Income Taxes (Tables)

12 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Schedule of (Loss) Income from Continuing Operations Before Income Tax Expense (Benefit) Attributable to Jurisdictions

 Income (loss) before income tax expense was attributable to the following jurisdictions:

	For the fiscal years ended June 30,
	2019		2018			2017
	(in millions)
U.S.	$	99	$	(55	)	$	84
Foreign		255		(1,034	)		(699	)
Income (loss) before income tax expense	$	354	$	(1,089	)	$	(615	)

Schedule of Components of Income Tax Expense (Benefit)

The significant components of the Company’s income tax expense were as follows:

	For the fiscal years ended June 30,
	2019			2018			2017
	(in millions)
Current:
U.S.
Federal	$	5		$	4		$	1
State & Local		2			8			4
Foreign		118			107			118
Total current tax		125			119			123
Deferred:
U.S.
Federal		26			269			57
State & Local		5			(9	)		(1	)
Foreign		(30	)		(24	)		(151	)
Total deferred tax		1			236			(95	)
Total income tax expense	$	126		$	355		$	28

Effective Income Tax Rate Reconciliation

The reconciliation between the Company’s actual effective tax rate and the statutory U.S. Federal income tax rate was as follows:

	For the fiscal years ended June 30,
	2019			2018			2017
U.S. federal income tax rate(a)		21	%		28	%		35	%
State and local taxes, net		2			(1	)		—
Effect of foreign operations(b)		9			(2	)		(17	)
Change in valuation allowance(c)		—			1			(7	)
Non-deductible goodwill and asset impairments (d)		5			(32	)		(7	)
Impact of the Tax Act(e)		—			(22	)		—
Write-off of channel distribution agreement(f)		—			(9	)		—
Income tax audit settlements(g)		—			5			(10	)
Non-deductible compensation and benefits		1			(1	)		(1	)
R&D credits		(2	)		—			1
Other, net		—			—			1
Effective tax rate(h)		36	%		(33	)%		(5	)%

(a)  As the Company has a June 30 fiscal year-end, the impact of the lower tax rate from the Tax Act was phased in resulting in a U.S. statutory federal tax rate of approximately 28% for the fiscal year ended June 30, 2018 and a 21% U.S. statutory federal tax rate for fiscal years thereafter.

(b)  The Company’s effective tax rate is impacted by the geographic mix of its pre-tax income. The Company’s foreign operations are located primarily in Australia and the United Kingdom (“U.K.”) which prior to the fiscal year ended June 30, 2018 had lower income tax rates than the U.S. Beginning with fiscal year ended June 30, 2019, Australia has a higher income tax rate than the U.S.

(c) For the fiscal year ended June 30, 2017, valuation allowance increased by $40 million related to foreign net operating losses, which more likely than not will not be utilized.

(d) For the fiscal year ended June 30, 2019, the Company recorded non-cash charges of $96 million related to the impairment of goodwill and indefinite-lived intangible assets, which reduced the Company’s tax expense by $10 million. These write-downs have an impact on our effective tax rate to the extent a lower tax benefit is recorded.

For the fiscal year ended June 30, 2018, the Company recorded non-cash charges of $218 million related to the impairment of goodwill and a write-down of assets and investments of approximately $1.1 billion, which reduced the Company’s tax expense by $54 million and $301 million, respectively. These impairments and write-downs have an impact on our effective tax rate to the extent a lower tax benefit is recorded.

For the fiscal year ended June 30, 2017, the Company recorded non-cash charges of $48 million related to the impairment of goodwill, which was non-deductible, and a write-down of $360 million on U.K. fixed assets, a portion of which were non-deductible, which reduced the Company’s tax expense by $12 million and $29 million, respectively. These impairments and write-downs have an impact on our effective tax rate to the extent a lower tax benefit is recorded.

(e) As a result of the Tax Act, the Company recognized a net provisional income tax expense of $237 million primarily related to the re-measurement of U.S. deferred tax balances for the reduction in tax rate, valuation allowances recorded on certain deferred tax assets, and the liability for the transition tax. In fiscal 2019, the Company determined that there were no material changes to the provisional amounts recorded as of June 30, 2018.

