In accordance with ASC 820, fair value measurements are required to be disclosed using a three-tiered fair value hierarchy which distinguishes market participant assumptions into the following categories:

•Level 2—Observable inputs other than quoted prices included in Level 1. The Company could value assets and liabilities included in this level using dealer and broker quotations, certain pricing models, bid prices, quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data.

•Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. For the Company, this primarily includes the use of forecasted financial information and other valuation related assumptions such as discount rates and long term growth rates in the income approach as well as the market approach which utilizes certain market and transaction multiples.

Under ASC 820, certain assets and liabilities are required to be remeasured to fair value at the end of each reporting period. The following table summarizes those assets and liabilities measured at fair value on a recurring basis:


	June 30, 2022								June 30, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Assets:
Interest rate derivatives—cash flow hedges	$	—	$	24	$	—	$	24	$	—	$	—	$	—	$	—
Foreign currency derivatives—cash flow hedges	—		1		—		1		—		—		—		—
Cross-currency interest rate derivatives—fair value hedges	—		19		—		19		—		18		—		18


Cross-currency interest rate derivatives	—		79		—		79		—		73		—		73
Equity securities(a)	109		—		103		212		164		—		116		280
Total assets	$	109	$	123	$	103	$	335	$	164	$	91	$	116	$	371
Liabilities:

Interest rate derivatives—cash flow hedges	$	—	$	—	$	—	$	—	$	—	$	9	$	—	$	9


Cross-currency interest rate derivatives	—		—		—		—		—		13		—		13
Total liabilities	$	—	$	—	$	—	$	—	$	—	$	22	$	—	$	22

The fair values of equity securities with quoted prices in active markets are determined based on the closing price at the end of each reporting period. These securities are classified as Level 1 in the fair value hierarchy outlined above. The fair values of equity securities without readily determinable fair market values are determined based on 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. These securities are classified as Level 3 in the fair value hierarchy outlined above.


	For the fiscal year ended June 30,
	2022		2021
	(in millions)
Balance—beginning of year	$	116	$	123
Additions	28		11

Returns of capital	(45)		(8)
Measurement adjustments	23		21
Foreign exchange and other (a)	(19)		(31)
Balance—end of year	$	103	$	116

(a)During the fiscal year ended June 30, 2022, the Company reclassified its investment in an equity security from Level 3 to Level 1 within the fair value hierarchy as the investment became publicly traded in the first quarter of fiscal 2022. During the three months ended December 31, 2020, the Company reclassified its investment in Tremor from Level 3 to Level 1 within the fair value hierarchy, as the sale restrictions were expected to lapse within 12 months.

The Company is directly and indirectly affected by risks associated with changes in certain market conditions. When deemed appropriate, the Company uses derivative instruments to mitigate the potential impact of these market risks. The primary market risks managed by the Company through the use of derivative instruments include:

•foreign currency exchange rate risk: arising primarily through Foxtel Debt Group borrowings denominated in U.S. dollars, payments for customer premise equipment and certain programming rights; and

During the fiscal year ended June 30, 2022, the Company entered into an interest rate swap derivative with a $500 million notional amount to exchange the floating rate interest component of its Term A Loans for a fixed rate of 2.083%. This interest rate swap derivative is accounted for as a cash flow hedge under ASC 815.

The Company formally designates qualifying derivatives as hedge relationships (“hedges”) and applies hedge accounting when considered appropriate. The Company does not use derivative financial instruments for trading or speculative purposes.


		Fair value as of June 30,
	Balance Sheet Location	2022		2021
		(in millions)
Foreign currency derivatives—cash flow hedges	Other current assets	$	1	$	—
Cross-currency interest rate derivatives—fair value hedges	Other current assets	11		—
Interest rate derivatives - cash flow hedges	Other current assets	4		—



Cross-currency interest rate derivatives	Other current assets	46		—

Interest rate derivatives - cash flow hedges	Other non-current assets	20		—
Cross-currency interest rate derivatives—fair value hedges	Other non-current assets	8		18
Cross-currency interest rate derivatives	Other non-current assets	33		73

Interest rate derivatives—cash flow hedges	Other current liabilities	—		(6)

Interest rate derivatives—cash flow hedges	Other non-current liabilities	—		(3)

Cross-currency interest rate derivatives	Other non-current liabilities	—		(13)

The Company utilizes a combination of foreign currency derivatives and interest rate derivatives to mitigate currency exchange and interest rate risk in relation to future interest and principal payments and payments for customer premise equipment and certain programming rights.

The total notional value of foreign currency contract derivatives designated for hedging was $21 million as of June 30, 2022. The maximum hedged term over which the Company is hedging exposure to foreign currency fluctuations is one year. As of June 30, 2022, the Company estimates that approximately $1 million of net derivative gains related to its foreign currency contract derivative cash flow hedges included in Accumulated other comprehensive loss will be reclassified into the Statements of Operations within the next 12 months.

The total notional value of interest rate swap derivatives designated for hedging was approximately A$350 million and $500 million as of June 30, 2022 for Foxtel Debt Group and News Corporation borrowings, respectively. The maximum hedged term over which the Company is hedging exposure to variability in interest payments is to March 2027. As of June 30, 2022, the Company estimates that approximately $5 million of net derivative gains related to its interest rate swap derivative cash flow hedges included in Accumulated other comprehensive loss will be reclassified into the Statements of Operations within the next 12 months.

