Twenty-First Century Fox 2015 Annual Report Download

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Table of contents

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  • Page 4
    ...are focused on global brands, developing clear momentum at our new channels FOX Sports 1, FXX and STAR Sports in India, investing in big sports events, and driving growth opportunities in both mature markets as well as developing economies such as India and Latin America. We have continued to return...

  • Page 5
    ... and cable for the top spot in many markets. Like sports, news programming commands a live audience that is minimally impacted by shifts toward non-linear viewing. Fox News' viewership is considerably larger than its two main competitors combined and, over the last fiscal year, grew by double digits...

  • Page 6
    ... venture Endemol Shine Group, which will enhance our position in the thriving global over the years from the stability content market by creating a more competitive business at a truly and strength of our senior global scale. Our company and our shareholders have benefited over the management team...

  • 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
    ...ITEM 9A. CONTROLS AND PROCEDURES ...ITEM 9B. OTHER 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 RELATED STOCKHOLDER MATTERS...ITEM 13. CERTAIN...

  • Page 9
    ... companies (the "Separation") by distributing to its stockholders shares of the new News Corporation ("News Corp"). The Company retained its interests in a global portfolio of cable, broadcast, film, pay-TV and satellite assets spanning six continents. News Corp holds the Company's former businesses...

  • Page 10
    ... Century Fox and related notes set forth elsewhere in this Annual Report. BUSINESS OVERVIEW The Company is a diversified global media and entertainment company, which manages and reports its businesses in the segments described below. Cable Network Programming The Company produces and licenses news...

  • Page 11
    ...Fox Sports 1 features a nightly multi-hour live national sports news show, Fox Sports Live, an afternoon multi-sport news and highlight show, America's Pregame Show, original and documentary programming and daily studio programming. Fox Sports 2. Fox Sports 2 is a multi-sports national cable network...

  • Page 12
    ...." trueX media inc. In February 2015, the Company acquired trueX media inc., a video advertising company specializing in consumer engagement and on-demand marketing campaigns. Fox International Channels ("FIC"). FIC operates, develops and distributes primarily factual, sports, lifestyle, movie and...

  • Page 13
    ... the global TV production company Endemol Shine Group in which the Company owns a 50% interest. FIC operates Fox Pan American Sports LLC, doing business as Fox Sports Latin America ("FSLA"), an international sports programming and production entity. FSLA owns and operates the Fox Sports networks in...

  • Page 14
    ... broadcast television stations, other local and regional sports networks, including sports networks launched by team owners, and distribution outlets, such as cable television systems. Fox Sports 1, Fox Sports 2, BTN and FSN compete for national rights principally with a number of national cable and...

  • Page 15
    ...competing programming. FIC. Internationally, the Company's cable businesses compete with various local and foreign television services providers and distribution networks for audiences, advertising, content acquisition and distribution platforms. STAR India. In India, the pay television broadcasting...

  • Page 16
    ... the UHF Discount. For more information regarding the FCC's national station ownership cap, see "Government Regulation-Television" in this Annual Report. (b) MyNetworkTV licensee station. (c) Independent station. (d) The Company also owns and operates full power station KFTC, Channel 26, Bemidji...

  • Page 17
    ...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 programming is...

  • Page 18
    ... business is highly competitive. FOX and MyNetworkTV compete for audiences, programming and advertising revenue with other broadcast networks, such as ABC, NBC, CBS and The CW Television Network, independent television stations, cable and direct broadcast satellite program services, cable television...

  • Page 19
    ... companies. Through Twentieth Century Fox Home Entertainment LLC and TCFF, the Company distributes motion pictures and other programming produced by units of TCFF, its affiliates and other producers in the United States, Canada and international markets in all home media formats, including the sale...

  • Page 20
    ...on free television networks, including basic cable programming services, both to independent third party broadcasters as well as to services operated by affiliated entities of the Company. Competition. Motion picture production and distribution are highly competitive businesses. The Company competes...

  • Page 21
    ... Simpsons to cable and broadcast networks. Twentieth Television also sells national advertising on behalf of other third party syndicators. Competition. Similar to motion picture production and distribution, production and distribution of television programming is extremely competitive. The Company...

  • Page 22
    operations, Sky operates a number of other businesses including wholesaling its channel portfolio, selling advertising on its own and partner channels and its international distribution operation. In November 2014, the Company sold its 100% and 57% ownership stakes in Sky Italia and Sky Deutschland,...

  • Page 23
    ...re-transmit the signal on its terrestrial networks and DTH networks. For such shared events, the regulations also provide for sharing of advertising revenue, 75% to the content rights owners and 25% to the government owned broadcaster. The Copyright laws in India were amended in June 2012 to provide...

