized its purchase price accounting for the acquisition during the third quarter of fiscal 2021 without any material adjustments.
Credible Acquisition
In October 2019, the Company acquired 67% of the equity in Credible Labs Inc. (“Credible”), a U.S. consumer finance marketplace, for approximately $260 million in cash (the “Credible Acquisition”), net of cash acquired. The remaining 33% of Credible not owned by the Company was recorded at fair value on the acquisition date based on the Company’s valuation of Credible’s business using a market approach (a Level 3 measurement as defined in Note 4—Fair Value). The consideration transferred of approximately $260 million has been allocated, based on a final valuation of 100% of Credible, as follows: approximately $75 million to intangible assets with useful lives ranging from five to 10 years; approximately $285 million representing goodwill; approximately $(110) million to redeemable noncontrolling interests and the remainder to other net assets. The estimated goodwill, which is not tax deductible, reflects the increased market penetration and synergies expected from combining the operations of Credible and the Company. The Company finalized
8
FOX CORPORATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
its purchase price accounting for the Credible Acquisition during the second quarter of fiscal 2021 without any material adjustments.
In accordance with ASC 920, “Entertainment—Broadcasters” (“ASC 920”), costs incurred in acquiring program rights or producing programs for the Cable Network Programming and Television segments, including advances, are capitalized and amortized over the license period or projected useful life of the programming. Program rights and the related liabilities are recorded at the gross amount of the liabilities when the license period has begun, the cost of the program is determinable and the program is accepted and available for airing. Effective for the Company beginning on July 1, 2020, ASC 920 permits program rights to be recorded in non-current inventories, net rather than segregated between current and non-current inventories, net. As a result, the Company reclassified entertainment programming rights, with a contract duration of longer than a year, that were previously classified as the current portion of inventories, net to non-current inventories, net on the Balance Sheet. Advances on sports events expected to be broadcast within one year and programs with an initial license period of one year or less continue to be recorded in the current portion of inventories, net. Television broadcast network entertainment programming, which includes acquired series, co-produced series, movies and other programs, are amortized primarily on an accelerated basis.
The Company has single and multi-year contracts for broadcast rights of programs and sports events. The Company evaluates the recoverability of the unamortized costs associated therewith, using total estimated advertising and other revenues attributable to the program material and considering the Company’s expectations of the usefulness of the program rights. The recoverability of entertainment programming is generally assessed on a contract basis and the recoverability of certain sports rights contracts for content broadcast on the FOX Network and the sports channels is assessed on an aggregate basis. Where an evaluation indicates that these multi-year contracts will result in an asset that is not recoverable, amortization of rights is accelerated in an amount equal to the amount by which the unamortized costs exceed fair value. The costs of multi-year sports contracts at the FOX Network and the sports channels are primarily amortized based on the ratio of each current period’s attributable revenue for each contract to the estimated total remaining attributable revenue for each contract. Estimates can change and, accordingly, are reviewed periodically and amortization is adjusted as necessary. Such changes in the future could be material.
|
| As of March 31, 2021 |
|
| As of June 30, 2020 |
| As of September 30, 2021 | As of June 30, 2021 | |||||||||||
|
| (in millions) |
| (in millions) | |||||||||||||||
Sports programming rights |
| $ | 505 |
|
| $ | 674 |
| Sports programming rights | $ | 988 | $ | 573 | ||||||
Entertainment programming rights |
|
| 363 |
|
|
| 384 |
| Entertainment programming rights | 484 | 355 | ||||||||
Total inventories, net |
|
| 868 |
|
|
| 1,058 |
| Total inventories, net | 1,472 | 928 | ||||||||
Less: current portion of inventories, net |
|
| (685 | ) |
|
| (856 | ) | Less: current portion of inventories, net | (1,135) | (729) | ||||||||
Total non-current inventories, net |
| $ | 183 |
|
| $ | 202 |
| Total non-current inventories, net | $ | 337 | $ | 199 | ||||||
9
FOX CORPORATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
|
| Fair value measurements |
| Fair value measurements | |||||||||||||||||||||||||||||||||||||||||
|
| As of March 31, 2021 |
| As of September 30, 2021 | |||||||||||||||||||||||||||||||||||||||||
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||||
|
| (in millions) |
| (in millions) | |||||||||||||||||||||||||||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets | ||||||||||||||||||||||||||||
Investments in equity securities |
| $ | 926 |
|
| $ | 926 | (a) |
| $ | 0 |
|
| $ | 0 |
| Investments in equity securities | $ | 857 | $ | 857 | (a) | $ | — | $ | — | |||||||||||||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||
Other |
|
| (4 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (4 | ) (b) | |||||||||||||||||||||||||||||
Redeemable noncontrolling interests |
|
| (225 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (225 | ) (b) | Redeemable noncontrolling interests | (302) | — | — | (302) | (b) | |||||||||||||||||||||||
Total |
| $ | 697 |
|
| $ | 926 |
|
| $ | 0 |
|
| $ | (229 | ) | Total | $ | 555 | $ | 857 | $ | — | $ | (302) | ||||||||||||||||||||
|
| Fair value measurements |
| |||||||||||||
|
| As of June 30, 2020 |
| |||||||||||||
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
|
| (in millions) |
| |||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in equity securities |
| $ | 531 |
|
| $ | 531 | (a) |
| $ | 0 |
|
| $ | 0 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
| (6 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (6) | (b) |
Redeemable noncontrolling interests |
|
| (305 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (305) | (b) |
Total |
| $ | 220 |
|
| $ | 531 |
|
| $ | 0 |
|
| $ | (311) |
|
| Fair value measurements | |||||||||||||||||||||||||||||
| As of June 30, 2021 | |||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Investments in equity securities | $ | 788 | $ | 788 | (a) | $ | — | $ | — | ||||||||||||||||||||
| Redeemable noncontrolling interests | (261) | — | — | (261) | (b) | ||||||||||||||||||||||||
| Total | $ | 527 | $ | 788 | $ | — | $ | (261) | |||||||||||||||||||||
| ||
| (a) | The investment categorized as Level 1 represents an investment in equity securities of Flutter Entertainment plc (“Flutter”) with a readily determinable fair value (See Note 3—Acquisitions, Disposals and Other Transactions in the | ||||
| |||||
| (b) | The Company utilizes the market approach valuation technique for its Level 3 fair value measures. Inputs to such measures could include observable market data obtained from independent sources such as broker quotes and recent market transactions for similar assets. It is the Company’s policy to maximize the use of observable inputs in the measurement of its Level 3 fair value measurements. To the extent observable inputs are not available, the Company utilizes unobservable inputs based upon the assumptions market participants would use in valuing the liability. Examples of utilized unobservable inputs are future cash flows and long-term growth rates. | ||||
10
FOX CORPORATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
an entertainment production company.
|
| For the three months ended March 31, |
|
| For the nine months ended March 31, |
| For the three months ended September 30, | ||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| 2021 | 2020 | |||||||||||||||||||||||||
|
| (in millions) |
| (in millions) | |||||||||||||||||||||||||||||||||||
Beginning of period |
| $ | (202 | ) |
| $ | (216 | ) |
| $ | (305 | ) |
| $ | (189 | ) | Beginning of period | $ | (261) | $ | (305) | ||||||||||||||||||
Acquisitions(a) |
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (109 | ) | Acquisitions(a) | (45) | — | ||||||||||||||||||||
Net income |
|
| (5 | ) |
|
| (4 | ) |
|
| (13 | ) |
|
| (16 | ) | |||||||||||||||||||||||
Redemption of noncontrolling interests(b) |
|
| 0 |
|
|
| 0 |
|
|
| 135 |
|
|
| 0 |
| |||||||||||||||||||||||
| Net loss (income) | Net loss (income) | 1 | (4) | ||||||||||||||||||||||||||||||||||||
Distributions |
|
| 1 |
|
|
| 6 |
|
|
| 12 |
|
|
| 19 | �� | Distributions | 3 | 6 | ||||||||||||||||||||
Accretion and other |
|
| (19 | ) |
|
| (44 | ) |
|
| (54 | ) |
|
| 37 |
| — | (7) | |||||||||||||||||||||
End of period |
| $ | (225 | ) |
| $ | (258 | ) |
| $ | (225 | ) |
| $ | (258 | ) | End of period | $ | (302) | $ | (310) | ||||||||||||||||||
|
| |
|
| ||||
| (a) | The increase for the | ||||
|
|
The final put right held by the sports network minority shareholdershareholder's put right was exercisable. In October 2021, this portion of the minority shareholder's put right expired and, as a result, approximately $110 million will become exercisablebe reclassified into equity in the first quarter of fiscal 2022.Financial Statements for the three months ending December 31, 2021. The put right held by the Credible minority shareholder will become exercisable in fiscal 2025.
