Twenty-First Century Fox 2014 Annual Report Download

Download and view the complete annual report

Please find the complete 2014 Twenty-First Century Fox annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 168

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168

Table of contents

  • Page 1

  • Page 2

  • Page 3

  • Page 4
    ..., news and sports programming has de ined our cable properties. In iscal 2014 our brands continued to stand out from the pack on the success of both new and established shows, and the growing footprint of our global sports rights. Rupert Murdoch Chairman & Chief Executive O icer 21st Century Fox

  • Page 5
    ..., most notably, with Super Bowl XLVIII, which was the most watched program in the history of television. > In India, our operations are stronger than ever, and, with a weekly reach of more than 650 million viewers, Star India remains that nation's largest and most in luential entertainment company.

  • Page 6
    ...announced an agreement with BSkyB, the U.K.'s leading digital TV provider, to combine our European satellite television holdings to create Europe's leading pay-TV business. 21st Century Fox will continue What has and always will separate us from the competition is our irm belief that the status quo...

  • Page 7
    ... (I.R.S. Employer Identification No.) 1211 Avenue of the Americas, New York, New York (Address of Principal Executive Offices) 10036 (Zip Code) Registrant's telephone number, including area code (212) 852-7000 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of...

  • Page 8
    ...INFORMATION ...PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ...ITEM 11. EXECUTIVE COMPENSATION...ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...AND FINANCIAL STATEMENT SCHEDULES ...153 152 152 152 153 153 36 38 39 70 72 151 151 151 BUSINESS ...RISK...

  • Page 9
    ...digital education and sports programming and pay-TV distribution in Australia. The Company completed the Separation by distributing to its stockholders one share of News Corp Class A common stock for every four shares of the Company's Class A common stock held on June 21, 2013, and one share of News...

  • Page 10
    ...business news, sports, general entertainment and movie programming for distribution primarily through cable television systems, direct broadcast satellite operators, telecommunications companies and online video distributors in the United States and internationally. FOX News and Fox Business Network...

  • Page 11
    .... Fox Sports 1. In August 2013, the Company launched Fox Sports 1, a multi-sport national cable network. During calendar year 2014, Fox Sports 1 will feature over 700 live events, including college football and basketball, UEFA Champions League and other premier soccer, National Association of Stock...

  • Page 12
    ... called "Simpsons World." Fox International Channels ("FIC"). FIC operates, develops and distributes primarily factual, sports, lifestyle and general entertainment channels in various countries in Europe, Latin America, Africa and Asia, including, but not limited to, the Fox Channel, Fox Life...

  • Page 13
    Brazil). Such channels primarily feature theatrical motion pictures of Twentieth Century Fox and three other studios dubbed in Spanish and/or in the English language with Spanish subtitles. FIC owns a 50.1% equity interest in Elite Sports Limited, a company that owns and distributes Baby TV, a ...

  • Page 14
    ...a company which listed on the Indonesia Stock Exchange in November 2011. PT Visi Media Asia Tbk owns and operates television channels and an online news portal, all of which are targeted at audiences in Indonesia. Competition General. Cable network programming is a highly competitive business. Cable...

  • Page 15
    ... of distribution rights to movie and series programming. National Geographic U.S. National Geographic Channel and Nat Geo Wild face competition for viewers and advertising from a number of basic cable and broadcast television channels, such as Discovery Channel, History Channel, Animal Planet...

  • Page 16
    ... the three largest DMAs, New York, Los Angeles and Chicago. Of the 28 full power stations, 18 stations are affiliates of FOX ("FOX Affiliates"). For a description of the programming offered to FOX Affiliates, see "-FOX Broadcasting Company." In addition, Fox Television Stations owns and operates 10...

  • Page 17
    ... and do not take into account the UHF Discount. For more information regarding the FCC's national station ownership cap, see "Government Regulation-Television" in this Annual Report. (b) MyNetworkTV affiliate. (c) In June 2014, Fox Television Stations entered into an agreement to acquire two San...

  • Page 18
    ... Network ("CBS"). FOX obtains programming from major television studios and independent television production companies pursuant to license agreements. The terms of those agreements generally provide FOX with the right to broadcast a television series for a minimum of four seasons. National sports...

  • Page 19
    ... Network, independent television stations, cable and direct broadcast satellite ("DBS") program services, as well as other media, including DVDs, Blu-rays, digital video recorders ("DVR"), video games, print and the Internet for audiences, programming and, in the case of FOX, advertising revenues...

  • Page 20
    ... a number of international territories with respect to television rights. Among its fiscal 2015 releases, TCFF currently expects to distribute three New Regency films. The Company has an arrangement with DreamWorks Animation SKG, Inc. ("DWA") to distribute new release animated motion pictures...

  • Page 21
    .... Generally, a television network or cable network will license a specified number of episodes for exhibition during the license period. All other distribution rights, including international and off-network syndication rights, are typically retained by TCFTV, utilized by other units of the Company...

  • Page 22
    ... businesses in Germany, France, Australia, Spain and Portugal. Shine also has a digital and direct to consumer business through its multi-platform game producer Bossa Studios and its online original content producer and YouTube multi-channel network, ChannelFlip Media. In May 2014, the Company...

  • Page 23
    ... 24-hour news channel. As of June 30, 2014, Sky Italia had approximately 4.73 million subscribers. Sky Deutschland In January 2013, the Company increased to 55% its ownership in Sky Deutschland, the leading pay television operator in Germany and Austria. Sky Deutschland currently distributes more...