  • Page 24
    ...imposed, or the impact on the Company's business. In May 2015, the EC published its Digital Single Market Strategy setting out a number of initiatives, including objectives to present legislative proposals to end geo-blocking in certain circumstances, review the EU copyright legislation to allow for...

  • Page 25
    ... are not likely to affect the impact of the FCC ownership rules on the Company's ownership of media properties. Fox Television Stations is in compliance with the rules governing ownership of multiple stations in the same market and with the national station ownership cap established by Congress. In...

  • Page 26
    ...discount it may affect the Company's ability to acquire television stations in additional markets. It is not possible to predict the timing or outcome of the pending proceeding. Fox Television Stations owns two television stations in the New York DMA. By virtue of its common ownership with News Corp...

  • Page 27
    ...initiate a new rulemaking proceeding by September 2015 to review the "totality of the circumstances" component of its retransmission consent good faith bargaining rules. The broadcast industry, including Fox Entertainment Group and Fox Television Stations, has filed comments opposing broader changes...

  • Page 28
    ... 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 reject or refuse network programming in certain circumstances or to...

  • Page 29
    ... 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 30
    ... traditional cable distribution offerings could adversely affect demand for our cable channels. There is a risk that the Company's responses to these changes and strategies to remain competitive, or failure to effectively anticipate or adapt to new market changes, could adversely affect our business...

  • Page 31
    ... to FOX, and could adversely affect the Company's advertising 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...

  • Page 32
    ...'s Ability to Protect Its Intellectual Property Rights. Content piracy and signal theft present a threat to the Company's revenues from products and services, including, but not limited to, films, television shows, cable and other programming. The Company seeks to limit the threat of content piracy...

  • Page 33
    ... Limit Common Stock Ownership and Voting Rights. The Company owns broadcast station licensees in connection with its ownership and operation of U.S. television stations. Under U.S. law, no broadcast station licensee may be owned by a corporation if more than 25% of its stock is owned or voted by non...

  • Page 34
    ... Tax Liability. The Company received (i) a private letter ruling from the IRS substantially to the effect that, among other things, the distribution of Class A Common Stock and Class B Common Stock of News Corp qualifies as tax-free under Sections 368 and 355 of the Internal Revenue Code of 1986, as...

  • Page 35
    ...ultimately determined to be taxable, 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...

  • Page 36
    ... the Fox Studios Lot, 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 and various other operations; The leased office and production facilities of Blue Sky Studios in...

  • Page 37
    ITEM 3. LEGAL PROCEEDINGS Shareholder Litigation 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 38
    ... SECURITIES Twenty-First Century Fox's Class A Common Stock and Class B Common Stock are listed and traded on the NASDAQ Global Select Market ("NASDAQ") under the symbols "FOXA" and "FOX", respectively. Until May 8, 2014, CHESS Depositary Interests ("CDIs") representing the Class A Common Stock...

  • Page 39
    ...a summary of the Company's repurchases of its Class A Common Stock during the fiscal year ended June 30, 2015: Total number of shares repurchased Average price per share Total cost of repurchase (in millions) Total first quarter fiscal 2015 ...Total second quarter fiscal 2015 ...Total third quarter...

  • Page 40
    ... other financial information included elsewhere herein. For the years ended June 30, 2015(a) 2014(a) 2013(a) 2012(b) (in millions, except per share data) 2011(c) STATEMENT OF OPERATIONS DATA: Revenues ...Income from continuing operations attributable to Twenty-First Century Fox, Inc. stockholders...

  • Page 41
    ..., information services and integrated marketing services, digital real estate services, book publishing, 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...

  • Page 42
    ...the sale of the DBS businesses, the Company continues to report in five segments for comparative purposes, and there is no future activity in the DBS segment. Cable Network Programming and Television The Company's cable networks, which target various demographics, derive a majority of their revenues...

  • Page 43
    ...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, 2015 of attributable revenues and costs...

  • Page 44
    ...from Cox Media Group in exchange for the Company's FOX affiliated stations WHBQ-TV FOX 13 and WFXT-TV FOX 25, located in the Memphis and Boston markets, respectively. Filmed Entertainment The Company and funds managed by Apollo Global Management, LLC ("Apollo") formed Endemol Shine Group in December...

  • Page 45
    ...ownership stakes in Sky Italia and Sky Deutschland, respectively, to Sky for approximately $8.8 billion in value comprised of approximately $8.2 billion in cash received, net of $650 million of cash paid to acquire Sky's 21% interest in NGC Network International LLC and NGC Network Latin America LLC...