The put right held by the entertainment production company's minority shareholder will become exercisable in fiscal 2027.
|
| As of March 31, 2021 |
|
| As of June 30, 2020 |
| As of September 30, 2021 | As of June 30, 2021 | |||||||||||
|
| (in millions) |
| (in millions) | |||||||||||||||
Borrowings |
|
|
|
|
|
|
|
| Borrowings | ||||||||||
Fair value |
| $ | 9,235 |
|
| $ | 9,746 |
| Fair value | $ | 9,460 | $ | 9,474 | ||||||
Carrying value |
| $ | 7,950 |
|
| $ | 7,946 |
| Carrying value | $ | 7,953 | $ | 7,951 | ||||||
11
FOX CORPORATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
In fiscal 2020, the Company’s
In accordance with the ASR agreements, in August 2020, the Company paid a third-party financial institution $154 million and $66 million and received initial deliveries of approximately 4.7 million and 2.0 million shares of Class A Common Stock and Class B Common Stock, respectively, representing 80% of the shares expected to be repurchased under each ASR agreement, at a price of $26.00 and $26.01 per share, which was
In addition to the shares purchased under the ASR agreements, the Company repurchased shares of Class A Common Stock and Class B Common Stock in the open market. In total, the Company repurchased approximately 247 million shares of Common Stock for $725approximately $250 million during the ninethree months ended March 31,September 30, 2021.
approximately $50 million.
|
| For the three months ended March 31, |
|
| For the nine months ended March 31, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Cash dividend per share |
| $ | 0.23 |
|
| $ | 0.23 |
|
| $ | 0.46 |
|
| $ | 0.46 |
|
| For the three months ended September 30, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| Cash dividend per share | $ | 0.24 | $ | 0.23 | |||||||||||||||||||
12
FOX CORPORATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The
|
| For the three months ended March 31, |
|
| For the nine months ended March 31, |
| For the three months ended September 30, | ||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| 2021 | 2020 | |||||||||||||||||||||||||
|
| (in millions) |
| (in millions) | |||||||||||||||||||||||||||||||||||
Equity-based compensation |
| $ | 37 |
|
| $ | 41 |
|
| $ | 112 |
|
| $ | 115 |
| Equity-based compensation | $ | 15 | $ | 31 | ||||||||||||||||||
Intrinsic value of all settled equity-based awards |
| $ | 4 |
|
| $ | 2 |
| �� | $ | 95 |
|
| $ | 8 |
| Intrinsic value of all settled equity-based awards | $ | 76 | $ | 81 | ||||||||||||||||||
Tax benefit on settled equity-based awards |
| $ | 1 |
|
| $ | 1 |
|
| $ | 17 |
|
| $ | 2 |
| Tax benefit on settled equity-based awards | $ | 17 | $ | 14 | ||||||||||||||||||
During the nine months ended March 31, 2020, approximately 1.1 million RSUs were granted, which vest in equal annual installments over a three-year period subject to the participants’ continued employment with the Company.
Stock Options
During the nine months ended March 31, 2020, approximately 3.8 million stock options were granted, which generally have a term of seven years and vest in equal annual installments over a three-year period subject to the participants’ continued employment with the Company.
Performance-based stock options (“PSOs”) are awards that entitle the holder to purchase a specified number of shares of Class A Common Stock at a specified price for a specified period of time, contingent on the performance of the Class A Common Stock over a three-year period, subject to the terms and conditions of the SAP, the applicable award documents and such other terms and conditions as the Compensation Committee of the Board may establish. The PSOs granted under the SAP will vest in full only if the Company’s Class A Common Stock exceeds the exercise price of the PSO by a certain threshold over a certain period of time during the performance period (the “market condition”). The PSOs were fair valued using a Monte Carlo simulation model that uses the following assumptions: (i) expected volatility; (ii) expected term; (iii) risk-free interest rate; and (iv) expected dividend yield.Compensation cost related to the PSO will be recognized even if the market condition is not met.
13
FOX CORPORATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
payments.
14
FOX CORPORATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
|
|
•Cable Network Programming, which principally consists of the production and licensing of news and sports content distributed primarily through traditional cable television systems, direct broadcast satellite operators and telecommunication companies (“traditional MVPDs”) and online multi-channel video programming distributors (“digital MVPDs”), primarily in the U.S. |
|
•Television, which principally consists of the production, acquisition, marketing and distribution of broadcast network programming and free advertising-supported video-on-demand (“AVOD”) services under the FOX and Tubi brands, respectively, and the operation of 29 full power broadcast television stations, including 11 duopolies, in the U.S. Of these stations, 18 are affiliated with the FOX Network, 10 are affiliated with MyNetworkTV and 1 is an independent station. |
|
15
|
| For the three months ended March 31, |
|
| For the nine months ended March 31, |
| For the three months ended September 30, | ||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| 2021 | 2020 | |||||||||||||||||||||||||
|
| (in millions) |
| (in millions) | |||||||||||||||||||||||||||||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues | ||||||||||||||||||||||
Cable Network Programming |
| $ | 1,471 |
|
| $ | 1,467 |
|
| $ | 4,284 |
|
| $ | 4,221 |
| Cable Network Programming | $ | 1,416 | $ | 1,325 | ||||||||||||||||||
Television |
|
| 1,695 |
|
|
| 1,926 |
|
|
| 5,601 |
|
|
| 5,548 |
| Television | 1,581 | 1,350 | ||||||||||||||||||||
Other, Corporate and Eliminations |
|
| 49 |
|
|
| 47 |
|
|
| 134 |
|
|
| 116 |
| Other, Corporate and Eliminations | 48 | 42 | ||||||||||||||||||||
Total revenues |
| $ | 3,215 |
|
| $ | 3,440 |
|
| $ | 10,019 |
|
| $ | 9,885 |
| Total revenues | $ | 3,045 | $ | 2,717 | ||||||||||||||||||
Segment EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Segment EBITDA | ||||||||||||||||||||||
Cable Network Programming |
| $ | 850 |
|
| $ | 792 |
|
| $ | 2,202 |
|
| $ | 2,032 |
| Cable Network Programming | $ | 774 | $ | 781 | ||||||||||||||||||
Television |
|
| 135 |
|
|
| 224 |
|
|
| 407 |
|
|
| 261 |
| Television | 359 | 457 | ||||||||||||||||||||
Other, Corporate and Eliminations |
|
| (86 | ) |
|
| (96 | ) |
|
| (239 | ) |
|
| (256 | ) | Other, Corporate and Eliminations | (69) | (72) | ||||||||||||||||||||
Amortization of cable distribution investments |
|
| (6 | ) |
|
| (5 | ) |
|
| (17 | ) |
|
| (19 | ) | Amortization of cable distribution investments | (5) | (5) | ||||||||||||||||||||
Depreciation and amortization |
|
| (78 | ) |
|
| (57 | ) |
|
| (216 | ) |
|
| (164 | ) | Depreciation and amortization | (79) | (68) | ||||||||||||||||||||
Impairment and restructuring charges |
|
| 0 |
|
|
| 0 |
|
|
| (35 | ) |
|
| (9 | ) | Impairment and restructuring charges | — | (35) | ||||||||||||||||||||
Interest expense |
|
| (98 | ) |
|
| (89 | ) |
|
| (296 | ) |
|
| (269 | ) | |||||||||||||||||||||||
Interest income |
|
| 0 |
|
|
| 8 |
|
|
| 3 |
|
|
| 33 |
| |||||||||||||||||||||||
| Interest expense, net | Interest expense, net | (97) | (98) | ||||||||||||||||||||||||||||||||||||
Other, net |
|
| 61 |
|
|
| (632 | ) |
|
| 752 |
|
|
| (345 | ) | Other, net | 69 | 519 | ||||||||||||||||||||
Income before income tax expense |
|
| 778 |
|
|
| 145 |
|
|
| 2,561 |
|
|
| 1,264 |
| Income before income tax expense | 952 | 1,479 | ||||||||||||||||||||
Income tax expense |
|
| (196 | ) |
|
| (55 | ) |
|
| (632 | ) |
|
| (347 | ) | Income tax expense | (244) | (362) | ||||||||||||||||||||
Net income |
|
| 582 |
|
|
| 90 |
|
|
| 1,929 |
|
|
| 917 |
| Net income | 708 | 1,117 | ||||||||||||||||||||
Less: Net income attributable to noncontrolling interests |
|
| (15 | ) |
|
| (12 | ) |
|
| (32 | ) |
|
| (40 | ) | Less: Net income attributable to noncontrolling interests | (7) | (11) | ||||||||||||||||||||
Net income attributable to Fox Corporation stockholders |
| $ | 567 |
|
| $ | 78 |
|
| $ | 1,897 |
|
| $ | 877 |
| Net income attributable to Fox Corporation stockholders | $ | 701 | $ | 1,106 | ||||||||||||||||||
16
|
| For the three months ended March 31, |
|
| For the nine months ended March 31, |
| For the three months ended September 30, | ||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| 2021 | 2020 | |||||||||||||||||||||||||
|
| (in millions) |
| (in millions) | |||||||||||||||||||||||||||||||||||
Cable Network Programming |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cable Network Programming | ||||||||||||||||||||||
Affiliate fee |
| $ | 1,068 |
|
| $ | 1,006 |
|
| $ | 2,969 |
|
| $ | 2,902 |
| Affiliate fee | $ | 1,026 | $ | 973 | ||||||||||||||||||
Advertising |
|
| 283 |
|
|
| 304 |
|
|
| 1,023 |
|
|
| 895 |
| Advertising | 311 | 299 | ||||||||||||||||||||
Other |
|
| 120 |
|
|
| 157 |
|
|
| 292 |
|
|
| 424 |
| Other | 79 | 53 | ||||||||||||||||||||
Total Cable Network Programming revenues |
|
| 1,471 |
|
|
| 1,467 |
|
|
| 4,284 |
|
|
| 4,221 |
| Total Cable Network Programming revenues | 1,416 | 1,325 | ||||||||||||||||||||
Television |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Television | ||||||||||||||||||||||
Advertising |
|
| 915 |
|
|
| 1,266 |
|
|
| 3,426 |
|
|
| 3,726 |
| Advertising | 819 | 670 | ||||||||||||||||||||
Affiliate fee |
|
| 651 |
|
|
| 553 |
|
|
| 1,801 |
|
|
| 1,487 |
| Affiliate fee | 641 | 560 | ||||||||||||||||||||
Other |
|
| 129 |
|
|
| 107 |
|
|
| 374 |
|
|
| 335 |
| Other | 121 | 120 | ||||||||||||||||||||
Total Television revenues |
|
| 1,695 |
|
|
| 1,926 |
|
|
| 5,601 |
|
|
| 5,548 |
| Total Television revenues | 1,581 | 1,350 | ||||||||||||||||||||
Other, Corporate and Eliminations |
|
| 49 |
|
|
| 47 |
|
|
| 134 |
|
|
| 116 |
| Other, Corporate and Eliminations | 48 | 42 | ||||||||||||||||||||
Total revenues |
| $ | 3,215 |
|
| $ | 3,440 |
|
| $ | 10,019 |
|
| $ | 9,885 |
| Total revenues | $ | 3,045 | $ | 2,717 | ||||||||||||||||||
|
| For the three months ended March 31, |
|
| For the nine months ended March 31, |
| For the three months ended September 30, | ||||||||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| 2021 | 2020 | |||||||||||||||||||||||||
|
| (in millions) |
| (in millions) | |||||||||||||||||||||||||||||||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Depreciation and amortization | ||||||||||||||||||||||
Cable Network Programming |
| $ | 16 |
|
| $ | 15 |
|
| $ | 41 |
|
| $ | 44 |
| Cable Network Programming | $ | 10 | $ | 13 | ||||||||||||||||||
Television |
|
| 26 |
|
|
| 17 |
|
|
| 77 |
|
|
| 46 |
| Television | 26 | 25 | ||||||||||||||||||||
Other, Corporate and Eliminations |
|
| 36 |
|
|
| 25 |
|
|
| 98 |
|
|
| 74 |
| Other, Corporate and Eliminations | 43 | 30 | ||||||||||||||||||||
Total depreciation and amortization |
| $ | 78 |
|
| $ | 57 |
|
| $ | 216 |
|
| $ | 164 |
| Total depreciation and amortization | $ | 79 | $ | 68 | ||||||||||||||||||
|
| As of March 31, 2021 |
|
| As of June 30, 2020 |
| As of September 30, 2021 | As of June 30, 2021 | |||||||||||
|
| (in millions) |
| (in millions) | |||||||||||||||
Assets |
|
|
|
|
|
|
|
| Assets | ||||||||||
Cable Network Programming |
| $ | 2,584 |
|
| $ | 2,591 |
| Cable Network Programming | $ | 2,557 | $ | 2,577 | ||||||
Television |
|
| 7,247 |
|
|
| 7,054 |
| Television | 8,162 | 7,305 | ||||||||
Other, Corporate and Eliminations |
|
| 12,039 |
|
|
| 11,487 |
| Other, Corporate and Eliminations | 11,444 | 12,145 | ||||||||
Investments |
|
| 1,037 |
|
|
| 618 |
| Investments | 998 | 899 | ||||||||
Total assets |
| $ | 22,907 |
|
| $ | 21,750 |
| Total assets | $ | 23,161 | $ | 22,926 | ||||||
17
Impairment and Restructuring Charges
Impairment and restructuring charges were $35 million and $9 million for the nine months ended March 31, 2021 and 2020, respectively, which were primarily comprised of severance costs principally at the Cable Network Programming segment.
