QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
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(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange | ||
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☒ |
Accelerated filer |
☐ | |||
Non-accelerated filer |
☐ |
Smaller reporting company |
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Emerging growth company |
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Page |
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2 |
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3 |
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4 |
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5 |
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6 |
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28 |
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43 |
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43 |
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44 |
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44 |
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44 |
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44 |
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44 |
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44 |
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45 |
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46 |
For the three months ended September 30, |
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Notes |
2019 |
2018 |
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Revenues: |
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Circulation and subscription |
$ | |
$ | |
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Advertising |
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Consumer |
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Real e state |
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Other |
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Total Revenues |
2 |
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|||||||||
Operating expenses |
( |
) | ( |
) | ||||||||
Selling, general and administrative |
( |
) | ( |
) | ||||||||
Depreciation and amortization |
( |
) | ( |
) | ||||||||
Impairment and restructuring charges |
3 |
( |
) | ( |
) | |||||||
Equity losses of affiliates |
4 |
( |
) | ( |
) | |||||||
Interest income (expense), net |
|
( |
) | |||||||||
Other, net |
1 3 |
|
|
|||||||||
(Loss) income before income tax benefit (expense) |
( |
) | |
|||||||||
Income tax benefit (expense) |
1 1 |
|
( |
) | ||||||||
Net (loss) income |
( |
) | |
|||||||||
Less: Net income attributable to noncontrolling interests |
( |
) | ( |
) | ||||||||
Net (loss) income attributable to News Corporation stockholders |
$ | ( |
) | $ | |
|||||||
Basic and diluted (loss) earnings per share: |
9 |
|||||||||||
Net (loss) income attributable to News Corporation stockholders per share |
$ | ( |
) | $ | |
|||||||
For the three months ended |
||||||||
September 30, |
||||||||
2019 |
2018 |
|||||||
Net (loss) income |
$ | ( |
) | $ | ||||
Other comprehensive loss: |
||||||||
Foreign currency translation adjustments |
( |
) | ( |
) | ||||
Net change in the fair value of cash flow hedges (a) |
( |
) | ||||||
Benefit plan adjustments, net (b) |
||||||||
Other comprehensive loss |
( |
) | ( |
) | ||||
Comprehensive (loss) income |
( |
) | ||||||
Less: Net income attributable to noncontrolling interests |
( |
) | ( |
) | ||||
Less: Other comprehensive loss attributable to noncontrolling interests |
||||||||
Comprehensive ( loss) income attributable to News Corporation stockholders |
$ | ( |
) | $ | ||||
(a) |
Net of income tax bene fit ( ) of $ million and ( $) for the three months ended September 30, 2019 and 2018, respectively. |
(b) |
Net of income tax expense of $ |
Notes |
As of September 30, 2019 |
As of June 30, 2019 |
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(unaudited) |
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(audited) |
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Assets: |
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||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
$ | |
$ | |
||||||||
Receivables, net |
1 3 |
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|||||||||
Inventory, net |
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||||||||||
Other current assets |
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|
||||||||||
Total current assets |
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|
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Non-current assets: |
||||||||||||
Investments |
4 |
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|||||||||
Property, plant and equipment, net |
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|
||||||||||
Operating lease right-of-use assets |
6 |
|
— |
|||||||||
Intangible assets, net |
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|
||||||||||
Goodwill |
|
|