  • Page 46
    ... % 75 % 84 % $ 4,514 2015 For the years ended June 30, 2014 (in millions, except %) % Change Revenues (excluding Direct Broadcast Satellite Television): Affiliate fees ...$ Advertising ...Content ...Other ...Adjusted Total Revenues ...Direct Broadcast Satellite Television, net of eliminations...

  • Page 47
    ... games and the continued investment in new shows at FX Networks suite of channels ("FX"). Selling, general and administrative expenses decreased 8% for fiscal 2015, as compared to fiscal 2014, primarily due to the sale of the DBS businesses in November 2014 partially offset by increases at the Cable...

  • Page 48
    Other, net - For the years ended June 30, 2015 2014 (in millions) Gain on disposition of DBS businesses ...$ Gain on disposition of Shine Group...Change in fair value of securities...Impairment charges ...Settlement loss on pension liabilities ...Restructuring ...Loss on exit of MundoFox investment...

  • Page 49
    ... Company's revenues increased 15% for fiscal 2014, as compared to fiscal 2013, primarily due to increases in subscription, affiliate fees, content and advertising revenues. The increase in subscription revenues was primarily due to the effect of the consolidation of Sky Deutschland from January 2013...

  • Page 50
    ...the DBS segment was primarily due to the effect of the consolidation of Sky Deutschland from January 2013. The increase at the Cable Network Programming segment for fiscal 2014 was primarily related to higher programming costs, the continued investments in the new channels, FS1, STAR Sports networks...

  • Page 51
    ......Investment impairment losses ...Restructuring ...(Loss) gain on sale of investment in NDS ...Change in fair value of securities...Gain on Sky Deutschland transaction ...Gain on Fox Sports Asia transaction ...Loss on sale of Baltimore station ...Impairment charges ...Other ...Other, net ...$ 199...

  • Page 52
    ... fiscal 2014, as compared to fiscal 2013, primarily due to the inclusion of the noncontrolling interests' share of Sky Deutschland's net losses on its consolidation. Segment Analysis The Company's operating segments have been determined in accordance with the Company's internal management structure...

  • Page 53
    ... the DBS segment and related intersegment eliminations ("Adjusted Total Revenues"). 2015 For the years ended June 30, 2014 (in millions, except %) % Change Revenues: Cable Network Programming ...$ Television ...Filmed Entertainment ...Direct Broadcast Satellite Television ...Other, Corporate and...

  • Page 54
    ... majority interest in YES Network and strong advertising growth led by FS1's inaugural broadcast of MLB regular season and playoff games, higher pricing at Fox News and higher ratings at FX. For fiscal 2015, international affiliate fee revenues increased 3%, as compared to fiscal 2014. The increase...

  • Page 55
    ... November 2014, the Company sold its interests in Sky Italia and Sky Deutschland (See Note 3 - Acquisitions, Disposals and Other Transactions to the accompanying Consolidated Financial Statements of TwentyFirst Century Fox). As a result, for fiscal 2015, revenues and Segment OIBDA at the DBS segment...

  • Page 56
    ... set forth the Company's Revenues and Segment OIBDA for fiscal 2014, as compared to fiscal 2013, including Adjusted Total Revenues. 2014 For the years ended June 30, 2013 (in millions, except %) % Change Revenues: Cable Network Programming ...$ Television ...Filmed Entertainment ...Direct Broadcast...

  • Page 57
    ... pricing at STAR's entertainment channels and STAR Sports' broadcast of the Asia Cup and ICC cricket tournaments. Also contributing to the increase in international affiliate fee and advertising revenues for fiscal 2014 was the conversion and related launch of STAR Sports, the consolidation of Fox...

  • Page 58
    ... contributing to the increase were higher advertising and marketing costs to support the fall 2013 launch of new television series and higher sports programming costs primarily related to the two additional MLB World Series games in fiscal 2014. Selling, general and administrative expenses increased...

  • Page 59
    ... with all of the covenants under the revolving credit facility, and it does not anticipate any violation of such covenants. The Company's internally generated funds are highly dependent upon the state of the advertising markets and public acceptance of its film and television productions. 53

  • Page 60
    ... the Company's liquidity position include the following: investments in the production and distribution of new motion pictures and television programs; the acquisition of and payments under programming rights for entertainment and sports programming; operational expenditures including employee costs...

  • Page 61
    ...to fiscal 2015. Based on the number of shares outstanding as of June 30, 2015 and a similar dividend rate as in fiscal 2015, the total aggregate cash dividends expected to be paid to stockholders in fiscal 2016 is approximately $610 million. Sources and Uses of Cash - Fiscal 2014 vs. Fiscal 2013 Net...