  • Page 24
    ... and partner channels, its Sky betting and gaming business and its international distribution operation. In July 2014, the Company entered into an agreement with BSkyB to sell to BSkyB its 100% and 57% (on a fully diluted basis) ownership stakes in Sky Italia and Sky Deutschland, respectively, which...

  • Page 25
    ...of foreign satellite channels, such as STAR India's channels, are permitted, subject to licensing requirements and compliance with local applicable laws, including programming and advertisement codes. The Indian government requires that all film and media content, whether produced in India or abroad...

  • Page 26
    ... January 2014, the European Commission ("EC") initiated formal antitrust proceedings to examine certain provisions in licensing agreements between several U.S. film studios, including Twentieth Century Fox, and a number of European pay-TV broadcasters, including Sky Italia, Sky Deutschland and BSkyB...

  • Page 27
    .... For information on the television stations owned and operated by the Company, see "-Fox Television Stations" above. In March 2010, the FCC delivered its national Broadband Plan to Congress, which reviews the nation's broadband Internet infrastructure and recommends a number of initiatives to spur...

  • Page 28
    ... News Corp agreed in the Separation and Distribution Agreement that if the Company acquires, after the Separation, newspapers, radio or television broadcast stations or television broadcast networks in the U.S. and such acquisition would impede or be reasonably likely to impede News Corp's business...

  • Page 29
    ... such an approval requirement in the network affiliation agreement. In March 2014, the FCC adopted limited changes to its retransmission consent rules to prohibit a television broadcast station ranked among the top four stations (as measured by audience share) from negotiating retransmission consent...

  • Page 30
    ...its rating. The Company has also agreed to make this ratings information available for all full-length entertainment programs that stream on websites the Company controls. FCC regulations governing network affiliation agreements mandate that television broadcast station licensees retain the right to...

  • Page 31
    ... motion pictures, television programming, books, publications, websites and technologies; trademarks in names, logos and characters; domain names; patents or patent applications for inventions related to its products, business methods and/or services; and licenses of intellectual property rights of...

  • Page 32
    ... when determining advertising rates, and with respect to the Company's television stations and broadcast and television networks, when determining the affiliate rates received by the Company. In addition, newer technologies, including new video formats, streaming and downloading capabilities via...

  • Page 33
    ...feature film and the audience ratings for a television series are generally key factors in generating revenues from other distribution channels, such as home entertainment and premium pay television, with respect to feature films, and syndication, with respect to television series. The Company Could...

  • Page 34
    ... and affiliate revenues. Upon renewal, the Company's results could be adversely affected if escalations in sports programming rights costs are unmatched by increases in advertising rates and, in the case of cable networks, subscriber fees. The Company Relies on Network and Information Systems and...

  • Page 35
    ... an adverse effect on the Company's businesses and profitability because it reduces the revenue that the Company could potentially receive from the legitimate sale and distribution of its products and services. The Company has taken, and will continue to take, a variety of actions to combat piracy...

  • Page 36
    ... Have an Adverse Effect on the Company's Business. The Company is subject to a variety of U.S. and foreign regulations in the jurisdictions in which its businesses operate. In general, the television broadcasting and multichannel video programming and distribution industries in the United States are...

  • Page 37
    ... the Company would recognize gains on the internal reorganization and/or recognize gain in an amount equal to the excess of the fair market value of shares of the News Corp common stock distributed to our stockholders on the distribution date over our tax basis in such shares of our common stock. We...

  • Page 38
    ... stations, television broadcast networks and newspapers (the "Broadcast Ownership Rules"). Under the FCC's rules for determining ownership of the media assets described above, the Murdoch Family Trust's ownership interest in both News Corp and the Company following the Separation would generally...

  • Page 39
    ... at Fox Plaza, located adjacent to the Fox Studios Lot and the leased office and production facility of Shine America in Los Angeles, California; The leased and owned U.S. headquarters of the Company, located in New York, New York which includes home offices for Fox News and Fox Television Stations...

  • Page 40
    ..., technical, dressing room and personnel support services structures; The leased premises in Hong Kong and other Asian cities used by FIC for its television broadcasting and programming operations; and The leased and owned premises in Mumbai, India used by STAR India for its corporate office and...

  • Page 41
    ...'s operations are subject to tax in various domestic and international jurisdictions and as a matter of course, the Company is regularly audited by federal, state and foreign tax authorities. The Company believes it has appropriately accrued for the expected outcome of all pending tax matters and...

  • Page 42
    ...the Class A Common Stock and Class B Common Stock were traded on the Australian Securities Exchange (the "ASX") under the symbols "FOXLV" and "FOX," respectively. As a result of the delisting from the ASX, Twenty-First Century Fox is solely listed and traded on the NASDAQ. As of June 30, 2014, there...

  • Page 43
    ... is a summary of the Company's purchases of its Class A Common Stock during the fiscal year ended June 30, 2014: Total number of shares purchased Average price per share Total cost of purchase (in millions) Total first quarter fiscal 2014 ...Total second quarter fiscal 2014 ...Total third quarter...

  • Page 44
    ..., restructuring charges and other transactions during fiscal 2014, 2013 and 2012. In fiscal 2011, the Company recorded a goodwill impairment charge of $168 million as a result of an impairment assessment performed on the Digital Media Group reporting unit and also recorded a restructuring charge of...