|
| For the three months ended March 31, |
|
| For the nine months ended March 31, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
|
| (in millions) |
| |||||||||||||
Transaction costs(a) |
| $ | (2 | ) |
| $ | (29 | ) |
| $ | 431 |
|
| $ | (72 | ) |
Net gains (losses) on investments in equity securities(b) |
|
| 43 |
|
|
| (567 | ) |
|
| 384 |
|
|
| (185 | ) |
U.K. Newspaper Matters Indemnity(c) |
|
| (15 | ) |
|
| (18 | ) |
|
| (43 | ) |
|
| (62 | ) |
Other |
|
| 35 |
|
|
| (18 | ) |
|
| (20 | ) |
|
| (26 | ) |
Total other, net |
| $ | 61 |
|
| $ | (632 | ) |
| $ | 752 |
|
| $ | (345 | ) |
| For the three months ended September 30, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
Net gains on investments in equity securities(a) | $ | 63 | $ | 121 | |||||||||||||||||||
Transaction costs(b) | (12) | 451 | |||||||||||||||||||||
| Other | 18 | (53) | |||||||||||||||||||||
| Total other, net | $ | 69 | $ | 519 | |||||||||||||||||||
| ||
| (a) | Net gains on investments in equity securities for the three months ended September 30, 2021 and for three months ended September 30, 2020 included the gain related to the change in fair value of the Company’s investment in Flutter (See Note 4—Fair Value). | ||||
| (b) | The transaction costs for the | |||||||
|
|
|
|
Other Non-Current Assets
|
| As of March 31, 2021 |
|
| As of June 30, 2020 |
| As of September 30, 2021 | As of June 30, 2021 | |||||||||||
|
| (in millions) |
| (in millions) | |||||||||||||||
Investments(a) |
| $ | 1,037 |
|
| $ | 618 |
| Investments(a) | $ | 998 | $ | 899 | ||||||
Operating lease ROU assets |
|
| 474 |
|
|
| 539 |
| Operating lease ROU assets | 484 | 469 | ||||||||
| Inventories, net | Inventories, net | 337 | 199 | ||||||||||||||||
Grantor Trust |
|
| 291 |
|
|
| 247 |
| Grantor Trust | 298 | 304 | ||||||||
Inventories, net |
|
| 183 |
|
|
| 202 |
| |||||||||||
Other |
|
| 190 |
|
|
| 195 |
| Other | 173 | 187 | ||||||||
Total other non-current assets |
| $ | 2,175 |
|
| $ | 1,801 |
| Total other non-current assets | $ | 2,290 | $ | 2,058 | ||||||
| ||
| (a) | Included investments accounted for at fair value on a recurring basis of | ||||
18
Accounts Payable, Accrued Expenses and Other Current Liabilities
|
| As of March 31, 2021 |
|
| As of June 30, 2020 |
| As of September 30, 2021 | As of June 30, 2021 | |||||||||||
|
| (in millions) |
| (in millions) | |||||||||||||||
Accrued expenses |
| $ | 1,070 |
|
| $ | 907 |
| Accrued expenses | $ | 842 | $ | 1,077 | ||||||
Program rights payable |
|
| 625 |
|
|
| 485 |
| Program rights payable | 686 | 659 | ||||||||
Deferred revenue |
|
| 214 |
|
|
| 152 |
| Deferred revenue | 212 | 196 | ||||||||
Operating lease liabilities |
|
| 90 |
|
|
| 122 |
| Operating lease liabilities | 95 | 92 | ||||||||
Other current liabilities |
|
| 237 |
|
|
| 240 |
| Other current liabilities | 284 | 229 | ||||||||
Total accounts payable, accrued expenses and other current liabilities |
| $ | 2,236 |
|
| $ | 1,906 |
| Total accounts payable, accrued expenses and other current liabilities | $ | 2,119 | $ | 2,253 | ||||||
|
| As of March 31, 2021 |
|
| As of June 30, 2020 |
| As of September 30, 2021 | As of June 30, 2021 | |||||||||||
|
| (in millions) |
| (in millions) | |||||||||||||||
Accrued non-current pension/postretirement liabilities |
| $ | 678 |
|
| $ | 709 |
| Accrued non-current pension/postretirement liabilities | $ | 574 | $ | 586 | ||||||
Non-current operating lease liabilities |
|
| 413 |
|
|
| 452 |
| Non-current operating lease liabilities | 423 | 409 | ||||||||
Other non-current liabilities |
|
| 321 |
|
|
| 321 |
| Other non-current liabilities | 360 | 341 | ||||||||
Total other liabilities |
| $ | 1,412 |
|
| $ | 1,482 |
| Total other liabilities | $ | 1,357 | $ | 1,336 | ||||||
|
| For the nine months ended March 31, |
| For the three months ended September 30, | |||||||||||||||
|
| 2021 |
|
| 2020 |
| 2021 | 2020 | |||||||||||
|
| (in millions) |
| (in millions) | |||||||||||||||
Supplemental cash flows information |
|
|
|
|
|
|
|
| Supplemental cash flows information | ||||||||||
Cash paid for interest |
| $ | (370 | ) |
| $ | (355 | ) | Cash paid for interest | $ | (168) | $ | (169) | ||||||
Cash paid for income taxes |
| $ | (132 | ) |
| $ | (75 | ) | Cash paid for income taxes | $ | (66) | $ | (86) | ||||||
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Supplemental information on acquisitions |
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Fair value of assets acquired, excluding cash |
| $ | 0 |
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| $ | 773 |
| Fair value of assets acquired, excluding cash | $ | 120 | $ | — | ||||||
Cash acquired |
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| 0 |
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| 15 |
| Cash acquired | — | — | ||||||||
Liabilities assumed |
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| 0 |
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| (53 | ) | Liabilities assumed | — | — | ||||||||
Noncontrolling interests |
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| 0 |
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| (109 | ) | Noncontrolling interests | (45) | — | ||||||||
Cash paid |
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| 0 |
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| (626 | ) | Cash paid | (75) | — | ||||||||
Fair value of equity instruments consideration |
| $ | 0 |
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| $ | 0 |
| Fair value of equity instruments consideration | $ | — | $ | — | ||||||
| ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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•Overview of the Company’s Business—This section provides a general description of the Company’s businesses, as well as developments that occurred during the three months ended September 30, 2021 and 2020 that the Company believes are important in understanding its results of operations and financial condition or to disclose known trends. |
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•Results of Operations—This section provides an analysis of the Company’s results of operations for the three months ended September 30, 2021 and 2020. This analysis is presented on both a consolidated and a segment basis. In addition, a brief description is provided of significant transactions and events that impact the comparability of the results being analyzed. |
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•Liquidity and Capital Resources—This section provides an analysis of the Company’s cash flows for the three months ended September 30, 2021 and 2020, as well as a discussion of the Company’s outstanding debt and commitments, both firm and contingent, that existed as of September 30, 2021. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to fund the Company’s future commitments and obligations, as well as a discussion of other financing arrangements. |
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• | Cable Network Programming, which principally consists of the production and licensing of news and sports content distributed primarily through traditional cable television systems, direct broadcast satellite operators and telecommunication companies (“traditional MVPDs”) and online |
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Other Business Developments
The outbreak of the coronavirus disease 2019 (“COVID-19”) pandemic has resulted in widespread and continuing negative impacts on the macroeconomic environment and disruption to the Company’s business. Weak economic conditions and increased volatility and disruption in the financial markets pose risks to the Company and its business partners, including advertisers whose expenditures tend to reflect overall economic conditions. The COVID-19 pandemic has caused some of the Company’s advertisers to reduce their spending, and future declines in the economic prospects of advertisers or the economy in general could negatively impact their advertising expenditures further. Depending on the duration and severity of the weak economic environment, it could lead to changes in consumer behavior, including increasing numbers of consumers canceling or foregoing subscriptions to multi-channel video programming distributordistributors (“MVPD”digital MVPDs”), primarily in the U.S.