  • Page 62
    ... to the accompanying Consolidated Financial Statements of Twenty-First Century Fox). Ratings of the Public Debt The table below summarizes the Company's credit ratings as of June 30, 2015. Rating Agency Senior Debt Outlook Moody's ...Standard & Poor's ...Revolving Credit Agreement Baa1...

  • Page 63
    ... billion, are approximately $280 million for office facilities that have been sub-leased to News Corp. Sports 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 64
    ... Consolidated Financial Statements of Twenty-First Century Fox). In addition, the Company has certain other local sports broadcasting rights including the right to broadcast the New York Yankees pre-season and regular season games through the 2042 MLB season. In July 2015, the Company expanded its...

  • Page 65
    ...directors, officers or certain designated employees or (ii) with respect to civil matters, co-defendants with News Corp (the "Indemnity") (See Note 15 - Commitments and Contingencies to the accompanying Consolidated Financial Statements of Twenty-First Century Fox). If additional information becomes...

  • Page 66
    ... of whether the Company has the substantial risks and rewards of ownership under the terms of an arrangement. Filmed Entertainment Costs and Programming Rights Filmed Entertainment Costs Accounting for the production and distribution of motion pictures and television programming is in accordance...

  • Page 67
    ... market screenings), the expected number of theaters in which the motion picture will be released and, once released, actual results of each motion picture. For each television program, management bases its estimates of ultimate revenue on the performance of the television programming in the initial...

  • Page 68
    ...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 69
    ... high-quality corporate bonds. The key assumptions used in developing the Company's fiscal 2015, 2014 and 2013 net periodic pension expense for its plans consist of the following: 2015 2014 (in millions, except %) 2013 Discount rate used to determine net periodic benefit costs ...Assets: Expected...

  • Page 70
    ...for the Company's pension plans is expected to be approximately $90 million, which is consistent with fiscal 2015. Recent Accounting Pronouncements See Note 2 - Summary of Significant Accounting Policies to the accompanying Consolidated Financial Statements of Twenty-First Century Fox for discussion...

  • Page 71
    ... operations. In November 2014, the Company sold its ownership interests in Sky Italia and Sky Deutschland (See Note 3 - Acquisitions, Disposals and Other Transactions to the accompanying Consolidated Financial Statements of Twenty-First Century Fox for further information). The U.S. dollar is...

  • Page 72
    ... did not represent significant concentrations of credit risk as of June 30, 2015 or 2014 due to the wide variety of customers, markets and geographic areas to which the Company's products and services are sold. The Company monitors its positions with, and the credit quality of, the financial...

  • Page 73
    ...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, 2015, 2014 and 2013...

  • Page 74
    ... firm who audited and reported on the Consolidated Financial Statements of Twenty-First Century Fox, Inc. included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2015, has audited the Company's internal control over financial reporting. Their report appears on the following...

  • Page 75
    ...control over financial reporting as of June 30, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Twenty-First Century Fox, Inc.'s management is responsible...

  • Page 76
    ...), Twenty-First Century Fox, Inc.'s internal control over financial reporting as of June 30, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated August 12...

  • Page 77
    TWENTY-FIRST CENTURY FOX, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) For the years ended June 30, 2014 2015 2013 Revenues ...$ Operating expenses ...Selling, general and administrative ...Depreciation and amortization ...Equity earnings of affiliates ......

  • Page 78
    ...-FIRST CENTURY FOX, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (IN MILLIONS) For the years ended June 30, 2014 2015 2013 Net income ...$ Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments ...Unrealized holding losses on securities ...Benefit plan...

  • Page 79
    .... 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 as of June 30, 2015 and 2014. The accompanying notes are an integral part of these Audited Consolidated Financial Statements...

  • Page 80
    ... equity-based compensation ...Repurchase of shares ...Dividends paid and distributions ...Purchase of subsidiary shares from noncontrolling interests ...Sale of subsidiary shares to noncontrolling interests ...Distribution to News Corporation ...Net cash used in financing activities from continuing...

  • Page 81
    ...FIRST CENTURY FOX, INC. CONSOLIDATED STATEMENTS OF EQUITY (IN MILLIONS) Class A Common Stock Shares Amount 1,585 $ 15 (69) $ $ $ Shares 799 Amount $ 8 - Class B Common Stock Balance, June 30, 2012 ...Net income...Other comprehensive (loss) income ...Distribution to News Corp ...Dividends declared...

