| | | | | | | | | | | |
| For the fiscal years ended June 30, |
| 2024 | | 2023 |
Broadcast ARPU(e) | A$86 (US$57) | | A$84 (US$56) |
Broadcast Subscriber Churn(f) | 12.4% | | 12.7% |
(a)Subscribing households throughout Australia as of June 30, 2024 and 2023.
(b)Commercial subscribers throughout Australia as of June 30, 2024 and 2023.
(c)Total and Paid subscribers for the applicable streaming service as of June 30, 2024 and 2023. Paid subscribers excludes customers receiving service for no charge under certain new subscriber promotions.
(d)Total subscribers consists of Foxtel Group’s broadcast and streaming services listed above and its news aggregation streaming service.
(e)Average monthly broadcast residential subscription revenue per user (Broadcast ARPU) for the fiscal years ended June 30, 2024 and 2023.
(f)Broadcast residential subscriber churn rate (Broadcast Subscriber Churn) for the fiscal years ended June 30, 2024 and 2023.
Dow Jones (22% of the Company’s consolidated revenues in both fiscal 2024 and 2023)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the fiscal years ended June 30, |
| 2024 | | 2023 | | Change | | % Change |
| (in millions, except %) | | | | | Better/(Worse) |
| Revenues: | | | | | | | |
| Circulation and subscription | $ | 1,771 | | | $ | 1,689 | | | $ | 82 | | | 5 | % |
| Advertising | 405 | | | 413 | | | (8) | | | (2) | % |
| Other | 55 | | | 51 | | | 4 | | | 8 | % |
| Total Revenues | 2,231 | | | 2,153 | | | 78 | | | 4 | % |
| Operating expenses | (919) | | | (934) | | | 15 | | | 2 | % |
| Selling, general and administrative | (770) | | | (725) | | | (45) | | | (6) | % |
| Segment EBITDA | $ | 542 | | | $ | 494 | | | $ | 48 | | | 10 | % |
For the fiscal year ended June 30, 2024, revenues at the Dow Jones segment increased $78 million, or 4%, as compared to fiscal 2023, primarily due to higher professional information business revenues. Digital revenues at the Dow Jones segment represented 80% of total revenues for the fiscal year ended June 30, 2024, as compared to 78% in fiscal 2023. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue increase of $7 million, or 1%, for the fiscal year ended June 30, 2024 as compared to fiscal 2023.
Circulation and Subscription Revenues
| | | | | | | | | | | | | | | | | | | | | | | |
| For the fiscal years ended June 30, |
| 2024 | | 2023 | | Change | | % Change |
| (in millions, except %) | | | | | Better/(Worse) |
| Circulation and subscription revenues: | | | | | | | |
| Circulation and other | $ | 927 | | | $ | 929 | | | $ | (2) | | | — | % |
Risk and Compliance | 294 | | | 253 | | | 41 | | | 16 | % |
Dow Jones Energy | 251 | | | 217 | | | 34 | | | 16 | % |
Other information services | 299 | | | 290 | | | 9 | | | 3 | % |
Professional information business | 844 | | | 760 | | | 84 | | | 11 | % |
| Total circulation and subscription revenues | $ | 1,771 | | | $ | 1,689 | | | $ | 82 | | | 5 | % |
Circulation and subscription revenues increased $82 million, or 5%, during the fiscal year ended June 30, 2024 as compared to fiscal 2023. Professional information business revenues increased $84 million, or 11%, primarily driven by the $41 million increase in Risk & Compliance revenues and the $34 million increase in Dow Jones Energy revenues driven by new products and customers and price increases and the $9 million increase in Other information services revenues due to higher revenues at Factiva. Circulation and other revenues decreased $2 million, driven by print circulation declines and lower content licensing revenues, partially offset by growth in digital-only subscriptions, primarily at The Wall Street Journal, which included a benefit from an increase in bundle offers. Digital revenues represented 71% of circulation revenue for the fiscal year ended June 30, 2024, as compared to 69% in fiscal 2023.
The following table summarizes average daily consumer subscriptions during the three months ended June 30, 2024 and 2023 for select publications and for all consumer subscription products.(a)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the three months ended June 30(b), |
| 2024 | | 2023 | | Change | | % Change |
| (in thousands, except %) | | | | | Better/(Worse) |
| The Wall Street Journal | | | | | | | |
Digital-only subscriptions(c) | 3,788 | | | 3,406 | | | 382 | | | 11 | % |
| Total subscriptions | 4,256 | | | 3,966 | | | 290 | | | 7 | % |
Barron’s Group(d) | | | | | | | |
Digital-only subscriptions(c) | 1,290 | | | 1,018 | | | 272 | | | 27 | % |
| Total subscriptions | 1,419 | | | 1,168 | | | 251 | | | 21 | % |
Total Consumer(e) | | | | | | | |
Digital-only subscriptions(c) | 5,226 | | | 4,510 | | | 716 | | | 16 | % |
| Total subscriptions | 5,842 | | | 5,242 | | | 600 | | | 11 | % |
(a)Based on internal data for the periods from April 1, 2024 to June 30, 2024 and April 3, 2023 to July 2, 2023, respectively, with independent verification procedures performed by PricewaterhouseCoopers LLP UK.
(b)Subscriptions include individual consumer subscriptions, as well as subscriptions purchased by companies, schools, businesses and associations for use by their respective employees, students, customers or members. Subscriptions exclude single-copy sales and copies purchased by hotels, airlines and other businesses for limited distribution or access to customers.
(c)For some publications, including The Wall Street Journal and Barron’s, Dow Jones sells bundled print and digital products. For bundles that provide access to both print and digital products every day of the week, only one unit is reported each day and is designated as a print subscription. For bundled products that provide access to the print product only on specified days and full digital access, one print subscription is reported for each day that a print copy is served and one digital subscription is reported for each remaining day of the week.
(d)Barron’s Group consists of Barron’s, MarketWatch, Financial News and Private Equity News.
(e)Total Consumer consists of The Wall Street Journal, Barron’s Group and Investor’s Business Daily.
Advertising Revenues
Advertising revenues decreased $8 million, or 2%, during the fiscal year ended June 30, 2024 as compared to fiscal 2023, primarily due to the $17 million decrease in print advertising revenues, partially offset by the $9 million increase in digital advertising. Digital advertising revenues represented 64% of advertising revenue for the fiscal year ended June 30, 2024, as compared to 61% in fiscal 2023.
Segment EBITDA
For the fiscal year ended June 30, 2024, Segment EBITDA at the Dow Jones segment increased $48 million, or 10%, as compared to fiscal 2023 primarily due to the increase in revenues discussed above and lower newsprint, production and distribution costs, partially offset by higher technology and marketing costs and higher employee costs, which were mitigated by ongoing cost savings initiatives.
Book Publishing (21% and 20% of the Company’s consolidated revenues in fiscal 2024 and 2023, respectively)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the fiscal years ended June 30, |
| 2024 | | 2023 | | Change | | % Change |
| (in millions, except %) | | | | | Better/(Worse) |
| Revenues: | | | | | | | |
| Consumer | $ | 2,000 | | | $ | 1,899 | | | $ | 101 | | | 5 | % |
| Other | 93 | | | 80 | | | 13 | | | 16 | % |
| Total Revenues | 2,093 | | | 1,979 | | | 114 | | | 6 | % |
| Operating expenses | (1,441) | | | (1,469) | | | 28 | | | 2 | % |
| Selling, general and administrative | (383) | | | (343) | | | (40) | | | (12) | % |
| Segment EBITDA | $ | 269 | | | $ | 167 | | | $ | 102 | | | 61 | % |
For the fiscal year ended June 30, 2024, revenues at the Book Publishing segment increased $114 million, or 6%, as compared to fiscal 2023, primarily due to improved returns in the U.S. driven by recovering consumer demand industry-wide and the absence of the impact of Amazon’s reset of its inventory levels and rightsizing of its warehouse footprint in the prior year, as well as higher digital book sales. These improvements were partially offset by lower physical book sales. Digital sales increased by 9% as compared to fiscal 2023 driven by strong market growth for audiobooks, including the contribution from the Spotify partnership. Digital sales represented approximately 23% of consumer revenues in fiscal 2024 as compared to 22% in fiscal 2023, and backlist sales represented approximately 61% of consumer revenues during the fiscal year ended June 30, 2024, as compared to 60% in fiscal 2023. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue increase of $16 million, or 1%, for the fiscal year ended June 30, 2024 as compared to fiscal 2023.
For the fiscal year ended June 30, 2024, Segment EBITDA at the Book Publishing segment increased $102 million, or 61%, as compared to fiscal 2023, primarily due to the higher revenues discussed above and lower manufacturing, freight and distribution costs driven by product mix and the absence of prior year supply chain challenges and inventory and inflationary pressures, partially offset by higher employee costs.
News Media (22% and 23% of the Company’s consolidated revenues in fiscal 2024 and 2023, respectively)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the fiscal years ended June 30, |
| 2024 | | 2023 | | Change | | % Change |
| (in millions, except %) | | | | | Better/(Worse) |
| Revenues: | | | | | | | |
| Circulation and subscription | $ | 1,085 | | | $ | 1,075 | | | $ | 10 | | | 1 | % |
| Advertising | 834 | | | 907 | | | (73) | | | (8) | % |
| Other | 267 | | | 284 | | | (17) | | | (6) | % |
| Total Revenues | 2,186 | | | 2,266 | | | (80) | | | (4) | % |
| Operating expenses | (1,213) | | | (1,256) | | | 43 | | | 3 | % |
| Selling, general and administrative | (853) | | | (854) | | | 1 | | | — | % |
| Segment EBITDA | $ | 120 | | | $ | 156 | | | $ | (36) | | | (23) | % |
|
|
For the fiscal year ended June 30, 2024, revenues at the News Media segment decreased $80 million, or 4%, as compared to fiscal 2023. Advertising revenues decreased $73 million, or 8%, as compared to fiscal 2023, primarily due to lower print advertising revenues at News Corp Australia and News UK and lower digital advertising revenues, mainly due to a decline in traffic at some mastheads due to platform-related changes, partially offset by the $5 million, or 1%, positive impact of foreign currency fluctuations. Circulation and subscription revenues increased $10 million, or 1%, as compared to fiscal 2023, due to the $15 million, or 1%, positive impact of foreign currency fluctuations, as cover price increases and digital subscriber growth were more than offset by print volume declines. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue increase of $20 million for the fiscal year ended June 30, 2024 as compared to fiscal 2023.
For the fiscal year ended June 30, 2024, Segment EBITDA at the News Media segment decreased $36 million, or 23%, as compared to fiscal 2023, which includes $6 million of one-time costs at News UK pertaining to the combination of printing operations with DMG Media. The decrease is primarily due to the adverse impact from News Corp Australia, partially offset by lower production costs at News UK driven by lower print volume and newsprint prices and gross cost savings related to the announced 5% headcount reduction initiative.
News Corp Australia
Revenues were $929 million for the fiscal year ended June 30, 2024, a decrease of $69 million, or 7%, as compared to fiscal 2023 revenues of $998 million. Advertising revenues decreased $46 million, or 11%, due to lower print and digital advertising revenues and the $10 million, or 2%, negative impact of foreign currency fluctuations. Circulation and subscription revenues decreased $21 million, or 5%, driven by print volume declines and the $11 million, or 3%, negative impact of foreign currency fluctuations, partially offset by cover price increases and digital subscriber growth. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue decrease of $25 million, or 3%, for the fiscal year ended June 30, 2024 as compared to fiscal 2023.
News UK
Revenues were $929 million for the fiscal year ended June 30, 2024, a decrease of $4 million as compared to fiscal 2023 revenues of $933 million. Circulation and subscription revenues increased $33 million, or 6%, driven by cover price increases, the $25 million, or 5%, positive impact of foreign currency fluctuations and digital subscriber growth, partially offset by print volume declines. Advertising revenues decreased $26 million, or 9%, due to lower digital and print advertising revenues, partially offset by the $10 million, or 4%, positive impact of foreign currency fluctuations. The impact of foreign currency fluctuations of the U.S. dollar against local currencies resulted in a revenue increase of $39 million, or 5%, for the fiscal year ended June 30, 2024 as compared to fiscal 2023.
LIQUIDITY AND CAPITAL RESOURCES
Current Financial Condition
The Company’s principal source of liquidity is internally generated funds and cash and cash equivalents on hand. As of June 30, 2024, the Company’s cash and cash equivalents were $1,960 million. The Company also has available borrowing capacity under its revolving credit facility (the “Revolving Facility”) and certain other facilities, as described below, and expects to have access to the worldwide credit and capital markets, subject to market conditions, in order to issue additional debt if needed or desired. The Company currently expects these elements of liquidity will enable it to meet its liquidity needs for at least the next twelve months, including repayment of indebtedness. Although the Company believes that its cash on hand and future cash from operations, together with its access to the credit and capital markets, will provide adequate resources to fund its operating and financing needs for at least the next twelve months, its access to, and the availability of, financing on acceptable terms in the future will be affected by many factors, including: (i) the financial and operational performance of the Company and/or its operating subsidiaries, as applicable; (ii) the Company’s credit ratings and/or the credit rating of its operating subsidiaries, as applicable; (iii) the provisions of any relevant debt instruments, credit agreements, indentures and similar or associated documents; (iv) the liquidity of the overall credit and capital markets; and (v) the state of the economy. There can be no assurances that the Company will continue to have access to the credit and capital markets on acceptable terms.
As of June 30, 2024, the Company’s consolidated assets included $975 million in cash and cash equivalents that were held by its foreign subsidiaries. Of this amount, $136 million is cash not readily accessible by the Company as it is held by REA Group, a majority owned but separately listed public company. REA Group must declare a dividend in order for the Company to have access to its share of REA Group’s cash balance. Prior to the enactment of the Tax Cuts and Jobs Act (“Tax Act”), the Company’s undistributed foreign earnings were considered permanently reinvested and as such, United States federal and state income taxes were not previously recorded on these earnings. As a result of the Tax Act, substantially all of the Company’s earnings in foreign subsidiaries generated prior to the enactment of the Tax Act were deemed to have been repatriated and taxed accordingly. As of June 30, 2024, the Company has approximately $1 billion of undistributed foreign earnings that it intends to reinvest permanently. It is not practicable to estimate the amount of tax that might be payable if these earnings were repatriated. The Company may repatriate future earnings of certain foreign subsidiaries in which case the Company may be required to accrue and pay additional taxes, including any applicable foreign withholding taxes and income taxes.
The principal uses of cash that affect the Company’s liquidity position include the following: operational expenditures including employee costs, paper purchases and programming costs; capital expenditures; income tax payments; investments in associated entities; acquisitions; the repurchase of shares; dividends; and the repayment of debt and related interest. In addition to the acquisitions and dispositions disclosed elsewhere, the Company has evaluated, and expects to continue to evaluate, possible future acquisitions and dispositions of certain businesses. Such transactions may be material and may involve cash, the issuance of the Company’s securities or the assumption of indebtedness.
Issuer Purchases of Equity Securities
The Company’s Board of Directors (the “Board of Directors”) has authorized a Repurchase Program to purchase up to $1 billion in the aggregate of the Company’s outstanding Class A Common Stock and Class B Common Stock. The manner, timing, number and share price of any repurchases will be determined by the Company at its discretion and will depend upon such factors as the market price of the stock, general market conditions, applicable securities laws, alternative investment opportunities and other factors. The Repurchase Program has no time limit and may be modified, suspended or discontinued at any time. As of June 30, 2024, the remaining authorized amount under the Repurchase Program was approximately $460 million.