Pursuant to the merger agreement relating to the merger of Twenty-First Century Fox, Inc. (“21CF”) and The Walt Disney Company (“Disney”), the Company made a prepayment of approximately $700 million which represented the Company’s share of the estimated tax liabilities resulting from the anticipated divestitures by Disney of certain assets (the “Divestiture Tax”), principally the FOX Sports Regional Sports Networks (“RSNs”). During the first quarter of fiscal 2021, the Company and Disney reached an agreement to settle the majority of the prepaid Divestiture Tax and the Company received $462 million from Disney as reimbursement of the Company’s prepayment based upon the sales price of the RSNs. This reimbursement was recorded in Other, net in the Statement of Operations. See Note 11—Additional Financial Information to the accompanying Financial Statements under the heading “Other, net.”
In 2019, the United States Court of Appeals for the Third Circuit decided
RESULTS OF OPERATIONS
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| For the three months ended March 31, |
| For the nine months ended March 31, | For the three months ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| 2021 |
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| 2020 |
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| 2020 |
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| Change |
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(in millions, except %) |
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| Better/(Worse) |
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| Better/(Worse) | (in millions, except %) | Better/(Worse) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues |
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| Revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Affiliate fee |
| $ | 1,719 |
| $ | 1,559 |
|
| $ | 160 |
|
|
| 10 |
| % |
| $ | 4,770 |
|
| $ | 4,389 |
|
| $ | 381 |
|
|
| 9 |
| % |
| Affiliate fee | $ | 1,667 | $ | 1,533 | $ | 134 | 9 | % | ||||||||||||||||||||||||||||||||||||||||||
Advertising |
|
| 1,198 |
| 1,570 |
|
|
| (372 | ) |
|
| (24 | ) | % |
|
| 4,449 |
|
|
| 4,621 |
|
|
| (172 | ) |
|
| (4 | ) | % |
| Advertising | 1,130 | 969 | 161 | 17 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Other |
|
| 298 |
|
| 311 |
|
|
| (13 | ) |
|
| (4 | ) | % |
|
| 800 |
|
|
| 875 |
|
|
| (75 | ) |
|
| (9 | ) | % |
| Other | 248 | 215 | 33 | 15 | % | |||||||||||||||||||||||||||||||||||||||||||||
Total revenues |
|
| 3,215 |
|
| 3,440 |
|
|
| (225 | ) |
|
| (7 | ) | % |
|
| 10,019 |
|
|
| 9,885 |
|
|
| 134 |
|
|
| 1 |
| % |
| Total revenues | 3,045 | 2,717 | 328 | 12 | % | |||||||||||||||||||||||||||||||||||||||||||||
Operating expenses |
|
| (1,885 | ) |
|
|
| (2,061 | ) |
|
| 176 |
|
|
| 9 |
| % |
|
| (6,399 | ) |
|
| (6,620 | ) |
|
| 221 |
|
|
| 3 |
| % |
| Operating expenses | (1,571) | (1,168) | (403) | (35) | % | |||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative |
|
| (437 | ) |
|
|
| (464 | ) |
|
| 27 |
|
|
| 6 |
| % |
|
| (1,267 | ) |
|
| (1,247 | ) |
|
| (20 | ) |
|
| (2 | ) | % |
| Selling, general and administrative | (415) | (388) | (27) | (7) | % | |||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization |
|
| (78 | ) |
| (57 | ) |
|
| (21 | ) |
|
| (37 | ) | % |
|
| (216 | ) |
|
| (164 | ) |
|
| (52 | ) |
|
| (32 | ) | % |
| Depreciation and amortization | (79) | (68) | (11) | (16) | % | |||||||||||||||||||||||||||||||||||||||||||||
Impairment and restructuring charges |
|
| - |
| - |
|
|
| - |
|
|
| - |
| % |
|
| (35 | ) |
|
| (9 | ) |
|
| (26 | ) |
| ** |
|
|
| Impairment and restructuring charges | — | (35) | 35 | 100 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Interest expense |
|
| (98 | ) |
| (89 | ) |
|
| (9 | ) |
|
| (10 | ) | % |
|
| (296 | ) |
|
| (269 | ) |
|
| (27 | ) |
|
| (10 | ) | % |
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Interest income |
|
| - |
| 8 |
|
|
| (8 | ) |
|
| (100 | ) | % |
|
| 3 |
|
|
| 33 |
|
|
| (30 | ) |
|
| (91 | ) | % |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense, net | Interest expense, net | (97) | (98) | 1 | 1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other, net |
|
| 61 |
|
| (632 | ) |
|
| 693 |
|
| ** |
|
|
|
| 752 |
|
|
| (345 | ) |
|
| 1,097 |
|
| ** |
|
|
| Other, net | 69 | 519 | (450) | (87) | % | |||||||||||||||||||||||||||||||||||||||||||||||
Income before income tax expense |
|
| 778 |
|
| 145 |
|
|
| 633 |
|
| ** |
|
|
|
| 2,561 |
|
|
| 1,264 |
|
|
| 1,297 |
|
| ** |
|
|
| Income before income tax expense | 952 | 1,479 | (527) | (36) | % | |||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense |
|
| (196 | ) |
|
| (55 | ) |
|
| (141 | ) |
| ** |
|
|
|
| (632 | ) |
|
| (347 | ) |
|
| (285 | ) |
|
| (82 | ) | % |
| Income tax expense | (244) | (362) | 118 | 33 | % | |||||||||||||||||||||||||||||||||||||||||||||
Net income |
|
| 582 |
|
| 90 |
|
|
| 492 |
|
| ** |
|
|
|
| 1,929 |
|
|
| 917 |
|
|
| 1,012 |
|
| ** |
|
|
| Net income | 708 | 1,117 | (409) | (37) | % | |||||||||||||||||||||||||||||||||||||||||||||||
Less: Net income attributable to noncontrolling interests |
|
| (15 | ) |
|
| (12 | ) |
|
| (3 | ) |
|
| (25 | ) | % |
|
| (32 | ) |
|
| (40 | ) |
|
| 8 |
|
|
| 20 |
| % |
| Less: Net income attributable to noncontrolling interests | (7) | (11) | 4 | 36 | % | ||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Fox Corporation stockholders |
| $ | 567 |
| $ | 78 |
|
| $ | 489 |
|
| ** |
|
|
| $ | 1,897 |
|
| $ | 877 |
|
| $ | 1,020 |
|
| ** |
|
|
| Net income attributable to Fox Corporation stockholders | $ | 701 | $ | 1,106 | $ | (405) | (37) | % | ||||||||||||||||||||||||||||||||||||||||||||
Overview— |
|
Overview
For the three months ended March 31, 2021 and 2020
The Company’s revenues decreased 7%increased 12% for the three months ended March 31,September 30, 2021, as compared to the corresponding period of fiscal 2020 as2021, due to higher affiliate fee, revenue was more than offset by lower advertising and other revenues. The increase in affiliate fee revenue was primarily attributable to higher average rates due to rate increases from affiliate agreement renewals andper subscriber, led by contractual rate increases on existing affiliate agreements and from affiliate agreement renewals, partially offset by the impact of a lower average number of subscribers.subscribers. The decreaseincrease in advertising revenue was primarily due to growth at Tubi and the comparative effectstrength of the broadcastschedule of live events at FOX Sports and original scripted programming at FOX Entertainment as compared to the National Football League’s (“NFL”prior year quarter, which was impacted by coronavirus disease 2019 ("COVID-19")Super Bowl LIV in February 2020 (the “Super Bowl”) and, partially offset by lower ratingspolitical advertising revenue at the FOX NetworkTelevision Stations due in part to COVID-19-impacted schedulesthe absence of the prior year presidential and congressional elections in the current quarter. The increase in other revenues was primarily due to higher sports sublicensing revenues related to college sports and higher revenues generated from Premier Boxing Champions ("PBC") pay-per-view events due to the impact of COVID-19 in the prior year quarter and higher FOX Nation subscription revenues, partially offset by the impact of the consolidationdivestiture of Tubi, which experienced record viewership and record advertising revenue, the rotating broadcast of one additional NFL Divisional playoff game and added broadcasts of NFL regular season games. The decrease in other revenues was primarily due to lowerCompany's sports sublicensing revenue related to college sports as a result of COVID-19 partially offset bymarketing businesses.higher content revenue at FOX Entertainment and Bento Box Entertainment, LLC (“Bento Box”).