  • Page 82
    ...-First Century Fox" or the "Company") is a diversified global media and entertainment company, which currently manages and reports its businesses in the following segments: Cable Network Programming, which principally consists of the production and licensing of programming distributed primarily...

  • Page 83
    ... will be released. Management updates such estimates based on information available on the actual results of each motion picture through its life cycle. Television production costs incurred in excess of the amount of revenue contracted for each episode in the initial market are expensed as incurred...

  • Page 84
    ... 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 series basis. Revenue forecasts for both motion pictures and television series are continually reviewed by management and revised when...

  • Page 85
    ... 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...

  • Page 86
    ... assured. The Company considers the terms of each arrangement to determine the appropriate accounting treatment. Cable Network Programming, Television and Direct Broadcast Satellite Television Advertising revenue is recognized as the commercials are aired, net of agency commissions. Subscriber...

  • Page 87
    ... these arrangements include studio and non-studio entities both domestic and international. In several of these agreements, other parties control certain distribution rights. The Company records the amounts received for the sale of an economic interest as a reduction of the cost of the film, as the...

  • Page 88
    ...-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Advertising expenses The Company expenses advertising costs as incurred, including advertising expenses for theatrical and television productions in accordance with ASC 720-35, "Other Expenses-Advertising Cost." Advertising...

  • Page 89
    ... did not represent significant concentrations of credit risk as of June 30, 2015 or 2014 due to the wide variety of customers, markets and geographic areas to which the Company's products and services are sold. The Company monitors its positions with, and the credit quality of, the financial...

  • Page 90
    ...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 Provide that a Performance Target Could be Achieved...

  • Page 91
    ... area television stations, KTVU-TV FOX 2 and KICU-TV 36, with a fair value of approximately $220 million from Cox Media Group in exchange for the Company's FOX Broadcasting Company ("FOX") affiliated stations WHBQ-TV FOX 13 and WFXT-TV FOX 25, located in the Memphis and Boston markets, respectively...

  • Page 92
    ...ownership stakes in Sky Italia and Sky Deutschland, respectively, to Sky for approximately $8.8 billion in value comprised of approximately $8.2 billion in cash received, net of $650 million of cash paid to acquire Sky's 21% interest in NGC Network International LLC and NGC Network Latin America LLC...

  • Page 93
    ... Financial Statements, as the Company has a continuing involvement in Endemol Shine Group. Fiscal 2014 Acquisitions Latin America Pay Television In September 2013, the Company acquired the 22% interest it did not already own in Latin America Pay Television ("LAPTV"), an entity that distributes...

  • Page 94
    ... the global TV production company Endemol Shine Group, has been recorded at its acquisition date fair value. The excess purchase price, based on a valuation of 100% of EMM, of approximately $670 million has been allocated as follows: $325 million to amortizable intangible assets, primarily customer...

  • Page 95
    ..., information services and integrated marketing services, digital real estate services, book publishing, 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...

  • Page 96
    ... Agreement also addresses equity compensation matters relating to employees of both companies. Summarized Financial Information Revenues and (Loss) income from discontinued operations related to News Corp were as follows: 2015 For the years ended June 30, 2014 (in millions) 2013 Revenues ...$ (Loss...

  • Page 97
    ... 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 98
    ... FINANCIAL STATEMENTS Changes in the program liabilities were as follows: One time termination benefits Facility costs and license fees Total continuing operations (in millions) Discontinued operations Total Balance, June 30, 2012 ...$ Additions ...Payments ...Separation of News Corp ...Balance...

  • Page 99
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 6. INVENTORIES, NET The Company's inventories were comprised of the following: As of June 30, 2015 (in millions) 2014 Programming rights ...$ DVDs, Blu-rays and other merchandise ...Filmed entertainment costs: Films:...

  • Page 100
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 7. INVESTMENTS The Company's investments were comprised of the following: Ownership percentage as of June 30, 2015 As of June 30, 2015 (in millions) 2014 Sky(a)(c) ...European DBS operator Endemol Shine Group(b)(c) ...

  • Page 101
    ... in Bona Film Group ("Bona"), a film distributer in China, for approximately $70 million in cash. 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...

  • Page 102
    ...below present information about financial assets and liabilities carried at fair value on a recurring basis: Fair value measurements As of June 30, 2015 Quoted prices in active markets for identical Significant other instruments observable inputs (Level 1) (Level 2) (in millions) Description Total...

  • Page 103
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of June 30, 2014 Quoted prices in active markets for identical Significant other instruments observable inputs (Level 1) (Level 2) (in millions) Description Total Significant unobservable inputs (Level 3) Assets ...

