Twenty-First Century Fox 2008 Annual Report Download - page 104

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NEWSCORP
Notes to the Consolidated Financial Statements (continued)
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 2008 2007
As of June 30, (in millions)
FCC licenses (1) Indefinite-lived $ 6,910 $ 6,910
Distribution networks Indefinite-lived 752 750
Publishing rights & imprints Indefinite-lived 506 506
Newspaper mastheads (2) Indefinite-lived 2,679 918
Other Indefinite-lived 1,474 1,355
Intangible assets not subject to amortization 12,321 10,439
Film library, net of accumulated amortization of $101 million and $70 million
as of June 30, 2008 and 2007, respectively 20 years 522 553
Other intangible assets, net of accumulated amortization of $376 million
and $222 million as of June 30, 2008 and 2007, respectively (2) 3 – 25 years 1,617 711
Total intangibles, net $14,460 $ 11,703
(1) 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 balances 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 statements 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.
(2) Intangible balances increased primarily due to the acquisition of Dow Jones. (See Note 3—Acquisitions, Disposals and Other Transactions for
further discussion of the purchase price allocation)
The changes in the carrying value of goodwill, by segment, are as follows:
Balance as of
June 30, 2007 Additions Adjustments Balance as of
June 30, 2008
(in millions)
Filmed Entertainment $ 1,071 $ — $ — $ 1,071
Television 3,284 — — 3,284
Cable Network Programming 4,915 330 (174) 5,071
Direct Broadcast Satellite Television 592 — 97 689
Magazines & Inserts 257 — — 257
Newspapers and Information Services 1,395 — 181 1,576
Book Publishing 2 — — 2
Other 2,303 4,506 (139) 6,670
Total goodwill $13,819 $4,836 $ (35) $18,620
Goodwill balances increased $4,801 million during the fiscal year ended June 30, 2008, primarily as a result of new acquisitions. The increased
goodwill balance at the Other segment arose from the acquisitions of Dow Jones and Photobucket (See Note 3—Acquisitions, Disposals and Other
Transactions.) The consolidation of NGC US beginning October 1, 2007 led to an increase in goodwill at the Cable segment (See Note 6—
Investments.) Adjustments primarily relate to an increase for foreign currency translation adjustments of $291 million and reductions for the
finalization of purchase price allocations for previously announced acquisitions of $125 million and a reduction of $201 million due to the
disposition of assets during fiscal 2008. Included in this $201 million was a $154 million reduction at the Cable Networks Programming segment as
a result of the disposition of the Three RSNs in connection with the closing of the Share Exchange Agreement (See Note 3—Acquisitions, Disposals
and Other Transactions.)
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