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News Corporation
Notes totheConsolidated Financial Statements (CONTINUED)
Total operating lease expense was approximately $358million, $327 million and$342 million for the years ended
June 30, 2006, 2005 and 2004, respectively.
NOTE 8. GOODWILL AND OTHER INTANGIBLE ASSETS
In accordance with SFAS No. 142, the Company’s intangible assets and related accumulated amortization are as follows:
Weighted
average useful lives 2006 2005
As of June 30, (in millions)
FCC licenses(a) Indefinite-lived $6,910 $8,485
Distribution networks Indefinite-lived 749 745
Publishing rights & imprints Indefinite-lived 506 501
Newspaper mastheads Indefinite-lived 796 744
Other Indefinite-lived 1,365 1,199
Intangible assets not subject toamortization 10,326 11,674
Film library, net of accumulated amortization of $39 million and$7million
as of June 30, 2006 and 2005, respectively(b) 20 years 584 530
Other intangible assets, net of accumulated amortization of $138 million and
$67million as of June 30, 2006 and 2005, respectively(b) 3–20years 536 313
Total intangibles, net $11,446 $12,517
(a) Effective July 1, 2005, the Company adopted D-108. D-108 requires companies who have applied the residual value
method in the valuation of acquired identifiable intangibles for purchase accounting and impairment testing to now
use a direct value method. As aresult of the adoption, the Company recorded acharge of $1.6 billion ($1 billion net of
tax, or ($0.33) per diluted share of Class ACommon Stock and ($0.28) per diluted share of Class BCommon Stock) to
reduce the intangible balances attributable to its television stations’ FCC licenses. As required, this charge has been
reflected as acumulative effect of accounting change, net of tax in the consolidated statement of operations.
The direct valuation method used for FCC Licenses requires, among other inputs, the use of published industry data
that are basedonsubjective judgments about future advertising revenues in the markets where the Company owns
television stations. This method also involves the use of management’s judgment in estimatingan appropriate dis-
count ratereflecting the risk of amarket participant in the U.S. broadcast industry. The resulting fair values for FCC
Licenses are sensitive to these long-term assumptions and any variations to such assumptions could result in an
impairment toexisting carrying values in future periods.
(b) See Note 3 Acquisitions and Disposals.
The changesinthe carrying value of goodwill, by segment, are as follows:
Balance as of
June 30, 2005 Acquisitions Adjustments(a)
Balance as of
June 30, 2006
(in millions)
Filmed Entertainment $976$—$97$1,073
Television 3,407 —(123) 3,284
Cable Network Programming 4,416 323(b) 40 4,779
Direct Broadcast Satellite Television 523 —36559
Magazines & Inserts 257 ——257
Newspapers 980 — (67) 913
Book Publishing —2— 2
Other 385 1,382(b) (86) 1,681
Total goodwill$10,944 $1,707 $(103) $12,548
(a) Adjustments primarily related to purchase price allocations for acquisitions, foreign currency translation adjustments.
(b) See Note 3 Acquisitions and Disposals.
ANNUAL REPORT 89