  • Page 104
    ... by (i) applying a multiples-based formula that is intended to approximate fair value for two of the sports networks and (ii) using a discounted OIBDA valuation model, assuming 8%-10% discount rates for the other sports networks. As of June 30, 2015, one minority shareholder's put right is currently...

  • Page 105
    ... CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Foreign Currency Forward Contracts The Company uses foreign currency forward contracts primarily to hedge certain exposures to foreign currency exchange rate risks associated with revenues, the cost of producing or acquiring films...

  • Page 106
    ... rate swap contracts ...$ The following table shows the changes in fair value of the Company's derivatives: For the years ended June 30, 2015 2014 (in millions) 255 $ - $ 270 - Beginning of year ...$ Changes in fair value recorded in accumulated other comprehensive loss, net of settlements...

  • Page 107
    ...fiscal 2015, 2014 and 2013, respectively. NOTE 10. GOODWILL AND INTANGIBLE ASSETS, NET The changes in the carrying values of the Company's intangible...Sky Deutschland. Amortization related to finite-lived intangible assets was $303 million, $401 million and $183 million for fiscal 2015, 2014 and 2013...

  • Page 108
    ... value of the Television, Filmed Entertainment and DBS segments goodwill, during fiscal 2015, was primarily due to the dispositions of the FOX affiliated stations, Shine Group and Sky Deutschland, respectively (See Note 3 - Acquisitions, Disposals and Other Transactions). Annual Impairment Review...

  • Page 109
    ... industry data on future advertising revenues in the markets where the Company owns television stations. These assumptions are based on actual historical performance and estimates of future performance in each market. Fiscal 2015 and 2014 During fiscal 2015 and 2014, the Company determined that the...

  • Page 110
    ... below. Bank 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. ("21CFA"), a wholly-owned subsidiary, and the Company had both guaranteed. The credit agreement...

  • Page 111
    ... unsecured revolving credit facility (the "New Credit Agreement"), among 21CFA as Borrower, the Company as Parent Guarantor, the initial lenders named therein (the "Lenders"), the initial issuing banks named therein, JPMorgan Chase Bank, N.A. ("JPMorgan Chase") and Citibank, N.A. ("Citibank") as Co...

  • Page 112
    .... The Company is authorized to issue 100,000,000 shares of preferred stock, par value $0.01 per share. The Board has the authority, without any further vote or action by the stockholders, to issue preferred stock in one or more series and to fix the number of shares, designations, relative rights...

  • Page 113
    ... Securities Exchange (the "ASX") for removal of its full foreign listing from 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 Global Select Market...

  • Page 114
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Other Comprehensive (Loss) Income Comprehensive income is reported in the Consolidated Statements of Comprehensive Income and consists of Net income and Other comprehensive (loss) income, including foreign currency ...

  • Page 115
    ...to benefit plan adjustments are included in Selling, general and administrative expenses or Other, net, as appropriate, in the Consolidated Statements of Operations for fiscal 2015, 2014 and 2013 (See Note 16 - Pension And Other Postretirement Benefits for additional information). Accumulated Other...

  • Page 116
    ... to certain named executive officers that vested in fiscal 2015 and 2014 were settled in cash. The fair value of equity-based compensation under the Plans is calculated according to the type of award issued. Cash-settled awards are marked-to-market at each reporting period. Performance Stock Units...

  • Page 117
    ...-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Separation-Related Adjustments In connection with the Separation, the Company entered into an Employee Matters Agreement with News Corp, which generally provides that employees of News Corp no longer participate in benefit plans...

  • Page 118
    ... STATEMENTS stock options for shares of Class A Common Stock on a one-for-two basis with no change in the original terms under the 2004 Stock Option Plan and 2004 Replacement Stock Option Plan (collectively, the "2004 Plan"). The 2004 Plan automatically terminated in fiscal 2014. The Company...

  • Page 119
    ... of the price per share based on a bona-fide sale offer or the original subscription price plus interest and amounts outstanding under shareholder loans advanced by the Company prior to June 2015. In January 2014, the Company terminated its licensing arrangement with Rotana Media Services ("RMS...

  • Page 120
    ... approximately $280 million for office facilities that have been sub-leased to News Corp. Sports 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 121
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS In July 2015, the Company expanded its arrangement with one of the collegiate conferences for broadcast rights through 2032 and one of the Company's RSNs agreed to a new rights agreement with a MLB team for broadcast ...

  • Page 122
    ... build on corporate governance and compliance enhancements which the Company has implemented. These shall remain in effect at least through December 31, 2016, and will be applicable to both the Company and News Corp. Southern District of New York On July 19, 2011, a purported class action lawsuit...

