Investments (Tables)

6 Months Ended

Dec. 31, 2015

Investments Schedule [Abstract]

Schedule of Investments

The Company’s investments were comprised of the following:

	Ownership Percentage as of December 31, 2015			As of December 31, 2015		As of June 30, 2015
				(in millions)
Equity method investments:
Foxtel(a)		50	%	$	1,402	$	1,476
Other equity method investments(b)		various			194		168
Loan receivable from Foxtel(c)		N/A			329		345
Available-for-sale securities(d)		various			159		185
Cost method investments(e)		various			204		205
Total Investments				$	2,288	$	2,379

^(a)  The change in the Foxtel investment for the six months ended December 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, 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. As of December 31, 2015, REA Group owned an approximate 22.7% interest in iProperty.

On November 2, 2015, REA Group announced a proposed transaction to acquire all of the outstanding shares of iProperty Group Limited (ASX:IPP) (“iProperty”) it does not already own. iProperty shareholders could elect to receive A$4.00 per share in cash or A$1.20 cash and 0.7 shares in a newly-formed company, subject to a maximum 20% indirect equity interest in iProperty. The total cash consideration for the transaction will be approximately A$480 million (approximately US$340 million) which will be funded primarily by debt with the remainder from REA Group’s existing cash. The transaction has received iProperty shareholder and court approval and is expected to be completed in February 2016. The acquisition of iProperty extends REA Group’s market leading business in Australia to attractive markets throughout Southeast Asia.

^(c)  In May 2012, Foxtel purchased Austar United Communications Ltd. The transaction was funded by Foxtel bank debt and pro rata capital contributions made by Foxtel shareholders 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 ($329 million and $345 million as of December 31, 2015 and June 30, 2015, respectively). The subordinated shareholder notes can be repaid beginning in July 2022 provided that Foxtel’s senior debt has been repaid. The subordinated shareholder notes have 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)  During fiscal 2015, the Company purchased a 14.99% interest in APN News and Media Limited (“APN”) for approximately $112 million. APN operates a portfolio of Australian and New Zealand radio and outdoor media assets and small regional print interests.

^(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 owned 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 which did not have an impact on the Company’s ownership. The Company’s share of the funding contribution was approximately $60 million. In June 2015, the Company purchased an additional 0.8% interest in SEEK Asia for approximately $7 million, which increased the Company’s investment to approximately 12.9%.

Schedule of Available-for-Sale Investments

The cost basis, unrealized gains, unrealized losses and fair market value of available-for-sale investments are set forth below:

	As of December 31, 2015			As of June 30, 2015
	(in millions)
Cost basis of available-for-sale investments	$	164		$	164
Accumulated gross unrealized gain		48			46
Accumulated gross unrealized loss		(53	)		(25	)
Fair value of available-for-sale investments	$	159		$	185
Net deferred tax liability	$	(3	)	$	(11	)

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 December 31,				For the six months ended December 31,
	2015		2014		2015		2014
	(in millions)
Foxtel(a)	$	13	$	15	$	22	$	40
Other equity affiliates, net		2		1		1		1
Total Equity earnings of affiliates	$	15	$	16	$	23	$	41

^(a)  In accordance with ASC 350, the Company amortized $13 million and $25 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, 2015, respectively, and $14 million and $30 million in the corresponding periods of fiscal 2015, 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 six months ended December 31,
	2015		2014
	(in millions)
Revenues	$	1,185	$	1,408
Operating income(a)		184		255
Net income		94		140

^(a)  Includes Depreciation and amortization of $111 million and $168 million for the six months ended December 31, 2015 and 2014, respectively. Operating income before depreciation and amortization was $295 million and $423 million for the six months ended December 31, 2015 and 2014, respectively.