||||||||||
Deferred income tax assets |
1 1 |
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|||||||||
Other non-current assets |
1 3 |
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|||||||||
Total assets |
$ | |
$ | |
||||||||
Liabilities and Equity: |
||||||||||||
Current liabilities: |
||||||||||||
Accounts payable |
$ | |
$ | |
||||||||
Accrued expenses |
|
|
||||||||||
Deferred revenue |
2 |
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|
|||||||||
Current borrowings |
5 |
|
|
|||||||||
Other current liabilities |
1 3 |
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|
|||||||||
Total current liabilities |
|
|
||||||||||
Non-current liabilities: |
||||||||||||
Borrowings |
5 |
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|
|||||||||
Retirement benefit obligations |
|
|
||||||||||
Deferred income tax liabilities |
11 |
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|||||||||
Operating lease liabilities |
6 |
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— |
|||||||||
Other non-current liabilities |
|
|
||||||||||
Commitments and contingencies |
1 0 |
|||||||||||
Class A common stock (a) |
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|
||||||||||
Class B common stock (b) |
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Additional paid-in capital |
|
|
||||||||||
Accumulated deficit |
( |
) | ( |
) | ||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||||||
Total News Corporation stockholders’ equity |
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||||||||||
Noncontrolling interests |
|
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||||||||||
Total equity |
7 |
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|||||||||
Total liabilities and equity |
$ | |
$ | |
||||||||
(a) | Class A common stock |
(b) |
Class B common stock , respectively . |
For the three months ended September 30, |
||||||||||||
Notes |
|
2019 |
2018 |
|||||||||
Operating activities: |
||||||||||||
Net (loss) income |
$ |
( |
) | $ |
|
|||||||
Adjustments to reconcile net (loss) income to cash provided by operating activities: |
||||||||||||
Depreciation and amortization |
|
|
||||||||||
Operating lease expense |
|
|
6 |
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|
|
— |
| |
Equity losses of affiliates |
4 |
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|
|||||||||
Cash distributions received from affiliates |
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|
||||||||||
Impairment charges |
3 |
|
— |
|||||||||
Other, net |
1 3 |
( |
) | ( |
) | |||||||
Deferred income taxes and taxes payable |
1 1 |
( |
) | |
||||||||
Change in operating assets and liabilities, net of acquisitions: |
||||||||||||
Receivables and other assets |
( |
) | ( |
) | ||||||||
Inventories, net |
( |
) | ( |
) | ||||||||
Accounts payable and other liabilities |
|
( |
) | |||||||||
Net cash provided by operating activities |
|
|
||||||||||
Investing activities: |
||||||||||||
Capital expenditures |
( |
) | ( |
) | ||||||||
Acquisitions, net of cash acquired |
— |
|
||||||||||
Investments in equity affiliates and other |
( |
) | ( |
) | ||||||||
Proceeds from business dispositions |
|
|
|
|
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— |
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Proceeds from property, plant and equipment and other asset dispositions |
|
— |
||||||||||
Other, net |
|
|
||||||||||
Net cash used in investing activities |
( |
) | ( |
) | ||||||||
Financing activities: |
||||||||||||
Borrowings |
5 |
|
|
|||||||||
Repayment of borrowings |
5 |
( |
) | ( |
) | |||||||
Dividends paid |
( |
) | ( |
) | ||||||||
Other, net |
|
( |
) | |||||||||
Net cash used in financing activities |
( |
) | ( |
) | ||||||||
Net change in cash and cash equivalents |
( |
) | ( |
) | ||||||||
Cash and cash equivalents, beginning of period |
|
|
||||||||||
Exchange movement on opening cash balance |
( |
) | ( |
) | ||||||||
Cash and cash equivalents, end of period |
$ | |
$ | |
||||||||
For the three months ended September 30, 2019 |
||||||||||||||||||||
News and Information Services |
Subscription Video Services |
Book Publishing |
Digital Real Estate Services |
|
Total Revenues |
|||||||||||||||
(in millions) |
||||||||||||||||||||
Revenues: |
||||||||||||||||||||
Circulation and subscription |
$ | $ | $ | — |
|
$ | $ | |||||||||||||
Advertising |
— |
|||||||||||||||||||
Consumer |
— |
— |
— |
|||||||||||||||||
Real estate |
— |
— |
— |
|||||||||||||||||
Other |
||||||||||||||||||||
Total Revenues |
$ | $ | $ | $ | $ | |||||||||||||||
For the three months ended September 30, 2018 |
||||||||||||||||||||
News and Information Services |
Subscription Video Services |
Book Publishing |
Digital Real Estate Services |
Total Revenues |
||||||||||||||||
(in millions) |
||||||||||||||||||||
Revenues: |
||||||||||||||||||||
Circulation and subscription |
$ | $ | $ | — |
$ | $ | ||||||||||||||
Advertising |
— |
|||||||||||||||||||