(f)  Represents the tax effect of the write-off of the FOX SPORTS Australia channel distribution agreement intangible asset as a result of the Transaction, as well as other costs directly attributable to the Transaction.

(g) In the fiscal year ended June 30, 2018, certain pre-Separation tax matters were effectively settled with the Internal Revenue Service. As a result of the settlement, the Company recorded a net income tax benefit of $49 million, comprised of a current tax benefit of $2 million and a deferred tax benefit of $47 million.

In the fiscal year ended June 30, 2017, the Company reached an agreement with a foreign tax authority to settle certain tax issues related to fiscal years 2010 through 2015. As a result of the settlement, the Company recorded net income tax expense of $63 million. See ”Uncertain Tax Positions” below.

(h) For the fiscal year ended June 30, 2019, the effective tax rate of 36% represents income tax expense when compared to consolidated pre-tax book income. For the fiscal years ended June 30, 2018 and 2017, the effective tax rates of (33)% and (5)%, respectively, represent income tax expense when compared to consolidated pre-tax book loss.

Summary of Recognized Deferred Income Taxes in Balance Sheets

The Company recognized deferred income taxes in the Balance Sheets as follows:

	As of June 30,
	2019			2018
	(in millions)
Deferred income tax assets	$	269		$	279
Deferred income tax liabilities		(295	)		(389	)
Net deferred tax liabilities	$	(26	)	$	(110	)

Schedule of Components of Deferred Tax Assets and Liabilities

The significant components of the Company’s deferred tax assets and liabilities were as follows:

	As of June 30,
	2019			2018
	(in millions)
Deferred tax assets:
Accrued liabilities	$	78		$	95
Capital loss carryforwards		923			889
Retirement benefit obligations		53			38
Net operating loss carryforwards		397			348
Business tax credits		78			62
Other		210			294
Total deferred tax assets		1,739			1,726
Deferred tax liabilities:
Asset basis difference and amortization		(266	)		(362	)
Other		(31	)		(89	)
Total deferred tax liabilities		(297	)		(451	)
Net deferred tax asset before valuation allowance		1,442			1,275
Less: valuation allowance (See Note 22—Valuation and Qualifying Accounts)		(1,468	)		(1,385	)
Net deferred tax liabilities	$	(26	)	$	(110	)

Schedule of Income Tax Net Operating Loss Carryforwards (NOLs) (Gross, Net Uncertain Tax Benefits)

As of June 30, 2019, the Company had income tax NOL Carryforwards (gross, net of uncertain tax benefits) in various jurisdictions as follows:

Jurisdiction	Expiration	Amount (in millions)
U.S. Federal	2021 to 2037	$	555
U.S. States	Various		444
Australia	Indefinite		516
U.K.	Indefinite		4
Other Foreign	Various		451

Change in Unrecognized Tax Benefits, Excluding Interest and Penalties

The following table sets forth the change in the Company’s unrecognized tax benefits, excluding interest and penalties:

	For the fiscal years ended June 30,
	2019			2018			2017
	(in millions)
Balance, beginning of period	$	62		$	64		$	86
Additions for prior year tax positions		—			2			107
Additions for current year tax positions		4			3			5
Reduction for prior year tax positions		—			(4	)		(9	)
Lapse of the statute of limitations		(6	)		(3	)		(8	)
Settlement—cash		—			—			(21	)
Settlement—tax attributes		—			(2	)		(94	)
Impact of currency translations		(2	)		2			(2	)
Balance, end of period	$	58		$	62		$	64

Summary of Major Tax Jurisdictions and Fiscal Years Open to Examination

The following is a summary of major tax jurisdictions for which tax authorities may assert additional taxes based upon tax years currently under audit and subsequent years that could be audited by the respective taxing authorities.

Jurisdiction	Fiscal Years Open to Examination
U.S. federal	2014, 2016-2018
U.S. states	Various
Australia	2015-2018
U.K.	2011-2018