Segment Information

3 Months Ended

Sep. 30, 2019

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 traditional 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. 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.

The following tables set forth the Company’s Revenues and Segment EBITDA for the three months ended September 30, 2019 and 2018:

	For the three months ended September 30,
	2019			2018
	(in millions)
Revenues
Cable Network Programming	$	1,285		$	1,265
Television		1,356			1,277
Other, Corporate and Eliminations		26			(1	)

Total revenues	$	2,667		$	2,541
Segment EBITDA
Cable Network Programming	$	684		$	633
Television		251			171
Other, Corporate and Eliminations		(79	)		(43	)
Amortization of cable distribution investments		(9	)		(10	)
Depreciation and amortization		(50	)		(43	)
Impairment and restructuring charges		(9	)		-
Interest expense		(90	)		(16	)
Interest income		17			-
Other, net		(15	)		139

Income before income tax expense		700			831
Income tax expense		(187	)		(216	)

Net income		513			615
Less: Net income attributable to noncontrolling interests		(14	)		(11	)

Net income attributable to Fox Corporation stockholders	$	499		$	604

Revenues by Segment by Component

	For the three months ended September 30,
	2019		2018
	(in millions)
Cable Network Programming
Affiliate fee	$	939	$	939
Advertising		254		264
Other		92		62

Total Cable Network Programming revenues		1,285		1,265
Television
Advertising		787		799
Affiliate fee		455		398
Other		114		80

Total Television revenues		1,356		1,277
Other, Corporate and Eliminations		26		(1	)

Total revenues	$	2,667	$	2,541

Future Performance Obligations

As of September 30, 2019, approximately $4.5 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 September 30,
	2019		2018
	(in millions)
Depreciation and amortization
Cable Network Programming	$	13	$	11
Television		15		26
Other, Corporate and Eliminations		22		6

Total depreciation and amortization	$	50	$	43

	As of September 30, 2019		As of June 30, 2019
	(in millions)
Assets
Cable Network Programming	$	2,642	$	2,584
Television		7,086		6,598
Other, Corporate and Eliminations		9,901		9,462
Investments		905		865

Total assets	$	20,534	$	19,509