Acquisitions, Disposals and Other Transactions

9 Months Ended

Mar. 31, 2020

Acquisitions, Disposals and Other Transactions

NOTE 3. ACQUISITIONS, DISPOSALS AND OTHER TRANSACTIONS

News America Marketing

On March 31, 2020, the Company entered into a definitive agreement for the sale of its News America Marketing business, a reporting unit within its News and Information Services segment (the “Transaction”), which was completed on May 5, 2020. The aggregate purchase price for the Transaction consists of (a) up to approximately $235 million, comprised of (i) $50 million in cash at closing, subject to working capital and other adjustments, less cash reinvested to acquire a 5% equity interest in the business at closing, and (ii) additional deferred cash payments payable on or before the fifth anniversary of closing in an aggregate amount of between $125 million and approximately $185 million, depending on the timing of such payments, and (b) a warrant to purchase up to an additional 10% equity interest in the business, which is exercisable on or prior to the seventh anniversary of closing. In the Transaction, the Company retained certain liabilities relating to

News America Marketing,

including those arising from its ongoing legal proceedings with Valassis Communications, Inc. (“Valassis”) and

Insignia Systems, Inc. (“Insignia”).

See Note 11—Commitments and Contingencies.

As a result of the progression of the sales process, the Company determined that the News America Marketing reporting unit met all of the criteria to be classified as held for sale as of March 31, 2020. Upon classification of the disposal group as held for sale, the Company tested the disposal group for impairment and recognized an impairment charge of $175 million within Impairment and restructuring charges in its Statements of Operations for the three and nine months ended March 31, 2020 to write the disposal group down to its fair value less costs to sell. See Note 4—Impairment and Restructuring Charges.

The major classes of assets and liabilities held for sale, which are included in Other current assets and Other current liabilities, respectively, in the Balance Sheets, were as follows:


	As of
	March 31, 2020
	(in millions)
Cash and cash equivalents	$	10
Receivables, net		217
Other current assets		28
Intangible assets, net		225
Other non-current assets		29
Impairment charge on disposal group		(175	)

Total assets held for sale	$	334

Accounts payable	$	13
Accrued expenses		69
Deferred revenue		46
Other current liabilities		54
Other non-current liabilities		8

Total liabilities held for sale	$	190

Loss

before income tax relating to News America Marketing included in the Statements of Operations was $154 million and $404 million for the three and nine months ended March 31, 2020, respectively, and

income before income tax was

$29 million and $46 million for the three and nine months ended March 31, 2019, respectively.

Unruly

In January 2020, the Company sold Unruly to Tremor International Ltd (“Tremor”) for approximately 7% of Tremor’s outstanding shares. The Company agreed not to sell the Tremor shares for a period of 18 months after closing. At closing, the Company and Tremor entered into a three year commercial arrangement which granted Tremor the exclusive right to sell outstream video advertising on all of the Company’s digital properties in exchange for a total minimum revenue guarantee for News Corp of £30 million.