Investments

9 Months Ended

Mar. 31, 2019

NOTE 5. INVESTMENTS

The Company’s investments were comprised of the following:

	Ownership Percentage as of March 31, 2019		As of March 31, 2019		As of June 30, 2018
			(in millions)
Equity method investments (a)		various	$	160	$	173
Equity securities (b)		various		187		220
Total Investments			$	347	$	393

(a)	Equity method investments are primarily comprised of new Foxtel’s investment in Nickelodeon Australia Joint Venture and Elara Technologies Pte. Ltd., which operates PropTiger.com, Makaan.com. and Housing.com.

(b)	Equity securities are primarily comprised of certain investments in China and the Company’s investment in HT&E Limited, which operates a portfolio of Australian radio and outdoor media assets.

The Company has equity securities with quoted prices in active markets as well as equity securities without readily determinable fair market values. Equity securities without readily determinable fair market values are valued at cost, less any impairment, plus or minus changes in fair value resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The components comprising total gains and losses on equity securities are set forth below:

	For the three months ended March 31,				For the nine months ended March 31,
	2019		2018		2019			2018
	(in millions)				(in millions)
Total gains (losses) recognized on equity securities	$	6	$	30	$	(23	)	$	13
Less: Net gains recognized on equity securities sold or impaired		—		29		—			5
Unrealized gains (losses) recognized on equity securities held at end of period	$	6	$	1	$	(23	)	$	8

Equity Losses of Affiliates

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

	For the three months ended March 31,						For the nine months ended March 31,
	2019			2018			2019			2018
	(in millions)						(in millions)
Foxtel (a)	$	—		$	(970	)	$	—		$	(974	)
Other equity affiliates, net (b)		(4	)		(4	)		(13	)		(28	)
Total Equity losses of affiliates	$	(4	)	$	(974	)	$	(13	)	$	(1,002	)

(a)

Following completion of the Transaction in April 2018, News Corp ceased accounting for Foxtel as an equity method investment and began consolidating its results in the fourth quarter of fiscal 2018. See Note 3— Acquisitions, Disposals and Other Transactions.

During the three and nine months ended March 31, 2018, the Company recognized a $957 million non-cash write-down of the carrying value of its investment in Foxtel. In the third quarter of fiscal 2018, the Company assessed the long-term prospects for Foxtel, on both a stand-alone and combined basis. As a result of lower-than-expected revenues from certain products and broadcast subscribers at Foxtel, the Company revised its outlook for Foxtel, which resulted in a reduction in expected future cash flows. Based on the revised projections, the Company concluded that the fair value of its investment in Foxtel declined below its carrying value. The assumptions utilized in the income approach valuation method were a discount rate of 10.25% and a long-term growth rate of 2.0%. The write-down was reflected in Equity losses of affiliates in the Statements of Operations for the three and nine months ended March 31, 2018.

In accordance with ASC 350, the Company amortized $17 million and $49

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, 2018, respectively. Such amortization was reflected in Equity losses of affiliates in the Statement of Operations.

(b)

Other equity affiliates, net for the three and nine months ended March 31, 2019 include losses primarily from the Company’s interest in Elara. During the nine months ended March 31, 2018, the Company recognized $13 million in non-cash write-downs of certain equity method investments’ carrying values. The write-downs were reflected in Equity losses of affiliates in the Statements of Operations for the nine months ended March 31, 2018.

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

	For the nine months ended March 31,
	2018
	(in millions)
Revenues	$	1,818
Operating income (a)		155
Net income		64

(a)	Includes Depreciation and amortization of $187 million for the nine months ended March 31, 2018. Operating income before depreciation and amortization was $342 million for the nine months ended March 31, 2018.