Twenty-First Century Fox 2013 Annual Report Download - page 109

TWENTY-FIRST CENTURY FOX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
unobservable inputs utilized in the income approach valuation method were discount rates ranging from 9.5% to
10.5%, based on weighted average cost of capital for FOX SPORTS Australia and Foxtel using the capital asset
pricing model, and long-term growth rates of approximately 2.5%, reflecting News Corp’s assessment of the
long-term inflation rate for Australia.
In May 2012, Foxtel purchased Austar United Communications Ltd. to create a national subscription
television service in Australia. At the time of this transaction News Corp owned a 25% interest in Foxtel. The
transaction was funded by Foxtel bank debt and Foxtel’s shareholders made pro-rata capital contributions in the
form of subordinated shareholder notes based on their respective ownership interest. News Corp’s share of the
funding contribution was approximately $230 million. The subordinated shareholder note has a maximum term
of 15 years, with interest payable on June 30th each year and at maturity. The subordinated shareholder note can
be repaid in 10 years provided that Foxtel’s senior debt has been repaid. Upon maturity, the principal advanced
will be repayable.
Dispositions
In March 2013, News Corp sold its 44% equity interest in SKY Network Television Ltd. for approximately
$675 million and recorded a gain of approximately $321 million which was included in Income (loss) from
discontinued operations, net of tax in the consolidated statements of operations for the fiscal year ended June 30,
2013.
Fiscal 2012
In May 2012, News Corp sold its former U.K. newspaper division headquarters located in East London,
which it relocated from in August 2010, for consideration of approximately £150 million (approximately $235
million), of which £50 million (approximately $78 million) has been received. The remaining £100 million
(approximately $156 million) is in the form of a secured note and News Corp will receive £25 million
(approximately $39 million) on May 31, 2014, and annually thereafter until May 31, 2017. News Corp recorded a
loss of approximately $22 million, net of tax on this transaction, which was included in Income (loss) from
discontinued operations, net of tax in the consolidated statements of operations for the fiscal year ended June 30,
2012.
Fiscal 2011
In fiscal 2011, News Corp acquired Wireless Generation, a digital education company, for cash. Total
consideration was approximately $390 million, which included the equity purchase and the repayment of
Wireless Generation’s outstanding debt.
News Corp Impairments
During the fourth quarter of fiscal 2013, as part of News Corp’s long-range planning process in preparation
for the distribution, News Corp adjusted its future outlook and related strategy principally with respect to its
News and Information Services business in Australia and secondarily with respect to its News and Information
Services businesses in the U.S. which resulted in a reduction in expected future cash flows. As a result, News
Corp determined that the fair value of these reporting units declined below their respective carrying values and
recorded an impairment charge of approximately $1.4 billion ($1.1 billion, net of tax) in the fiscal year ended
June 30, 2013. The charges primarily consisted of a write-down of News Corp’s goodwill of $494 million, a
write-down of intangible assets (primarily newspaper mastheads) of $862 million, and a write-down of
101