Stock repurchases under the Repurchase Program commenced on November 9, 2021. The following table summarizes the shares repurchased and subsequently retired and the related consideration paid during the fiscal years ended June 30, 2024 and 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the fiscal years ended June 30, |
| 2024 | | 2023 | |
| Shares | | Amount | | Shares | | Amount | |
| (in millions) |
Class A Common Stock | 3.4 | | | $ | 79 | | | 9.5 | | | $ | 159 | | |
Class B Common Stock | 1.6 | | | 38 | | | 4.7 | | | 81 | | |
Total | 5.0 | | | $ | 117 | | | 14.2 | | | $ | 240 | | |
Dividends
The following table summarizes the dividends declared and paid per share on both the Company’s Class A Common Stock and Class B Common Stock:
| | | | | | | | | | | |
| For the fiscal years ended
June 30, |
| 2024 | | 2023 |
| Cash dividends paid per share | $ | 0.20 | | | $ | 0.20 | |
The timing, declaration, amount and payment of future dividends to stockholders, if any, is within the discretion of the Board of Directors. The Board of Directors’ decisions regarding the payment of future dividends will depend on many factors, including the Company’s financial condition, earnings, capital requirements and debt facility covenants, other contractual restrictions, as well as legal requirements, regulatory constraints, industry practice, market volatility and other factors that the Board of Directors deems relevant.
Sources and Uses of Cash—Fiscal 2024 versus Fiscal 2023
Net cash provided by operating activities for the fiscal years ended June 30, 2024 and 2023 was as follows (in millions):
| | | | | | | | | | | | | | |
| For the fiscal years ended June 30, | | 2024 | | 2023 |
| Net cash provided by operating activities | | $ | 1,098 | | | $ | 1,092 | |
Net cash provided by operating activities increased by $6 million for the fiscal year ended June 30, 2024 as compared to fiscal 2023. The increase was primarily due to higher Total Segment EBITDA, largely offset by higher working capital and higher restructuring payments.
Net cash used in investing activities for the fiscal years ended June 30, 2024 and 2023 was as follows (in millions):
| | | | | | | | | | | | | | |
| For the fiscal years ended June 30, | | 2024 | | 2023 |
| Net cash used in investing activities | | $ | (524) | | | $ | (574) | |
Net cash used in investing activities was $524 million for the fiscal year ended June 30, 2024 as compared to net cash used in investing activities of $574 million for fiscal 2023.
During the fiscal year ended June 30, 2024, the Company used $496 million of cash for capital expenditures, of which $139 million related to the Foxtel Group, and $134 million of cash for investments and acquisitions. During the fiscal year ended June 30, 2023, the Company used $499 million of cash for capital expenditures, of which $152 million related to the Foxtel Group, and $120 million of cash for investments and acquisitions.
Net cash used in financing activities for the fiscal years ended June 30, 2024 and 2023 was as follows (in millions):
| | | | | | | | | | | | | | |
| For the fiscal years ended June 30, | | 2024 | | 2023 |
| Net cash used in financing activities | | $ | (441) | | | $ | (501) | |
The Company had net cash used in financing activities of $441 million for the fiscal year ended June 30, 2024 as compared to net cash used in financing activities of $501 million for fiscal 2023.
During the fiscal year ended June 30, 2024, the Company had $1,375 million of borrowing repayments, primarily related to the refinancing of Foxtel and REA Group’s debt portfolios, $117 million of repurchases of outstanding Class A and Class B Common Stock under the Repurchase Program and dividend payments of $172 million to News Corporation stockholders and REA Group minority stockholders. The net cash used in financing activities was partially offset by new borrowings of $1,268 million primarily related to the refinancing of Foxtel and REA Group’s debt portfolios and $53 million related to the net settlement of certain hedges which were terminated in connection with the refinancing at Foxtel.
During the fiscal year ended June 30, 2023, the Company had $589 million of borrowing repayments, primarily related to the Foxtel Group’s 2019 Credit Facility and U.S. private placement senior unsecured notes that matured in July 2022, $243 million of repurchases of outstanding Class A and Class B Common Stock under the Repurchase Program and dividend payments of $174 million to News Corporation stockholders and REA Group minority stockholders. The net cash used in financing activities was partially offset by new borrowings related to the Foxtel Group of $514 million. See Note 9—Borrowings in the accompanying Consolidated Financial Statements.
Reconciliation of Free Cash Flow
Free cash flow is a non-GAAP financial measure. Free cash flow is defined as net cash provided by (used in) operating activities, less capital expenditures. Free cash flow may not be comparable to similarly titled measures reported by other companies, since companies and investors may differ as to what items should be included in the calculation of free cash flow.
Free cash flow does not represent the total increase or decrease in the cash balance for the period and should be considered in addition to, not as a substitute for, the net change in cash and cash equivalents as presented in the Company’s consolidated Statements of Cash Flows prepared in accordance with GAAP, which incorporates all cash movements during the period. The Company believes free cash flow provides useful information to management and investors about the Company’s liquidity and cash flow trends.
The following table presents a reconciliation of net cash provided by operating activities to free cash flow:
| | | | | | | | | | | |
| For the fiscal years ended
June 30, |
| 2024 | | 2023 |
| (in millions) |
| Net cash provided by operating activities | $ | 1,098 | | | $ | 1,092 | |
| Less: Capital expenditures | (496) | | | (499) | |
| Free cash flow | 602 | | | 593 | |
Free cash flow in the fiscal year ended June 30, 2024 was $602 million compared to $593 million in fiscal 2023. Free cash flow increased primarily due to higher cash provided by operating activities, as discussed above.
Borrowings
As of June 30, 2024, the Company, certain subsidiaries of NXE Australia Pty Limited (the “Foxtel Group” and together with such subsidiaries, the “Foxtel Debt Group”) and REA Group and certain of its subsidiaries (REA Group and certain of its subsidiaries, the “REA Debt Group”) had total borrowings of $2.9 billion, including the current portion. Both the Foxtel Group and REA Group are consolidated but non wholly-owned subsidiaries of News Corp, and their indebtedness is only guaranteed by members of the Foxtel Debt Group and REA Debt Group, respectively, and is non-recourse to News Corp.
News Corporation Borrowings
As of June 30, 2024, the Company had (i) borrowings of $1,968 million, consisting of its outstanding 2021 Senior Notes, 2022 Senior Notes and Term A Loans and (ii) $750 million of undrawn commitments available under the Revolving Facility.
Foxtel Group Borrowings
As of June 30, 2024, the Foxtel Debt Group had (i) borrowings of approximately $784 million, including the amounts outstanding under the 2024 Foxtel Credit Facility (described below), the A$40 million 2017 Working Capital Facility and the Telstra Facility (described below) and (ii) total undrawn commitments of A$200 million available under the 2024 Foxtel Credit Facility and 2017 Working Capital Facility.
During the fiscal year ended June 30, 2024, the Foxtel Group refinanced its A$610 million 2019 revolving credit facility, A$250 million term loan facility and tranche 3 of its 2012 U.S. private placement senior unsecured notes with the proceeds of a new A$1.2 billion syndicated credit facility (the “2024 Foxtel Credit Facility”). The 2024 Foxtel Credit Facility consists of three sub-facilities: (i) an A$817.5 million three year revolving credit facility (the “2024 Foxtel Credit Facility — tranche 1”), (ii) a US$48.7 million four year term loan facility (the “ 2024 Foxtel Credit Facility — tranche 2”) and (iii) an A$311.0 million four year term loan facility (the “2024 Foxtel Credit Facility — tranche 3”). In addition, the Foxtel Group amended its 2017 Working Capital Facility to extend the maturity to August 2026 and modify the pricing.
Depending on the Foxtel Group’s net leverage ratio, (i) borrowings under the 2024 Foxtel Credit Facility — tranche 1 and 2017 Working Capital Facility bear interest at a rate of the Australian BBSY plus a margin of between 2.35% and 3.60%; (ii) borrowings under the 2024 Foxtel Credit Facility — tranche 2 bear interest at a rate based on a Term SOFR formula, as set forth in the 2024 Foxtel Credit Agreement, plus a margin of between 2.50% and 3.75%; and (iii) borrowings under the 2024 Foxtel Credit Facility — tranche 3 bear interest at a rate of the Australian BBSY plus a margin of between 2.50% and 3.75%. Tranche 1 carries a commitment fee of 45% of the applicable margin on any undrawn balance. Tranches 2 and 3 of the 2024 Foxtel Credit Facility amortize on a proportionate basis in an aggregate annual amount equal to A$35 million in each of the first two years following closing and A$40 million in each of the two years thereafter.
The agreements governing the Foxtel Debt Group’s external borrowings contain customary affirmative and negative covenants and events of default, with customary exceptions, including specified non-financial covenants and financial covenants calculated in accordance with Australian International Financial Reporting Standards. Subject to certain exceptions, these covenants restrict or prohibit members of the Foxtel Debt Group from, among other things, undertaking certain transactions, disposing of certain properties or assets (including subsidiary stock), merging or consolidating with any other person, making financial accommodation available, giving guarantees, entering into certain other financing arrangements, creating or permitting certain liens, engaging in transactions with affiliates, making repayments of certain other loans, undergoing fundamental business changes and making restricted payments. In addition, the agreements require the Foxtel Debt Group to maintain a ratio of net debt to Earnings Before Interest, Tax, Depreciation and Amortization, as adjusted under the applicable agreements, of not more than 3.25 to 1.0. The agreements also require the Foxtel Debt Group to maintain a net interest coverage ratio of not less than 3.5 to 1.0. There are no assets pledged as collateral for any of the borrowings.
In addition to third-party indebtedness, the Foxtel Debt Group has related party indebtedness consisting of A$596 million of outstanding principal (excluding capitalized interest) of subordinated shareholder loans as of June 30, 2024. The shareholder loans bear interest at a variable rate of the Australian BBSY plus an applicable margin ranging from 6.30% to 7.75% and mature in December 2027. Amounts outstanding under the shareholder loans are permitted to be repaid if (i) no actual or potential event of default exists both before and immediately after repayment and (ii) the net debt to EBITDA ratio of the Foxtel Debt Group was on the most recent covenant calculation date, and would be immediately after the cash repayment, less than or equal to 2.25 to 1.0. In the fiscal year ended June 30, 2024, the Foxtel Debt Group repaid A$104 million of outstanding principal of shareholder loans. Additionally, the Foxtel Debt Group has an A$170 million subordinated shareholder loan facility with Telstra which can be used to finance cable transmission costs due to Telstra. The Telstra Facility bears interest at a variable rate of the Australian BBSY plus an applicable margin of 7.75% and matures in December 2027. The Company excludes the utilization of the Telstra Facility from the Statements of Cash Flows because it is non-cash.
REA Group Borrowings
As of June 30, 2024, REA Group had (i) borrowings of approximately $134 million, consisting of amounts outstanding under the 2024 REA Credit Facility (described below) and 2024 Subsidiary Facility (described below) and (ii) A$481 million of undrawn commitments available under the 2024 REA Credit Facility and the 2024 Subsidiary Facility.
During the fiscal year ended June 30, 2024, REA Group entered into a new unsecured syndicated credit facility (the “2024 REA Credit Facility”) which replaced the 2022 Credit Facility and consists of two sub-facilities: (i) a five-year A$400 million revolving loan facility (the “2024 REA Credit Facility—tranche 1”) which was used to refinance tranche 1 of the 2022 Credit Facility and (ii) an A$200 million revolving loan facility representing the continuation of tranche 2 of the 2022 Credit Facility (the “2024 REA Credit Facility—tranche 2”). REA Group may request increases in the amount of the 2024 REA Credit Facility up to a maximum amount of A$500 million, subject to the terms and limitations set forth in the syndicated facility agreement.
Borrowings under the 2024 REA Credit Facility — tranche 1 accrue interest at a rate of the Australian BBSY plus a margin of between 1.45% and 2.35%, depending on REA Group’s net leverage ratio. Borrowings under the 2024 REA Credit Facility — tranche 2 continue to accrue interest at a rate of the Australian BBSY plus a margin of between 1.15% and 2.25%, depending on REA Group’s net leverage ratio. Both tranches carry a commitment fee of 40% of the applicable margin on any undrawn balance.
The syndicated facility agreement governing the 2024 REA Credit Facility requires REA Group to maintain (i) a net leverage ratio of not more than 3.5 to 1.0 and (ii) an interest coverage ratio of not less than 3.0 to 1.0. The agreement also contains certain other customary affirmative and negative covenants and events of default. Subject to certain exceptions, these covenants restrict or prohibit REA Group and its subsidiaries from, among other things, incurring or guaranteeing debt, disposing of certain properties or assets, merging or consolidating with any other person, making financial accommodation available, entering into certain other financing arrangements, creating or permitting certain liens, engaging in non-arms’ length transactions with affiliates, undergoing fundamental business changes and making restricted payments.
During the fiscal year ended June 30, 2024, REA Group also entered into an A$83 million unsecured bilateral revolving credit facility (the “2024 Subsidiary Facility”). Proceeds of the 2024 Subsidiary Facility were used to refinance an existing facility at one of its subsidiaries and to fund its business of providing short-term financing to real estate agents and vendors. Borrowings under the 2024 Subsidiary Facility accrue interest at a rate of the Australian BBSY plus a margin of 1.40% and undrawn balances carry a commitment fee of 40% of the applicable margin. The facility agreement governing the 2024 Subsidiary Facility permits the lender to cancel its commitment and declare all outstanding amounts immediately due and payable after a consultation period in specified circumstances, including if certain key operating measures of its subsidiary fall below the budgeted amount for two consecutive quarters. The agreement also contains certain other customary affirmative and negative covenants and events of default that are similar to those governing the 2024 REA Credit Facility.
All of the Company’s borrowings contain customary representations, covenants and events of default. The Company was in compliance with all such covenants at June 30, 2024.
See Note 9—Borrowings in the accompanying Consolidated Financial Statements for further details regarding the Company’s outstanding debt, including additional information about interest rates, amortization (if any), maturities and covenants related to such debt arrangements.
Commitments
The Company has commitments under certain firm contractual arrangements to make future payments. These firm commitments secure the current and future rights to various assets and services to be used in the normal course of operations.
The following table summarizes the Company’s material firm commitments as of June 30, 2024:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As of June 30, 2024 |
| Payments Due by Period |
| Total | | Less than 1
year | | 1-3 years | | 3-5 years | | More than
5 years |
| (in millions) |
Purchase obligations(a) | $ | 1,563 | | | $ | 544 | | | $ | 627 | | | $ | 263 | | | $ | 129 | |
Sports programming rights(b) | 3,177 | | | 481 | | | 1,080 | | | 775 | | | 841 | |
Programming costs(c) | 908 | | | 324 | | | 407 | | | 169 | | | 8 | |
Operating leases(d) | | | | | | | | | |
Transmission costs(e) | 112 | | | 19 | | | 30 | | | 29 | | | 34 | |
| Land and buildings | 1,486 | | | 143 | | | 245 | | | 149 | | | 949 | |
| Plant and machinery | 11 | | | 5 | | | 4 | | | 2 | | | — | |
| Finance leases | | | | | | | | | |
Transmission costs(e) | 23 | | | 19 | | | 4 | | | — | | | — | |
Borrowings(f) | 2,902 | | | 33 | | | 1,093 | | | 1,276 | | | 500 | |
Interest payments on borrowings(g) | 610 | | | 146 | | | 251 | | | 136 | | | 77 | |
| Total commitments and contractual obligations | $ | 10,792 | | | $ | 1,714 | | | $ | 3,741 | | | $ | 2,799 | | | $ | 2,538 | |
(a)The Company has commitments under purchase obligations related to minimum subscriber guarantees for license fees, printing contracts, capital projects, marketing agreements, production services and other legally binding commitments.
(b)The Company has sports programming rights commitments with the National Rugby League, Australian Football League and Cricket Australia, as well as certain other broadcast rights, which are payable through fiscal 2032.
(c)The Company has programming rights commitments with various suppliers for programming content.