Selling, general and administrative expenses Income tax expense—The Company’s tax provision and related effective tax rate of For the three months ended March 31, For the nine months ended March 31, 2021 2020 Change % Change 2021 2020 Change % Change (in millions, except %) Better/(Worse) Better/(Worse) Revenues Cable Network Programming $ 1,471 $ 1,467 $ 4 - % $ 4,284 $ 4,221 $ 63 1 % Television 1,695 1,926 (231 ) (12 ) % 5,601 5,548 53 1 % Other, Corporate and Eliminations 49 47 2 4 % 134 116 18 16 % Total revenues $ 3,215 $ 3,440 $ (225 ) (7 ) % $ 10,019 $ 9,885 $ 134 1 % For the three months ended March 31, For the nine months ended March 31, 2021 2020 Change % Change 2021 2020 Change % Change (in millions, except %) Better/(Worse) Better/(Worse) Segment EBITDA Cable Network Programming $ 850 $ 792 $ 58 7 % $ 2,202 $ 2,032 $ 170 8 % Television 135 224 (89 ) (40) % 407 261 146 56 % Other, Corporate and Eliminations (86 ) (96 ) 10 10 % (239 ) (256 ) 17 7 % Adjusted EBITDA(a) $ 899 $ 920 $ (21 ) (2 ) % $ 2,370 $ 2,037 $ 333 16 % Cable Network Programming For the three months ended March 31, For the nine months ended March 31, 2021 2020 Change % Change 2021 2020 Change % Change (in millions, except %) Better/(Worse) Better/(Worse) Revenues Affiliate fee $ 1,068 $ 1,006 $ 62 6 % $ 2,969 $ 2,902 $ 67 2 % Advertising 283 304 (21 ) (7 ) % 1,023 895 128 14 % Other 120 157 (37 ) (24 ) % 292 424 (132 ) (31 ) % Total revenues 1,471 1,467 4 - % 4,284 4,221 63 1 % Operating expenses (505 ) (554 ) 49 9 % (1,725 ) (1,866 ) 141 8 % Selling, general and administrative (122 ) (126 ) 4 3 % (374 ) (342 ) (32 ) (9 ) % Amortization of cable distribution investments 6 5 1 20 % 17 19 (2 ) (11 ) % Segment EBITDA $ 850 $ 792 $ 58 7 % $ 2,202 $ 2,032 $ 170 8 % events that were canceled in the prior year quarter because of COVID-19, and higher FOX Nation subscription revenues, partially offset by the impact of the divestiture of the Company's sports marketing businesses. respectively) For the three months ended March 31, For the nine months ended March 31, 2021 2020 Change % Change 2021 2020 Change % Change (in millions, except %) Better/(Worse) Better/(Worse) Revenues Advertising $ 915 $ 1,266 $ (351 ) (28 ) % $ 3,426 $ 3,726 $ (300 ) (8 ) % Affiliate fee 651 553 98 18 % 1,801 1,487 314 21 % Other 129 107 22 21 % 374 335 39 12 % Total revenues 1,695 1,926 (231 ) (12 ) % 5,601 5,548 53 1 % Operating expenses (1,359 ) (1,486 ) 127 9 % (4,613 ) (4,713 ) 100 2 % Selling, general and administrative (201 ) (216 ) 15 7 % (581 ) (574 ) (7 ) (1 ) % Segment EBITDA $ 135 $ 224 $ (89 ) (40) % $ 407 $ 261 $ 146 56 % 2021) For the three months ended March 31, For the nine months ended March 31, 2021 2020 Change % Change 2021 2020 Change % Change (in millions, except %) Better/(Worse) Better/(Worse) Revenues $ 49 $ 47 $ 2 4 % $ 134 $ 116 $ 18 16 % Operating expenses (21 ) (21 ) - - % (61 ) (41 ) (20 ) (49 ) % Selling, general and administrative (114 ) (122 ) 8 7 % (312 ) (331 ) 19 6 % Segment EBITDA $ (86 ) $ (96 ) $ 10 10 % $ (239 ) $ (256 ) $ 17 7 % Adjusted EBITDA is considered a non-GAAP financial measure and should be considered in addition to, not as a substitute for, net income, cash flow and other measures of financial performance reported in accordance with U.S. generally accepted accounting principles (“GAAP”). In addition, this measure does not reflect cash available to fund requirements and excludes items, such as depreciation and amortization and impairment charges, which are significant components in assessing the Company’s financial performance. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. For the three months ended March 31, For the nine months ended March 31, 2021 2020 2021 2020 (in millions) Net income $ 582 $ 90 $ 1,929 $ 917 Add Amortization of cable distribution investments 6 5 17 19 Depreciation and amortization 78 57 216 164 Impairment and restructuring charges - - 35 9 Interest expense 98 89 296 269 Interest income - (8 ) (3 ) (33 ) Other, net (61 ) 632 (752 ) 345 Income tax expense 196 55 632 347 Adjusted EBITDA $ 899 $ 920 $ 2,370 $ 2,037 For the three months ended March 31, For the nine months ended March 31, 2021 2020 2021 2020 (in millions) Revenues $ 3,215 $ 3,440 $ 10,019 $ 9,885 Operating expenses (1,885 ) (2,061 ) (6,399 ) (6,620 ) Selling, general and administrative (437 ) (464 ) (1,267 ) (1,247 ) Amortization of cable distribution investments 6 5 17 19 Adjusted EBITDA $ 899 $ 920 $ 2,370 $ 2,037 LIQUIDITY AND CAPITAL RESOURCES For the nine months ended March 31, 2021 2020 Net cash provided by operating activities $ 1,866 $ 1,345 prior year impact of COVID-19. For the nine months ended March 31, 2021 2020 Net cash used in investing activities $ (329 ) $ (397 ) Net cash For the nine months ended March 31, 2021 2020 Net cash used in financing activities $ (417 ) $ (986 ) Tax in fiscal 2021 and the timing of dividends paid to the Company’s stockholders in fiscal 2022. Moody's BBB Stable •the impact of COVID-19 and other widespread health emergencies or pandemics and measures to contain their spread and related weak macroeconomic conditions and increased market volatility; •the impact of COVID-19 specifically on the Company, including content disruptions that negatively affect the timing, volume or popularity of the Company’s programming, particularly sports programming, and potential non-cash impairment charges resulting from significant declines in the Company’s estimated revenues or the expected popularity of the Company’s programming; •evolving technologies and distribution platforms and changes in consumer behavior as consumers seek more control over when, where and how they consume content, and related impacts on advertisers and traditional MVPDs; •declines in advertising expenditures due to various factors such as the economic prospects of advertisers or the economy, major sports events and elections cycles, evolving technologies and •further declines in the number of subscribers to traditional MVPD services; •the failure to enter into or renew on favorable terms, or at all, affiliation or carriage agreements or arrangements through which the Company makes its content available for viewing through online video platforms; •the highly competitive nature of the industry in which the Company’s businesses operate; •the popularity of the Company’s content, including special sports events; and the continued popularity of the sports franchises, leagues and teams for which the Company has acquired programming rights; •the Company’s ability to renew programming rights, particularly sports programming rights, on sufficiently favorable terms, or at all; •damage to the Company’s brands or reputation; •the inability to realize the anticipated benefits of the Company’s strategic investments and acquisitions; • the loss of key personnel; • labor disputes, including labor disputes involving professional sports leagues whose games or events the Company has the right to broadcast; •a degradation, failure or misuse of the Company’s network and information systems and other technology relied on by the Company that causes a disruption of services or improper disclosure of personal data or other confidential information; •content piracy and signal theft and the Company’s ability to protect its intellectual property rights; •the failure to comply with laws, regulations, rules, industry standards or contractual obligations relating to privacy and personal data protection; •changes in tax, federal communications or other laws, regulations, practices or the interpretations thereof (including changes in legislation currently being considered); •the impact of any investigations or fines from governmental authorities, including Federal Communications Commission (“FCC”) rules and policies and FCC decisions regarding revocation, renewal or grant of station licenses, waivers and other matters; •the failure or destruction of satellites or transmitter facilities the Company depends on to distribute its programming; •unfavorable litigation or investigation results that require the Company to pay significant amounts or lead to onerous operating procedures; •changes in GAAP or other applicable accounting standards and policies; •the Company’s ability to achieve the benefits it expects to achieve as a standalone, publicly traded company; •the Company’s ability to secure additional capital on acceptable terms; •the impact of any payments the Company is required to make or liabilities it is required to assume under the Separation Agreement (as defined in Note 1—Description of Business and Basis of Presentation in the 2021 Form 10-K) and the indemnification arrangements entered into in connection with the Separation and the Distribution (as defined in Note 1—Description of Business and Basis of Presentation in the 2021 Form 10-K); and (a)Disclosure Controls and Procedures (b)Changes in Internal Control over Financial Reporting PART II Total number of shares purchased(a) Average price paid per share(b) Approximate dollar value of shares that may yet be purchased under the program(b)(c) (in millions) January 1, 2021 – January 31, 2021 Class A common stock 707,531 $ 30.77 Class B common stock 310,602 30.09 February 1, 2021 – February 28, 2021 Class A common stock 4,019,798 32.85 Class B common stock 1,099,719 31.70 March 1, 2021 – March 31, 2021 Class A common stock 1,803,783 39.25 Class B common stock 998,116 37.36 Total Class A common stock 6,531,112 34.39 Class B common stock 2,408,437 33.84 8,939,549 $ 675 31.2 32.1 101 104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). Fox Corporation By: /s/ Steven Tomsic Steven Tomsic Chief Financial Officerdecreased 6%increased 7% for the three months ended March 31,September 30, 2021, as compared to the corresponding period of fiscal 20202021, primarily due to lowerhigher digital marketing initiatives at FOX News Media including costs associated with the absencelaunch of FOX Weather.Super Bowl in the current year.For the ninethree months ended March 31, 2021 and 2020The Company’s revenues remained relatively flat for the nine months ended March 31,September 30, 2021, as compared to the corresponding period of fiscal 2020 as higher affiliate fee revenue was offset by lower advertising and other revenues. The increase in affiliate fee revenue was2021, primarily attributable to higher average rates due to rate increases from affiliate agreement renewals and contractual rate increases on existing affiliate agreements, partially offset by the impact of a lower average number of subscribers and the estimated affiliate fee credits provided as a result of the under-delivery of live college football games discussed above. The decrease in advertising revenue was primarily due to the comparative effect of the broadcast of the Super Bowland lower ratings at the FOX Network due in part to COVID-19-impacted schedules in the current year partially offset by higher political advertising revenue related to the 2020 presidential and congressional elections, the impact of the consolidation of Tubi and the rotating broadcast of one additional NFL Divisional playoff game. The decrease in other revenues was primarily due to lower sports sublicensing revenue related to college sports as a result of COVID-19 and lower content licensing revenue at the FOX Network partially offset byhigher content revenue at FOX Entertainment and Bento Box and the impact of the consolidation of Credible in fiscal 2020.Operating expenses decreased 3% for the nine months