  • Page 123
    ... CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS $49 million and $79 million to News Corp during fiscal 2015 and 2014, respectively. If additional information becomes available and as payments are made, the Company will update the liability provision for the Indemnity. Any changes...

  • Page 124
    ...benefit obligation, change in the fair value of plan assets and funded status for the Company's benefit plans: Pension benefits As of June 30, 2015 2014 (in millions) 2015 2014 Postretirement benefits Projected benefit obligation, beginning of the year ...$ Service cost ...Interest cost ...Benefits...

  • Page 125
    ... and $2,191 million, respectively. Information about funded and unfunded pension plans is presented below: Funded plans 2015 Unfunded plans As of June 30, 2014 2015 2014 (in millions) Projected benefit obligation ...$ Accumulated benefit obligation ...Fair value of plan assets ...(a) 1,647 $ 1,377...

  • Page 126
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Below is information about pension plans in which the accumulated benefit obligation exceeds fair value of the plan assets. Funded plans 2015 Unfunded plans As of June 30, 2014 2015 2014 (in millions) Projected benefit ...

  • Page 127
    ... CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Pension benefits Postretirement benefits For the years ended June 30, 2014 2013 2015 2014 2013 2015 Additional information related to continuing operations: Weighted-average assumptions used to determine benefit obligations Discount...

  • Page 128
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The following table sets forth the estimated benefit payments and estimated settlements for the next five fiscal years and in aggregate for the five fiscal years thereafter. These payments are estimated based on the same ...

  • Page 129
    ... 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 in a non-active market. The fair values...

  • Page 130
    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, 2015 2014 Asset Category: Equity securities ...Debt securities ...Other, including cash......

  • Page 131
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 17. INCOME TAXES Income from continuing operations before income tax expense was attributable to the following jurisdictions: 2015 For the years ended June 30, 2014 (in millions) 2013 U.S. (including exports) ...$ ...

  • Page 132
    ... as of June 30, 2015 and 2014, respectively. The Company also had non-current deferred tax liabilities of $2,082 million and $2,729 million as of June 30, 2015 and 2014, respectively. The primary reason for the change in the net deferred tax liabilities is due to the sale of the DBS businesses which...

  • Page 133
    ...INFORMATION The Company is a diversified global media and entertainment company, which manages and reports its businesses in the following segments: ï,- Cable Network Programming, which principally consists of the production and licensing of programming distributed primarily through cable television...

  • Page 134
    ... of corporate overhead and eliminations and other businesses. Following the sale of the DBS businesses, the Company continues to report in five segments for comparative purposes. The Company's operating segments have been determined in accordance with the Company's internal management structure...

  • Page 135
    ...the Company's financial performance. 2015 For the years ended June 30, 2014 (in millions) 2013 Revenues: Cable Network Programming ...$ Television ...Filmed Entertainment...Direct Broadcast Satellite Television ...Other, Corporate and Eliminations ...Total revenues ...$ Segment OIBDA: Cable Network...

  • Page 136
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2015 For the years ended June 30, 2014 (in millions) 2013 Capital expenditures: Cable Network Programming ...$ Television ...Filmed Entertainment...Direct Broadcast Satellite Television ...Other, Corporate and ...

  • Page 137
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Geographic Segments 2015 For the years ended June 30, 2014 (in millions) 2013 Revenues: U.S. and Canada(a) ...$ Europe(b) ...Other(c) ...Total revenues ...$ (a) 18,563 $ 5,724 4,700 28,987 $ 17,842 $ 9,745 4,280 31,867 ...

  • Page 138
    ...shares - basic ...Shares issuable under equity-based compensation plans(a) ...Weighted average shares - diluted ...Income from continuing operations attributable to Twenty-First Century Fox stockholders per share - basic ...$ Income from continuing operations attributable to Twenty-First Century Fox...

  • Page 139
    ... attributable to Twenty-First Century Fox stockholders per share - diluted ...Stock prices(b) Class A - High ...Class A - Low...Class B - High ...Class B - Low ...Fiscal 2014 Revenues ...Income from continuing operations attributable to Twenty-First Century Fox stockholders ...Income (loss) from...

  • Page 140
    ...$ 48 (899) (3,284) NOTE 22. ADDITIONAL FINANCIAL INFORMATION Supplemental Cash Flows Information 2015 For the years ended June 30, 2014 (in millions) 2013 Supplemental cash flows information: Cash paid for income taxes(a) ...Cash paid for interest ...Sale of other investments ...Purchase of other...

