NOTE 4. INVESTMENTS

The Company’s investments were comprised of the following:


	Ownership Percentage as of December 31, 2013		As of December 31, 2013		As of June 30, 2013
			(in millions)
Equity method investments:
Foxtel^(a)		50%	$	1,819	$	1,875
Other equity method investments		various		34		35
Loan receivable from Foxtel^(b)		N/A		400		412
Other investments		various		178		177

Total Investments			$	2,431	$	2,499

^(a)	For the six months ended December 31, 2013 and 2012, the Company received dividends from Foxtel of $46 million and $57 million, respectively.

^(b)

In May 2012, Foxtel purchased Austar United Communications Ltd. The transaction was funded by Foxtel bank debt and Foxtel’s shareholders made pro-rata capital contributions in the form of subordinated shareholder notes based on their respective ownership interests. The Company’s share of the subordinated shareholder notes was approximately A$451 million ($400 million and $412 million as of December 31, 2013 and June 30, 2013, respectively). The subordinated shareholder note can be repaid beginning in July 2022 provided that Foxtel’s senior debt has been repaid. The subordinated shareholder note has a maturity date of July 15, 2027, with interest of 12% payable on June 30 each year and at maturity. Upon maturity, the principal advanced will be repayable.

Equity Earnings of Affiliates

The Company’s share of the earnings of its equity affiliates was as follows:


	For the three months ended December 31,				For the six months ended December 31,
	2013		2012		2013		2012
	(in millions)
Foxtel^(a)	$	17	$	8	$	30	$	13
Pay television and cable network programming equity affiliates^(b)		—		20		—		42
Other equity affiliates		—		—		—		(1	)

Total Equity earnings of affiliates	$	17	$	28	$	30	$	54

^(a)

The Company owned 25% of Foxtel through November 2012. In November 2012, the Company increased its ownership in Foxtel to 50% as a result of the CMH acquisition. In accordance with ASC 350, the Company amortized $15 million and $31 million related to excess cost over the Company’s proportionate share of its investment’s underlying net assets allocated to finite-lived intangible assets during the three and six months ended December 31, 2013, respectively, and $6 million in both the corresponding periods of fiscal 2013. Such amortization is reflected in Equity earnings of affiliates in the Statements of Operations.

^(b)

Includes equity earnings of FOX SPORTS Australia and SKY Network Television Ltd. The Company acquired the remaining interest in FOX SPORTS Australia in November 2012 as a result of the CMH acquisition and sold its investment in SKY Network Television Ltd. in March 2013. The results of FOX SPORTS Australia have been included within the Cable Network Programming segment in the Company’s consolidated results of operations since November 2012.

Summarized financial information for Foxtel, presented in accordance with U.S. GAAP, was as follows:


	For the six months ended December 31,
	2013		2012
	(in millions)
Revenues	$	1,457	$	1,605
Operating income^(a)		260		214
Net income		122		60

^(a)	Includes Depreciation and amortization of $171 million and $229 million for the six months ended December 31, 2013 and 2012, respectively. Operating income before depreciation and amortization was $431 million and $443 million for the six months ended December 31, 2013 and 2012, respectively.

For the six months ended December 31, 2013, Foxtel’s net income increased $62 million to $122 million from $60 million in the corresponding prior year period. Foxtel revenues, while higher in local currency, were down from the corresponding period in the prior year due to foreign currency fluctuations. Operating income increased reflecting the realization of costs savings from the Austar acquisition and the absence of costs associated with the London Olympics. Depreciation and amortization decreased reflecting foreign exchange fluctuations and reduced Austar intangible asset amortization.