Investments (Tables)

9 Months Ended

Mar. 31, 2015

Investments Schedule [Abstract]

Schedule of Investments

The Company’s investments were comprised of the following:

	Ownership
	Percentage	As of		As of
	as of March 31,	March 31,		June 30,
	2015	2015		2014
		(in millions)
Equity method investments:
Foxtel(a)	50%	$	1,538	$	1,869
Other equity method investments(b)	various		171		24
Loan receivable from Foxtel(c)	N/A		350		425
Available-for-sale securities(d)	various		135		151
Cost method investments(e)	various		188		140
Total Investments		$	2,382	$	2,609

^(a)  The change in the Foxtel investment for the nine months ended March 31, 2015 was primarily due to the impact of foreign currency fluctuations.

^(b)  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, Thailand and Singapore. In December 2014, REA Group sold Squarefoot, its Hong Kong based business, to iProperty in exchange for an additional 2.2% interest in iProperty. Upon completion of the transaction and including an acquisition of additional shares of iProperty in October 2014, REA Group owns an approximate 19.9% interest in iProperty, and retroactively applied the equity method of accounting in the second quarter of fiscal 2015 in accordance with ASC 323, “Investments – Equity Method and Joint Ventures.” The carrying value of the investment in iProperty was $91 million as of March 31, 2015.

^(c)  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 ($350 million and $425 million as of March 31, 2015 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.

^(d)  In March 2015, the Company agreed to increase its 4.8% interest in APN News and Media Limited (“APN”) to 14.99% for a purchase price of approximately $70 million. APN operates a portfolio of Australian and New Zealand radio and outdoor media assets and small regional print interests. The acquisition is subject to regulatory approval and is expected to be completed in the fourth quarter of fiscal 2015. If regulatory approval is not obtained, the APN shares will be sold to alternative purchasers with the Company bearing the economic loss if the sales price is lower than the Company’s agreed purchase price and benefiting from the gain if the sales price is higher.

^(e)  Cost method investments primarily include the Company’s investment in SEEKAsia Limited (“SEEK Asia”) and certain investments in China. In November 2014, SEEK Asia, in which the Company owns a 12.1% interest, acquired the online employment businesses of JobStreet Corporation Berhad (“JobStreet”), which were combined with JobsDB, Inc., SEEK Asia’s existing online employment business. The transaction was funded primarily through additional contributions by SEEK Asia shareholders. The Company’s share of the funding contribution was approximately $60 million and the Company continues 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, “Fair Value Measurement,” 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 March 31, 2015		As of June 30, 2014
	(in millions)
Cost basis of available-for-sale investments	$	77	$	113
Accumulated gross unrealized gain		58		38
Accumulated gross unrealized loss		—		—
Fair value of available-for-sale investments	$	135	$	151
Net deferred tax liability	$	22	$	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 March 31,					For the nine months ended March 31,
	2015			2014		2015		2014
	(in millions)
Foxtel(a)	$	8		$	23	$	48	$	53
Other equity affiliates, net		(1	)		—		—		—
Total Equity earnings of affiliates	$	7		$	23	$	48	$	53

^(a)  In accordance with ASC 350, the Company amortized $14 million and $44 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 nine months ended March 31, 2015, respectively, and $15 million and $46 million in the corresponding periods of fiscal 2014, respectively. 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 nine months ended March 31,
	2015		2014
	(in millions)
Revenues	$	2,028	$	2,154
Operating income(a)		343		392
Net income		184		198

^(a)  Includes Depreciation and amortization of $243 million and $263 million for the nine months ended March 31, 2015 and 2014, respectively. Operating income before depreciation and amortization was $586 million and $655 million for the nine months ended March 31, 2015 and 2014, respectively.