NOTE 5. INVESTMENTS

The Company’s investments were comprised of the following:


	Ownership Percentage as of March 31, 2016			As of March 31, 2016		As of June 30, 2015



				(in millions)
Equity method investments:
Foxtel^(a)		50	%	$	1,427	$	1,476
Other equity method investments^(b)		various			107		168
Loan receivable from Foxtel^(c)		N/A			339		345
Available-for-sale securities^(d)		various			182		185
Cost method investments^(e)		various			209		205

Total Investments				$	2,264	$	2,379

^(a)	The change in the Foxtel investment for the nine months ended March 31, 2016 was primarily due to the impact of foreign currency fluctuations.

^(b)

Other equity method investments as of June 30, 2015 primarily included REA Group’s investment in iProperty. In July 2014, REA Group purchased a 17.22% interest in 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 June 30, 2015, REA Group owned an approximate 19.9% interest in iProperty. In February 2016, REA Group increased its ownership interest in iProperty to approximately 86.9% for A$482 million (approximately $340 million) and its results are now consolidated within the Digital Real Estate Services Segment. Refer to Note 2—Acquisitions, Disposals and Other Transactions for further details regarding the iProperty acquisition.

^(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 ($339 million and $345 million as of March 31, 2016 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)

Available-for-sale securities primarily include the Company’s investments in The Rubicon Project, Inc. and APN News and Media Limited (“APN”). During fiscal 2015, the Company purchased a 14.99% interest in 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%.

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, 2016			As of June 30, 2015
	(in millions)
Cost basis of available-for-sale investments	$	164		$	164
Accumulated gross unrealized gain		56			46
Accumulated gross unrealized loss		(38	)		(25	)

Fair value of available-for-sale investments	$	182		$	185

Net deferred tax liability	$	(11	)	$	(11	)

Equity Earnings of 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,
	2016			2015			2016			2015
	(in millions)
Foxtel^(a)	$	4		$	8		$	26		$	48
Other equity affiliates, net		(2	)		(1	)		(1	)		—

Total Equity earnings of affiliates	$	2		$	7		$	25		$	48

^(a)

In accordance with ASC 350, the Company amortized $12 million and $37 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, 2016, respectively, and $14 million and $44 million in the corresponding periods of fiscal 2015, respectively. Such amortization is reflected in Equity earnings of affiliates in the Statements of Operations.

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


	For the nine months ended March 31,
	2016		2015
	(in millions)
Revenues	$	1,763	$	2,028
Operating income^(a)		269		343
Net income		126		184

^(a)	Includes Depreciation and amortization of $170 million and $243 million for the nine months ended March 31, 2016 and 2015, respectively. Operating income before depreciation and amortization was $439 million and $586 million for the nine months ended March 31, 2016 and 2015, respectively.

For the nine months ended March 31, 2016, Foxtel’s revenues decreased $265 million, or 13%, as a result of the negative impact of foreign currency fluctuations, which more than offset higher revenues in local currency. Operating income decreased primarily due to the negative impact of foreign currency fluctuations, a planned increase in programming costs to support subscriber growth, increased costs associated with higher sales volumes, the public launch of Triple Play and continued investment in Presto, partially offset by lower depreciation expense resulting from Foxtel’s reassessment of the useful lives of cable and satellite installations. Net income decreased as a result of the lower operating income noted above, partially offset by lower income tax expense.