(d)The Company leases office facilities, warehouse facilities, printing plants, satellite services and equipment. These leases, which are classified as operating leases, are expected to be paid at certain dates through fiscal 2048. Amounts reflected represent only the Company’s lease obligations for which it has firm commitments.
(e)The Company has contractual commitments for satellite transmission services. The Company’s satellite transponder services arrangements extend through fiscal 2032 and are accounted for as operating or finance leases, based on the underlying terms of those arrangements.
(f)See Note 9—Borrowings in the accompanying Consolidated Financial Statements.
(g)Reflects the Company’s expected future interest payments based on borrowings outstanding and interest rates applicable at June 30, 2024. Such rates are subject to change in future periods. See Note 9—Borrowings in the accompanying Consolidated Financial Statements.
The Company has certain contracts to purchase newsprint, ink and plates that require the Company to purchase a percentage of its total requirements for production. Since the quantities purchased annually under these contracts are not fixed and are based on the Company’s total requirements, the amount of the related payments for these purchases is excluded from the table above.
The table also excludes the Company’s pension obligations, other postretirement benefits (“OPEB”) obligations and the liabilities for unrecognized tax benefits for uncertain tax positions as the Company is unable to reasonably predict the ultimate amount and timing of the commitments. The Company made contributions of $23 million and $14 million to its pension plans in fiscal 2024 and fiscal 2023, respectively. Future plan contributions are dependent upon actual plan asset returns, interest rates and statutory requirements. The Company anticipates that it will make required contributions of approximately $1 million in fiscal 2025, assuming that actual plan asset returns are consistent with the Company’s returns in fiscal 2024 and those expected beyond, and that interest rates remain constant. The Company will continue to make voluntary contributions as necessary to improve the funded status of the plans. Payments due to participants under the Company’s pension plans are primarily paid out of underlying trusts. Payments due under the Company’s OPEB plans are not required to be funded in advance, but are paid as medical costs are incurred by covered retiree populations, and are principally dependent upon the future cost of retiree medical benefits under the Company’s OPEB plans. The Company expects its OPEB payments to approximate $7 million in fiscal 2025. See Note 17—Retirement Benefit Obligations and Note 18—Other Postretirement Benefits in the accompanying Consolidated Financial Statements.
Other significant ongoing expenses or cash requirements for each of the Company’s segments are discussed above in “Overview of the Company’s Businesses.” The Company generally expects to fund these short and long-term cash requirements with internally-generated funds and cash and cash equivalents on hand.
Contingencies
The Company routinely is involved in various legal proceedings, claims and governmental inspections or investigations, including those discussed in Note 16—Commitments and Contingencies in the accompanying Consolidated Financial Statements. The outcome of these matters and claims is subject to significant uncertainty, and the Company often cannot predict what the eventual outcome of pending matters will be or the timing of the ultimate resolution of these matters. Fees, expenses, fines, penalties, judgments or settlement costs which might be incurred by the Company in connection with the various proceedings could adversely affect its results of operations and financial condition.
The Company establishes an accrued liability for legal claims when it determines that a loss is probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters. Legal fees associated with litigation and similar proceedings are expensed as incurred. The Company recognizes gain contingencies when the gain becomes realized or realizable. See Note 16—Commitments and Contingencies in the accompanying Consolidated Financial Statements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
An accounting policy is considered to be critical if it is important to the Company’s financial condition and results of operations and if it requires significant judgment and estimates on the part of management in its application. The development and selection of these critical accounting policies have been determined by management of the Company. See Note 2—Summary of Significant Accounting Policies in the accompanying Consolidated Financial Statements.
Goodwill and Indefinite-Lived Intangible Assets
The Company tests goodwill and indefinite-lived intangible assets for impairment on an annual basis in the fourth quarter and at other times if a significant event or change in circumstances indicates that it is more likely than not that the fair value of these assets has been reduced below their carrying value. The Company uses its judgment in assessing whether assets may have become impaired between annual impairment assessments. Indicators such as unexpected adverse economic factors, unanticipated technological changes or competitive activities, loss of key personnel and acts by governments and courts, may signal that an asset has become impaired.
Under ASC 350, Intangibles—Goodwill and Other (“ASC 350”), in assessing goodwill for impairment, the Company has the option to first perform a qualitative assessment to determine whether events or circumstances exist that lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company is not required to perform any additional tests in assessing goodwill for impairment. However, if the Company concludes otherwise or elects not to perform the qualitative assessment, then it is required to perform a quantitative analysis to determine the fair value of the reporting unit, and compare the calculated fair value of a reporting unit with its carrying amount, including goodwill. The Company determines the fair value of a reporting unit primarily by using both a discounted cash flow analysis and market-based valuation approach.
Determining fair value requires the exercise of significant judgments, including judgments about appropriate discount rates, long-term growth rates, relevant comparable company earnings multiples and the amount and timing of expected future cash flows. During the fourth quarter of fiscal 2024, as part of the Company’s long-range planning process, the Company completed its annual goodwill and indefinite-lived intangible asset impairment test.
The performance of the Company’s annual impairment analysis resulted in $18 million of impairments to an indefinite-lived intangible asset and goodwill in fiscal 2024. Significant unobservable inputs utilized in the income approach valuation method were discount rates (ranging from 8.0% to 18.5%), long-term growth rates (ranging from 1.0% to 3.5%) and royalty rates (ranging from 0.25% to 7.0%). Significant unobservable inputs utilized in the market approach valuation method were EBITDA and revenue multiples from guideline public companies operating in similar industries (ranging from 5.5x to 11.8x and 2.0x to 2.8x, respectively) and control premiums (ranging from 5.0% to 10.0%). Significant increases (decreases) in royalty rates, growth rates, control premiums and multiples, assuming no change in discount rates, would result in a significantly higher (lower) fair value measurement. Significant decreases (increases) in discount rates, assuming no changes in royalty rates, growth rates, control premiums and multiples, would result in a significantly higher (lower) fair value measurement. See Note 8—Goodwill and Other Intangible Assets in the accompanying Consolidated Financial Statements for further details regarding changes in these inputs and assumptions compared to prior fiscal years.
As of June 30, 2024, there were no reporting units with goodwill at-risk for future impairment. The Company will continue to monitor its goodwill for possible future impairment.
Programming Costs
Costs incurred in acquiring programming rights are accounted for in accordance with ASC 920, Entertainment—Broadcasters (“ASC 920”). Programming 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. Programming costs are amortized based on the expected pattern of consumption over the license period or expected useful life of each program, which requires significant judgment. The pattern of consumption is based primarily on consumer viewership information as well as other factors. If initial airings are expected to generate higher viewership, an accelerated method of amortization is used. The Company monitors its programming amortization policy on an ongoing basis and any impact arising from changes to the policy would be recognized prospectively. The Company regularly reviews its programming assets for events or changes in circumstances that would indicate that the fair value of the programming asset may be less than its unamortized cost. Changes in circumstances may result in a write-down of the asset to fair value. The Company has single and multi-year contracts for broadcast rights of sporting events. The costs of sports contracts are primarily charged to expense over the respective season as events are aired. For sports contracts with dedicated channels, the Company amortizes the sports programming rights costs over 12 months.
Income Taxes
The Company is subject to income taxes in the U.S. and various foreign jurisdictions in which it operates and records its tax provision for the anticipated tax consequences in its reported results of operations. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining the Company’s tax expense and in evaluating its tax positions including evaluating uncertainties as promulgated under ASC 740, Income Taxes (“ASC 740”).
The Company’s annual tax rate is based primarily on its geographic income and statutory tax rates in the various jurisdictions in which it operates. Significant management judgment is required in determining the Company’s provision for income taxes, deferred tax assets and liabilities and the valuation allowance recorded against the Company’s deferred tax assets. In assessing the likelihood of realization of deferred tax assets, management considers estimates of the amount and character of future taxable income. The Company’s actual effective tax rate and income tax expense could vary from estimated amounts due to the future impacts of various items, including changes in income tax laws, tax planning and the Company’s forecasted financial condition and results of operations in future periods. Although the Company believes its current estimates are reasonable, actual results could differ from these estimates.
The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the Consolidated Financial Statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Significant management judgment is required to determine whether the recognition threshold has been met and, if so, the appropriate amount of unrecognized tax benefits to be recorded in the Consolidated Financial Statements. Management re-evaluates its tax positions each period in which new information about recognition or measurement becomes available. The Company’s policy is to recognize, when applicable, interest and penalties on unrecognized income tax benefits as part of Income tax (expense) benefit.
See Note 19—Income Taxes in the accompanying Consolidated Financial Statements for further details regarding these estimates and assumptions and changes compared to prior fiscal years.
Retirement Benefit Obligations
The Company’s employees participate in various defined benefit pension and postretirement plans sponsored by the Company and its subsidiaries. See Note 17—Retirement Benefit Obligations in the accompanying Consolidated Financial Statements.
The Company records amounts relating to its pension and other postretirement benefit plans based on calculations specified by GAAP. The measurement and recognition of the Company’s pension and other postretirement benefit plans, including the net periodic benefit costs (income) and projected benefit obligation, require the use of significant management judgments, including discount rates, expected return on plan assets, mortality and other actuarial assumptions. Current market conditions, including changes in investment returns and interest rates, were considered in making these assumptions. In developing the expected long-term rate of return, the pension portfolio’s past average rate of returns and future return expectations of the various asset classes were considered. The weighted average expected long-term rate of return of 5.9% for fiscal 2025 is based on a weighted average target asset allocation assumption of 14% equities, 83% fixed-income securities and 3% cash and other investments.
The Company recorded $28 million and $13 million in net periodic benefit costs (income) in the Statements of Operations for the fiscal years ended June 30, 2024 and 2023, respectively. The Company utilizes the full yield-curve approach to estimate the service and interest cost components of net periodic benefit costs (income) for its pension and other postretirement benefit plans.
Although the discount rate used for each plan will be established and applied individually, a weighted average discount rate of 5.3% will be used in calculating the fiscal 2025 net periodic benefit costs (income). The discount rate reflects the market rate for high-quality fixed-income investments on the Company’s annual measurement date of June 30 and is subject to change each fiscal year. The discount rate assumptions used to account for pension and other postretirement benefit plans reflect the rates at which the benefit obligations could be effectively settled. The rate was determined by matching the Company’s expected benefit payments for the plans to a hypothetical yield curve developed using a portfolio of several hundred high-quality non-callable corporate bonds. The weighted average discount rate is volatile from year to year because it is determined based upon the prevailing rates in the U.S., the U.K., Australia and other foreign countries as of the measurement date.
The key assumptions used in developing the Company’s fiscal 2024 and 2023 net periodic benefit costs (income) for its plans consist of the following:
| | | | | | | | | | | |
| 2024 | | 2023 |
| (in millions, except %) |
| Weighted average assumptions used to determine net periodic benefit costs (income): | | | |
| Discount rate for PBO | 5.4% | | 4.1% |
Discount rate for service cost | 5.4% | | 4.8% |
Discount rate for interest on PBO | 5.6% | | 4.0% |
| Assets: | | | |
| Expected rate of return | 5.6% | | 4.3% |
| Expected return | $49 | | $43 |
| Actual return | $45 | | $(92) |
| Loss | $(4) | | $(135) |
| One year actual return | 5.2% | | (8.7)% |
| Five year actual return | (1.8)% | | (1.7)% |
The Company will use a weighted average long-term rate of return of 5.9% for fiscal 2025 based principally on a combination of current asset mix and an expectation of future long term investment returns. The accumulated net pre-tax losses on the Company’s pension plans as of June 30, 2024 were approximately $438 million which decreased from approximately $467 million for the Company’s pension plans as of June 30, 2023. This net decrease of $29 million was primarily due to unrecognized losses amortized during fiscal 2024 and the settlement of certain plans. Lower discount rates increase present values of benefit obligations, the Company’s deferred losses and subsequent-year benefit costs. Higher discount rates decrease the present values of benefit obligations, reduce the Company’s accumulated net loss and decrease subsequent-year benefit costs. These deferred losses are being systematically recognized in future net periodic benefit costs (income) in accordance with ASC 715, Compensation—Retirement Benefits (“ASC 715”). Unrecognized losses for the primary plans in excess of 10% of the greater of the market-related value of plan assets or the plan’s projected benefit obligation are recognized over the average life expectancy for plan participants for the primary plans.
The Company made contributions of $23 million and $14 million to its pension plans in fiscal 2024 and 2023, respectively. Future plan contributions are dependent upon actual plan asset returns, statutory requirements and interest rate movements. Assuming that actual plan asset returns are consistent with the Company’s returns in fiscal 2024 and those expected beyond, and that interest rates remain constant, the Company anticipates that it will make required pension contributions of approximately $1 million in fiscal 2025. The Company will continue to make voluntary contributions as necessary to improve the funded status of the plans. See Note 17—Retirement Benefit Obligations and Note 18—Other Postretirement Benefits in the accompanying Consolidated Financial Statements.
Changes in net periodic benefit costs may occur in the future due to changes in the Company’s expected rate of return on plan assets and discount rate resulting from economic events. The following table highlights the sensitivity of the Company’s pension obligations and expense to changes in these assumptions, assuming all other assumptions remain constant:
| | | | | | | | | | | | | | |
| Changes in Assumption | | Impact on Annual
Pension Expense | | Impact on Projected
Benefit Obligation |
| 0.25 percentage point decrease in discount rate | | — | | Increase $21 million |
| 0.25 percentage point increase in discount rate | | — | | Decrease $20 million |
| 0.25 percentage point decrease in expected rate of return on assets | | Increase $2 million | | — |
| 0.25 percentage point increase in expected rate of return on assets | | Decrease $2 million | | — |
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has exposure to different types of market risk including changes in foreign currency exchange rates, interest rates and credit.
When deemed appropriate, the Company uses derivative financial instruments such as cross-currency interest rate swaps, interest rate swaps and foreign exchange contracts to hedge certain risk exposures. The primary market risks managed by the Company through the use of derivative instruments include:
•foreign currency exchange rate risk: arising primarily through Foxtel Debt Group borrowings denominated in U.S. dollars, payments for customer premise equipment, certain programming rights, product development costs and inventory purchases; and
•interest rate risk: arising from fixed and floating rate Foxtel Debt Group and News Corporation borrowings. The Company neither holds nor issues financial instruments for trading purposes.
The following sections provide quantitative information on the Company’s exposure to foreign currency exchange rate risk, interest rate risk and other relevant market risks. The Company makes use of sensitivity analyses that are inherently limited in estimating actual losses in fair value that can occur from changes in market conditions.
Foreign Currency Exchange Rate Risk
The Company conducts operations in three principal currencies: the U.S. dollar; the Australian dollar; and the British pound sterling. These currencies operate primarily as the functional currency for the Company’s U.S., Australian and U.K. operations, respectively. Cash is managed centrally within each of the three regions with net earnings generally reinvested locally and working capital requirements met from existing liquid funds. To the extent such funds are not sufficient to meet working capital requirements, funding in the appropriate local currencies is made available from intercompany capital. The Company does not hedge its investments in the net assets of its Australian and U.K. operations.
Because of fluctuations in exchange rates, the Company is subject to currency translation risk on the results of its operations. Foreign currency translation risk is the risk that exchange rate gains or losses arise from translating foreign entities’ statements of operations and balance sheets from their functional currency to the Company’s reporting currency (the U.S. dollar) for consolidation purposes. The Company does not hedge translation risk because it generally generates positive cash flows from its international operations that are typically reinvested locally. Exchange rates with the most significant impact to translation include the Australian dollar and British pound sterling. As exchange rates fluctuate, translation of its statements of operations into U.S. dollars affects the comparability of revenues and expenses between years.
The table below details the percentage of revenues and expenses by the three principal currencies for the fiscal years ended June 30, 2024 and 2023:
| | | | | | | | | | | | | | | | | |
| U.S.