  • Page 45
    ...digital education and sports programming and pay-TV distribution in Australia. The Company completed the Separation by distributing to its stockholders one share of News Corp Class A common stock for every four shares of the Company's Class A common stock held on June 21, 2013, and one share of News...

  • Page 46
    ...'S BUSINESS The Company is a diversified global media and entertainment company, which manages and reports its businesses in the following five segments: x Cable Network Programming, which principally consists of the production and licensing of programming distributed through cable television...

  • Page 47
    ...house advertising sales force, as well as salaries, employee benefits, rent and other routine overhead expenses. The profitability of U.S. national sports contracts and international sports rights agreements is based on the Company's best estimates at June 30, 2014 of attributable revenues and costs...

  • Page 48
    ... distributes premium and basic television channels in Latin America, for approximately $75 million in cash. As a result of this transaction, the Company now owns 100% of LAPTV. On February 28, 2014, the Company acquired an additional 31% interest in the Yankees Entertainment and Sports Network ("YES...

  • Page 49
    ...the ASX. Delisting from the ASX occurred on May 8, 2014 and, effective as of that date, all of Twenty-First Century Fox's Class A common stock and Class B common stock is listed solely on the NASDAQ. In fiscal 2014, the Company sold its remaining 12% interest in Phoenix Satellite Television Holdings...

  • Page 50
    ... in advertising revenue for fiscal 2014 was principally attributable to revenues arising from the broadcast of Super Bowl XLVIII in February 2014, growth at the Cable Network Programming segment including the conversion and related launch of new channels, Fox Sports 1, STAR Sports networks and...

  • Page 51
    ... the new channels, Fox Sports 1, STAR Sports networks and FXX, and the Acquisitions. The increase at the Filmed Entertainment segment was primarily related to an increase in production amortization and participation costs related to the television programming and motion picture production businesses...

  • Page 52
    ...ability to utilize the domestic production activities deduction and the recognition of a deferred tax asset for additional tax basis. In connection with the pending disposition of Sky Italia and Sky Deutschland pursuant to sale agreements with BSkyB, the Company plans to use most of its U.S. capital...

  • Page 53
    ... as a result of the Separation in fiscal 2013 and the recognition in fiscal 2014 of a tax refund paid to News Corp and then transferred to the Company in accordance with the tax sharing and indemnification agreement. A subsidiary of News Corp, prior to the Separation, had filed for refunds to...

  • Page 54
    ...Sky Deutschland, Fox Sports Asia and FSLA and the acquisition of EMM. Impairment charges - During fiscal 2013 and 2012, the Company recorded non-cash goodwill impairment charges of $35 million and $201 million, respectively, related to the sale of a business in its Digital Media Group in fiscal 2013...

  • Page 55
    ... Media Holdings Ltd. These improvements were partially offset by transaction costs related to the Separation. Net income - Net income increased for fiscal 2013, as compared to fiscal 2012, primarily due to the gain on the Sky Deutschland transaction as well as the gains on the sale of the Company...

  • Page 56
    ... Company's cable businesses. These increases were partially offset by the noncontrolling interests' share of Sky Deutschland's net losses. Segment Analysis The Company's operating segments have been determined in accordance with the Company's internal management structure, which is organized based...

  • Page 57
    ... Company's Revenues and Segment OIBDA for fiscal 2014, as compared to fiscal 2013. For the years ended June 30, 2014 2013 Change % Change (in millions, except %) Revenues: Cable Network Programming ...$ Television ...Filmed Entertainment ...Direct Broadcast Satellite Television...Other, Corporate...

  • Page 58
    ... at the National Geographic Channels and the conversion and related launch of Fox Sports 1. The balance of the growth in domestic advertising revenue was primarily attributable to the contributions from the YES Network and additional NHL games in fiscal 2014. For fiscal 2014, international affiliate...

  • Page 59
    ... games in fiscal 2014. Selling, general and administrative expenses increased by approximately $45 million for fiscal 2014, as compared to fiscal 2013, primarily due to higher legal fees and costs associated with the television station transactions. Filmed Entertainment (30% and 31% of the Company...

  • Page 60
    ... of revenues from the Company's digital media business, as it was disposed in the third quarter of fiscal 2013. For fiscal 2014, the improvement in the Segment OIBDA results at the Other, Corporate and Eliminations segment, as compared to fiscal 2013, was primarily due to lower compensation expenses...

  • Page 61
    ... Company's Revenues and Segment OIBDA for fiscal 2013, as compared to fiscal 2012. For the years ended June 30, 2013 2012 Change % Change (in millions, except %) Revenues: Cable Network Programming ...$ Television ...Filmed Entertainment ...Direct Broadcast Satellite Television...Other, Corporate...

  • Page 62
    ...of Fox Sports San Diego. For fiscal 2013, domestic advertising revenues increased 6%, as compared to fiscal 2012, primarily due to higher pricing and ratings at FX and the National Geographic Channels, which comprised 80% of the growth. For fiscal 2013, international affiliate fee revenues increased...

  • Page 63
    ..., and the distribution of Turbo for DreamWorks Animation. Selling, general and administrative expenses increased by approximately $70 million primarily due to higher personnel costs. Direct Broadcast Satellite Television (16% and 15% of the Company's consolidated revenues in fiscal 2013 and 2012...

  • Page 64
    ... including employee costs; capital expenditures; interest expenses; income tax payments; investments in associated entities; dividends; acquisitions; debt repayments; and stock repurchases. The Company entered into a separation and distribution agreement with News Corp ("Separation and Distribution...

