Twenty-First Century Fox 2013 Annual Report Download - page 95

TWENTY-FIRST CENTURY FOX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
term deals are charged as operating expenses as incurred. Development costs for projects not produced are
written-off at the earlier of the time the decision is made not to develop the story or after three years.
Filmed Entertainment costs are stated at the lower of unamortized cost or estimated fair value on an
individual motion picture or television product basis. Revenue forecasts for both motion pictures and television
products are continually reviewed by management and revised when warranted by changing conditions. When
estimates of total revenues and other events or changes in circumstances indicate that a motion picture or
television production has a fair value that is less than its unamortized cost, a loss is recognized currently for the
amount by which the unamortized cost exceeds the film or television production’s fair value.
Programming Costs:
In accordance with ASC 920, “Entertainment—Broadcasters,” costs incurred in acquiring program rights or
producing programs for the Television, Direct Broadcast Satellite Television and Cable Network Programming
segments are capitalized and amortized over the license period or projected useful life of the programming.
Program rights and the related liabilities are recorded at the gross amount of the liabilities when the license
period has begun, the cost of the program is determinable and the program is accepted and available for airing.
Television broadcast network and original cable programming are amortized on an accelerated basis. The
Company has single and multi-year contracts for broadcast rights of programs and sporting events. At the
inception of these contracts and at least annually, the Company evaluates the recoverability of the unamortized
costs associated therewith, using aggregate estimated advertising and other revenues directly attributable to the
program material and related expenses. Where an evaluation indicates that a multi-year contract will result in an
asset that is not recoverable, additional amortization is provided. The costs of national sports contracts at FOX
are charged to expense based on the ratio of each current period’s profit for each contract to the estimated total
remaining profit for each contract. Estimates of total profit can change and, accordingly, are reviewed
periodically and amortization is adjusted as necessary. Such changes in the future could be material.
The costs of local and regional sports contracts for a specified number of events are amortized on an event-
by-event basis while costs for local and regional sports contracts for a specified season are amortized over the
season on a straight-line basis.
Investments
Investments in and advances to equity or joint ventures in which the Company has significant influence, but
less than a controlling voting interest, are accounted for using the equity method. Significant influence is
generally presumed to exist when the Company owns an interest between 20% and 50% and exercises significant
influence.
Under the equity method of accounting the Company includes its investment and amounts due to and from
its equity method investments in its consolidated balance sheets. The Company’s consolidated statements of
operations include the Company’s share of the investees’ earnings (losses) and the Company’s consolidated
statements of cash flows include all cash received from or paid to the investee.
The difference between the Company’s investment and its share of the fair value of the underlying net assets
of the investee is first allocated to either finite-lived intangibles or indefinite-lived intangibles and the balance is
attributed to goodwill. The Company follows ASC 350, “Intangibles—Goodwill and Other” (“ASC 350”), which
requires that equity method finite-lived intangibles be amortized over their estimated useful life while indefinite-
lived intangibles and goodwill are not amortized.
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