Dollars | | Australian
Dollars | | British Pound
Sterling |
| Fiscal year ended June 30, 2024 | | | | | |
| Revenues | 41 | % | | 41 | % | | 14 | % |
| Operating and Selling, general and administrative expenses | 42 | % | | 37 | % | | 16 | % |
| Fiscal year ended June 30, 2023 | | | | | |
| Revenues | 41 | % | | 41 | % | | 14 | % |
| Operating and Selling, general and administrative expenses | 42 | % | | 37 | % | | 16 | % |
Based on the fiscal year ended June 30, 2024, a one cent change in each of the U.S. dollar/Australian dollar and the U.S. dollar/British pound sterling exchange rates would have impacted revenues by approximately $63 million and $12 million, respectively, for each currency on an annual basis, and would have impacted Total Segment EBITDA by approximately $14 million and $1 million, respectively, on an annual basis.
Derivatives and Hedging
As of June 30, 2024, the Foxtel Group operating subsidiaries, whose functional currency is Australian dollars, had approximately $49 million aggregate principal amount of outstanding indebtedness denominated in U.S. dollars. The remaining borrowings are denominated in Australian dollars. The Foxtel Group utilizes cross-currency interest rate swaps to hedge a portion of the exchange rate risk related to interest and principal payments on its U.S. dollar denominated debt. The Foxtel Group also has a portfolio of foreign exchange contracts to hedge a portion of the exchange rate risk related to U.S. dollar payments for customer premise equipment and certain programming rights, product development costs and inventory purchases. The notional value of these foreign exchange contracts was $79 million as of June 30, 2024. Refer to Note 11—Financial Instruments and Fair Value Measurements in the accompanying Consolidated Financial Statements for further detail.
Some of the derivative instruments in place may create volatility during the fiscal year as they are marked-to-market according to accounting rules which may result in revaluation gains or losses in different periods from when the currency impacts on the underlying transactions are realized.
The table below provides further details of the sensitivity of the Company’s derivative financial instruments which are subject to foreign exchange rate risk and interest rate risk as of June 30, 2024 (in millions):
| | | | | | | | | | | | | | | | | | | | | | | |
| Notional
Value | | Fair Value | | Sensitivity
from
Adverse
10%
Change in
Foreign
Exchange
Rates | | Sensitivity
from
Adverse
10%
Change in
Interest
Rates |
| Foreign currency derivatives | US$ | 79 | | | US$ | — | | | US$ | (7) | | | n/a |
| Cross-currency interest rate swaps | US$ | 49 | | | US$ | (2) | | | US$ | (4) | | | US$ | — | |
| Interest rate derivatives | A$ | 610 | | | US$ | 1 | | | n/a | | US$ | (1) | |
| Interest rate derivatives | US$ | 484 | | | US$ | 28 | | | n/a | | US$ | (1) | |
Any resulting changes in the fair value of the derivative financial instruments may be partially offset by changes in the fair value of certain balance sheet positions (primarily U.S. dollar denominated liabilities) impacted by the change in the foreign exchange rates. The ability to reduce the impact of currency fluctuations on earnings depends on the magnitude of the derivatives compared to the balance sheet positions during each reporting cycle.
Interest Rate Risk
The Company’s current financing arrangements and facilities include $1,500 million of outstanding fixed-rate debt and $1,402 million of outstanding variable-rate bank facilities, before adjustments for unamortized discount and debt issuance costs (See Note 9—Borrowings in the accompanying Consolidated Financial Statements). Fixed and variable-rate debts are impacted differently by changes in interest rates. A change in the market interest rate or yield of fixed-rate debt will only impact the fair market value of such debt, while a change in the market interest rate of variable-rate debt will impact interest expense, as well as the amount of cash required to service such debt. News Corporation has entered into an interest rate swap cash flow hedge to fix the floating rate interest component of its Term A Loans and the Foxtel Group has utilized certain derivative instruments to swap U.S. dollar denominated fixed rate interest payments for Australian dollar denominated variable rate payments. As discussed above, the Foxtel Group utilizes cross-currency interest rate swaps to hedge a portion of the interest rate risk related to interest and principal payments on its U.S. dollar denominated debt. The Foxtel Group has also utilized an interest rate swap cash flow hedge to swap Australian dollar denominated variable interest rate payments for Australian dollar denominated fixed rate payments. As of June 30, 2024, the notional amount of interest rate swap contracts outstanding was approximately A$610 million and $484 million for Foxtel Group and News Corporation borrowings, respectively. Refer to the table above for further details of the sensitivity of the Company’s financial instruments which are subject to interest rate risk. Refer to Note 11—Financial Instruments and Fair Value Measurements in the accompanying Consolidated Financial Statements for further detail.
Credit Risk
Cash and cash equivalents are maintained with multiple financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and, therefore, bear minimal credit risk.
The Company’s receivables did not represent significant concentrations of credit risk as of June 30, 2024 or June 30, 2023 due to the wide variety of customers, markets and geographic areas to which the Company’s products and services are sold.
The Company monitors its positions with, and the credit quality of, the financial institutions which are counterparties to its financial instruments. The Company is exposed to credit loss in the event of nonperformance by the counterparties to the agreements. As of June 30, 2024, the Company did not anticipate nonperformance by any of the counterparties.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NEWS CORPORATION
INDEX TO FINANCIAL STATEMENTS
Management’s Report on Internal Control Over Financial Reporting for June 30, 2024
Management of News Corporation is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, and for the assessment of the effectiveness of internal control over financial reporting. News Corporation’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. The Company’s internal control over financial reporting includes those policies and procedures that:
•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of News Corporation;
•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America;
•provide reasonable assurance that receipts and expenditures of News Corporation are being made only in accordance with authorizations of management and directors of News Corporation; and
•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.
Internal control over financial reporting includes the controls themselves, monitoring and internal auditing practices and actions taken to correct deficiencies as identified.
Because of its inherent limitations, internal control over financial reporting, no matter how well designed, may not prevent or detect misstatements. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, the assessment of the effectiveness of internal control over financial reporting was made as of a specific date. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management, including the Company’s principal executive officer and principal financial officer, conducted an assessment of the effectiveness of News Corporation’s internal control over financial reporting as of June 30, 2024, based on criteria for effective internal control over financial reporting described in the 2013 “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an evaluation of the design of News Corporation’s internal control over financial reporting and testing of the operational effectiveness of its internal control over financial reporting. Management reviewed the results of its assessment with the Audit Committee of News Corporation’s Board of Directors.
Based on this assessment, management did not identify any material weakness in the Company’s internal control over financial reporting, and management determined that, as of June 30, 2024, News Corporation maintained effective internal control over financial reporting.
Ernst & Young LLP, the independent registered public accounting firm who audited and reported on the Consolidated Financial Statements of News Corporation included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2024, has audited the Company’s internal control over financial reporting. Their report appears on the following page.
August 13, 2024
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of News Corporation
Opinion on Internal Control Over Financial Reporting
We have audited News Corporation’s internal control over financial reporting as of June 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, News Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of June 30, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of June 30, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for each of the three years in the period ended June 30, 2024, and the related notes and our report dated August 13, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/
August 13, 2024
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of News Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of News Corporation (the Company) as of June 30, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for each of the three years in the period ended June 30, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 30, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated August 13, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
| | | | | | | | |
| | Valuation of goodwill |
| | |
| Description of the Matter | | As reflected in the Company’s consolidated financial statements, at June 30, 2024, the Company’s goodwill was $5,186 million. As disclosed in Note 8 to the consolidated financial statements, goodwill is tested for impairment at least annually or more frequently if indicators of impairment require the performance of an interim impairment assessment. Auditing management’s impairment test of goodwill was complex and highly judgmental due to the significant measurement uncertainty in determining the fair values of the reporting units. In particular, the fair value estimates of the reporting units were sensitive to changes in significant assumptions such as discount rates, projected revenue growth rates earnings before interest, taxes, depreciation, and amortization (“EBITDA”) margins, and comparable company earnings multiples. All of these assumptions are affected by expected future market or economic conditions. |
| | | | | | | | |
| | |
| How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment assessment process. For example, we tested controls over management’s review of the significant assumptions and methodologies used in estimating the fair values of the reporting units. We also tested management’s controls to validate that the data used in the valuation models was complete and accurate. To test the fair values of the reporting units, our audit procedures included, among others, assessing methodologies and testing the completeness and accuracy of the underlying data used by the Company. We performed sensitivity analyses over the significant assumptions to evaluate the change in the fair value of the reporting units resulting from changes in the assumptions. Our testing procedures over the significant assumptions included, among others, comparing projected revenue growth rates and EBITDA margins to historical trends, while also considering changes in the Company’s business model. We also involved an internal valuation professional to assist in evaluating the Company’s models, valuation methodology, and significant assumptions used in the fair value estimates. In addition, we tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the Company. |
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2012.
New York, New York
August 13, 2024
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| | | For the fiscal years ended June 30, |
| Notes | | 2024 | | 2023 | | 2022 |
Revenues: | | | | | | | |
Circulation and subscription | | | $ | | | | $ | | | | $ | | |
Advertising | | | | | | | | | | |
Consumer | | | | | | | | | | |
Real estate | | | | | | | | | | |
Other | | | | | | | | | | |
Total Revenues | 3 | | | | | | | | | |
Operating expenses | | | () | | | () | | | () | |
Selling, general and administrative | | | () | | | () | | | () | |
Depreciation and amortization | | | () | | | () | | | () | |
Impairment and restructuring charges | 5, 7, 8 | | () | | | () | | | () | |
Equity losses of affiliates | 6 | | () | | | () | | | () | |
| Interest expense, net | | | () | | | () | | | () | |
Other, net | 21 | | () | | | | | | | |
| Income before income tax expense | | | | | | | | | | |
| Income tax expense | 19 | | () | | | () | | | () | |
| Net income | | | | | | | | | | |
| Net income attributable to noncontrolling interests | | | () | | | () | | | () | |
| Net income attributable to News Corporation stockholders | | | $ | | | | $ | | | | $ | | |
| Net income attributable to News Corporation stockholders per share: | 14 | | | | | | |
Basic | | | $ | | | | $ | | | | $ | | |
Diluted | | | $ | | | | $ | | | | $ | | |
The accompanying notes are an integral part of these audited consolidated financial statements.
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
| | | | | | | | | | | | | | | | | |
| For the fiscal years ended June 30, |
| 2024 | | 2023 | | 2022 |
| Net income | $ | | | | $ | | | | $ | | |
| Other comprehensive (loss) income: | | | | | |
Foreign currency translation adjustments | () | | | | | | () | |
Net change in the fair value of cash flow hedges(a) | () | | | | | | | |
Benefit plan adjustments, net(b) | | | | () | | | | |
| Other comprehensive (loss) income | () | | | | | | () | |
| Comprehensive income | | | | | | | | |
| Net income attributable to noncontrolling interests | () | | | () | | | () | |
Other comprehensive loss attributable to noncontrolling interests(c) | | | | | | | | |
| Comprehensive income attributable to News Corporation stockholders | $ | | | | $ | | | | $ | | |
(a)) million, $ million and $ million for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.
(b) million, $() million and $ million for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.
(c)
The accompanying notes are an integral part of these audited consolidated financial statements.
NEWS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share amounts)
| | | | | | | | | | | | | | | | | |
| | | As of June 30, |
| Notes | | 2024 | | 2023 |
| Assets: | | | | | |
| Current assets: | | | | | |
| Cash and cash equivalents | | | $ | | | | $ | | |
| Receivables, net | 2 | | | | | | |
| Inventory, net | | | | | | | |
| Other current assets | | | | | | | |
| Total current assets | | | | | | | |
| Non-current assets: | | | | | |
| Investments | 6 | | | | | | |
| Property, plant and equipment, net | 7 | | | | | | |
| Operating lease right-of-use assets | | | | | | | |
| Intangible assets, net | 8 | | | | | | |
| Goodwill | 8 | | | | | | |
Deferred income tax assets, net | 19 | | | | | | |
| Other non-current assets | 21 | | | | | | |
| Total assets | | | $ | | | | $ | | |
| Liabilities and Equity: | | | | | |
| Current liabilities: | | | | | |
| Accounts payable | | | $ | | | | $ | | |
| Accrued expenses | | | | | | | |
| Deferred revenue | 3 | | | | | | |
| Current borrowings | 9 | | | | | | |
| Other current liabilities | 21 | | | | | | |
| Total current liabilities | | | | | | | |
| Non-current liabilities: | | | | | |
| Borrowings | 9 | | | | | | |
| Retirement benefit obligations | 17 | | | | | | |
Deferred income tax liabilities, net | 19 | | | | | | |
| Operating lease liabilities | | | | | | | |
| Other non-current liabilities | | | | | | | |
| Commitments and contingencies | 16 | | | | | | |
Class B common stock(b) | | | | | | | |
| Additional paid-in capital | | | | | | | |
| Accumulated deficit | | | () | | | () | |
| Accumulated other comprehensive loss | 21 | | () | | | () | |
| Total News Corporation stockholders’ equity | | | | | | | |
| Noncontrolling interests | | | | | | | |
| Total equity | | | | | | | |
| Total liabilities and equity | | | $ | | | | $ | | |
(a) par value per share (“Class A Common Stock”), shares authorized, and shares issued and outstanding, net of treasury shares at par, at June 30, 2024 and June 30, 2023, respectively.
(b) par value per share (“Class B Common Stock”), shares authorized, and shares issued and outstanding, net of treasury shares at par, at June 30, 2024 and June 30, 2023, respectively.
The accompanying notes are an integral part of these audited consolidated financial statements.
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | |
| | | For the fiscal years ended June 30, |
| Notes | | 2024 | | 2023 | | 2022 |
| Operating activities: | | | | | | | |
| Net income | | | $ | | | | $ | | | | $ | | |
|
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | |
| Depreciation and amortization | | | | | | | | | | |
| Operating lease expense | | | | | | | | | | |
| Equity losses of affiliates | 6 | | | | | | | | | |
|
| Impairment charges | 7,8 | | | | | | | | | |
| Deferred income taxes | 19 | | | | | | | | () | |
| Other, net | | | | | | | | | () | |
| Change in operating assets and liabilities, net of acquisitions: | | | | | | | |
|
| Receivables and other assets | | | () | | | () | | | () | |
| Inventories, net | | | | | | () | | | () | |
| Accounts payable and other liabilities | | | () | | | | | | | |
|
|
|
| Net cash provided by operating activities | | | | | | | | | | |
| Investing activities: | | | | | | | |
| Capital expenditures | | | () | | | () | | | () | |
| Proceeds from sales of property, plant and equipment | | | | | | | | | | |
| Acquisitions, net of cash acquired | | | () | | | () | | | () | |
|
| Purchases of investments in equity affiliates and other | | | () | | | () | | | () | |
| Proceeds from sales of investments in equity affiliates and other | | | | | | | | | | |
| Other, net | | | | | | () | | | | |
|
|
| Net cash used in investing activities | | | () | | | () | | | () | |
| Financing activities: | | | | | | | |
| Borrowings | 9 | | | | | | | | | |
| Repayment of borrowings | 9 | | () | | | () | | | () | |
| Repurchase of shares | 12 | | () | | | () | | | () | |
| Dividends paid | | | () | | | () | | | () | |
| Other, net | | | () | | | () | | | () | |
|
|
| Net cash (used in) provided by financing activities | | | () | | | () | | | | |
| Net change in cash and cash equivalents | | | | | | | | | () | |
| Cash and cash equivalents, beginning of year | | | | | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | () | | | () | | | () | |
| Cash and cash equivalents, end of year | | | $ | | | | $ | | | | $ | | |
The accompanying notes are an integral part of these audited consolidated financial statements.