ended March 31, 2021 as compared to the corresponding period of fiscal 2020 primarily due to lower sports programming rights amortization and production costs, including the absence of the broadcast of the Super Bowl in the current year and the under-delivery of live college football games, and lower entertainment programming rights amortization due to fewer hours of original scripted programming as a result of COVID-19 partially offset by the impact of the consolidation of Tubi. Partially offsetting lower sports programming rights amortization and production costs were contractual rate increases for NFL, Major League Baseball (“MLB”) and college football content, the rotating broadcast of one additional NFL Divisional playoff game and higher volume of NASCAR races due to fewer races in the prior year period due to COVID-19.Selling, general and administrative expenses increased 2% for the nine months ended March 31, 2021 as compared to the corresponding period of fiscal 2020 primarily due to the impact of acquisitions that occurred in fiscal 2020 (the “Fiscal 2020 Acquisitions”) (See Note 2—Acquisitions, Disposals and Other Transactions to the accompanying Financial Statements) and higher legal and marketing expenses partially offset by lower professional fees, lower bad debt expense and lower marketing costs associated with the absence of the Super Bowl in the current year.Depreciation and amortization—Depreciation and amortization expense increased 37% and 32% for the three and nine months ended March 31, 2021, respectively, as compared to the corresponding periods of fiscal 2020, primarily due to assets placed into service as the Company transitions from service agreements entered into in connection with the Separation (as defined in Note 1—Description of Business and Basis of Presentation in the 2020 Form 10-K under the heading “The Distribution”) and the Fiscal 2020 Acquisitions.Impairment and restructuring charges—Impairment and restructuring charges increased $26 million for the nine months ended March 31, 2021, as compared to the corresponding period of fiscal 2020, primarily due to higher severance costs principally at the Cable Network Programming segment (See Note 11Company's new standalone broadcast technical facilities.Additional Financial Information to the accompanying Financial Statements).Interest expense—Interest expense increased 10% for the three and nine months ended March 31, 2021 as compared to the corresponding periods of fiscal 2020, primarily due to the issuance of $1.2 billion of senior notes in April 2020 (See Note 9—Borrowings in the 2020 Form 10-K under the heading “Public Debt – Senior Notes Issued” for additional information).Interest income—Interest income decreased for the three and nine months ended March 31, 2021, as compared to the corresponding periods of fiscal 2020, primarily due to lower interest rates.Other, net—See Note 11—11—Additional Financial Information to the accompanying Financial Statements under the heading “Other, net.”25%26% for the three and nine months ended March 31,September 30, 2021 was higher than the statutory rate of 21% primarily due to state taxes and other permanent items.ninethree months ended March 31, 2021,September 30, 2020 was higher than the statutory rate of 21% primarily due to state taxes, partially offset by a benefit from the reduction of uncertain tax positions for state tax audits.The Company’s tax provision and related effective tax rate of 38% and 27%—Net income decreased 37% for the three and nine months ended March 31, 2020, respectively, were higher than the statutory rate of 21% primarily due to state taxes, a valuation allowance recorded against net capital losses and other permanent items.Net income—Net income increased $492 million and $1.0 billion for the three and nine months ended March 31, 2021, respectively, as compared to the corresponding periods of fiscal 2020, primarily due to unrealized gains related to changes in fair value of the Company’s investments in equity securities as compared to losses related to the Company’s investment in Roku, Inc. (“Roku”) which was sold in March 2020 partially offset by higher income tax expense. Contributing to the increase in Net income for the nine months ended March 31,September 30, 2021, as compared to the corresponding period of fiscal 2020, was2021, primarily due to the receiptsubstantially resolved settlement from The Walt Disney Company ("Disney") of $462 million related to the reimbursement of the $462 million reimbursement from Disney related toCompany’s prepayment of its share of the Divestiture Tax (See Note 1—Description of Business and Basis of Presentation11—Additional Financial Information to the accompanying Financial Statements for additional information) and higher Segment EBITDA (as defined below) atunder the Cable Network Programming and Television segments.heading “Other, net.”).Interest income,net, Other, net and Income tax expense. Management believes that Segment EBITDA is an appropriate measure for evaluating the operating performance of the Company’s business segments because it is the primary measure used by the Company’s chief operating decision maker to evaluate the performance of and allocate resources to the Company’s businesses.and nine months ended March 31,September 30, 2021, as compared to the three and nine months ended March 31,September 30, 2020: For the three months ended September 30, 2021 2020 Change % Change (in millions, except %) Better/(Worse) Revenues Cable Network Programming $ 1,416 $ 1,325 $ 91 7 % Television 1,581 1,350 231 17 % Other, Corporate and Eliminations 48 42 6 14 % Total revenues $ 3,045 $ 2,717 $ 328 12 % For the three months ended September 30, 2021 2020 Change % Change (in millions, except %) Better/(Worse) Segment EBITDA Cable Network Programming $ 774 $ 781 $ (7) (1) % Television 359 457 (98) (21) % Other, Corporate and Eliminations (69) (72) 3 4 % $ 1,064 $ 1,166 $ (102) (9) % (a)(a) For a discussion of Adjusted EBITDA and a reconciliation of Net income to Adjusted EBITDA, see “Non-GAAP Financial Measures” below. (43% (47% and 49% of the Company’srevenues forthe firstnine three months offiscal 2022 and 2021, and 2020)respectively) For the three months ended September 30, 2021 2020 Change % Change (in millions, except %) Better/(Worse) Revenues Affiliate fee $ 1,026 $ 973 $ 53 5 % Advertising 311 299 12 4 % Other 79 53 26 49 % Total revenues 1,416 1,325 91 7 % Operating expenses (523) (434) (89) (21) % Selling, general and administrative (124) (115) (9) (8) % Amortization of cable distribution investments 5 5 — — % Segment EBITDA $ 774 $ 781 $ (7) (1) % For the three months ended March 31, 2021 and 2020remained relatively flatincreased 7% for the three months ended March 31,September 30, 2021, as compared to the corresponding period of fiscal 2020 as the increase in2021, due to higher affiliate fee, revenue was offset by lower advertising and other revenues. The increase in affiliate fee revenue was primarily dueattributable to contractual rate increases on existing affiliate agreements and from affiliate agreement renewals, partially offset by a lower average number of subscribers. The decrease in the average number of subscribers was due to a reduction in traditional MVPD subscribers, partially offset by an increase in digital MVPD subscribers.The decreaseincrease in advertising revenue was principallyprimarily due to a slower news cycle, which drove lower linearhigher number of live sports events compared to the prior year quarter, including the return to a full college football schedule that was shortened due to COVID-19 in the prior year quarter and increased digital advertising revenue including lower ratings,at FOX News Media, partially offset by higher pricinglower political advertising revenue at FOX News Media.Media due to the absence of the prior year presidential and congressional elections in the current year quarter. The decreaseincrease in other revenues was primarily attributabledue to lowerhigher sports sublicensing revenues due in part to COVID-19 and the absence of revenues generated from Premier Boxing Champions (“PBC”)PBC pay-per-view events.increased 7%decreased 1% for the three months ended March 31,September 30, 2021, as compared to the corresponding period of fiscal 20202021, as the revenue increases noted above were offset by higher expenses. Operating expenses increased for the three months ended September 30, 2021 primarily due to lower expenses.Operatingthe return of a full college football schedule, as the 2020 season was impacted by COVID-19, partially offset by the absence of events that were shifted into the prior year quarter, including National Association of Stock Car Auto Racing (“NASCAR”) Cup Series races and additional Major League Baseball ("MLB") regular season games, as a result of COVID-19 rescheduling. Selling, general and administrative expenses decreased primarilyincreased for three months ended September 30, 2021 principally due to lower sports programming rights amortization and production costs driven by the comparative effect of on-site productionhigher investment in digital growth initiatives at FOX News Media, including costs associated with the Super Bowllaunch of FOX Weather.lower sublicensed sports rights, partially offset by50% of the higher volumeCompany’s revenues for the first three months of NASCAR races due to fewer races in the prior year period due to COVID-19.For the nine months ended March 31,fiscal 2022 and 2021, and 2020 For the three months ended September 30, 2021 2020 Change % Change (in millions, except %) Better/(Worse) Revenues Advertising $ 819 $ 670 $ 149 22 % Affiliate fee 641 560 81 14 % Other 121 120 1 1 % Total revenues 1,581 1,350 231 17 % Operating expenses (1,026) (714) (312) (44) % Selling, general and administrative (196) (179) (17) (9) % Segment EBITDA $ 359 $ 457 $ (98) (21) % Cable Network ProgrammingTelevision segment remained relatively flatincreased 17% for the ninethree months ended March 31,September 30, 2021, as compared to the corresponding period of fiscal 2020 as the increases in2021, due to higher advertising, affiliate fee, and advertising revenues were offset by lower other revenues. The increase in affiliate fee revenue was primarily due to rate increases from affiliate agreement renewals and contractual rate increases on existing affiliate agreements, partially offset by a lower average number of subscribers and estimated affiliate fee credits provided as a result of the under-delivery of live college football games discussed above. The decrease in the average number of subscribers was due to a reduction in traditional MVPD subscribers, partially offset by an increase in digital MVPD subscribers. The increase in advertising revenue was primarily attributable to growth at Tubi, the return of a full schedule of college football and the MLB All-Star Game and more original scripted programming at FOX Entertainment due to the 2020 presidential election coverage at FOX News Media, which drove higher linear advertising revenue, including higher pricing, and higher digital advertising revenue. The decrease in other revenues was primarily attributable to lower sports sublicensing revenues due in part toimpact of COVID-19 and lower revenues generated from PBC pay-per-view events.Cable Network Programming Segment EBITDA increased 8% for the nine months ended March 31, 2021 as compared to the corresponding period of fiscal 2020 primarily due to the affiliate