The Company utilizes cross-currency interest rate derivatives to mitigate currency exchange and interest rate risk in relation to future interest and principal payments. The Company determined that these cash flow hedges no longer qualified as highly

effective as of December 31, 2020 primarily due to changes in foreign exchange and interest rates. Amounts recognized in Accumulated other comprehensive loss during the periods the hedges were considered highly effective will continue to be reclassified out of Accumulated other comprehensive loss over the remaining term of the derivatives. Changes in the fair values of these derivatives will be recognized within Other, net in the Statements of Operations on a prospective basis.

The total notional value of cross-currency interest rate swaps for which the Company discontinued hedge accounting was approximately $280 million as of June 30, 2022. The maximum hedged term over which the Company is hedging exposure to variability in interest and principal payments is to July 2024. As of June 30, 2022, the Company estimates that approximately $1 million of net derivative gains related to its cross-currency interest rate swap derivative cash flow hedges included in Accumulated other comprehensive loss will be reclassified into the Statements of Operations within the next 12 months.

The following table presents the impact that changes in the fair values had on Accumulated other comprehensive loss and the Statements of Operations during the fiscal years ended June 30, 2022, 2021 and 2020 for both derivatives designated as cash flow hedges that continue to be highly effective and derivatives initially designated as cash flow hedges but for which hedge accounting was discontinued as of December 31, 2020:


	Gain (loss) recognized in Accumulated Other Comprehensive Loss for the fiscal year ended June 30,						Income statement location
	2022		2021		2020
	(in millions)
Foreign currency derivatives—cash flow hedges	$	2	$	3	$	(2)	Operating expenses
Cross-currency interest rate derivatives	—		(15)		—		Interest expense, net
Interest rate derivatives—cash flow hedges	30		—		(7)		Interest expense, net
Total	$	32	$	(12)	$	(9)


	(Gain) loss reclassified from Accumulated Other Comprehensive Loss for the fiscal year ended June 30,						Income statement location
	2022		2021		2020
	(in millions)
Foreign currency derivatives—cash flow hedges	$	—	$	(1)	$	(2)	Operating expenses
Cross-currency interest rate derivatives	(4)		11		3		Interest expense, net
Interest rate derivatives—cash flow hedges	(2)		5		(3)		Interest expense, net
Total	$	(6)	$	15	$	(2)

The amounts recognized in Other, net in the Statements of Operations resulting from the changes in fair value of cross-currency interest rate derivatives that were discontinued as cash flow hedges due to hedge ineffectiveness as of December 31, 2020 were a gain of approximately $25 million for the fiscal year ended June 30, 2022 and a gain of approximately $11 million for the fiscal year ended June 30, 2021.

Borrowings in Australia issued at fixed rates and in U.S. dollars expose the Company to fair value interest rate risk and currency exchange rate risk. The Company manages fair value interest rate risk and currency exchange rate risk through the use of cross-currency interest rate swaps under which the Company exchanges fixed interest payments equivalent to the interest payments on the U.S. dollar denominated debt for floating rate Australian dollar denominated interest payments. The changes in fair value of derivatives designated as fair value hedges and the offsetting changes in fair value of the hedged items are recognized in Other, net. During the fiscal year ended June 30, 2022, such adjustments increased the carrying value of borrowings by nil.

The total notional value of the fair value hedges was approximately $70 million as of June 30, 2022. The maximum hedged term over which the Company is hedging exposure to variability in interest payments is to July 2024.

During fiscal 2022, 2021 and 2020, the amount recognized in the Statements of Operations on derivative instruments designated as fair value hedges related to the ineffective portion was nil and the Company excluded the currency basis from the changes in fair value of the derivative instruments from the assessment of hedge effectiveness.

In addition to assets and liabilities that are remeasured at fair value on a recurring basis, the Company has certain assets, primarily goodwill, intangible assets, equity method investments and property, plant and equipment, that are not required to be remeasured to fair value at the end of each reporting period. On an ongoing basis, the Company monitors whether events occur or circumstances change that would more likely than not reduce the fair values of these assets below their carrying amounts. If the Company determines that these assets are impaired, the Company would write down these assets to fair value. These nonrecurring fair value measurements are considered to be Level 3 in the fair value hierarchy.

During the fourth quarter of fiscal 2020, the Company recognized non-cash impairment charges of $203 million related to fixed assets in the U.K. and Australia. The carrying values of property, plant and equipment subsequent to the impairment charges at the Australian and U.K. newspapers reporting units were $235 million and $207 million, respectively. See Note 7—Property, Plant and Equipment.

During the third quarter of fiscal 2020, the Company recognized non-cash impairment charges of $882 million and $49 million related to goodwill and indefinite-lived intangible assets, respectively, at its Foxtel reporting unit. The carrying value of goodwill at Foxtel decreased from $1,668 million to $786 million and the value of indefinite-lived intangible assets decreased from $189 million to $140 million. See Note 8—Goodwill and Other Intangible Assets.

During the first quarter of fiscal 2020, the Company recognized non-cash impairment charges of $122 million and $113 million related to goodwill and indefinite-lived intangible assets, respectively, at the News America Marketing reporting unit. The carrying value of goodwill at News America Marketing decreased from $122 million to nil and the value of indefinite-lived intangible assets decreased from $308 million to $195 million. See Note 8—Goodwill and Other Intangible Assets.

As of June 30, 2022, the carrying value of the Company’s outstanding borrowings approximates the fair value. The 2022 Senior Notes, 2021 Senior Notes and U.S. private placement borrowings are classified as Level 2 and the remaining borrowings are classified as Level 3 in the fair value hierarchy.