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(In millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A
Common Stock | | Class B
Common Stock | | Additional
Paid-in
Capital | | Accumulated
Deficit | | Accumulated
Other
Comprehensive
Loss | | Total News
Corporation
Equity | | Noncontrolling
Interests | | Total
Equity |
| Shares | | Amount | | Shares | | Amount | |
| Balance, June 30, 2021 | | | | $ | | | | | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | | | | $ | | |
| | | | | | | | | | | |
| Net income | — | | | — | | | — | | | — | | | — | | | | | | — | | | | | | | | | | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | () | | | () | | | () | | | () | |
| Dividends | — | | | — | | | — | | | — | | | () | | | — | | | — | | | () | | | () | | | () | |
Share repurchases | () | | | — | | | () | | | — | | | () | | | () | | | — | | | () | | | — | | | () | |
| Other | | | | — | | | — | | | — | | | | | | | | | — | | | | | | | | | | |
| Balance, June 30, 2022 | | | | | | | | | | | | | | | | () | | | () | | | | | | | | | | |
| | | | | | | | | | | |
| Net income | — | | | — | | | — | | | — | | | — | | | | | | — | | | | | | | | | | |
| Other comprehensive income (loss) | — | | | — | | | — | | | — | | | — | | | — | | | | | | | | | () | | | | |
| Dividends | — | | | — | | | — | | | — | | | () | | | — | | | — | | | () | | | () | | | () | |
| Share repurchases | () | | | — | | | () | | | — | | | () | | | — | | | — | | | () | | | — | | | () | |
| Other | | | | — | | | — | | | — | | | | | | — | | | — | | | | | | () | | | | |
| Balance, June 30, 2023 | | | | | | | | | | | | | | | | () | | | () | | | | | | | | | | |
| | | | | | | | | | | |
| Net income | — | | | — | | | — | | | — | | | — | | | | | | — | | | | | | | | | | |
| Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | — | | | () | | | () | | | () | | | () | |
| Dividends | — | | | — | | | — | | | — | | | () | | | — | | | — | | | () | | | () | | | () | |
| Share repurchases | () | | | — | | | () | | | — | | | () | | | () | | | — | | | () | | | — | | | () | |
| Other | | | | — | | | — | | | — | | | | | | — | | | — | | | | | | () | | | | |
| Balance, June 30, 2024 | | | | $ | | | | | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | | | | $ | | |
The accompanying notes are an integral part of these audited consolidated financial statements.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | |
| Less: allowances | () | | | () | |
Receivables, net | $ | | | | $ | | |
The Company’s receivables did not represent significant concentrations of credit risk as of June 30, 2024 or June 30, 2023 due to the wide variety of customers, markets and geographic areas to which the Company’s products and services are sold.
million for the fiscal year ended June 30, 2024. Approximately $ million, $ million and $ million of the unamortized programming costs as of June 30, 2024 are expected to be amortized in each of the fiscal years ending June 30, 2025, 2026 and 2027, respectively.Inventory for books and newsprint are valued at the lower of cost or net realizable value. Cost for non-programming inventory is determined by the weighted average cost method. The Company records a reserve for excess and obsolete inventory based upon a calculation using the historical usage rates, sales patterns of its products and specifically identified obsolete inventory.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
to years. Leasehold improvements are amortized using the straight-line method over the shorter of their useful lives or the life of the lease. Costs associated with the repair and maintenance of property, plant and equipment are expensed as incurred. Changes in circumstances, such as technological advances or changes to the Company’s business model or capital strategy, could result in the actual useful lives differing from the Company’s estimates. In those cases where the Company determines that the useful life of buildings and equipment should be changed, the Company would depreciate the asset over its revised remaining useful life, thereby increasing or decreasing depreciation expense. Refer to Note 7—Property, Plant and Equipment for further detail.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
and months after initial publication of the first format. Additionally, the Company reviews its portfolio of royalty advances for unpublished titles to determine if individual royalty advances are not recoverable for discrete reasons, such as the death of an author prior to completion of a title or titles, a Company decision to not publish a title, poor market demand or other relevant factors that could impact recoverability. Based on this information, the portion of any advance that the Company believes is not recoverable is expensed.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Advertising and promotional expenses recognized totaled $ million, $ million and $ million for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | Advertising | | | | | | | | | | | | | | | | | | | | |
Consumer | | | | | | | | | | | | | | | | | | | | |
Real estate | | | | | | | | | | | | | | | | | | | | |
Other | | | | | | | | | | | | | | | | | | | | |
Total Revenues | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | | ) ) )
| Imprints | | | | | |
| Radio broadcast licenses | | | | | |
| Total intangible assets not subject to amortization | | | | | |
| Intangible Assets Subject to Amortization | | | |
Publishing rights(a) | | | | | |
Customer relationships(b) | | | | | |
Other(c) | | | | | |
| Total intangible assets subject to amortization, net | | | | | |
| Total Intangible assets, net | $ | | | | $ | | |
(a)Net of accumulated amortization of $ million and $ million as of June 30, 2024 and 2023, respectively. The useful lives of publishing rights range from to years primarily based on the weighted-average remaining contractual terms of the underlying publishing contracts and the Company’s estimates of the period within those terms that the asset is expected to generate a majority of its future cash flows.
(b)Net of accumulated amortization of $ million and $ million as of June 30, 2024 and 2023, respectively. The useful lives of customer relationships range from to years. The useful lives of these assets are estimated by applying historical attrition rates and determining the resulting period over which a majority of the accumulated undiscounted cash flows related to the customer relationships are expected to be generated.
(c)Net of accumulated amortization of $ million and $ million as of June 30, 2024 and 2023, respectively. The useful lives of other intangible assets range from to years. The useful lives represent the periods over which these intangible assets are expected to contribute directly or indirectly to the Company’s future cash flows.
Amortization expense related to amortizable intangible assets was $ million, $ million and $ million for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.
Based on the current amount of amortizable intangible assets, the estimated amortization expense for each of the succeeding five fiscal years is as follows: 2025—$ million; 2026—$ million; 2027—$ million; 2028—$ million; and 2029—$ million.
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
Acquisitions | | | | | | | | | | | | | | | | | |
| | | |
| | | |
| Foreign exchange and other | () | | | () | | | | | | () | | | | | | () | |
| Balance, June 30, 2023 | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
Acquisitions | | | | | | | | | | | | | | | | | |
| Impairments | | | | () | | | | | | | | | | | | () | |
| | | |
| Foreign exchange and other | | | | | | | | | | () | | | | | | () | |
| Balance, June 30, 2024 | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Annual Impairment Assessments
In accordance with ASC 350, the Company’s goodwill and indefinite-lived intangible assets are tested annually in the fourth quarter for impairment or earlier if events occur or circumstances change that would more likely than not reduce the fair values below their carrying amounts. See Note 2—Summary of Significant Accounting Policies.
Fiscal 2024
The performance of the Company’s annual impairment analysis resulted in impairments of $ million to an indefinite-lived intangible asset and goodwill in fiscal 2024. Significant unobservable inputs utilized in the income approach valuation method were discount rates (ranging from % to %), long-term growth rates (ranging from % to %) and royalty rates (ranging from % to %). Significant unobservable inputs utilized in the market approach valuation method were EBITDA and revenue multiples from guideline public companies operating in similar industries (ranging from 5.5x to 11.8x and 2.0x to 2.8x, respectively) and control premiums (ranging from % to %). Significant increases (decreases) in royalty rates, growth rates, control premiums and multiples, assuming no change in discount rates, would result in a significantly higher (lower) fair value measurement. Significant decreases (increases) in discount rates, assuming no changes in royalty rates, growth rates, control premiums and multiples, would result in a significantly higher (lower) fair value measurement.
Fiscal 2023
The performance of the Company’s annual impairment analysis resulted in impairments of $ million to indefinite-lived intangible assets and impairments to goodwill in fiscal 2023. Significant unobservable inputs utilized in the income approach valuation method were discount rates (ranging from % to %), long-term growth rates (ranging from % to %) and royalty rates (ranging from % to %). Significant unobservable inputs utilized in the market approach valuation method were EBITDA and revenue multiples from guideline public companies operating in similar industries (ranging from 6.0x to 11.5x and 2.0x to 2.8x, respectively) and control premiums (ranging from % to %). Significant increases (decreases) in royalty rates, growth rates, control premiums and multiples, assuming no change in discount rates, would result in a significantly higher (lower) fair value measurement. Significant decreases (increases) in discount rates, assuming no changes in royalty rates, growth rates, control premiums and multiples, would result in a significantly higher (lower) fair value measurement.
Fiscal 2022
The performance of the Company’s annual impairment analysis resulted in impairments to goodwill and indefinite-lived intangible assets in fiscal 2022. Significant unobservable inputs utilized in the income approach valuation method were discount rates (ranging from % to %), long-term growth rates (ranging from % to %) and royalty rates (ranging from % to %). Significant unobservable inputs utilized in the market approach valuation method were EBITDA and revenue multiples from guideline public companies operating in similar industries (ranging from 2.5x to 10.0x and 1.3x to 1.8x, respectively) and control premiums (ranging from % to %). Significant increases (decreases) in royalty rates, growth rates, control premiums and multiples, assuming no change in discount rates, would result in a significantly higher (lower) fair value measurement. Significant decreases (increases) in discount rates, assuming no changes in royalty rates, growth rates, control premiums and multiples, would result in a significantly higher (lower) fair value measurement.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
% | | Mar 31, 2027 | | | | | | | | 2022 Senior notes | | % | | Feb 15, 2032 | | | | | | |
| 2021 Senior notes | | % | | May 15, 2029 | | | | | | |
Foxtel Group(b) | | | | | | | |
2024 Foxtel credit facility — tranche 1(c)(d) | | % | | Aug 1, 2026 | | | | | | |
2024 Foxtel credit facility — USD portion — tranche 2(e) | | % | | Aug 1, 2027 | | | | | | |
2024 Foxtel credit facility — tranche 3(d) | | % | | Aug 1, 2027 | | | | | | |
2017 Working capital facility (c) | | % | | Aug 1, 2026 | | | | | | |
| Telstra facility | | % | | Dec 22, 2027 | | | | | | |
2019 Credit facility(f) | | % | | May 31, 2024 | | | | | | |
2019 Term loan facility(f) | | % | | Nov 22, 2024 | | | | | | |
2012 US private placement—USD portion—tranche 3(f) | | % | | Jul 25, 2024 | | | | | | |
REA Group(b) | | | | | | | |
2024 REA credit facility — tranche 1(g) | | % | | Sep 15, 2028 | | | | | | |
2024 REA credit facility — tranche 2(g) | | % | | Sep 16, 2025 | | | | | | |
2024 Subsidiary facility(g) | | % | | Sep 28, 2025 | | | | | | |
2022 Credit facility - tranche 1(f) | | % | | Sep 16, 2024 | | | | | | |
2022 Credit facility - tranche 2(f) | | % | | Sep 16, 2025 | | | | | | |
|
|
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | | | | | | | | |
| | $ | | | | Fiscal 2026 | | | | | |
| Fiscal 2027 | | | | | |
| Fiscal 2028 | | | | | |
| Fiscal 2029 | | | | | |
| Thereafter | | | | | |
| Total future minimum lease payments | $ | | | | $ | | |
| Less: interest | () | | | | |
| Present value of minimum payments | $ | | | | $ | | |
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | Foreign currency derivatives - cash flow hedges | | | | | | | | | | | | | | | | | | | | | | | |
| Cross-currency interest rate derivatives - fair value hedges | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | |
Cross-currency interest rate derivatives(a) | | | | | | | | | | | | | | | | | | | | | | | |
Equity and other securities | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | | | | | | | | | | | |
| Liabilities: | | | | | | |
| | | | | | | |
|
| Interest rate derivatives - cash flow hedges | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | | | |
| Cross-currency interest rate derivatives - fair value hedges | | | | | | | | | | | | | | | | () | | | | | | () | |
Cross currency interest rate derivatives - cash flow hedges | | | | () | | | | | | () | | | | | | | | | | | | | |
Cross-currency interest rate derivatives(a) | | | | | | | | | | | | | | | | () | | | | | | () | |
| | | | | | | |
|
|
Cross-currency interest rate derivatives(a) | Other current assets | | | | | | |
|
| Interest rate derivatives - cash flow hedges | Other non-current assets | | | | | | |
| Cross-currency interest rate derivatives - fair value hedges | Other non-current assets | | | | | | |
|
Cross-currency interest rate derivatives(a) | Other non-current assets | | | | | | |
|
|
| Cross-currency interest rate derivatives - fair value hedges | Other current liabilities | | ) | |
|
Cross-currency interest rate derivatives(a) | Other current liabilities | | | | | () | |
|
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| Cross currency interest rate derivatives - cash flow hedges | Other non-current liabilities | | () | | | | |
(a)These cross-currency interest rate derivatives were initially designated as cash flow hedges. Hedge accounting for these derivatives was discontinued as of December 31, 2020.
Cash Flow Hedges
The Company utilizes a combination of interest rate derivatives, foreign currency derivatives and cross-currency interest rate derivatives to mitigate currency exchange rate risk and interest rate risk in relation to future interest and principal payments and payments for customer premise equipment, certain programming rights, product development costs and inventory purchases.
The total notional value of interest rate swap derivatives designated for hedging was approximately $ million and A$ million as of June 30, 2024 for News Corporation and Foxtel Debt Group borrowings, respectively. The maximum hedged term over which the Company is hedging exposure to variability in interest payments is to July 2027. As of June 30, 2024, the Company estimates that approximately $ million of net derivative gains related to its interest rate swap derivative cash flow hedges included in Accumulated other comprehensive loss will be reclassified into the Statements of Operations within the next twelve months.
The total notional value of foreign currency contract derivatives designated for hedging was $ million as of June 30, 2024. The maximum hedged term over which the Company is hedging exposure to foreign currency fluctuations is less than one year. As of June 30, 2024, the Company estimates that net derivative losses related to its foreign currency contract derivative cash flow hedges included in Accumulated other comprehensive loss will be reclassified into the Statements of Operations within the next twelve months.
The total notional value of cross-currency interest rate swap derivatives designated for hedging was approximately $ million as of June 30, 2024. The maximum hedged term over which the Company is hedging exposure to variability in interest and principal payments is to July 2027. As of June 30, 2024, the Company estimates that net derivative gains related to its cross-currency interest rate swap derivative cash flow hedges included in Accumulated other comprehensive loss will be reclassified into the Statements of Operations within the next twelve months.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | $ | | |
Foreign currency derivatives—cash flow hedges | | | | | | | | |
Cross-currency interest rate derivatives—cash flow hedges | () | | | | | | | |
Total | $ | | | | $ | | | | $ | | |
(Gains) losses reclassified from Accumulated other comprehensive loss into the Statements of Operations for the fiscal years ended June 30, 2024, 2023 and 2022, by derivative instrument: | | | | | | | | | | | | | | | | | | | | | | | |
| Income Statement Classification | | For the fiscal years ended June 30, |
| | | 2024 | | 2023 | | 2022 |
| | | (in millions) |
Interest rate derivatives - cash flow hedges | Interest expense, net | | $ | () | | | $ | () | | | $ | () | |
Foreign currency derivatives - cash flow hedges | Operating expenses | | () | | | | | | | |
Cross-currency interest rate derivatives - cash flow hedges | Interest expense, net | | () | | | | | | | |
Cross-currency interest rate derivatives(a) | Interest expense, net | | | | | () | | | () | |
Total | | | $ | () | | | $ | () | | | $ | () | |
(a)These cross-currency interest rate derivatives were initially designated as cash flow hedges. Hedge accounting for these derivatives was discontinued as of December 31, 2020.
The amounts recognized in Other, net in the Statements of Operations resulting from the changes in fair value of cross-currency interest rate derivatives that were discontinued as cash flow hedges due to hedge ineffectiveness as of December 31, 2020 were gains of approximately $ million, $ million and $ million for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.