fee and advertising revenue increases noted above and lower expenses.Operating expenses decreased primarily due to lower sports programming rights amortization and production costs driven by the under-delivery of live games in the first half of fiscal 2021, partially offset by contractual rate increases for college football and MLB content andprior year quarter. Partially offsetting the shift of NASCAR races and MLB regular season games into fiscal 2021 as a result of COVID-19. Selling, general and administrative expenses increased principally due to higher legal and marketing expenses.Television (56% of the Company’srevenues forthe first nine months offiscal 2021 and2020)For the three months ended March 31, 2021 and 2020Revenues at the Television segment decreased 12% for the three months ended March 31, 2021 as compared to the corresponding period of fiscal 2020 as higher affiliate fee and other revenues were more than offset by lower advertising revenue. The decreaseincrease in advertising revenue was primarilylower political advertising revenue at the FOX Television Stations due to the comparative effectabsence of the broadcast of the Super Bowlprior year presidential and lower ratings at the FOX Network due in part to COVID-19-impacted schedules partially offset by the impact of the consolidation of Tubi, the rotating broadcast of one additional NFL Divisional playoff game and added broadcasts of NFL regular season games.congressional elections. The increase in affiliate fee revenue was primarily due to higher fees received from television stations that are affiliated with the FOX Network, and higher average rates per subscriber, partially offset by a lower average number of subscribers, at the Company’s owned and operated television stations. The increase in other revenues was primarily due to higher content revenue at FOX Entertainment and Bento Box.40%21% for the three months ended March 31,September 30, 2021, as compared to the corresponding period of fiscal 20202021, as the revenue increases noted above were more than offset by higher expenses. Operating expenses increased primarily due to the revenue decreases noted above partially offset by lower expenses. Operating expenses decreased primarily due to lowerhigher sports programming rights amortization and production costs, including the absencea higher number of the broadcast of the Super Bowl in the current year,live events, increased digital investment at Tubi, and lowerhigher entertainment programming rights amortization and marketing costs due to fewermore hours of original scripted programming as a result of COVID-19 partially offset by the impact of the consolidation of Tubi. Partially offsetting the decrease in sports programming rights amortization and production costs were the rotating broadcast of one additional NFL Divisional playoff game, higher volume of NASCAR races duecompared to fewer races in the prior year period due to COVID-19quarter which was impacted by COVID-19.added broadcasts of NFL regular season games. Selling, general and administrative expenses decreased primarily due to lower marketing costs associated with the absenceEliminations (1% of the Super Bowl inCompany’s revenues for the current year.For the ninefirst three months ended March 31, 2021of fiscal 2022 and 2020 For the three months ended September 30, 2021 2020 Change % Change (in millions, except %) Better/(Worse) Revenues $ 48 $ 42 $ 6 14 % Operating expenses (22) (20) (2) (10) % Selling, general and administrative (95) (94) (1) (1) % Segment EBITDA $ (69) $ (72) $ 3 4 % TelevisionOther, Corporate and Eliminations segment remained relatively flatincreased 14% for the ninethree months ended March 31,September 30, 2021, as compared to the corresponding period of fiscal 2020 as higher affiliate fee and other revenues were offset by lower advertising revenue. The decrease in advertising revenue was primarily2021, due to the comparative effect of the broadcast of the Super Bowland lower ratings at the FOX Network due in part to COVID-19-impacted schedules partially offset by the impact of the consolidation of Tubi, higher political advertising revenue at the FOX Television Stations related to the 2020 presidential and congressional elections and the rotating broadcast of one additional NFL Divisional playoff game. The increase in affiliate fee revenue was primarily due to higher fees received from television stations that are affiliated with the FOX Network and higher average rates partially offset by a lower average number of subscribers at the Company’s owned and operated television stations. The increase in other revenues was primarily due to higher content revenue at FOX Entertainment and Bento Box partially offset by lower content licensing revenue at the FOX Network.Television Segment EBITDA increased 56% for the nine months ended March 31, 2021 as compared to the corresponding period of fiscal 2020 due to higher revenues and lower expenses. Operating expenses decreased primarily due to lower sports programming rights amortization and production costs, including the absence of the broadcast of the Super Bowl in the current year, and lower entertainment programming rights amortization due to fewer hours of original scripted programming as a result of COVID-19 partially offset by the impact of the consolidation of Tubi. Partially offsetting the decrease in sports programming rights amortization and production costs were contractual rate increases for NFL, MLB and college football content, the rotating broadcast of one additional NFL Divisional playoff game and higher volume of NASCAR races due to fewer races in the prior year period due to COVID-19. Selling, general and administrative expenses remained relatively flat primarily due to the Fiscal 2020 Acquisitions offset by lower bad debt expense and lower marketing costs associated with the absence of the Super Bowl in the current year.Other, Corporate and Eliminations (1% of the Company’srevenues forthe first nine months offiscal 2021 and 2020)For the three months ended March 31, 2021 and 2020Revenues at the Other, Corporate and Eliminations segment increased 4% for the three months ended March 31, 2021 as compared to the corresponding period of fiscal 2020 primarily due to growth at Credible.Other, Corporate and Eliminations Segment EBITDA increased 10% for the three months ended March 31, 2021 as compared to the corresponding period of fiscal 2020 primarily due to the revenue increases noted above and lower expenses. Selling, general and administrative expenses decreased primarily due to lower professional fees and employee costs.For the nine months ended March 31, 2021 and 2020Revenues at the Other, Corporate and Eliminations segment increased 16% for the nine months ended March 31, 2021 as compared to the corresponding period of fiscal 2020 primarily due to the impact of the consolidation of Credible in the second quarter of fiscal 2020 and growth at Credible partially offset by lower revenues from operating the FOX Studio Lot due to COVID-19.Other, Corporate and Eliminations Segment EBITDA increased 7% for the nine months ended March 31, 2021 as compared to the corresponding period of fiscal 2020prior year quarter which was impacted by COVID-19 and growth at Credible. Operating expenses increased primarily due to the revenue increases noted above partially offset by higher expenses. Operating expenses increased principally due to the impact of the consolidation ofgrowth at Credible. Selling, general and administrative expenses decreased primarily due to lower professional fees and employee costs.Interest income,net, Other, net and Income tax expense.and nine months ended March 31,September 30, 2021, as compared to the three and nine months ended March 31,September 30, 2020: For the three months ended September 30, 2021 2020 (in millions) Net income $ 708 $ 1,117 Add Amortization of cable distribution investments 5 5 Depreciation and amortization 79 68 Impairment and restructuring charges — 35 Interest expense, net Interest expense, net 97 98 Other, net (69) (519) Income tax expense 244 362 Adjusted EBITDA $ 1,064 $ 1,166 and nine months ended March 31,September 30, 2021, as compared to the three and nine months ended March 31, 2020:September 30, 2020. For the three months ended September 30, 2021 2020 (in millions) Revenues $ 3,045 $ 2,717 Operating expenses (1,571) (1,168) Selling, general and administrative (415) (388) Amortization of cable distribution investments 5 5 Adjusted EBITDA $ 1,064 $ 1,166 The Company’s principal source of liquidity is internally generated funds which are highly dependent upon the continuation of affiliate agreements and the state of the advertising markets, the latter of which continues to be negatively impacted by the weak economic environment as a result of COVID-19. Depending on the duration and severity of the weak economic environment, it could lead to changes in consumer behavior, including increasing numbers of consumers canceling or foregoing subscriptions to MVPD services, that adversely affect the Company’s affiliate fee and advertising revenues. In addition, the Company’s business depends on the volume and popularity of the content it distributes, particularly sports content. Following the COVID-19 outbreak, sports events to which the Company has broadcast rights were cancelled or postponed and the production of certain entertainment content the Company distributes was suspended. Although most sports events and productions have resumed, there may be additional content disruptions in the future and, depending on their duration and severity, these disruptions could materially adversely affect the Company’s future advertising revenues and, over a longer period, its future affiliate fee revenues. The magnitude of the impact of the COVID-19 pandemic on the Company remains uncertain and subject to change and will depend on evolving factors beyond the Company’s control. These include the duration and extent of the pandemic, including increases or spikes in the number of cases, mutations or related strains of the virus and the success of vaccination efforts; the pace of economic recovery and the economic and operating conditions facing the Company and others in the pandemic’s aftermath; the effect of governmental actions; and potential changes in consumer behavior. $5.8$5.4 billion of cash and cash equivalents as of March 31,September 30, 2021 and an unused five-year $1.0 billion unsecured revolving credit facility (See Note 5—Borrowings to the accompanying Financial Statements). The Company also has access to the worldwide capital markets, subject to market conditions which could be impacted by COVID-19.conditions. As of March 31, September 30, 2021, the Company was in compliance with all of the covenants under the revolving credit facility, and it does not anticipate any noncompliance with such covenants.programming along with the continued investment in the Company’s broadcast technical facilities following the Distribution (as defined in Note 1—Description of Business and Basis of Presentation in the 2020 Form 10-K under the heading “The Distribution”);programming; employee and facility costs; capital expenditures; acquisitions; interest and dividend payments; debt repayments; and stock repurchases.ninethree months ended March 31,September 30, 2021 and 2020 was as follows (in millions):For the three months ended September 30, 2021 2020 Net cash provided by operating activities $ 29 $ 267 increasedecrease