  • Page 65
    ...to fiscal 2014. Based on the number of shares outstanding as of June 30, 2014 and a similar dividend rate as in fiscal 2014, the total aggregate cash dividends expected to be paid to stockholders in fiscal 2015 is approximately $550 million. Sources and Uses of Cash - Fiscal 2013 vs. Fiscal 2012 Net...

  • Page 66
    ... Note 11 - Borrowings to the accompanying Consolidated Financial Statements of Twenty-First Century Fox. The fiscal 2014 activity includes $168 million in borrowings and $143 million in repayments under the YES Network secured revolving credit facility. The balance of the repayments was related to...

  • Page 67
    ... 2012, 21st Century Fox America, Inc. (formerly known as News America Incorporated) ("21CFA"), entered into a credit agreement (the "Credit Agreement"), among 21CFA as Borrower, the Company as Parent Guarantor, the lenders named therein, the initial issuing banks named therein, JPMorgan Chase Bank...

  • Page 68
    ...$2.2 billion, are approximately $315 million of office facilities that have been subleased to News Corp. Sport programming rights Under the Company's contract with the NFL, remaining future minimum payments for program rights to broadcast certain football games are payable over the remaining term of...

  • Page 69
    ..., if any, of the Company relating to these investigations. In connection with the Separation, the Company and News Corp agreed in the Separation and Distribution Agreement that the Company will indemnify News Corp, on an after-tax basis, for payments made after the Separation arising out of civil...

  • Page 70
    ... ASC 605-50, "Revenue Recognition-Customer Payments and Incentives." The Company defers the cable distribution investments and amortizes the amounts on a straight-line basis over the contract period. Filmed Entertainment Revenues from distribution of motion pictures and television programming are...

  • Page 71
    ... basis. Management regularly reviews, and revises when necessary, its total revenue estimates on a contract basis, which may result in a change in the rate of amortization and/or a write-down of the asset to fair value. The costs of national sports contracts at FOX and the national sports channels...

  • Page 72
    ...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...

  • Page 73
    ... were transferred to News Corp. For financial reporting purposes, net periodic pension expense is calculated based upon a number of actuarial assumptions, including a discount rate for plan obligations, an expected rate of return on plan assets and mortality. The Company considers current market...

  • Page 74
    The key assumptions used in developing the Company's fiscal 2014, 2013 and 2012 net periodic pension expense for its plans consist of the following: 2014 2013 (in millions, except %) 2012 Discount rate used to determine net periodic benefit cost ...Assets: Expected rate of return ...Expected return...

  • Page 75
    ... on plan assets and discount rate resulting from economic events. The following table highlights the sensitivity of the Company's pension obligations and expense to changes in these assumptions, assuming all other assumptions remain constant: Changes in Assumption Impact on Annual Pension Expense...

  • Page 76
    ... all of its ownership interests in Sky Italia and Sky Deutschland whose functional currency is the Euro (See Note 3 - Acquisitions, Disposals and Other Transactions to the accompanying Consolidated Financial Statements of TwentyFirst Century Fox, Inc. for further information). The Company may enter...

  • Page 77
    ... in quoted interest rates: loss ...$ (859 ) $ (865)      2014  (in millions) 2013 (a) The change in fair value of the Company's financial instruments with exposure to interest rate risk is primarily due to the acquisition of the majority interest in the YES Network. Stock Prices The...

  • Page 78
    ...TWENTY-FIRST CENTURY FOX, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Management's Report on Internal Control Over Financial Reporting ...Reports of Independent Registered Public Accounting Firm...Consolidated Statements of Operations for the fiscal years ended June 30, 2014, 2013 and 2012...

  • Page 79
    ...procedures may deteriorate. Management, including the Company's principal executive officer and principal financial officer, conducted an assessment of the effectiveness of Twenty-First Century Fox, Inc.'s internal control over financial reporting as of June 30, 2014, based on criteria for effective...

  • Page 80
    ...Directors and Stockholders of Twenty-First Century Fox, Inc. (formerly News Corporation): We have audited Twenty-First Century Fox, Inc.'s internal control over financial reporting as of June 30, 2014, based on criteria established in the Internal Control-Integrated Framework issued by the Committee...

  • Page 81
    ..., 2014, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Twenty-First Century Fox, Inc.'s internal control over financial reporting as of June 30, 2014, based on...

  • Page 82
    TWENTY-FIRST CENTURY FOX, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) For the years ended June 30, 2014  2013  2012 Revenues...$ Operating expenses ...Selling, general and administrative...Depreciation and amortization ...Impairment charges ...Equity ...

  • Page 83
    TWENTY-FIRST CENTURY FOX, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN MILLIONS) For the years ended June 30, 2014 2013 2012 Net income...$ Other comprehensive income (loss), net of tax: Foreign currency translation adjustments...Unrealized holding losses on securities...Benefit plan ...

  • Page 84
    .... Class B common stock, $0.01 par value per share, 3,000,000,000 shares authorized, 798,520,953 shares issued and outstanding, net of 356,993,807 treasury shares at par at June 30, 2014 and 2013. The accompanying notes are an integral part of these audited consolidated financial statements...

  • Page 85
    ...: Borrowings ...Repayment of borrowings ...Issuance of shares ...Repurchase of shares ...Dividends paid ...Purchase of subsidiary shares from noncontrolling interest ...Sale of subsidiary shares to noncontrolling interest...Distribution to News Corporation ...Net cash used in financing activities...