Nonrecurring Fair Value Measurements
In addition to assets and liabilities that are remeasured at fair value on a recurring basis, the Company has certain assets, primarily goodwill, intangible assets, equity method investments and property, plant and equipment, that are not required to be remeasured to fair value at the end of each reporting period. On an ongoing basis, the Company monitors whether events occur or circumstances change that would more likely than not reduce the fair values of these assets below their carrying amounts. If the Company determines that these assets are impaired, the Company would write down these assets to fair value. These nonrecurring fair value measurements are considered to be Level 3 in the fair value hierarchy.
Other Fair Value Measurements
As of June 30, 2024, the carrying value of the Company’s outstanding borrowings approximates the fair value. The 2022 Senior Notes and the 2021 Senior Notes are classified as Level 2 and the remaining borrowings are classified as Level 3 in the fair value hierarchy.
shares of Class A Common Stock, par value $ per share, shares of Class B Common Stock, par value $ per share, shares of Series Common Stock, par value $ per share, and shares of Preferred Stock, par value $ per share.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Dividends—
| | $ | | | | $ | | | The timing, declaration, amount and payment of future dividends to stockholders, if any, is within the discretion of the Company’s Board of Directors (the “Board of Directors”). The Board of Directors’ decisions regarding the payment of future dividends will depend on many factors, including the Company’s financial condition, earnings, capital requirements and debt facility covenants, other contractual restrictions, as well as legal requirements, regulatory constraints, industry practice, market volatility and other factors that the Board of Directors deems relevant.
Voting Rights—Holders of the Company’s Class A Common Stock are entitled to vote only in the limited circumstances set forth in the Company’s Restated Certificate of Incorporation (the “Charter”). Holders of the Company’s Class B Common Stock are entitled to vote for each share held of record on all matters submitted to a vote of the stockholders.
Liquidation Rights—In the event of a liquidation or dissolution of the Company, holders of Class A Common Stock and Class B Common Stock shall be entitled to receive all of the remaining assets of the Company available for distribution to its stockholders, ratably in proportion to the number of shares held by Class A Common Stock holders and Class B Common Stock holders, respectively. In the event of any merger or consolidation with or into another entity, the holders of Class A Common Stock and the holders of Class B Common Stock shall generally be entitled to receive substantially identical per share consideration.
Under the Company’s Charter, the Board of Directors is authorized to issue shares of preferred stock or series common stock at any time, without stockholder approval, in one or more series and to fix the number of shares, designations, voting powers, if any, preferences and relative, participating, optional and other rights of such series, as well as any applicable qualifications, limitations or restrictions, to the full extent permitted by Delaware law, subject to the limitations set forth in the Charter, including stockholder approval requirements with respect to the issuance of preferred stock or series common stock entitling holders thereof to more than one vote per share.
Stock Repurchases
The Board of Directors has authorized a stock repurchase program to purchase up to $ billion in the aggregate of the Company’s outstanding Class A Common Stock and Class B Common Stock (the “Repurchase Program”). The manner, timing, number and share price of any repurchases will be determined by the Company at its discretion and will depend upon such factors as the market price of the stock, general market conditions, applicable securities laws, alternative investment opportunities and other factors. The Repurchase Program has no time limit and may be modified, suspended or discontinued at any time. As of June 30, 2024, the remaining authorized amount under the Repurchase Program was approximately $ million.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | | | | $ | | | | | | | $ | | | Class B Common Stock | | | | | | | | | | | | | | | | | |
Total | | | | $ | | | | | | | $ | | | | | | | $ | | |
Stockholders Agreement
In September 2021, the Company entered into a stockholders agreement (the “Stockholders Agreement”) with the Murdoch Family Trust (the “MFT”) pursuant to which the MFT and the Company have agreed not to take actions that (i) would result in the MFT and Murdoch family members, including K. Rupert Murdoch and Lachlan K. Murdoch, the Company’s Chair, together owning more than % of the outstanding voting power of the shares of the Company’s Class B Common Stock (“Class B Shares”), or (ii) would increase the MFT’s voting power by more than % in any rolling twelve-month period. The MFT would forfeit votes in connection with any Company stockholders meeting to the extent necessary to ensure that the MFT and the Murdoch family collectively do not exceed % of the outstanding voting power of the Class B Shares at such meeting, except where a Murdoch family member votes their own shares differently from the MFT on any matter. The Stockholders Agreement will terminate upon the MFT’s distribution of all or substantially all of its Class B Shares.
million shares of Class A Common Stock under the terms of the 2013 LTIP. All shares of Class A Common Stock reserved for cancelled or forfeited equity-based compensation awards under the 2013 LTIP become available for future grants. | | $ | | | | $ | | | As of June 30, 2024, the total compensation cost not yet recognized for all unvested awards held by participants was approximately $ million and is expected to be recognized over a weighted average period of between one and . The total intrinsic value of all outstanding awards was approximately $ million as of June 30, 2024.
The tax benefit recognized on PSUs and RSUs for participants that vested during the applicable fiscal year was $ million, $ million and $ million for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.
Summary of Incentive Plans
The fair value of equity-based compensation granted under the 2013 LTIP is calculated according to the type of award issued. Cash-settled awards are marked-to-market at the end of each reporting period.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | Cash-settled PSUs(a) granted | | | | | | | | |
Total PSUs granted | | | | | | | | |
(a)Granted to executive Directors and to employees in certain foreign locations and settled in cash, assuming performance conditions are met.
The following table summarizes information related to vests of PSUs during the fiscal years ended June 30, 2024, 2023 and 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the fiscal years ended June 30, |
| 2024 | | 2023 | | 2022 |
| Shares | | Settlement Value(a) | | Shares | | Settlement Value(a) | | Shares | | Settlement Value(a) |
| (in millions) |
| | | |
Class A Common Stock-settled PSUs vested | | | | $ | | | | | | | $ | | | | | | | $ | | |
Cash-settled PSUs vested | | | | | | | | | | | | | | | | | |
Total PSUs vested | | | | $ | | | | | | | $ | | | | | | | $ | | |
(a)Settlement value represents cash paid (for cash-settled PSUs) or the fair value of PSU awards at the time of vesting (for stock-settled PSUs) and does not include statutory tax withholdings.
Restricted Stock Units
RSU grants entitle the holder to shares of the Company’s Class A Common Stock or the cash equivalent value of such shares. The fair value of RSUs is based upon the fair market value of the shares underlying the awards on the grant date and expensed using a straight-line method over the applicable vesting period. Any person who holds RSUs shall have no ownership interest in the shares or cash to which such RSUs relate unless and until the shares or cash are delivered to the holder. Each RSU is entitled to receive dividend equivalents for each regular cash dividend on the Class A Common Stock paid by the Company during the award period, subject to the same terms and conditions as apply to the underlying award.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | Cash-settled RSUs(a) granted | | | | | | | | |
Total RSUs granted | | | | | | | | |
(a)Granted to executive Directors and to employees in certain foreign locations.
The following table summarizes information related to vests of RSUs during the fiscal years ended June 30, 2024, 2023 and 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the fiscal years ended June 30, |
| 2024 | | 2023 | | 2022 |
| Shares | | Settlement Value(a) | | Shares | | Settlement Value(a) | | Shares | | Settlement Value(a) |
| (in millions) |
| | | |
| Class A Common Stock-settled RSUs vested | | | | $ | | | | | | | $ | | | | | | | $ | | |
Cash-settled RSUs vested | | | | | | | | | | | | | | | | | |
| Total RSUs vested | | | | $ | | | | | | | $ | | | | | | | $ | | |
(a)Settlement value represents cash paid (for cash-settled RSUs) or the fair value of RSU awards at the time of vesting (for stock-settled RSUs) and does not include statutory tax withholdings.
| | $ | | | | | | | $ | | | | | | | $ | | | Granted(a) | | | | | | | | | | | | | | | | | |
| Vested | () | | | | | | () | | | | | | () | | | | |
Cancelled(b) | () | | | | | | () | | | | | | () | | | | |
| Unvested units at the end of the year | | | | $ | | | | | | | $ | | | | | | | $ | | |
(a)For fiscal 2024, includes million target PSUs and million RSUs granted and a payout adjustment of million PSUs due to the actual performance level achieved for PSUs granted in fiscal 2021 that vested during fiscal 2024.
For fiscal 2023, includes million target PSUs and million RSUs granted and a payout adjustment of million PSUs due to the actual performance level achieved for PSUs granted in fiscal 2020 that vested during fiscal 2023.
For fiscal 2022, includes million target PSUs and million RSUs granted and a payout adjustment of million PSUs due to the actual performance level achieved for PSUs granted in fiscal 2019 that vested during fiscal 2022.
(b)For fiscal 2024, includes million of target PSUs and million RSUs cancelled.
For fiscal 2023, includes million of target PSUs and million RSUs cancelled.
For fiscal 2022, includes million of target PSUs and million RSUs cancelled.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | $ | | | | Net income attributable to noncontrolling interests | () | | | () | | | () | |
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(a)The Company has commitments under purchase obligations related to minimum subscriber guarantees for license fees, printing contracts, capital projects, marketing agreements, production services and other legally binding commitments.
(b)The Company has sports programming rights commitments with the National Rugby League, Australian Football League and Cricket Australia, as well as certain other broadcast rights which are payable through fiscal 2032.
(c)The Company has programming rights commitments with various suppliers for programming content.
(d)The Company leases office facilities, warehouse facilities, printing plants, satellite services and equipment. These leases, which are classified as operating leases, are expected to be paid at certain dates through fiscal 2048. Amounts reflected represent only the Company’s lease obligations for which it has firm commitments.
(e)The Company has contractual commitments for satellite transmission services. The Company’s satellite transponder services arrangements extend through fiscal 2032 and are accounted for as operating or finance leases, based on the underlying terms of those arrangements.
(f)See Note 9—Borrowings.
(g)Reflects the Company’s expected future interest payments based on borrowings outstanding and interest rates applicable at June 30, 2024. Such rates are subject to change in future periods. See Note 9—Borrowings.
Contingencies
The Company routinely is involved in various legal proceedings, claims and governmental inspections or investigations, including those discussed below. The outcome of these matters and claims is subject to significant uncertainty, and the Company often cannot predict what the eventual outcome of pending matters will be or the timing of the ultimate resolution of these matters. Fees, expenses, fines, penalties, judgments or settlement costs which might be incurred by the Company in connection with the various proceedings could adversely affect its results of operations and financial condition.
The Company establishes an accrued liability for legal claims when it determines that a loss is probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters. Legal fees associated with litigation and similar proceedings are expensed as incurred. Except as otherwise provided below, for the contingencies disclosed for which there is at least a reasonable possibility that a loss may be incurred, the Company was unable to estimate the amount of loss or range of loss. The Company recognizes gain contingencies when the gain becomes realized or realizable.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Company is not able to predict the ultimate outcome or cost of the civil claims. It is possible that these proceedings and any adverse resolution thereof could damage its reputation, impair its ability to conduct its business and adversely affect its results of operations and financial condition.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| Other current liabilities | | | | | | | () | | | () | | | () | | | () | | | () | | | () | |
| Retirement benefit obligations | () | | | () | | | () | | | () | | | () | | | () | | | () | | | () | |
Net asset (liability) recognized | $ | () | | | $ | () | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | () | |
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | Service cost | | | | | | | | | | | | | | | | | | | | | | | |
| Interest cost | | | | | | | | | | | | | | | | | | | | | | | |
| Benefits paid | () | | | () | | | () | | | () | | | () | | | () | | | () | | | () | |
Settlements(a) | | | | | | | () | | | () | | | | | | | | | () | | | () | |
Actuarial (gain) loss(b) | () | | | () | | | | | | () | | | | | | () | | | | | | () | |
| Foreign exchange rate changes | | | | | | | () | | | | | | | | | | | | () | | | | |
| | | | | | | |
Projected benefit obligation, end of the year | | | | | | | | | | | | | | | | | | | | | | | |
Change in the fair value of plan assets for the Company’s benefit plans: | | | | | | | | | | | | | | | |
Fair value of plan assets, beginning of the year | | | | | | | | | | | | | | | | | | | | | | | |
| Actual return on plan assets | | | | | | | | | | () | | | | | | | | | | | | () | |
| Employer contributions | | | | | | | | | | | | | | | | | | | | | | | |
| Benefits paid | () | | | () | | | () | | | () | | | | | | | | | () | | | () | |
Settlements(a) | | | | | | | () | | | () | | | | | | | | | () | | | () | |
| Foreign exchange rate changes | | | | | | | () | | | | | | | | | | | | () | | | | |
Fair value of plan assets, end of the year | | | | | | | | | | | | | | | | | | | | | | | |
| Funded status | $ | () | | | $ | () | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | () | |
(a)Amounts related to payments made to former employees of the Company in full settlement of their pension benefits.
| | $ | | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | | | | Prior service cost (benefit) | | | | | | | | | | | | | () | | | () | | | () | | | () | |
| Net amounts recognized | $ | | | | $ | | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | | |
Accumulated pension benefit obligations as of June 30, 2024 and 2023 were $ million and $ million, respectively.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | Accumulated benefit obligation | | | | | | | | | | | | | | | | | |
| Fair value of plan assets | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Foreign Pension Benefits |
| Funded Plans | | Unfunded Plans | | Total |
| As of June 30, |
| 2024 | | 2023 | | 2024 | | 2023 | | 2024 | | 2023 |
| (in millions) |
| Projected benefit obligation | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| Accumulated benefit obligation | | | | | | | | | | | | | | | | | |
| Fair value of plan assets | | | | | | | | | | | | | | | | | |
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | Accumulated benefit obligation | | | | | | | | | | | | | | | | | |
| Fair value of plan assets | | | | | | | | | | | | | | | | | |
Summary of Net Periodic Benefit Costs
The Company recorded $ million, $ million and in net periodic benefit costs in the Statements of Operations for the fiscal years ended June 30, 2024, 2023 and 2022, respectively. The Company utilizes the full yield-curve approach to estimate the service and interest cost components of net periodic benefit costs for its pension and other postretirement benefit plans.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | Interest costs on projected benefit obligations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expected return on plan assets | () | | | () | | | () | | | () | | | () | | | () | | | | | | | | | | | | () | | | () | | | () | |
Amortization of deferred losses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Amortization of prior service credits | | | | | | | | | | | | | | | | | | | () | | | () | | | () | | | () | | | () | | | () | |
Settlements, curtailments and other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net periodic benefit costs (income) – Total | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | () | | | $ | () | |
| $ | () | | | $ | () | | | $ | | | | $ | | | | $ | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pension Benefits | | | | | | |
| Domestic | | Foreign | | Postretirement Benefits |
| For the fiscal years ended June 30, |
| 2024 | | 2023 | | 2022 | | 2024 | | 2023 | | 2022 | | 2024 | | 2023 | | 2022 |
Additional information | | | | | | | | | | | | | | | | | |
| Weighted-average assumptions used to determine benefit obligations | | | | | | | | | | | | | | | | | |
| Discount rate | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % |
| Rate of increase in future compensation | N/A | | N/A | | N/A | | | % | | | % | | | % | | N/A | | N/A | | N/A |
| Weighted-average assumptions used to determine net periodic benefit cost | | | | | | | | | | | | | | | | | |
| Discount rate for PBO | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % |
Discount rate for service cost | N/A | | N/A | | | % | | | % | | | % | | | % | | | % | | | % | | | % |
Discount rate for interest on PBO | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % | | | % |
| Expected return on plan assets | | % | | | % | | | % | | | % | | | % | | | % | | N/A | | N/A | | N/A |
| Rate of increase in future compensation | N/A | | N/A | | N/A | | | % | | | % | | | % | | N/A | | N/A | | N/A |
N/A—not applicable
% | | | % | | Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) | | % | | | % |
| Year that the rate reaches the ultimate trend rate | | | |
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | $ | | | | $ | | | | 2026 | | | | | | | | | | | |
| 2027 | | | | | | | | | | | |
| 2028 | | | | | | | | | | | |
| 2029 | | | | | | | | | | | |
| 2030 to 2034 | | | | | | | | | | | |
Plan Assets
The Company applies the provisions of ASC 715, which requires disclosures including: (i) investment policies and strategies; (ii) the major categories of plan assets; (iii) the inputs and valuation techniques used to measure plan assets; (iv) the effect of fair value measurements using significant unobservable inputs on changes in plan assets for the period; and (v) significant concentrations of risk within plan assets.
| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | International equity funds | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Domestic fixed income funds | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| International fixed income funds | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balanced funds | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
(a)Open-ended pooled funds that are registered and/or available to the general public are valued at the daily published net asset value (“NAV”). Other pooled funds are valued at the NAV provided by the fund issuer.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | Actual return on plan assets: | |
| Relating to assets still held at end of period | () | |
| Relating to assets sold during the period | | |
| Purchases, sales, settlements and issuances | | |
| Transfers in and out of Level 3 | | |
| Balance, June 30, 2023 | $ | | |
| Actual return on plan assets: | |
| Relating to assets still held at end of period | | |
| Relating to assets sold during the period | | |
| Purchases, sales, settlements and issuances | () | |
| Transfers in and out of Level 3 | | |
| Balance, June 30, 2024 | $ | | |
The Company’s investment strategy for its pension plans is to maximize the long-term rate of return on plan assets within an acceptable level of risk in order to minimize the cost of providing pension benefits while maintaining adequate funding levels. The Company’s practice is to conduct a periodic strategic review of its asset allocation. The Company’s current broad strategic targets are to have a pension asset portfolio comprised of % equity securities, % fixed income securities and % in cash and other investments. In developing the expected long-term rate of return, the Company considered the pension asset portfolio’s past average rate of returns and future return expectations of the various asset classes. A portion of the other allocation is reserved in cash to provide for expected benefits to be paid in the short term. The Company’s equity portfolios are managed in such a way as to achieve optimal diversity. The Company’s fixed income portfolio is investment grade in the aggregate. The Company does not manage any assets internally.