  • Page 141
    ... in the Consolidated Statements of Operations: 2015 For the years ended June 30, 2014 (in millions) 2013 Gain on disposition of DBS businesses(a) ...$ Gain on disposition of Shine Group(a) ...Change in fair value of securities(a) ...Impairment charges(b) ...Settlement loss on pension liabilities...

  • Page 142
    TWENTY-FIRST CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 23. SUPPLEMENTAL GUARANTOR INFORMATION In May 2015, the Company refinanced the Prior Credit Agreement with the New Credit Agreement, among 21CFA as Borrower, the Company as Parent Guarantor and other parties (See Note...

  • Page 143
    ...Supplemental Condensed Consolidating Statement of Operations For the year ended June 30, 2015 (in millions) Twenty-First Century Fox and Subsidiaries 21st Century Fox America, Inc. Twenty-First Century Fox Non-Guarantor Reclassifications and Eliminations Revenues ...$ Expenses ...Equity (losses...

  • Page 144
    ... Supplemental Condensed Consolidating Statement of Operations 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 Reclassifications and Eliminations Revenues ...$ Expenses ...Equity...

  • Page 145
    ... Supplemental Condensed Consolidating Statement of Operations For the year ended June 30, 2013 (in millions) Twenty-First Century Fox and Subsidiaries 21st Century Fox America, Inc. Twenty-First Century Fox Non-Guarantor Reclassifications and Eliminations Revenues ...$ Expenses ...Equity...

  • Page 146
    ...CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Supplemental Condensed Consolidating Balance Sheet As of June 30, 2015 (in millions) Twenty-First Century Fox and Subsidiaries 21st Century Fox America, Inc. Twenty-First Century Fox... in associated companies and other ...information 140

  • Page 147
    ...CENTURY FOX, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Supplemental Condensed Consolidating Balance Sheet As of June 30, 2014 (in millions) Twenty-First Century Fox and Subsidiaries 21st Century Fox America, Inc. Twenty-First Century Fox... in associated companies and other ...information 141

  • Page 148
    ... equity-based compensation ... Repurchase of shares ... Dividends paid and distributions ... Purchase of subsidiary shares from noncontrolling interests... - 51 (5,939) (587) (650) (291) (2) - 51 (5,939) (878) (652) Net cash provided by (used in) financing activities from continuing...

  • Page 149
    ... of borrowings ... Issuance of shares and excess tax benefit from equity-based compensation ... Repurchase of shares ... Dividends paid and distributions ... Purchase of subsidiary shares from noncontrolling interests... Distribution to News Corporation... - 66 (3,772) (568) (10...

  • Page 150
    ... tax benefit from equity-based compensation ... Repurchase of shares ... Dividends paid and distributions ... Purchase of subsidiary shares from noncontrolling interests... Sale of subsidiary shares to noncontrolling interests... Distribution to News Corporation... 19 - 203 (2,026...

  • Page 151
    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 152
    ... communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management's Report on Internal Control Over Financial Reporting Management's report and the report of the...

  • Page 153
    ... 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 Fox" and...

  • Page 154
    ... 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 RELATIONSHIPS AND RELATED...

  • Page 155
    ..., thereunto duly authorized. TWENTY-FIRST CENTURY FOX, INC. (Registrant) By: /S/ JOHN P. NALLEN John P. Nallen Senior Executive Vice President and Chief Financial Officer Date: August 12, 2015 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by...

  • Page 156
    Notes

  • Page 157
    Notes

  • Page 158
    Notes

  • Page 159
    ...News Corporation's Class A Common Stock and Class B Common Stock were listed and traded on The NASDAQ Global Select Market under the symbols "NWSA" and "NWS," respectively. The Peer Group Index, which consists of media and entertainment companies that represent Twenty-First Century Fox's competitors...

  • Page 160
    ... Founder and Chief Executive Officer Breyer Capital Chase Carey Executive Vice Chairman 21st Century Fox David F. DeVoe Senior Advisor 21st Century Fox Viet Dinh Founding Partner Bancroft PLLC Sir Roderick I. Eddington Lead Director 21st Century Fox Non-Executive Chairman, Australia and New Zealand...

  • Page 161
    ... 21st Century Fox is a diversified global media company which principally consists of the following: CABLE NETWORK PROGRAMMING United States Fox Business Network Fox News Channel FX Networks and Productions FOX Sports Regional Networks National Geographic Channels (70%) FOX Sports 1 FOX Sports 2 Big...

  • Page 162
    Our embrace of the future has always been a hallmark of our company. It powers our ability to continually evolve our business, especially in this time of transformational change.

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