NOTE 6. INVESTMENTS

The Company’s investments were comprised of the following:


	Ownership Percentage as of June 30, 2016			As of June 30,
	Ownership Percentage as of June 30, 2016			2016		2015
				(in millions)
Equity method investments:
Foxtel^(a)		50	%	$	1,437	$	1,476
Other equity method investments^(b)		various			101		168
Loan receivable from Foxtel^(c)		N/A			338		345
Available-for-sale securities^(d)		various			189		185
Cost method investments^(e)		various			205		205

Total Investments				$	2,270	$	2,379

^(a)

The change in the Foxtel investment for the fiscal year ended June 30, 2016 was primarily due to the impact of foreign currency fluctuations. For the fiscal years ended June 30, 2016 and 2015, the Company received dividends from Foxtel of $26 million and $107 million, respectively.The Company’s investment in Foxtel exceeded its equity in the underlying net assets by approximately $1.5 billion as of June 30, 2016. This amount represented the excess cost over the Company’s proportionate share of its investment’s underlying net assets. This has been allocated between finite-lived intangible assets, indefinite-lived intangible assets and goodwill. The finite-lived intangible assets of approximately $0.5 billion primarily represent subscriber relationships with a weighted average remaining useful life of 7 years.

^(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. 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 and increased its ownership percentage to an approximate 22.7% interest in the first quarter of fiscal 2016. In February 2016, REA Group increased its ownership interest in iProperty to approximately 86.9% for A$482 million (approximately $340 million) and from then its results are consolidated within the Digital Real Estate Services segment. (See Note 3—Acquisitions, Disposals and Other Transactions).

^(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 ($338 million and $345 million as of June 30, 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 payable on June 30 each year and at maturity. On June 22, 2016, Foxtel and Foxtel’s shareholders agreed to modify the terms of the loan receivable to reduce the interest rate from 12% to 10.5%, to more closely align with current market rates. Foxtel paid interest at a rate of 10.5% for fiscal 2016. 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. During fiscal 2015, the Company purchased a 14.99% interest in APN for approximately $112 million. During fiscal 2016, the Company participated in an entitlement offer to maintain its 14.99% interest for $20 million. APN operates a portfolio of Australian radio and outdoor media assets.

^(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%. In June 2016, the Company’s interest in SEEK Asia increased to approximately 13.75% as a result of the repurchase and cancellation of shares owned by certain other shareholders.

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 June 30,
	2016		2015
	(in millions)
Cost basis of available-for-sale investments	$	155	$	164
Accumulated gross unrealized gain		34		46
Accumulated gross unrealized loss		—		(25	)

Fair value of available-for-sale investments	$	189	$	185

Net deferred tax liability	$	13	$	11

Equity Earnings of Affiliates

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


	For the fiscal years ended June 30,
	2016			2015			2014
	(in millions)
Foxtel^(a)	$	38		$	59		$	90
Other equity affiliates, net		(8	)		(1	)		—

Total Equity earnings of affiliates	$	30		$	58		$	90

^(a)

In accordance with ASC 350, the Company amortized $52 million, $57 million and $62 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 fiscal years ended June 30, 2016, 2015 and 2014, respectively. Such amortization is reflected in Equity earnings of affiliates in the Statements of Operations.

Impairments of investments

The Company regularly reviews its investments for impairments based on criteria that include the extent to which the investment’s carrying value exceeds its related market value, the duration of the market decline, the Company’s ability to hold its investment until recovery and the investment’s financial strength and specific prospects. The Company recorded write-offs and impairments of certain investments in the fiscal years ended June 30, 2016, 2015 and 2014 of $21 million, $5 million and $10 million, respectively. These write-offs and impairments were reflected in Other, net in the Statements of Operations and were taken either as a result of the deteriorating financial position of the investee or due to an other-than-temporary impairment resulting from sustained losses and limited prospects for recovery. Of the $21 million in write-offs and impairments recognized in the fiscal year ended June 30, 2016 , approximately $17 million was reclassified out of accumulated other comprehensive income and included in Other, net in the Statement of Operations.

Summarized Financial Information

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


	For the fiscal years ended June 30,
	2016		2015		2014
	(in millions)
Revenues	$	2,379	$	2,658	$	2,897
Operating income^(a)		373		441		554
Net income		180		232		304

^(a)

Includes Depreciation and amortization of $231 million, $319 million and $349 million for the fiscal years ended June 30, 2016, 2015 and 2014, respectively. Operating income before depreciation and amortization was $604 million, $760 million and $903 million for the fiscal years ended June 30, 2016, 2015 and 2014, respectively.


	As of June 30,
	2016		2015
	(in millions)
Current assets	$	605	$	458
Non-current assets		2,470		2,506
Current liabilities		764		731
Non-current liabilities		2,534		2,544