Income Taxes (Tables)

12 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

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

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

	For the fiscal years ended June 30,
	2020		2019		2018
	(in millions)
U.S.	$	(310)	$	99	$	(55)
Foreign	(1,214)		255		(1,034)
(Loss) income before income tax expense	$	(1,524)	$	354	$	(1,089)

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,
	2020		2019		2018
	(in millions)
Current:
U.S.
Federal	$	(4)	$	5	$	4
State & Local	3		2		8
Foreign	102		118		107
Total current tax	101		125		119
Deferred:
U.S.
Federal	(45)		26		269
State & Local	(4)		5		(9)
Foreign	(31)		(30)		(24)
Total deferred tax	(80)		1		236
Total income tax expense	$	21	$	126	$	355

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,
	2020		2019		2018
U.S. federal income tax rate (a)	21	%	21	%	28	%
State and local taxes, net	1		2		(1)
Effect of foreign operations (b)	(2)		9		(2)
Change in valuation allowance	—		—		1
Non-deductible goodwill and asset impairments (c)	(22)		5		(32)
Impact of the Tax Act (d)	—		—		(22)
Write-off of channel distribution agreement (e)	—		—		(9)
Income tax audit settlements (f)	—		—		5
Non-deductible compensation and benefits	—		1		(1)
R&D credits	1		(2)		—
Other, net	—		—		—
Effective tax rate (g)	(1)	%	36	%	(33)	%

________________________

(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 the 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, 2020, the Company recorded non-cash charges of $1,690 million related to the impairment of goodwill, indefinite-lived intangible assets and fixed assets which reduced the Company’s tax expense by $262 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, 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.

(d)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 2020 and fiscal 2019, the Company determined that there were no material changes to the provisional amounts recorded as of June 30, 2018.

(e)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.

(f)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.

(g)For the fiscal years ended June 30, 2020 and 2018, the effective tax rates of (1)% and (33)%, respectively, represent income tax expense when compared to consolidated pre-tax book loss. 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.

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,
	2020		2019
	(in millions)
Deferred income tax assets	$	332	$	269
Deferred income tax liabilities	(258)		(295)
Net deferred tax assets (liabilities)	$	74	$	(26)

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,
	2020		2019
	(in millions)
Deferred tax assets:
Accrued liabilities	$	100	$	78
Capital loss carryforwards	886		923
Retirement benefit obligations	56		53
Net operating loss carryforwards	578		397
Business tax credits	93		78
Operating lease liabilities	302		—
Other	197		210
Total deferred tax assets	2,212		1,739
Deferred tax liabilities:
Asset basis difference and amortization	(269)		(266)
Operating lease right-of-use asset	(276)		—
Other	(47)		(31)
Total deferred tax liabilities	(592)		(297)
Net deferred tax asset before valuation allowance	1,620		1,442
Less: valuation allowance (See Note 23—Valuation and Qualifying Accounts)	(1,546)		(1,468)
Net deferred tax assets (liabilities)	$	74	$	(26)

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

As of June 30, 2020, the Company had income tax net operating loss (“NOL”) carryforwards (gross, net of uncertain tax benefits) in various jurisdictions as follows:

Jurisdiction	Expiration	Amount (in millions)
U.S. Federal	2021 to 2037	$	552
U.S. Federal	Indefinite	598
U.S. States	Various	887
Australia	Indefinite	627
U.K.	Indefinite	10
Other Foreign	Various	435

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,
	2020		2019		2018
	(in millions)
Balance, beginning of period	$	58	$	62	$	64
Additions for prior year tax positions	4		—		2
Additions for current year tax positions	8		4		3
Reduction for prior year tax positions	(1)		—		(4)
Lapse of the statute of limitations	(3)		(6)		(3)
Settlement—cash	—		—		—
Settlement—tax attributes	(2)		—		(2)
Impact of currency translations	(1)		(2)		2
Balance, end of period	$	63	$	58	$	62

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	2016-2019
U.S. states	Various
Australia	2013-2019
U.K.	2016-2019