  • Page 86
    ... loss ...Dividends declared ...Shares (purchased) issued, net(b) ...Other ...Balance, June 30, 2012 ...Net income ...Other comprehensive (loss) income ...Distribution to News Corp ...Dividends declared ...Shares (purchased) issued, net(b) ...Acquisitions(c) ...Other ...Balance, June 30, 2013 ...Net...

  • Page 87
    ...-First Century Fox" or the "Company") is a diversified global media and entertainment company, which manages and reports its businesses in five segments: Cable Network Programming, which principally consists of the production and licensing of programming distributed through cable television systems...

  • Page 88
    ... this information, management reserves a percentage of each dollar of product sales that provide the customer with the right of return. The Company has receivables with original maturities greater than one year in duration principally related to the Company's sale of program rights in the television...

  • Page 89
    ...At least annually, the Company evaluates the recoverability of the unamortized costs associated therewith, using total estimated advertising and other revenues attributable to the program material. The recoverability of sports rights contracts for content broadcast on the national sports channels is...

  • Page 90
    ... investments if readily determinable market values are available. If an investment's fair value is not readily determinable, the Company accounts for its investment at cost. The Company reports available-for-sale investments at fair value based on quoted market prices. Unrealized gains and losses on...

  • Page 91
    ... is recognized if the carrying value of such asset exceeds its fair value. The Company generally measures fair value by considering sale prices for similar assets or by discounting estimated future cash flows using an appropriate discount rate. Considerable management judgment is necessary to...

  • Page 92
    ... viewing via digital distribution platforms and all Company-imposed restrictions on the sale or availability have expired. Revenues from television distribution are recognized when the motion picture or television series is made available to the licensee for broadcast. Management bases its estimates...

  • Page 93
    ... plans. Equity based compensation The Company accounts for share-based payments in accordance with ASC 718, "Compensation-Stock Compensation" ("ASC 718"). ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the Consolidated Financial Statements...

  • Page 94
    .... Early adoption is not permitted. The Company is currently evaluating the impact ASU 2014-09 will have on its Consolidated Financial Statements. In June 2014, the FASB issued ASU 2014-12, "Compensation--Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award...

  • Page 95
    ...interests. Yankees Entertainment and Sports Networks In December 2012, the Company acquired a 49% equity interest in the Yankees Entertainment and Sports Network ("YES Network"), a Regional Sports Network ("RSN") primarily broadcasting pre-season and regular season games for the New York Yankees and...

  • Page 96
    ...that holds the collective media and sponsorship rights of the Dutch Premier League. The remaining 49% of EMM, which is owned by the Dutch Premier League and the global TV production company Endemol, has been recorded at its acquisition date fair value. The excess purchase price, based on a valuation...

  • Page 97
    ...92 million additional shares of Sky Deutschland increasing the Company's ownership interest to 55%. The remaining 45% of Sky Deutschland not owned by the Company has been recorded at fair value of approximately $2.3 billion, based on the closing price of its shares on the Frankfurt Stock Exchange on...

  • Page 98
    ..., an international sports programming and production entity, which owns and operates Fox Sports Latin America network, a Spanish and Portuguese-language sports network distributed to subscribers in certain Caribbean and Central and South American nations, and partially through its ownership in FSLA...

  • Page 99
    ...digital education and sports programming and pay-TV distribution in Australia. The Company completed the Separation by distributing to its stockholders one share of News Corp Class A common stock for every four shares of the Company's Class A Common Stock held on June 21, 2013, and one share of News...

  • Page 100
    ... News Corp's U.S.-based businesses (the "Employee Matters Agreement"). In general, the Employee Matters Agreement addresses matters relating to employees transferring to News Corp's U.S. businesses and former News Corp employees of those businesses that participated in the Company's retirement plans...

  • Page 101
    ... 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. Dispositions In March 2013, News Corp sold its 44% equity interest in SKY Network Television...

  • Page 102
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The impairment charges also include $42 million reflecting the potential sale of assets at values below their carrying values. During the fourth quarter of fiscal 2012, News Corp recorded non-cash impairment charges of ...

  • Page 103
    ...The Company's inventories were comprised of the following: As of June 30, 2014 2013 (in millions) Programming rights ...$ DVDs, Blu-rays, and other merchandise ...Filmed entertainment costs: Films: Released ...Completed, not released ...In production ...In development or preproduction ...Television...

  • Page 104
    ... FINANCIAL STATEMENTS NOTE 7. INVESTMENTS The Company's investments were comprised of the following: Ownership percentage as of June 30, 2014 As of June 30, 2014 2013 (in millions) Equity method investments: British Sky Broadcasting Group plc(a) ...U.K. DBS operator YES Network(b) ...RSN...

  • Page 105
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Equity Earnings of Affiliates The Company's share of the earnings of its equity affiliates was as follows: For the years ended June 30, 2014 2013 2012 (in millions) DBS equity affiliates...$ Cable channel equity ...

  • Page 106
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Other In fiscal 2014, through separate transactions, the Company sold its 47% interest in CMC-News Asia Holdings Limited, its 50% interest in STATS LLC and its 50% interest in STAR CJ Network India Pvt. Ltd., all equity ...

  • Page 107
    ...value on a recurring basis: Fair value measurements As of June 30, 2014 Quoted prices in active markets Significant other for identical observable inputs instruments (Level 2) (Level 1) (in millions) Description Total Significant unobservable inputs (Level 3) Assets Available-for-sale securities...