in net cash provided by operating activities during the ninethree months ended March 31,September 30, 2021, as compared to the corresponding period of fiscal 2020,2021, was comprised of higherprimarily due to lower Segment EBITDA, as well as higher sports and higherentertainment programming amortization over cash payments atas a result of the Television segment partially offset by higher tax payments.ninethree months ended March 31,September 30, 2021 and 2020 was as follows (in millions):For the three months ended September 30, For the three months ended September 30, 2021 2020 Net cash used in investing activities $ (75) $ (149) Netninethree months ended March 31,September 30, 2021, as compared to the corresponding period of fiscal 2021, was primarily compriseddue to proceeds from the disposition of property, plant and equipment and the absence of payments related to investments made in connection with establishing the Company’sCompany's new standalone broadcast technical facilities, and additional fundingwhich were placed into service in the Company’s investments in Flutter Entertainment plcfiscal 2021, partially offset by the sale of the Company’s sports marketing businesses as compared to thefiscal 2022 acquisitions of three television stations and Credible (Seeinvestments.Note 2—Acquisitions, Disposals and Other Transactions to the accompanying Financial Statements) partially offset by the sale of the Company’s investment in Roku during the nine months ended March 31, 2020.used in(used in) provided by financing activities for the ninethree months ended March 31,September 30, 2021 and 2020 was as follows (in millions):For the three months ended September 30, 2021 2020 Net cash (used in) provided by financing activities $ (429) $ 298 Netused in(used in) provided by financing activities during the ninethree months ended March 31,September 30, 2021, was lower thanas compared to the corresponding prior year period of fiscal 2021, was primarily due to the absence of the $462 million reimbursement from Disney related to the Divestiture Tax.$0.23$0.24 per share on both the Class A Common Stock and the Class B Common Stock during the three months ended March 31,September 30, 2021, which was paid in AprilSeptember 29, 2021 to stockholders of record on March 10,September 1, 2021.20202021 Form 10-K under the heading “Public Debt – Senior Notes Issued”).March 31,September 30, 2021:Rating AgencySenior DebtOutlookMoody'sBaa2StableBaa2 Stable Standard & Poor's Caution Concerning Forward-Looking Statements•the impact of COVID-19 and other widespread health emergencies or pandemics and measures to contain their spread and related weak macroeconomic conditions and increased market volatility;the impact of COVID-19 specifically on the Company, including content disruptions that negatively affect the volume or popularity of the Company’s programming, particularly sports programming, and potential non-cash impairment charges resulting from significant declines in the Company’s estimated revenues or the expected popularity of the Company’s programming;evolving technologies and distribution platforms and changes in consumer behavior as consumers seek more control over when, where and how they consume content, and related impacts on advertisers and traditional MVPDs;declines in advertising expenditures due to various factors such as the economic prospects of advertisers or the economy in general, new technologies and distribution platforms and related changes in consumer behavior, and shifts in advertisers’ spending toward digital and mobile offerings and away from more traditional media;further declines in the number of subscribers to traditional MVPD services;•the failure to enter into or renew on favorable terms, or at all, affiliation or carriage agreements or arrangements through which the Company makes its content available for viewing through online video platforms;
distribution platforms and related changes in consumer behavior and shifts in advertisers’ expenditures, the evolving market for AVOD advertising campaigns, and audience measurement methodologies’ ability to accurately reflect actual viewership levels;•the highly competitive nature of the industry in which the Company’s businesses operate;the popularity of the Company’s content, including special sports events; the continued popularity of the sports franchises, leagues and teams for which the Company has acquired programming rights;the Company’s ability to renew programming rights, particularly sports programming rights, on sufficiently favorable terms, or at all;damage to the Company’s brands or reputation;the inability to realize the anticipated benefits of the Company’s strategic investments and acquisitions;the failure to comply with laws, regulations, rules, industry standards or contractual obligations relating to privacy and personal data protection;a degradation, failure or misuse of the Company’s network and information systems and other technology relied on by the Company that causes a disruption of services or improper disclosure of personal data or other confidential information;content piracy and signal theft and the Company’s ability to protect its intellectual property rights;
•lower than expected valuations associated with one of the Company’s reporting units, indefinite-lived intangible assets, investments or long-lived assets;changes in tax, federal communications or other laws, regulations, practices or the interpretations thereof (including changes in legislation currently being considered);the impact of any investigations or fines from governmental authorities, including FCC rules and policies and FCC decisions regarding revocation, renewal or grant of station licenses, waivers and other matters;the failure or destruction of satellites or transmitter facilities the Company depends on to distribute its programming;lower than expected valuations associated with one of the Company’s reporting units, indefinite-lived intangible assets, investments or long-lived assets;changes in GAAP or other applicable accounting standards and policies;the Company’s limited operating history as a standalone, publicly traded company and the risk that the Company is unable to make, on a timely or cost-effective basis, the changes necessary to operate effectively as a standalone, publicly traded company;increased costs in connection with the Company operating as a standalone, publicly traded company following the Distribution and the loss of synergies the Company enjoyed from operating as part of 21CF;the Company’s reliance on 21CF to provide the Company various services during transition periods under transition services agreements with 21CF, including broadcast operations, sports production, information systems and technology, and other services, and the risks that 21CF does not properly provide the services under these agreements or that the Company is unable to provide or obtain such services following the applicable transition period (or during such transition period, if 21CF does not properly provide them in a timely and cost effective manner);the Company’s ability to secure additional capital on acceptable terms;the impact of any payments the Company is required to make or liabilities it is required to assume under the Separation Agreement (as defined in Note 1—Description of Business and Basis of Presentation in the 2020 Form 10-K) and the indemnification arrangements entered into in connection with the Separation and the Distribution (as defined in Note 1—Description of Business and Basis of Presentation in the 2020 Form 10-K); andthe other risks and uncertainties detailed in Part I., Item 1A. “Risk Factors” in the 2020 Form 10-K.ITEM 3.20202021 Form 10-K.ITEM 4.Disclosure Controls and ProceduresChanges in Internal Control over Financial Reportingthirdfirst quarter of fiscal 2021,2022, the Company implemented a new advertising sales planning, traffickinggeneral ledger and billing system for its sports and entertainment businesses to replace a system that wasprocure-to-pay systems. This company-wide implementation involved migrating multiple legacy systems, some of which were subject to a Twenty-First Century Fox, Inc. transition services agreement. Asagreement, to a result,common platform. In connection with this implementation, the Company has implemented updates and changes to its current processes and related control activities.thirdfirst quarter of fiscal 20212022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.Due to the COVID-19 pandemic, most of the Company’s employees continue to work remotely, and the Company has strived to minimize the impact of this on the design and effectiveness of the Company’s internal control over financial reporting. The Company is continually monitoring and assessing its internal control over financial reporting and has not experienced any material impact to its internal control over financial reporting due to the COVID-19 pandemic.ITEM 1.8—8—Commitments and Contingencies to the accompanying Unaudited Consolidated Financial Statements of FOX under the heading “Contingencies” for a discussion of the Company’s legal proceedings.ITEM 1A.20202021 as filed with the Securities and Exchange Commission on August 10, 2020.2021, except as set forth below:ITEM 2.March 31,September 30, 2021: (in millions) July 1, 2021 – July 31, 2021 July 1, 2021 – July 31, 2021 Class A common stock 968,421 $ 36.14 Class B common stock 440,273 34.07 August 1, 2021 – August 31, 2021 August 1, 2021 – August 31, 2021 Class A common stock 1,728,556 37.00 Class B common stock 935,236 34.19 September 1, 2021 – September 30, 2021 September 1, 2021 – September 30, 2021 Class A common stock 2,043,556 37.22 Class B common stock 820,198 34.17 Total Class A common stock 4,740,533 36.92 Class B common stock 2,195,707 34.16 6,936,240 $ 2,150 (a)(a) The Company has not made any purchases of Common Stock other than in connection with the publicly announced stock repurchase program described below. (b)(b) These amounts exclude any fees, commissions or other costs associated with the share repurchases. (c)On November 6, 2019, the Company announced that its(c) The Company's Board of Directors had(the "Board") has authorized a $4 billion stock repurchase program, providing forunder which the Company can repurchase of $2 billion of the Company’s Common Stock.The program has no time limit and may be modified, suspended or discontinued at any time.247 million shares of Common Stock for $725approximately $250 million during the ninethree months ended March 31,September 30, 2021.ITEM 3.ITEM 4.ITEM 5.ITEM 6.EXHIBITS(a)Exhibits.3.131.1 31.1March 31,September 30, 2021 formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Unaudited Consolidated Statements of Operations for the three and nine months ended March 31,September 30, 2021 and 2020; (ii) Unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended March 31,September 30, 2021 and 2020; (iii) Consolidated Balance Sheets as of March 31,September 30, 2021 (unaudited) and June 30, 20202021 (audited); (iv) Unaudited Consolidated Statements of Cash Flows for the ninethree months ended March 31,September 30, 2021 and 2020; (v) Unaudited Consolidated Statements of Equity for the three and nine months ended March 31,September 30, 2021 and 2020; and (vi) Notes to the Unaudited Consolidated Financial Statements.**Filed herewith.
___________**Furnished herewith.
* Filed herewith.Fox Corporation
(Registrant)Date: November 3, 2021 Date: May 5, 202136