Segment Information

12 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segment Information

NOTE 16. 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 and telecommunication companies (“traditional MVPDs”) and online multi-channel video programming distributors (“digital MVPDs”), 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, 10 are affiliated with 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 EBITDA. Due to the integrated nature of these operating segments, estimates and judgments are made in allocating certain assets, revenues and expenses.

Beginning with the announcement of the Company’s financial results for the third quarter of fiscal 2019, the Company has renamed as “Segment EBITDA” the measure that it previously referred to as “Segment OIBDA”. The definition of this measure has not changed: Segment EBITDA is defined as Revenues less Operating expenses and Selling, general and administrative expenses. Segment EBITDA does not include: Amortization of cable distribution investments, Depreciation and amortization, Impairment and restructuring charges, Interest expense, Interest income, Other, net and Income tax (expense) benefit. Management believes that Segment EBITDA 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 EBITDA assists all users of the Company’s 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 EBITDA 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 EBITDA and Total Segment EBITDA, may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences).

Total Segment EBITDA may be considered a non-GAAP financial 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. Total Segment EBITDA may not be comparable to similarly titled measures reported by other companies.

The following table reconciles Income before income tax (expense) benefit to Total Segment EBITDA for fiscal 2019, 2018 and 2017:

	For the years ended June 30,
	2019			2018		2017
	(in millions)
Income before income tax (expense) benefit	$	2,224		$	2,170	$	2,241
Add
Amortization of cable distribution investments		38			53		57
Depreciation and amortization		212			171		169
Impairment and restructuring charges		26			16		165
Interest expense		203			43		23
Interest income		(41	)		-		-
Other, net		19			39		131
Total Segment EBITDA	$	2,681		$	2,492	$	2,786

The following tables set forth the Company’s Revenues and Segment EBITDA for fiscal 2019, 2018 and 2017:

	For the years ended June 30,
	2019			2018			2017
	(in millions)
Revenues
Cable Network Programming	$	5,381		$	5,049		$	4,323
Television		5,979			5,106			5,600
Other, Corporate and Eliminations		29			(2	)		(2	)
Total revenues	$	11,389		$	10,153		$	9,921
Segment EBITDA
Cable Network Programming	$	2,495		$	2,308		$	2,055
Television		470			379			909
Other, Corporate and Eliminations		(284	)		(195	)		(178	)
Total Segment EBITDA	$	2,681		$	2,492		$	2,786

Revenues by Segment by Component

	For the years ended June 30,
	2019		2018			2017
	(in millions)
Cable Network Programming
Affiliate fee	$	3,804	$	3,541		$	3,059
Advertising		1,184		1,120			1,075
Other		393		388			189
Total Cable Network Programming revenues		5,381		5,049			4,323
Television
Advertising		3,872		3,478			4,076
Affiliate fee		1,708		1,382			1,235
Other		399		246			289
Total Television revenues		5,979		5,106			5,600
Other, Corporate and Eliminations		29		(2	)		(2	)
Total revenues	$	11,389	$	10,153		$	9,921

For fiscal 2019, the Company had one customer that represented approximately 11% of Revenues.

Future Performance Obligations

As of June 30, 2019, approximately $1.9 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 sports rights sublicensing contracts and affiliate 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 years ended June 30,
	2019		2018		2017
	(in millions)
Depreciation and amortization
Cable Network Programming	$	48	$	38	$	33
Television		96		112		116
Other, Corporate and Eliminations		68		21		20
Total depreciation and amortization	$	212	$	171	$	169

	For the years ended June 30,
	2019		2018		2017
	(in millions)
Capital expenditures
Cable Network Programming	$	83	$	64	$	41
Television		71		89		74
Other, Corporate and Eliminations		81		62		76
Total capital expenditures	$	235	$	215	$	191

	As of June 30,
	2019		2018
	(in millions)
Assets
Cable Network Programming	$	2,584	$	2,430
Television		6,598		6,805
Other, Corporate and Eliminations		9,462		3,611
Investments		865		275
Total assets	$	19,509	$	13,121

	As of June 30,
	2019		2018
	(in millions)
Goodwill and intangible assets, net
Cable Network Programming	$	1,246	$	1,184
Television		3,891		4,024
Other, Corporate and Eliminations		405		405
Total goodwill and intangible assets, net	$	5,542	$	5,613