Fair Value

6 Months Ended

Dec. 31, 2020

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 December 31, 2020
	Total			Level 1			Level 2		Level 3
	(in millions)
Assets
Investments in equity securities	$	894		$	894	(a)	$	-	$	-
Liabilities
Other		(4	)		-			-		(4)	(b)
Redeemable noncontrolling interests		(202	)		-			-		(202)	(b)
Total	$	688		$	894		$	-	$	(206)

	Fair value measurements
	As of June 30, 2020
	Total			Level 1			Level 2		Level 3
	(in millions)
Assets
Investments in equity securities	$	531		$	531	(a)	$	-	$	-
Liabilities
Other		(6	)		-			-		(6)	(b)
Redeemable noncontrolling interests		(305	)		-			-		(305)	(b)
Total	$	220		$	531		$	-	$	(311)

^(a) The investment categorized as Level 1 represents an investment in equity securities of Flutter Entertainment plc (“Flutter”) with a readily determinable fair value (See Note 3—Acquisitions, Disposals and Other Transactions in the 2020 Form 10-K under the heading “Flutter” for further discussion). In December 2020, the Company made an additional investment of approximately $55 million in Flutter.

^(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 are put rights held by minority shareholders in a majority-owned sports network and in Credible.

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

	For the three months ended December 31,						For the six months ended December 31,
	2020			2019			2020			2019
	(in millions)
Beginning of period	$	(310	)	$	(207	)	$	(305	)	$	(189	)
Acquisitions(a)		-			(109	)		-			(109	)
Net income		(4	)		(3	)		(8	)		(12	)
Redemption of noncontrolling interests(b)		135			-			135			-
Distributions		5			5			11			13
Accretion and other(c)		(28	)		98			(35	)		81
End of period	$	(202	)	$	(216	)	$	(202	)	$	(216	)

^(a) See Note 2—Acquisitions, Disposals and Other Transactions under the heading “Credible Acquisition.”

^(b) As a result of the exercise of a portion of the put rights held by the sports network minority shareholder during the three months ended December 31, 2020, approximately $135 million was reclassified out of Redeemable noncontrolling interests. The Company will pay half of the purchase price in cash at closing and deliver a three-year promissory note for the balance. The Company recorded $67 million in Current liabilities and the remaining balance in Non-current liabilities in the Balance Sheet.

^(c) As a result of the expiration of a portion of the put rights held by the sports network minority shareholder during the three months ended December 31, 2019, approximately $120 million was reclassified into equity.

The final put right held by the sports network minority shareholder will become exercisable in July 2021. The put right held by the Credible minority shareholder will become exercisable in fiscal 2025.

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 method in accordance with ASC 321, approximates fair value.

	As of December 31, 2020		As of June 30, 2020
	(in millions)
Borrowings
Fair value	$	9,905	$	9,746
Carrying value	$	7,949	$	7,946

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.

The Company’s receivables did not represent significant concentrations of credit risk as of December 31, 2020 or June 30, 2020. Generally, the Company does not require collateral to secure receivables. As of December 31, 2020 and June 30, 2020, the Company had no individual customers that accounted for 10% or more of the Company’s receivables.