% | | | % | | Debt securities | | % | | | % |
| Cash and other | | % | | | % |
| Total | | % | | | % |
Required pension plan contributions for the next fiscal year are expected to be approximately $ million; however, actual contributions may be affected by pension asset and liability valuation changes during the year. The Company will continue to make voluntary contributions as necessary to improve funded status.
million, $ million and $ million for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | $ | | | | Foreign | | | | | | | | |
| Income before income tax expense | $ | | | | $ | | | | $ | | |
| | $ | | | | $ | | | | State & Local | | | | | | | | |
| Foreign | | | | | | | | |
| Total current tax | | | | | | | | |
Deferred | | | | | |
| U.S. | | | | | |
| Federal | | | | () | | | | |
| State & Local | | | | | | | | |
| Foreign | () | | | | | | () | |
| Total deferred tax | | | | | | | () | |
| Total income tax expense | $ | | | | $ | | | | $ | | |
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
% | | | % | | | % | | State and local taxes, net | | | | | | | | |
Effect of foreign operations (a) | | | | | | | | |
Change in valuation allowance (b) | | | | | | | () | |
| Non-deductible goodwill and asset impairments | | | | | | | | |
|
|
|
|
| Net operating loss carryforwards | | | | | |
| Business tax credits | | | | | |
| Operating lease liabilities | | | | | |
| Other | | | | | |
| Total deferred tax assets | | | | | |
Deferred tax liabilities | | | |
| Asset basis difference and amortization | () | | | () | |
| Operating lease right-of-use asset | () | | | () | |
| Other | () | | | () | |
| Total deferred tax liabilities | () | | | () | |
| Net deferred tax asset before valuation allowance | | | | | |
Less: valuation allowance (See Note 22—Valuation and Qualifying Accounts) | () | | | () | |
| Net deferred tax assets | $ | | | | $ | | |
Significant judgment is applied in determining the ability to realize our deferred tax assets. Management assesses available positive and negative evidence, including historical results and future income forecasts to determine whether deferred tax assets will be realized. Based on its assessment, management has concluded that it is more likely than not that certain deferred tax assets may not be realized and therefore, a valuation allowance has been established against those tax assets. Certain of our businesses may incur losses in the future resulting in additional valuation allowances being recorded.
| | U.S. Federal | | Indefinite | | | |
| U.S. States | | Various | | | |
| Australia | | Indefinite | | | |
| U.K. | | Indefinite | | | |
| Other Foreign | | Various | | | |
Utilization of the NOLs is dependent on generating sufficient taxable income from our operations in each of the respective jurisdictions to which the NOLs relate, while taking into account tax filing groups and limitations and/or restrictions on our ability to use them. Certain of our U.S. federal NOLs were acquired as part of the acquisition of Move and are subject to limitations as promulgated under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). Section 382 of the Code limits the amount of NOLs that we can use on an annual basis to offset consolidated U.S. taxable income. The NOLs are also subject to review by relevant tax authorities in the jurisdictions to which they relate.
The Company recorded a deferred tax asset of $ million and $ million associated with its NOLs (net of approximately $ million and $ million, respectively, of uncertain tax benefits recorded against deferred tax assets) as of June 30, 2024 and 2023, respectively.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2024, the Company had approximately $ billion and $ billion of capital loss carryforwards in Australia and the U.K., respectively, which may be carried forward indefinitely. The capital loss carryforwards are also subject to review by relevant tax authorities in the jurisdictions to which they relate. Realization of our capital losses is dependent on generating capital gain taxable income and satisfying certain continuity of ownership and/or business requirements. The Company recorded a deferred tax asset of $ billion as of June 30, 2024 and 2023 for these capital loss carryforwards. It is more likely than not that the Company will not generate capital gain income in the normal course of business in these jurisdictions, and accordingly, valuation allowances of $ billion have been established to reduce the capital loss carryforward deferred tax asset to an amount that will more likely than not be realized as of June 30, 2024 and 2023.
As of June 30, 2024, the Company had approximately $ million of U.S. federal tax credit carryforwards which includes $ million of foreign tax credits and $ million of general business credits, which begin to expire in 2026 and 2036, respectively.
As of June 30, 2024, the Company had approximately $ million of non-U.S. tax credit carryforwards which expire in various amounts beginning in 2027 and $ million of state tax credit carryforwards (net of U.S. federal benefit), which expire in various amounts beginning in 2025.
A valuation allowance of $ million has been established to reduce the deferred tax asset associated with the Company’s U.S. federal tax credits, non-U.S. tax credits and state tax credit carryforwards to an amount that will more likely than not be realized as of June 30, 2024.
Uncertain Tax Positions
| | $ | | | | $ | | | | Additions for prior year tax positions | | | | | | | | |
| Additions for current year tax positions | | | | | | | | |
| Reduction for prior year tax positions | () | | | | | | () | |
| Lapse of the statute of limitations | () | | | () | | | () | |
|
| Settlement—tax attributes | | | | () | | | | |
| Impact of currency translations | () | | | | | | () | |
| Balance, end of period | $ | | | | $ | | | | $ | | |
The Company recognizes interest and penalty charges related to unrecognized tax benefits as income tax expense, which is consistent with the recognition in prior reporting periods. The Company recognized an expense related to interest and penalties of $ million for each of the fiscal years ended June 30, 2024, 2023 and 2022. The Company recorded liabilities for accrued interest and penalties of approximately $ million, $ million and $ million as of June 30, 2024, 2023 and 2022, respectively.
The Company’s tax returns are subject to on-going review and examination by various tax authorities. Tax authorities may not agree with the treatment of items reported in our tax returns, and therefore the outcome of tax reviews and examinations can be unpredictable. The Company is currently undergoing tax examinations in the U.S., various states and foreign jurisdictions. The Company settled its audit with the Internal Revenue Service for the fiscal year ended June 30, 2018 in June 2024 with no material adjustments. The Company believes it has appropriately accrued for the expected outcome of uncertain tax matters and believes such liabilities represent a reasonable provision for taxes ultimately expected to be paid. However, the Company may need to accrue additional income tax expense and our liability may need to be adjusted as new information becomes known and as these tax examinations continue to progress, or as settlements or litigations occur.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
It is reasonably possible that uncertain tax positions may increase or decrease in the next fiscal year, however, actual developments in this area could differ from those currently expected. As of June 30, 2024, approximately $ million would affect the Company’s effective income tax rate, if and when recognized in future fiscal years. It is reasonably possible that the amount of uncertain tax liabilities which may be resolved within the next fiscal year is between the range of approximately and $ million, a portion of which will affect our effective income tax rate, primarily as a result of the settlement of tax examinations and the lapsing of statutes of limitations.
Other
The Organization for Economic Cooperation and Development (“OECD”) continues to develop detailed rules to assist member states in the implementation of landmark reforms to the international tax system, as agreed in October 2021 by 136 members of the OECD/G20 Inclusive Framework. These rules are intended to address certain tax challenges arising from digitalization of the global economy and ensure that companies pay a global minimum level of taxation in countries where they operate.
The OECD’s recommendations call for a global minimum effective tax rate of 15% for multinational groups with annual global revenue exceeding 750 million Euros. In December 2022, European Union (“EU”) member states agreed to adopt the OECD’s minimum tax rules, which began going into effect in tax years beginning on or after January 1, 2024. The majority of the EU countries and the U.K. enacted minimum tax legislation in 2023. Several other countries, including Australia, have proposed changes to their tax law to implement the OECD’s minimum tax proposal. Global minimum tax legislation will generally be effective for the Company’s financial year beginning on July 1, 2024. The Company has assessed the potential impact of global minimum tax proposals in the jurisdictions where it operates, including available transitional safe harbor relief which provides more simplified measures, on its consolidated financial statements and related disclosures. Based on our assessment, these rules are not expected to have a material impact on the Company’s results of operations. However, the application of the rules continues to evolve, and its outcome may alter aspects of how the Company’s tax obligations are determined in countries in which it does business. The Company continues to evaluate the potential impact of these rules.
Prior to the enactment of the Tax Act, the Company’s undistributed foreign earnings were considered permanently reinvested and as such, United States federal and state income taxes were not previously recorded on these earnings. As a result of the Tax Act, substantially all of the Company’s earnings in foreign subsidiaries generated prior to the enactment of the Tax Act were deemed to have been repatriated and taxed accordingly. As of June 30, 2024, the Company has approximately $ billion of undistributed foreign earnings that it intends to reinvest permanently. It is not practicable to estimate the amount of tax that might be payable if these earnings were repatriated. The Company may repatriate future earnings of certain foreign subsidiaries in which case the Company may be required to accrue and pay additional taxes, including any applicable foreign withholding taxes and income taxes.
During the fiscal years ended June 30, 2024, 2023 and 2022, the Company paid gross income taxes of $ million, $ million and $ million, respectively, and received income tax refunds of $ million, $ million and $ million, respectively.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
•Digital Real Estate Services—The Digital Real Estate Services segment consists of the Company’s % interest in REA Group and % interest in Move. The remaining % interest in Move is held by REA Group. REA Group is a market-leading digital media business specializing in property and is listed on the Australian Securities Exchange (“ASX”) (ASX: REA). REA Group advertises property and property-related services on its websites and mobile apps, including Australia’s leading residential, commercial and share property websites, realestate.com.au, realcommercial.com.au and Flatmates.com.au, property.com.au and property portals in India. In addition, REA Group provides property-related data to the financial sector and financial services through a digital property search and financing experience and a mortgage broking offering.
Move is a leading provider of digital real estate services in the U.S. and primarily operates Realtor.com®, a premier real estate information, advertising and services platform. Move offers real estate advertising solutions to agents and brokers, including its ConnectionsSM Plus, Market VIPSM, AdvantageSM Pro and Listing Toolkit products as well as its referral-based services, ReadyConnect ConciergeSM and RealChoiceTM Selling (formerly UpNest). Move also offers online tools and services to do-it-yourself landlords and tenants.
•Subscription Video Services—The Company’s Subscription Video Services segment provides sports, entertainment and news services to pay-TV and streaming subscribers and other commercial licensees via satellite and internet distribution and consists of (i) the Company’s % interest in the Foxtel Group (with the remaining % interest held by Telstra, an ASX-listed telecommunications company) and (ii) Australian News Channel (“ANC”). The Foxtel Group is the largest Australian-based subscription television provider. Its Foxtel pay-TV service provides approximately channels and video on demand covering sports, general entertainment, movies, documentaries, music, children’s programming and news. Foxtel and the Group’s Kayo Sports streaming service offer the leading sports programming content in Australia, with broadcast rights to live sporting events including: National Rugby League, Australian Football League, Cricket Australia and various motorsports programming. The Foxtel Group’s other products and services include BINGE, its entertainment streaming service, Foxtel Now, a streaming service that provides access across Foxtel’s live and on-demand content, and Hubbl, its recently-launched content aggregation platform.
ANC operates the Sky News Australia network, Australia’s 24-hour multi-channel, multi-platform news service. ANC channels are distributed throughout Australia on Foxtel and Sky News is distributed in New Zealand by Sky Network Television Limited. ANC also owns and operates the IPTV Australia Channel, which is available in territories outside Australia and New Zealand, and offers content across a variety of digital media platforms, including web, mobile and third-party providers.
•Dow Jones—The Dow Jones segment consists of Dow Jones, a global provider of news and business information whose products target individual consumers and enterprise customers and are distributed through a variety of media channels including newspapers, newswires, websites, mobile apps, newsletters, magazines, proprietary databases, live journalism, video and podcasts. Dow Jones’s consumer products include premier brands such as The Wall Street Journal, Barron’s, MarketWatch and Investor’s Business Daily. Dow Jones’s professional information products, which target enterprise customers, include Dow Jones Risk & Compliance, a leading provider of data solutions to help customers identify and manage regulatory, corporate and reputational risk with tools focused on financial crime, sanctions, trade and other compliance requirements, Dow Jones Energy, a leading provider of pricing data, news, insights, analysis and other information for energy commodities and key base chemicals, Factiva, a leading provider of global business content, and Dow Jones Newswires, which distributes real-time business news, information and analysis to financial professionals and investors.
