NOTE 4. INVESTMENTS

The Company’s investments were comprised of the following:


	Ownership Percentage as of December 31, 2017		As of December 31, 2017		As of June 30, 2017
			(in millions)
Equity method investments:
Foxtel^(a)		50%	$	1,605	$	1,208
Other equity method investments^(b)		various		123		133
Loan receivable from Foxtel^(a)		N/A		—		370
Available-for-sale securities^(c)		various		80		97
Cost method investments^(d)		various		211		219

Total Investments			$	2,019	$	2,027

^(a)

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$481 million ($370 million) as of June 30, 2017. During the three months ended September 30, 2017, Foxtel’s shareholders made pro-rata capital contributions to Foxtel by way of promissory notes. The Company’s share of the capital contributions was A$494 million ($388 million) at September 28, 2017, and the Company’s investment in Foxtel increased by this amount. Foxtel utilized the shareholders’ capital contributions to repay its subordinated shareholder notes and interest accrued in the three months ended September 30, 2017. As a result, such notes were considered to be repaid as of September 30, 2017.

^(b)	Other equity method investments are primarily comprised of Elara Technologies Pte. Ltd., which operates PropTiger.com, Makaan.com and Housing.com.

^(c)	Available-for-sale securities are primarily comprised of the Company’s investment in HT&E Limited (formerly APN News and Media Limited), which operates a portfolio of Australian radio and outdoor media assets.

^(d)	Cost method investments are primarily comprised of the Company’s investment in SEEKAsia Limited and certain investments in China.

The Company measures the fair market values of available-for-sale securities as Level 1 financial instruments under Accounting Standards Codification (“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 securities are set forth below:


	As of December 31, 2017			As of June 30, 2017
	(in millions)
Cost basis of available-for-sale securities	$	81		$	99
Accumulated gross unrealized gain		1			—
Accumulated gross unrealized loss		(2	)		(2	)

Fair value of available-for-sale securities	$	80		$	97

Net deferred tax asset	$	—		$	(1	)

Equity Losses of Affiliates

The Company’s equity losses of affiliates were as follows:


	For the three months ended December 31,						For the six months ended December 31,
	2017			2016			2017			2016
	(in millions)						(in millions)
Foxtel^(a)	$	1		$	(233	)	$	(4	)	$	(244	)
Other equity affiliates, net^(b)		(19	)		(5	)		(24	)		(9	)

Total Equity losses of affiliates	$	(18	)	$	(238	)	$	(28	)	$	(253	)

^(a)

In accordance with ASC 350, “Intangibles—Goodwill and Other,” the Company amortized $15 million and $32 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, 2017, respectively, and $18 million and $37 million in the corresponding periods of fiscal 2017. Such amortization is reflected in Equity losses of affiliates in the Statements of Operations.

Additionally, during the second quarter of fiscal 2017, the Company recognized a $227 million non-cash write-down of the carrying value of its investment in Foxtel to fair value. As a result of Foxtel’s performance in the first half of fiscal 2017 and the competitive operating environment in the Australian pay-TV market, the Company revised its future outlook for the business, which resulted in a reduction in expected future cash flows. Based on the revised projections, the Company determined that the fair value of its investment in Foxtel declined below its $1.4 billion carrying value, which includes the gain recognized in connection with the acquisition of Consolidated Media Holdings Ltd. (“CMH”). The write-down is reflected in Equity losses of affiliates in the Statements of Operations for the three and six months ended December 31, 2016.

^(b)

During the three months ended December 31, 2017, the Company recognized $13 million in non-cash write-downs of certain equity method investments’ carrying values to fair value. The write-downs are reflected in Equity losses of affiliates in the Statements of Operations for the three and six months ended December 31, 2017.

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


	For the six months ended December 31,
	2017		2016
	(in millions)
Revenues	$	1,231	$	1,220
Operating income^(a)		120		184
Net income		56		40

^(a)	Includes Depreciation and amortization of $118 million and $103 million for the six months ended December 31, 2017 and 2016, respectively. Operating income before depreciation and amortization was $238 million and $287 million for the six months ended December 31, 2017 and 2016, respectively.