  • Page 108
    ... applying a multiples-based formula that is intended to approximate fair value for one of the sports networks and (ii) using a discounted OIBDA valuation model, assuming an 8% discount rate for another sports network. As of June 30, 2014, one minority shareholder's put right is currently exercisable...

  • Page 109
    ... currency exchange risks associated with the cost of producing or acquiring films and television programming. The Company's foreign currency forward contracts are valued using an income approach based on the present value of the forward rate less the contract rate multiplied by the notional amount...

  • Page 110
    ... of reputable credit and, therefore, bear minimal credit risk. The Company's receivables did not represent significant concentrations of credit risk at June 30, 2014 or 2013 due to the wide variety of customers, markets and geographic areas to which the Company's products and services are sold. 104

  • Page 111
    ... $365 million for the fiscal year ended June 30, 2014 and $385 million for the fiscal years ended June 30, 2013 and 2012. NOTE 10. GOODWILL AND OTHER INTANGIBLE ASSETS The changes in the carrying values of the Company's intangible assets and related accumulated amortization were as follows...

  • Page 112
    ... of the majority interest in the YES Network in February 2014 and the finalization of the allocation of excess purchase price related to Fox Sports Asia. The decrease in the carrying value of Direct Broadcast Satellite Television segment goodwill during fiscal 2014 was primarily due to the...

  • Page 113
    ... and $201 million in fiscal 2013 and 2012, respectively, related to a business in its Digital Media Group, which was sold in fiscal 2013. NOTE 11. BORROWINGS Weighted average interest rate as of June 30, 2014 Outstanding as of June 30, 2014 (in millions) 2013 Description Due date as of June 30...

  • Page 114
    ... loans In January 2013, Sky Deutschland, a majority owned subsidiary of the Company, entered into a credit agreement, with major financial institutions, that 21st Century Fox America, Inc. (formerly known as News America Incorporated) ("21CFA"), a wholly-owned subsidiary, and the Company have both...

  • Page 115
    ... $ 16,458 (a) Sky Deutschland credit agreement. Revolving Credit Agreement In May 2012, 21CFA entered into a credit agreement (the "Credit Agreement"), among 21CFA as Borrower, the Company as Parent Guarantor, the lenders named therein, the initial issuing banks named therein, JPMorgan Chase Bank...

  • Page 116
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Fees under the Credit Agreement will be based on the Company's long-term senior unsecured non-credit enhanced debt ratings. Given the current debt ratings, 21CFA pays a facility fee of 0.125% and an initial drawn cost of ...

  • Page 117
    ... TO THE CONSOLIDATED FINANCIAL STATEMENTS Stockholder Rights Agreement During fiscal 2013, the Board adopted a stockholder rights agreement. Each right entitled the holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock upon the occurrence...

  • Page 118
    ... to benefit plan adjustments are included in Selling, general and administrative expenses in the Consolidated Statements of Operations for the fiscal years ended June 30, 2014, 2013 and 2012. (See Note 17 - Pension And Other Postretirement Benefits for additional information) Other comprehensive...

  • Page 119
    ... fiscal 2013 and 2012, the shares repurchased were Class A Common Stock of the Company then known as News Corporation. The Company did not purchase any of its Class B Common Stock during the three fiscal years ended June 30, 2014. Dividends For the years ended June 30, 2014 2013 2012 Cash dividend...

  • Page 120
    ... ASX occurred on May 8, 2014 and, effective as of that date, all of Twenty-First Century Fox's Class A Common Stock and Class B Common Stock is listed solely on the NASDAQ Global Select Market ("NASDAQ"). NOTE 14. EQUITY BASED COMPENSATION 2013 Long-Term Incentive Plan In October 2013, the Company...

  • Page 121
    ... News Corp no longer participate in benefit plans sponsored or maintained by the Company. Pursuant to the Employee Matters Agreement5 the Company made certain adjustments to the exercise price and number of the Company's share-based compensation awards5 using the closing price of the Company's Class...

  • Page 122
    ...2013 and 2012. Included in the number of shares vested in fiscal 2014 was approximately 1 million shares issued to News Corp employees. The intrinsic value of unvested RSUs and target PSUs at June 30, 2014 was approximately $570 million. 2004 Stock Option Plan and 2004 Replacement Stock Option Plan...

  • Page 123
    ... the Separation in fiscal 2013, the Company undertook a series of internal reorganization transactions to facilitate the transfers of entities and the related assets and liabilities. As part of those transactions, the Company redeemed 7,600 shares of preferred stock of Fox Television Holdings, Inc...

  • Page 124
    ...Stock, owns a controlling interest in Rotana. The Company also has an option to sell its interest in Rotana in fiscal year 2015 at the higher of the price per share based on a bona-fide sale offer or the original subscription price plus interest. In January 2014, the Company terminated its licensing...

  • Page 125
    ...are approximately $315 million for office facilities that have been subleased to News Corp. Sport programming rights Under the Company's contract with the National Football League, remaining future minimum payments for program rights to broadcast certain football games are payable over the remaining...

  • Page 126
    ... right to broadcast the New York Yankees pre-season and regular season games through the 2042 MLB season. Other commitments and contractual obligations Primarily includes obligations relating to distribution agreements, marketing agreements and television rating services. Hulu indemnity The Company...

  • Page 127
    ... will be applicable to both the Company and News Corp. Southern District of New York On July 19, 2011, a purported class action lawsuit captioned Wilder v. News Corp., et al. ("Wilder Litigation"), was filed on behalf of all purchasers of the Company's common stock between March 3, 2011 and July 11...

