NOTE 8. RELATED PARTY TRANSACTIONS AND TWENTY-FIRST CENTURY FOX, INC. INVESTMENT

In the ordinary course of business, the Company enters into transactions with related parties, which prior to the Distribution included subsidiaries and equity affiliates of 21CF.

The following table sets forth the net revenue from related parties included in the Statement of Operations for the three months ended September 30, 2018:

	For the three months ended September 30, 2018
	(in millions)
Related party revenue	$	71
Related party expense		(31	)

Related party revenue, net of expense	$	40

For the three months ended September 30, 2019, the related party revenue and expense were not material.

Prior to the Distribution, 21CF provided services to and funded certain expenses for the Company such as: global real estate and occupancy costs and employee benefits (“Direct Corporate Expenses”). In addition, the Company’s Unaudited Combined Financial Statements include general corporate expenses of 21CF which were not historically allocated to the Company for certain support functions that were provided on a centralized basis within 21CF and not recorded at the business unit level, such as certain expenses related to finance, legal, insurance, information technology, compliance and human resources management activities, among others (“General Corporate Expenses”). For purposes of the Unaudited Combined Financial Statements for the three months ended September 30, 2018, the General Corporate Expenses have been allocated to the Company. The General Corporate Expenses are included in the Unaudited Combined Statement of Operations in Selling, general and administrative expenses and Other, net, as appropriate. These expenses have been allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on a pro rata basis of combined revenues, headcount or other relevant measures of the Company. Management believes the assumptions underlying the Unaudited Combined Financial Statements, including the assumptions regarding allocating General Corporate Expenses from 21CF are reasonable. Nevertheless, the Unaudited Combined Financial Statements may not include all of the actual expenses that would have been incurred by FOX and may not reflect the Company’s consolidated results of operations and cash flows had it been a standalone company prior to the Distribution. Actual costs that would have been incurred if the Company had been a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. For the purposes of the Unaudited Combined Statement of Operations, the Company recorded approximately $75 million of General Corporate Expenses within Selling, general and administrative expenses and the remaining balance of the Corporate allocations presented in the table below within Other, net for the three months ended September 30, 2018.

Intercompany transactions with 21CF or its affiliates and the Company are reflected in the historical Unaudited Combined Financial Statements for the period prior to the Distribution. All significant intercompany balances between 21CF and the Company, for the period prior to the Distribution, have been reflected in the Unaudited Combined Statement of Cash Flows as a financing activity.

The following table summarizes the components of the net increase in the Twenty-First Century Fox, Inc. investment for the three months ended September 30, 2018:

	For the three months ended September 30, 2018
	(in millions)
Cash pooling, general financing activities and other^(a)	$	580
Corporate allocations		85

Net increase in Twenty-First Century Fox, Inc. investment	$	665

^(a)	The nature of activities included in the line item ‘Cash pooling, general financing activities and other’ includes financing activities, capital transfers, cash sweeps, other treasury services and Direct Corporate Expenses.