Fair Value

3 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value

NOTE 4. FAIR VALUE

In accordance with ASC 820, “Fair Value Measurement,” fair value measurements are required to be disclosed using a three-tiered fair value hierarchy which distinguishes market participant assumptions into the following categories: (i) inputs that are quoted prices in active markets (“Level 1”); (ii) inputs other than quoted prices included within Level 1 that are observable, including quoted prices for similar assets or liabilities (“Level 2”); and (iii) inputs that require the entity to use its own assumptions about market participant assumptions (“Level 3”).

The following tables present information about financial assets and liabilities carried at fair value on a recurring basis:

	Fair value measurements
	As of September 30, 2019
	Total			Level 1		Level 2		Level 3
	(in millions)
Assets
Investments(a)	$	804		$	613	$	191	$	-
Liabilities
Contingent consideration(b)		(6	)		-		-		(6	)
Redeemable noncontrolling interests(b)		(207	)		-		-		(207	)
Total	$	591		$	613	$	191	$	(213	)

	Fair value measurements
	As of June 30, 2019
	Total			Level 1		Level 2		Level 3
	(in millions)
Assets
Investments(a)	$	761		$	545	$	216	$	-
Redeemable noncontrolling interests(b)		(189	)		-		-		(189	)
Total	$	572		$	545	$	216	$	(189	)

^(a) The investment categorized as Level 1 represents an investment in equity securities of Roku, Inc. (“Roku”) with a readily determinable fair value. The investment categorized as Level 2 represents an investment in equity securities of The Stars Group estimated using the quoted market price of The Stars Group common stock less a discount due to a lack of marketability (“DLOM”). The DLOM was derived based on the remaining term of the lock up period and the volatility of The Stars Group common stock (See Note 2—Acquisitions, Disposals and Other Transactions under the heading “The Stars Group” for further discussion).

^(b) The Company utilizes the market approach valuation technique for its Level 3 fair value measures. Inputs to such measures could include observable market data obtained from independent sources such as broker quotes and recent market transactions for similar assets. It is the Company’s policy to maximize the use of observable inputs in the measurement of its Level 3 fair value measurements. To the extent observable inputs are not available, the Company utilizes unobservable inputs based upon the assumptions market participants would use in valuing the liability. Examples of utilized unobservable inputs are future cash flows and long-term growth rates.

Redeemable Noncontrolling Interests

The Company accounts for redeemable noncontrolling interests in accordance with ASC 480-10-S99-3A, “Distinguishing Liabilities from Equity”, because their exercise is outside the control of the Company. The redeemable noncontrolling interests recorded at fair value are put rights held by the minority shareholder in one of the Company’s majority-owned sports networks.

The changes in redeemable noncontrolling interests classified as Level 3 measurements were as follows:

	For the three months ended September 30,
	2019			2018
	(in millions)
Beginning of period	$	(189	)	$	(275	)
Net income		(9	)		(11	)
Distributions		8			13
Accretion and other		(17	)		190		(a)
					-
End of period	$	(207	)	$	(83	)

^(a) As a result of the expiration of a portion of the minority shareholder’s put right, approximately $200 million was reclassified into equity.

As of September 30, 2019, a portion of the minority shareholder’s put right was exercisable. In October 2019, this portion of the minority shareholder’s put right expired and, as a result, approximately $120 million will be reclassified into equity in the Company’s consolidated financial statements for the three months ending December 31, 2019.

Another portion of the minority shareholder’s put right will become exercisable in July 2020 and the remaining portion will become exercisable in July 2021.

Financial Instruments

The carrying value of the Company’s financial instruments, such as cash and cash equivalents, receivables, payables and investments accounted for using the measurement alternative in accordance with ASC 321, approximates fair value.

	As of September 30, 2019		As of June 30, 2019
	(in millions)
Borrowings
Fair value	$	7,889	$	7,643
Carrying value	$	6,752	$	6,751

Fair value is generally determined by reference to market values resulting from trading on a national securities exchange or in an over-the-counter market (a Level 1 measurement).

Concentrations of Credit Risk

Cash and cash equivalents are maintained with several financial institutions. The Company has deposits held with banks that exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and, therefore, bear minimal credit risk.

Generally, the Company does not require collateral to secure receivables. As of September 30, 2019, the Company had one customer that accounted for approximately 10% of the Company’s receivables. As of June 30, 2019, the Company had no individual customers that accounted for 10% or more of the Company’s receivables.