  • Page 128
    ... FINANCIAL STATEMENTS In connection with the Separation, the Company and News Corp agreed in the Separation and Distribution Agreement that the Company will indemnify News Corp, on an after-tax basis, for payments made after the Separation arising out of civil claims and investigations relating...

  • Page 129
    ... pension plans and postretirement benefit plans are closed to new participants (with the exception of groups covered by collective bargaining agreements). In connection with the Separation, the Company entered into an Employee Matters Agreement with News Corp which provides that employees of News...

  • Page 130
    ... the Company's benefit plans: Fair value of plan assets, beginning of the year ...Actual return on plan assets ...Employer contributions...Benefits paid ...Settlements(a) ...Foreign exchange rate changes ...Amendments, transfers and other ...Separation of News Corp plans...Payable to News Corp plans...

  • Page 131
    ... cost...Net amounts recognized...$ 36 $ 1 37 $ 3 3 Accumulated pension benefit obligations at June 30, 2014 and 2013 were $2,191 million and $1,843 million, respectively. Below is information about funded and unfunded pension plans. Funded plans As of June 30, 2014 2013 2014 (in millions) 2013...

  • Page 132
    ... $ 116 $ Pension benefits 2014 2013 2012 4 $ 6 3 13 $ 4 $ 6 3 13 $ 3 6 (2) 7 Postretirement benefits 2014 2013 2012 For the years ended June 30, Additional information related to continuing operations: Weighted-average assumptions used to determine benefit obligations Discount rate ...Rate of...

  • Page 133
    ...per year. Plan Assets The Company applies the provisions of ASC 715, which required disclosures include: (i) investment policies and strategies; (ii) the major categories of plan assets; (iii) the inputs and valuation techniques used to measure plan assets; (iv) the effect of fair value measurements...

  • Page 134
    ...Common stocks that are publicly traded are valued at the closing price reported on active markets in which the individual securities are traded. The fair value of corporate, government and agency obligations are valued based on a compilation of primary observable market information or a broker quote...

  • Page 135
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The Company's benefit plan weighted-average asset allocations, by asset category, are as follows: Pension benefits As of June 30, 2014 2013 Asset Category: Equity securities ...Debt securities ...Other, including cash ......

  • Page 136
    ... years ended June 30, 2014 2013 2012 U.S. federal income tax rate...Sale of interest in subsidiaries ...State and local taxes...Effect of foreign operations ...Resolution of tax matters ...Non-deductible goodwill on asset impairment ...Valuation allowance movements ...Nontaxable income attributable...

  • Page 137
    ... value. In addition, at June 30, 2013, a net deferred tax asset of $1.1 billion with a corresponding valuation allowance of $1.1 billion was recorded with respect to net operating losses, primarily due to the consolidation of Sky Deutschland. The valuation allowance was recorded because Sky...

  • Page 138
    ... INFORMATION The Company is a diversified global media and entertainment company, which manages and reports its businesses in the following five segments: y Cable Network Programming, which principally consists of the production and licensing of programming distributed through cable television...

  • Page 139
    ... in Italy, Germany and Austria. Other, Corporate and Eliminations, which principally consists of corporate overhead and eliminations and other businesses. y y y The Company's operating segments have been determined in accordance with the Company's internal management structure, which...

  • Page 140
    ... in assessing the Company's financial performance. For the years ended June 30, 2014 2013 (in millions) 2012 Revenues: Cable Network Programming ...Television ...Filmed Entertainment...Direct Broadcast Satellite Television ...Other, Corporate and Eliminations ...Total revenues ...Segment OIBDA...

  • Page 141
    ... segment. For the years ended June 30, 2014 2013 (in millions) 2012 Depreciation and amortization: Cable Network Programming ...$ Television ...Filmed Entertainment...Direct Broadcast Satellite Television ...Other, Corporate and Eliminations ...Total depreciation and amortization ...$ 232...

  • Page 142
    ... in Italy in fiscal 2014, 2013 and 2012, respectively. Revenues include approximately $2.2 billion, $2.1 billion and $1.6 billion from customers in Asia in fiscal 2014, 2013 and 2012, respectively. As of June 30, 2014 2013 (in millions) Long-lived assets:(a) U.S. and Canada...$ 7,951 $ Europe...

  • Page 143
    ...-based compensation plans(a) ...Weighted average shares - diluted ...Income from continuing operations attributable to Twenty-First Century Fox stockholders per share - basic and diluted ...$ Income (loss) from discontinued operations, net of tax attributable to TwentyFirst Century Fox stockholders...

  • Page 144
    ...attributable to Twenty-First Century Fox stockholders per share - basic and diluted ...Stock prices(b) Class A - High ...Class A - Low ...Class B - High ...Class B - Low ...Fiscal 2013 Revenues ...Income from continuing operations attributable to TwentyFirst Century Fox stockholders ...(Loss) income...

  • Page 145
    ...the years ended June 30, 2014 2013 (in millions) 2012 Supplemental cash flows information: Cash paid for income taxes(a) ...$ Cash paid for interest ...Sale of other investments ...Purchase of other investments ...Supplemental information on businesses acquired: Fair value of assets acquired...Cash...

