Investments (Tables)

3 Months Ended

Sep. 30, 2014

Investments Schedule [Abstract]

Schedule of Investments

The Company’s investments were comprised of the following:

	Ownership Percentage as of September 30, 2014	As of September 30, 2014		As of June 30, 2014
		(in millions)
Equity method investments:
Foxtel(a)	50%	$	1,767	$	1,869
Other equity method investments	various		41		24
Loan receivable from Foxtel(b)	N/A		396		425
Available-for-sale securities(c)	various		153		151
Cost method investments(d)	various		140		140
Total Investments		$	2,497	$	2,609

^(a)  The change in the Foxtel investment for the three months ended September 30, 2014 was primarily due to the impact of foreign currency fluctuations.

^(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 ($396 million and $425 million as of September 30, 2014 and June 30, 2014, 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.

^(c)  In August 2014, REA Group Limited (“REA Group”) completed the sale of a minority interest held in marketable securities for total cash consideration of $104 million. As a result of the sale, REA Group recognized a pre-tax gain of $29 million, which was reclassified out of accumulated other comprehensive income and included in Other, net in the Statement of Operations.

In July 2014, REA Group purchased a 17.22% interest in iProperty Group Limited (ASX:IPP) (“iProperty”) for total cash consideration of approximately $100 million. iProperty has online property advertising operations primarily in Malaysia, Indonesia, Hong Kong, Macau and Singapore. In October 2014, REA Group agreed to sell Squarefoot, its Hong Kong based business, to iProperty in exchange for an additional 2.2% interest in iProperty. The transaction is expected to be completed in the second quarter of fiscal 2015 and is subject to customary closing conditions, including iProperty shareholder approval. Upon completion of the transaction and including an acquisition of additional shares of iProperty in October 2014, REA Group will hold an approximate 19.9% interest in iProperty, which it expects to account for as an equity method investment.

^(d)  Cost method investments primarily include the Company’s investment in SEEKAsia Limited (“SEEK Asia”) and certain investments in China. In February 2014, SEEK Asia, in which the Company owns a 12.1% interest, agreed to purchase the online employment businesses of JobStreet Corporation Berhad (“JobStreet”), which will be combined with JobsDB, Inc., SEEK Asia’s existing online employment business. The transaction will be funded primarily through additional contributions by SEEK Asia shareholders. The Company’s share of the funding contribution is expected to be approximately $60 million and is subject to the closing of the JobStreet acquisition. The Company will continue to hold a 12.1% investment in SEEK Asia following the transaction.

Schedule of Available-for-Sale Investments

The Company measures the fair market values of available-for-sale investments as Level 1 financial instruments under ASC 820 as such investments have quoted prices in active markets. The cost basis, unrealized gains, unrealized losses and fair market value of available-for-sale investments are set forth below:

	As of September 30, 2014				As of June 30, 2014
	(in millions)
Cost basis of available-for-sale investments		$	151			$	113
Accumulated gross unrealized gain			25				38
Accumulated gross unrealized loss			(23	)			—
Fair value of available-for-sale investments		$	153			$	151
Net deferred tax liability		$	2			$	14

Schedule of Earnings of Equity Affiliates

The Company’s share of the earnings of its equity affiliates was as follows:
	For the three months ended September 30,
	2014			2013
	(in millions)
Foxtel(a)		$	25		$	13
Other equity affiliates			—			—
Total Equity earnings of affiliates		$	25		$	13

^(a)  In accordance with ASC 350, the Company amortized $16 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 both the three months ended September 30, 2014 and 2013. Such amortization is reflected in Equity earnings of affiliates in the Statements of Operations.

Schedule of Summarized Financial Information

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

	For the three months ended September 30,
	2014		2013
	(in millions)
Revenues	$	728	$	718
Operating income(a)		137		135
Net income		81		58

^(a)  Includes Depreciation and amortization of $88 million and $86 million for the three months ended September 30, 2014 and 2013, respectively. Operating income before depreciation and amortization was $225 million and $221 million for the three months ended September 30, 2014 and 2013, respectively.