•Book Publishing—The Book Publishing segment consists of HarperCollins, the second largest consumer book publisher in the world, with operations in countries and particular strengths in general fiction, nonfiction, children’s and religious publishing. HarperCollins owns more than branded publishing imprints, including Harper, William Morrow, Mariner, HarperCollins Children’s Books, Avon, Harlequin and Christian publishers Zondervan and Thomas Nelson, and publishes works by well-known authors such as Harper Lee, George Orwell, Agatha Christie and Zora Neale Hurston, as well as global author brands including J.R.R. Tolkien, C.S. Lewis, Daniel Silva, Karin Slaughter and Dr. Martin Luther King, Jr. It is also home to many beloved children’s books and series and a significant Christian publishing business.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | $ | | | | Subscription Video Services | | | | | | | | |
| Dow Jones | | | | | | | | |
| Book Publishing | | | | | | | | |
| News Media | | | | | | | | |
| Other | | | | | | | | |
Total Revenues | $ | | | | $ | | | | $ | | |
| Segment EBITDA: | | | | | |
| Digital Real Estate Services | $ | | | | $ | | | | $ | | |
| Subscription Video Services | | | | | | | | |
| Dow Jones | | | | | | | | |
| Book Publishing | | | | | | | | |
| News Media | | | | | | | | |
| Other | () | | | () | | | () | |
| Depreciation and amortization | () | | | () | | | () | |
Impairment and restructuring charges | () | | | () | | | () | |
Equity losses of affiliates | () | | | () | | | () | |
| Interest expense, net | () | | | () | | | () | |
Other, net | () | | | | | | | |
| Income before income tax expense | | | | | | | | |
| Income tax expense | () | | | () | | | () | |
| Net income | $ | | | | $ | | | | $ | | |
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | $ | | | | Subscription Video Services | | | | | | | | |
| Dow Jones | | | | | | | | |
| Book Publishing | | | | | | | | |
| News Media | | | | | | | | |
| Other | | | | | | | | |
| Total Depreciation and amortization | $ | | | | $ | | | | $ | | |
| | | | | | | | | | | | | | | | | |
| For the fiscal years ended June 30, |
| 2024 | | 2023 | | 2022 |
| (in millions) |
| Capital expenditures: | | | | | |
| Digital Real Estate Services | $ | | | | $ | | | | $ | | |
| Subscription Video Services | | | | | | | | |
| Dow Jones | | | | | | | | |
| Book Publishing | | | | | | | | |
| News Media | | | | | | | | |
| Other | | | | | | | | |
| Total Capital expenditures | $ | | | | $ | | | | $ | | |
| | $ | | | | Subscription Video Services | | | | | |
| Dow Jones | | | | | |
| Book Publishing | | | | | |
| News Media | | | | | |
Other(a) | | | | | |
| Investments | | | | | |
| Total assets | $ | | | | $ | | |
(a)The Other segment primarily includes Cash and cash equivalents.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | Subscription Video Services | | | | | |
| Dow Jones | | | | | |
| Book Publishing | | | | | |
| News Media | | | | | |
| Other | | | | | |
| Total Goodwill and intangible assets, net | $ | | | | $ | | |
| | $ | | | | $ | | | Europe(c) | | | | | | | | |
Australasia and Other(d) | | | | | | | | |
Total Revenues | $ | | | | $ | | | | $ | | |
(a)Revenues are attributed to region based on location of customer.
(b)Revenues include approximately $ billion for fiscal 2024, $ billion for fiscal 2023 and $ billion for fiscal 2022 from customers in the U.S.
(c)Revenues include approximately $ billion for fiscal 2024, $ billion for fiscal 2023 and $ billion for fiscal 2022 from customers in the U.K.
(d)Australasia comprises Australia, Asia, Papua New Guinea and New Zealand. Revenues include approximately $ billion for fiscal 2024, $ billion for fiscal 2023 and $ billion for fiscal 2022 from customers in Australia.
| | | | | | | | | | | |
| As of June 30, |
| 2024 | | 2023 |
| (in millions) |
Long-lived assets:(a) | | | |
| U.S. and Canada | $ | | | | $ | | |
| Europe | | | | | |
| Australasia and Other | | | | | |
Total long-lived assets | $ | | | | $ | | |
(a)Reflects total assets less current assets, goodwill, intangible assets, investments and deferred income tax assets.
There is no material reliance on any single customer. Revenues are attributed to countries based on location of customers.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | Retirement benefit assets | | | | | |
Inventory(a) | | | | | |
News America Marketing deferred consideration(b) | | | | | |
| Other | | | | | |
| Total Other non-current assets | $ | | | | $ | | |
(a)Primarily consists of the non-current portion of programming rights.
Other Current Liabilities
| | $ | | | | Current operating lease liabilities | | | | | |
| Allowance for sales returns | | | | | |
Programming rights payable | | | | | |
| Other | | | | | |
| Total Other current liabilities | $ | | | | $ | | |
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | | | | | | Fiscal year activity(a) | () | | | | | | | |
Balance, end of year | | | | | | | | |
Benefit Plan Adjustments: | | | | | |
Balance, beginning of year | () | | | () | | | () | |
Fiscal year activity(b) | | | | () | | | | |
Balance, end of year | () | | | () | | | () | |
Foreign currency translation adjustments: | | | | | |
Balance, beginning of year | () | | | () | | | () | |
| Fiscal year activity | () | | | | | | () | |
Balance, end of year | () | | | () | | | () | |
|
|
|
|
Total accumulated other comprehensive loss, net of tax: | | | | | |
Balance, beginning of year | () | | | () | | | () | |
Fiscal year activity, net of income taxes(c) | () | | | | | | () | |
Balance, end of year | $ | () | | | $ | () | | | $ | () | |
(a)Net of income tax expense (benefit) of $() million, $ million and $ million for the fiscal years ended June 30, 2024, 2023 and 2022 respectively.
(b)Net of income tax expense (benefit) of $ million, $() million and $ million for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.
(c)Excludes $() million, $() million and $() million relating to noncontrolling interests for the fiscal years ended June 30, 2024, 2023 and 2022, respectively.
Other, net
) | | $ | () | | | $ | () | | | Dividends received from equity security investments | | | | | | | | |
|
Gain on sale of businesses(a) | | | | | | | | |
Gain on remeasurement of previously-held interest | | | | | | | | |
Gain on dilution of PropertyGuru investment(b) | | | | | | | | |
| Other | () | | | | | | () | |
| Total Other, net | $ | () | | | $ | | | | $ | | |
(a)During the fiscal year ended June 30, 2022, REA Group acquired an % interest in PropertyGuru in exchange for all shares of REA Group’s entities in Malaysia and Thailand. The Company recognized a gain of $ million on the disposition of such entities.
(b)During the fiscal year ended June 30, 2022, PropertyGuru completed its merger with Bridgetown 2 Holdings Limited. As a result of the merger and subsequent investments made in connection with the transaction, REA Group’s ownership interest in PropertyGuru was % and a gain of $ million was recorded resulting from its ownership dilution in the transaction.
NEWS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | $ | | | | $ | | | Cash paid for taxes | | | | | | | | |
) | | $ | () | | | $ | () | | | $ | | | | $ | | | | $ | () | | | Allowances for sales returns | () | | | () | | | | | | | | | | | | () | |
Deferred tax valuation allowance | () | | | () | | | () | | | | | | () | | | () | |
| Fiscal 2023 | | | | | | | | | | | |
Allowances for doubtful accounts | $ | () | | | $ | () | | | $ | | | | $ | | | | $ | | | | $ | () | |
| Allowances for sales returns | () | | | () | | | | | | | | | () | | | () | |
Deferred tax valuation allowance | () | | | () | | | | | | | | | () | | | () | |
| Fiscal 2022 | | | | | | | | | | | |
Allowances for doubtful accounts | $ | () | | | $ | () | | | $ | | | | $ | | | | $ | | | | $ | () | |
| Allowances for sales returns | () | | | () | | | () | | | | | | | | | () | |
Deferred tax valuation allowance | () | | | () | | | () | | | | | | | | | () | |
per share for Class A Common Stock and Class B Common Stock. This dividend is payable on October 9, 2024 to stockholders of record as of September 11, 2024.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Annual Report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective in recording, processing, summarizing and reporting on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and were effective in ensuring that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Management’s report and the report of the independent registered public accounting firm thereon are set forth on pages 61 and 62, respectively, and are incorporated herein by reference. Changes in Internal Control over Financial Reporting
There has been no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the Company’s fourth quarter of the fiscal year ended June 30, 2024 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None
Trading Plans
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item with respect to the Company’s Directors is contained in the Proxy Statement for the Company’s 2024 Annual Meeting of Stockholders (the “Proxy Statement”) to be filed with the SEC under the heading “Proposal 1: Election of Directors” and is incorporated by reference in this Annual Report.
The information required by this item with respect to the Company’s executive officers is contained in the Proxy Statement under the heading “Executive Officers” and is incorporated by reference in this Annual Report.
To the extent applicable, the information required by this item with respect to compliance with Section 16(a) of the Exchange Act is contained in the Proxy Statement and is incorporated by reference in this Annual Report.
The information required by this item with respect to the Company’s Standards of Business Conduct is contained in the Proxy Statement under the heading “Corporate Governance Matters—Corporate Governance Policies” and is incorporated by reference in this Annual Report.
The information required by this item with respect to the procedures by which security holders may recommend nominees to the Board of Directors is contained in the Proxy Statement under the heading “Corporate Governance Matters—Stockholder Recommendation of Director Candidates” and is incorporated by reference in this Annual Report.
The information required by this item with respect to the Company’s Audit Committee, including the Audit Committee’s members and its financial expert, is contained in the Proxy Statement under the heading “Corporate Governance Matters—Board Committees” and is incorporated by reference in this Annual Report.
The information required by this item with respect to the Company’s insider trading policy is contained in the Proxy Statement under the heading “Compensation Discussion and Analysis—Insider Trading Policy and Prohibition on Hedging and Pledging of News Corporation Stock” and is incorporated by reference in this Annual Report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item with respect to executive compensation and director compensation is contained in the Proxy Statement under the headings “Compensation Discussion and Analysis,” “Executive Compensation,” “Pay Ratio,” “Pay versus Performance” and “Director Compensation,” respectively, and is incorporated by reference in this Annual Report.
The information required by this item with respect to compensation policies and practices as they relate to the Company’s risk management is contained in the Proxy Statement under the heading “Risks Related to Compensation Policies and Practices” and is incorporated by reference in this Annual Report.
To the extent applicable, the information required by this item with respect to compensation committee interlocks and insider participation is contained in the Proxy Statement and is incorporated by reference in this Annual Report.
The report of the Company’s Compensation Committee required by this item is contained in the Proxy Statement under the heading “Report of the Compensation Committee” and is incorporated by reference in this Annual Report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item with respect to securities authorized for issuance under the Company’s equity compensation plans is contained in the Proxy Statement under the heading “Equity Compensation Plan Information” and is incorporated by reference in this Annual Report.
The information required by this item with respect to the security ownership of certain beneficial owners and management is contained in the Proxy Statement under the heading “Security Ownership of News Corporation” and is incorporated by reference in this Annual Report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item with respect to transactions with related persons is contained in the Proxy Statement under the heading “Corporate Governance Matters—Related Person Transactions Policy” and is incorporated by reference in this Annual Report.
The information required by this item with respect to director independence is contained in the Proxy Statement under the headings “Corporate Governance Matters—Director Independence” and “Corporate Governance Matters—Board Committees” and is incorporated by reference in this Annual Report.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is contained in the Proxy Statement under the headings “Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm—Fees Paid to Independent Registered Public Accounting Firm” and “Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm—Audit Committee Pre-Approval Policies and Procedures” and is incorporated by reference in this Annual Report.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)The following documents are filed as part of this report:
1.The Company’s Consolidated Financial Statements required to be filed as part of this Annual Report and the Reports of Independent Registered Public Accounting Firm are included in Part II, Item 8. Financial Statements and Supplementary Data.
2.All other financial statement schedules are omitted because the required information is not applicable, or because the information called for is included in the Company’s Consolidated Financial Statements or the Notes to the Consolidated Financial Statements.
3.Exhibits—The exhibits listed under Part (b) below are filed or incorporated by reference as part of this Annual Report. A “±” identifies each management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report, and such listing is incorporated herein by reference.
(b) Exhibits
| | | | | | | | |
Exhibit Number | | Exhibit Description |
| | |
| 2.1 | | | |
| | |
| 2.2 | | | Partial Assignment and Assumption Agreement, dated as of March 18, 2019, among Twenty-First Century Fox, Inc., Fox Corporation, News Corporation and News Corp Holdings UK & Ireland, in respect of the Separation and Distribution Agreement, dated June 28, 2013. (Incorporated by reference to Exhibit 2.1 to the Quarterly Report of News Corporation on Form 10-Q (File No. 001-35769) filed with the Securities and Exchange Commission on May 10, 2019.) |
| | |
| 2.3 | | | |
| | |
| 2.4 | | | |
| | |
| 2.5 | | | |
| | |
| 2.6 | | | |
| | |
| 2.7 | | | |
| | |
| 3.1 | | | |
| | |
| 3.2 | | | |
| | |
| 3.3 | | | |
| | |
| | | | | | | | |
Exhibit Number | | Exhibit Description |
| 4.1 | | | |
| | |
| 4.2 | | | |
| | |
| 4.3 | | | |
| | |
| 4.4 | | | |
| | |
| 4.5 | | | |
| | |
| 10.1 | | | |
| | |
| 10.2 | | | |
| | |
| 10.3 | | | |
| | |
| 10.4 | | | |
| | |
| 10.5 | | | |
| | |
| 10.6 | | | |
| | |
| 10.7 | | | |
| | |
| 10.8 | | | |
| | |
| 10.9 | | | |
| | |
| 10.10 | | | |
| | |
| 10.11 | | | Amendment No. 1, dated as of March 9, 2023, to the Credit Agreement, dated as of March 29, 2022, among the Company, the lenders and other parties party thereto, and Bank of America, N.A., as Administrative Agent. (Incorporated by reference to Exhibit 10.1 to the Quarterly Report of News Corporation on Form 10-Q (File No. 001-35769) filed with the Securities and Exchange Commission on May 12, 2023.) |
| | |
| 10.12 | | | |
| | |
| | | | | | | | |
Exhibit Number | | Exhibit Description |
| 10.13 | | | |
| | |
| 10.14 | | | |
| | |
| 10.15 | | | |
| | |
| 10.16 | | | |
| | |
| 10.17 | | | |
| | |
| 10.18 | | | |
| | |
| 10.19 | | | |
| | |
| 10.20 | | | |
| | |
| 10.21 | | | |
| | |
| 10.22 | | | |
| | |
| 19.1 | | |
|
| | |
| 21.1 | | | |
| | |
| 23.1 | | | |
| | |
| 31.1 | | | |
| | |
| 31.2 | | | |
| | |
| 32.1 | | | |
| | |
| 97.1 | | | |
| | |
| | | | | | | | |
Exhibit Number | | Exhibit Description |
| 101 | | | The following financial information from the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024 formatted in Inline XBRL: (i) Consolidated Statements of Operations for the fiscal years ended June 30, 2024, 2023 and 2022; (ii) Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended June 30, 2024, 2023 and 2022; (iii) Consolidated Balance Sheets as of June 30, 2024 and 2023; (iv) Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2024, 2023 and 2022; (v) Consolidated Statements of Equity for the fiscal years ended June 30, 2024, 2023 and 2022; and (vi) Notes to the Consolidated Financial Statements.* |
| | |
| 104 | | | The cover page from News Corporation's Annual Report on Form 10-K for the fiscal year ended June 30, 2024, formatted in Inline XBRL (included as Exhibit 101).* |
________________________
* Filed herewith
** Furnished herewith
± Management contract or compensatory plan or arrangement
† Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K.
ITEM 16. FORM 10-K SUMMARY
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | | | | |
| NEWS CORPORATION
(Registrant) |
| | | |
| By: | | /s/ Susan Panuccio |
| | | Susan Panuccio
Chief Financial Officer |
Date: August 13, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
| | | | | | | | | | | | | | |
| Signature | | Title | | Date |
| | | | |
| /s/ Robert J. Thomson | | Chief Executive Officer and Director
(Principal Executive Officer) | | August 13, 2024 |
| Robert J. Thomson | | |
| | | | |
| /s/ Susan Panuccio | | Chief Financial Officer
(Principal Financial Officer) | | August 13, 2024 |
| Susan Panuccio | | |
| | | | |
| /s/ Marygrace DeGrazio | | Chief Accounting Officer
(Principal Accounting Officer) | | August 13, 2024 |
| Marygrace DeGrazio | | |
| | | | |
| /s/ Lachlan K. Murdoch | | Chair | | August 13, 2024 |
| Lachlan K. Murdoch | | |
| | | | |
| /s/ Kelly Ayotte | | Director | | August 13, 2024 |
| Kelly Ayotte | | |
| | | | |
| /s/ José María Aznar | | Director | | August 13, 2024 |
| José María Aznar | | |
| | | | |
| /s/ Natalie Bancroft | | Director | | August 13, 2024 |
| Natalie Bancroft | | |
| | | | |
| /s/ Ana Paula Pessoa | | Director | | August 13, 2024 |
| Ana Paula Pessoa | | |
| | | | |
| /s/ Masroor Siddiqui | | Director | | August 13, 2024 |
| Masroor Siddiqui | | |
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