Segment Information

6 Months Ended

Dec. 31, 2018

NOTE 11. SEGMENT INFORMATION

The Company is a news, sports and entertainment company, which manages and reports its businesses in the following segments:

•

Cable Network Programming, which principally consists of the production and licensing of news and sports content distributed primarily through cable television systems, direct broadcast satellite operators, telecommunication companies and online video distributors (collectively, multi-channel video programming distributors), primarily in the U.S.

•

Television, which principally consists of the acquisition, marketing and distribution of broadcast network programming nationally under the FOX brand and the operation of 28 full power broadcast television stations, including 11 duopolies, in the U.S. (of these stations, 17 are affiliated with the FOX Network, nine are affiliated with MyNetworkTV, one is affiliated with both The CW Television Network and MyNetworkTV and one is an independent station).

•

Other, Corporate and Eliminations, which principally consists of corporate overhead costs, intracompany eliminations and the FOX Studios lot. The FOX Studios lot, located in Los Angeles, California, provides television and film production services along with office space, studio operation services and includes all operations of the facility.

The Company’s operating segments have been determined in accordance with the Company’s internal management structure, which is organized based on operating activities. The Company evaluates performance based upon several factors, of which the primary financial measure is segment operating income before depreciation and amortization, or Segment OIBDA. Due to the integrated nature of these operating segments, estimates and judgments are made in allocating certain assets, revenues and expenses.

Segment OIBDA is defined as Revenues less Operating expenses and Selling, general and administrative expenses. Segment OIBDA does not include: Amortization of cable distribution investments, Depreciation and amortization, Impairment and restructuring charges, Interest expense, Other, net and Income tax (expense) benefit. Management believes that Segment OIBDA is an appropriate measure for evaluating the operating performance of the Company’s business segments because it is the primary measure used by the Company’s chief operating decision maker to evaluate the performance of and allocate resources to the Company’s businesses.

Management believes that information about Total Segment OIBDA assists all users of the Company’s Unaudited Combined Financial Statements by allowing them to evaluate changes in the operating results of the Company’s portfolio of businesses separate from non-operational factors that affect net income, thus providing insight into both operations and the other factors that affect reported results. Total Segment OIBDA provides management, investors and equity analysts a measure to analyze the operating performance of the Company’s business and its enterprise value against historical data and competitors’ data, although historical results, including Segment OIBDA and Total Segment OIBDA, may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences).

Total Segment OIBDA may be considered a non-GAAP measure and should be considered in addition to, not as a substitute for, net income, cash flow and other measures of financial performance reported in accordance with GAAP. In addition, this measure does not reflect cash available to fund requirements and excludes items, such as depreciation and amortization and impairment charges, which are significant components in assessing the Company’s financial performance.

The following table reconciles Income before income tax (expense) benefit to Total Segment OIBDA for the three and six months ended December 31, 2018 and 2017:

	For the three months ended December 31,				For the six months ended December 31,
	2018		2017		2018		2017
	(in millions)
Income before income tax (expense) benefit	$	31	$	312	$	862	$	923
Add
Amortization of cable distribution investments		9		20		19		32
Depreciation and amortization		51		42		94		83
Interest expense		15		6		31		13
Other, net		339		93		200		95

Total Segment OIBDA	$	445	$	473	$	1,206	$	1,146

The following tables set forth the Company’s Revenues and Segment OIBDA for the three and six months ended December 31, 2018 and 2017:

	For the three months ended December 31,						For the six months ended December 31,
	2018			2017			2018			2017
	(in millions)
Revenues
Cable Network Programming	$	1,434		$	1,315		$	2,699		$	2,453
Television		2,149			1,793			3,426			2,844
Other, Corporate and Eliminations		-			-			(1	)		(1	)

Total revenues	$	3,583		$	3,108		$	6,124		$	5,296
Segment OIBDA
Cable Network Programming	$	519		$	462		$	1,152		$	1,038
Television		(14	)		62			157			187
Other, Corporate and Eliminations		(60	)		(51	)		(103	)		(79	)

Total Segment OIBDA	$	445		$	473		$	1,206		$	1,146

Revenues by Component

	For the three months ended December 31,				For the six months ended December 31,
	2018		2017		2018		2017
	(in millions)
Revenues
Affiliate fee	$	1,345	$	1,174	$	2,682	$	2,329
Advertising		1,987		1,732		3,050		2,620
Other		251		202		392		347

Total revenues	$	3,583	$	3,108	$	6,124	$	5,296

Revenues by Segment by Component

	For the three months ended December 31,				For the six months ended December 31,
	2018		2017		2018			2017
	(in millions)
Cable Network Programming
Affiliate fee	$	938	$	848	$	1,877		$	1,678
Advertising and other		496		467		822			775

Total Cable Network Programming revenues		1,434		1,315		2,699			2,453
Television
Advertising		1,634		1,411		2,433			2,061
Affiliate fee and other		515		382		993			783

Total Television revenues		2,149		1,793		3,426			2,844
Other, Corporate and Eliminations		-		-		(1	)		(1	)

Total revenues	$	3,583	$	3,108	$	6,124		$	5,296

Future Performance Obligations

As of December 31, 2018, approximately $2.3 billion of revenues are expected to be recognized primarily over the next one to three years. The Company’s most significant remaining performance obligations relate to affiliate contracts and sports rights sublicensing contracts with fixed fees. The amount disclosed does not include (i) revenues related to performance obligations that are part of a contract whose original expected duration is one year or less, (ii) revenues that are in the form of sales- or usage-based royalties and (iii) revenues related to performance obligations for which the Company elects to recognize revenue in the amount it has a right to invoice.

	For the three months ended December 31,				For the six months ended December 31,
	2018		2017		2018		2017
	(in millions)
Depreciation and amortization
Cable Network Programming	$	12	$	9	$	23	$	18
Television		26		28		52		55
Other, Corporate and Eliminations		13		5		19		10

Total depreciation and amortization	$	51	$	42	$	94	$	83

	As of December 31, 2018		As of June 30, 2018
	(in millions)
Assets
Cable Network Programming	$	2,545	$	2,430
Television		7,591		6,805
Other, Corporate and Eliminations		3,041		3,611
Investments		289		275

Total assets	$	13,466	$	13,121