Twenty-First Century Fox 2007 Annual Report Download - page 87

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NEWS CORPORATION
Notes to the Consolidated Financial Statements (continued)
Note 7 Property, Plant and Equipment
Useful Lives 2007 2006
As of June 30, (in millions)
Land $ 305 $ 288
Buildings and leaseholds 2 to 50 years 2,864 2,451
Machinery and equipment 2 to 30 years 6,394 5,361
9,563 8,100
Less accumulated depreciation and amortization (4,838) (4,029)
4,725 4,071
Construction in progress 892 684
Total property, plant and equipment, net $ 5,617 $ 4,755
Depreciation and amortization related to property, plant and equipment was $769 million, $676 million and $608 million for
the fiscal years ended June 30, 2007, 2006, and 2005, respectively. This includes depreciation of set-top boxes at the DBS segment
of $119 million, $100 million and $100 million for the fiscal years ended June 30, 2007, 2006 and 2005, respectively.
Total operating lease expense was approximately $432 million, $358 million and $327 million for the fiscal years ended
June 30, 2007, 2006 and 2005, 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 2007 2006
As of June 30, (in millions)
FCC licenses(a) Indefinite-lived $ 6,910 $ 6,910
Distribution networks Indefinite-lived 750 749
Publishing rights & imprints Indefinite-lived 506 506
Newspaper mastheads Indefinite-lived 918 796
Other Indefinite-lived 1,355 1,365
Intangible assets not subject to amortization 10,439 10,326
Film library, net of accumulated amortization of $70 million and $39 million as of
June 30, 2007 and 2006, respectively 20 years 553 584
Other intangible assets, net of accumulated amortization of $222 million and
$138 million as of June 30, 2007 and 2006, respectively 3 – 20 years 711 536
Total intangibles, net $11,703 $11,446
(a) Effective July 1, 2005, the Company adopted EITF D-108. EITF 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 a result of the adoption, the Company recorded a charge of $1.6 billion ($1 billion net of tax, or ($0.33) per
diluted share of Class A Common Stock and ($0.28) per diluted share of Class B Common Stock) to reduce the intangible balan-
ces attributable to its television stations’ FCC licenses. As required, this charge has been reflected as a cumulative 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
based on subjective 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 estimating an appropriate discount rate reflecting the risk of a
market 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 to existing carrying values in future periods
and such impairment could be material.
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