  • Page 146
    ... For the years ended June 30, 2014 2013 (in millions) 2012 Gain on Sky Deutschland transaction(a) ...$ (Loss) gain on sale of investment in NDS(b) ...Gain on sale of investment in Phoenix(b) ...Gain on Fox Sports Asia transaction(a)...Gain on sale of investment in STATS(b) ...Shareholder litigation...

  • Page 147
    ... limitations on secured indebtedness. Fees under the Credit Agreement will be based on the Company's long-term senior unsecured non-credit enhanced debt ratings. Given the current debt ratings, 21CFA pays a facility fee of 0.125% and an initial drawn cost of LIBOR plus 1.125%. The Parent Guarantor...

  • Page 148
    ...2014 (in millions) Twenty-First Century Fox and Subsidiaries 21st Century Fox America, Inc. Twenty-First Century Fox Non-Guarantor Reclassifications and Eliminations Revenues... $ (5,178 ) $ 4,514 234 $ 4,799 $ 5,279 $ (5,513 ) $ 4,799 See notes to supplemental guarantor information 142

  • Page 149
    ...2013 (in millions) Twenty-First Century Fox and Subsidiaries 21st Century Fox America, Inc. Twenty-First Century Fox Non-Guarantor Reclassifications and Eliminations Revenues... (10,471 ) $ 7,097 2,566 $ 6,466 $ 7,519 $ (10,085 ) $ 6,466 See notes to supplemental guarantor information 143

  • Page 150
    ...2012 (in millions) Twenty-First Century Fox and Subsidiaries 21st Century Fox America, Inc. Twenty-First Century Fox Non-Guarantor Reclassifications and Eliminations Revenues... $ (2,504 ) $ 1,179 (231) $ (432) $ 1,426 $ (1,195 ) $ (432) See notes to supplemental guarantor information 144

  • Page 151
    ...STATEMENTS Supplemental Condensed Consolidating Balance Sheet At June 30, 2014 (in millions) Twenty-First Century Fox and Subsidiaries 21st Century Fox America, Inc. Twenty-First Century Fox...057 8,856 18,259 6,236 541 20,901 54,793 $ 67,382 $ See notes to supplemental guarantor information 145

  • Page 152
    ...STATEMENTS Supplemental Condensed Consolidating Balance Sheet At June 30, 2013 (in millions) Twenty-First Century Fox and Subsidiaries 21st Century Fox America, Inc. Twenty-First Century Fox...298 8,435 16,321 5,544 519 20,125 50,944 $ 65,225 $ See notes to supplemental guarantor information 146

  • Page 153
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Supplemental Condensed Consolidating Statement of Cash Flows For the year ended June 30, 2014 (in millions) Twenty-First Century Fox and Subsidiaries 21st Century Fox America, Inc. Twenty-First Century Fox Non-Guarantor...

  • Page 154
    ...: Borrowings ...Repayment of borrowings ...Issuance of shares ...Repurchase of shares ...Dividends paid ...Purchase of subsidiary shares from noncontrolling interests ...Sale of subsidiary shares to noncontrolling interests ...Distribution to News Corporation ...Net cash provided by (used in...

  • Page 155
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Supplemental Condensed Consolidating Statement of Cash Flows For the year ended June 30, 2012 (in millions) Twenty-First Century Fox and Subsidiaries 21st Century Fox America, Inc. Twenty-First Century Fox Non-Guarantor...

  • Page 156
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to Supplemental Guarantor Information (1) Investments in the Company's subsidiaries, for purposes of the supplemental consolidating presentation, are accounted for by their parent companies under the equity method of...

  • Page 157
    ...has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. ITEM 9B. OTHER INFORMATION. On August 12, 2014, the Company filed with the office of the Secretary of State of the State of Delaware a Certificate of Elimination, whereupon...

  • Page 158
    ...Governance Matters- Standards of Business Conduct and Code of Ethics" and is incorporated by reference in this Annual Report. The information required by this item with respect to the Company executive officers is contained in the Proxy Statement under the heading "Executive Officers of 21st Century...

  • Page 159
    The information required by this item with respect to the security ownership of certain beneficial owners and management is contained in the Proxy Statement under the heading "Security Ownership of 21st Century Fox" and is incorporated by reference in this Annual Report. ITEM 13. CERTAIN ...

  • Page 160
    ..., thereunto duly authorized. TWENTY-FIRST CENTURY FOX, INC. (Registrant) By: /S/ JOHN NALLEN John Nallen Senior Executive Vice President and Chief Financial Officer Date: August 13, 2014 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the...

  • Page 161
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 162
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 163
    ... traded companies on June 28, 2013 (the "Separation"). In connection with the Separation, the former News Corporation was re-named Twenty-First Century Fox. Since June 28, 2013, Twenty-First Century Fox's Class A Common Stock and Class B Common Stock have been listed and traded on The NASDAQ Global...

  • Page 164
    ...Fox John P. Nallen Chief Financial O icer 21st Century Fox Gerson Zweifach Group General Counsel, Chief Compliance O icer 21st Century Fox SUPPLEMENTAL INFORMATION Corporate Secretary Laura A. Cleveland Auditors Ernst & Young LLP Annual Report and Form 10 K Requests 1211 Avenue of Americas New York...

  • Page 165
    ...21st Century Fox is a diversi ied global media company which, as of June 30, 2014, principally consists of the following: CABLE NETWORK PROGRAMMING United States Fox Business Network Fox News Channel FX Networks and Productions FOX Sports Regional Networks MundoFox (50%) National Geographic Channels...

  • Page 166

  • Page 167

  • Page 168