Consumer |
— |
— |
— |
|||||||||||||||||
Real estate |
— |
— |
— |
|||||||||||||||||
Other |
||||||||||||||||||||
Total Revenues |
$ | $ | $ | $ | $ | |||||||||||||||
For the three months ended |
||||||||
September 30, |
||||||||
2019 |
2018 |
|||||||
(in millions) |
||||||||
Balance - beginning of period |
$ |
|
$ |
|||||
Deferral of revenue |
||||||||
Recognition of deferred revenue (a) |
( |
) | ( |
) | ||||
Other |
( |
) | ||||||
Balance - end of period |
$ | $ | ||||||
(a) |
For the three months ended September 30, 2019 and 2018, the Company recognized approximately $ |
For the three months ended September 30, |
||||||||||||||||||||||||||||||||
2019 |
2018 |
|||||||||||||||||||||||||||||||
One time employee termination benefits |
Facility related costs |
Other |
Total |
One time employee termination benefits |
Facility related costs |
Other |
Total |
|||||||||||||||||||||||||
(in millions) |
||||||||||||||||||||||||||||||||
Balance, beginning of period |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||
Additions |
|
— |
— |
|
|
— |
— |
|
||||||||||||||||||||||||
Payments |
( |
) | — |
— |
( |
) | ( |
) | — |
( |
) | ( |
) | |||||||||||||||||||
Other |
( |
) | ( |
) | — |
( |
) | ( |
) | — |
|
— |
||||||||||||||||||||
Balance, end of period |
$ | |
$ | — |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||
Ownership Percentage as of September 30, 2019 |
As of September 30, 2019 |
As of June 30, 2019 |
||||||||||
(in millions) |
||||||||||||
Equity method investments (a) |
various |
$ | |
$ | |
|||||||
Equity securities (b) |
various |
|
|
|||||||||
Total Investments |
$ | |
$ | |
||||||||
(a) |
Equity method investments are primarily comprised of Foxtel’s investment in Nickelodeon Australia Joint Venture and Elara Technologies Pte. Ltd. (“Elara”), which operates PropTiger.com, Makaan.com and Housing.com. |
(b) |
Equity securities are primarily comprised of certain investments in China and the Company’s investment in HT&E Limited, which operates a portfolio of Australian radio and outdoor media assets. |
For the three months ended |
||||||||
September 30, |
||||||||
2019 |
2018 |
|||||||
(in millions) |
||||||||
Total gains recognized on equity securities |
$ | |
$ | |
||||
Less: Gains recognized on equity securities sold |
— |
— |
||||||
Unrealized gains recognized on equity securities held at end of period |
$ | |
$ | |
||||
Interest rate at September 30, |
Due date at September 30, |
As of September 30, 2019 |
As of June 30, 2019 |
|||||||||||||
(in millions) |
||||||||||||||||
Foxtel Group |
||||||||||||||||
Credit facility 2014 (a) |
|
% | |
$ | |
$ | |
|||||||||
Credit facility 2015 (a) |
|
% | |
|
|
|||||||||||
Credit facility 2016 (a)(c) |
|
% | |
|
|
|||||||||||
Working capital facility 2017 (a)(c) |
|
% | |
|
|
|||||||||||
US private placement 2009 tranche 3 (b) |
— |
|
— |
|
||||||||||||
US private placement 2012 USD portion tranche 1 (b) |
— |
|
— |
|
||||||||||||
US private placement 2012 USD portion (d) |
|
% | |
|
|
|||||||||||
US private placement 2012 USD portion tranche 3 (d) |
|
% | |
|
|
|||||||||||
US private placement 2012 AUD portion |
|
% | |
|
|
|||||||||||
REA Group |
||||||||||||||||
Credit facility 2016 tranche 3 (e) |
|
% | |
|
|
|||||||||||
Credit facility 2018 (e) |
|
% | |
|
|
|||||||||||
Total borrowings |
|
|
||||||||||||||
Less: current portion (f) |
( |
) | ( |
) | ||||||||||||
Long-term borrowings |
$ | |
$ |
|
||||||||||||
(a) |
Borrowings under these facilities bear interest at a floating rate of Australian BBSY plus an applicable margin of between |
(b) |
During the three months ended September 30, 2019, certain subsidiaries of Foxtel (together with Foxtel, the “ Foxtel Debt Group”) repaid $aggregate pri senior unsecured notencipal amou n t of s maturing in July 2019 and $aggregate principal amount of senior unsecured notes maturing in September 2019. |
(c) |
As of September 30, 2019, the Foxtel Debt Group has undrawn commitments of $ of |
(d) |
The carrying value of the borrowings include any fair value adjustments related to the Company’s fair value hedges. See Note 8 —Financial Instruments and Fair Value Measurements. |
(e) |
Borrowings under these facilities bear interest at a floating rate of the Australian BBSY plus a margin of between |
(f) |
The Company classifies the current portion of long term debt as non-current liabilities on the Balance Sheets when it has the intent and ability to refinance the obligation on a long-term basis, in accordance with ASC 470-50 “Debt.” |
For the three months ended September 30, |
||||||||
Income Statement Location |
2019 |
|||||||
(in millions) |
||||||||
Operating lease costs |
Selling, general and administrative |
$ | |
|||||
Operating lease costs |
Operating expenses |
|
||||||
Short term lease costs |
Operating expenses |
|
||||||
Variable l ease costs |
Selling, general and administrative |
|
||||||
Total lease costs |
$ | |
||||||
As of September 30, |
||||
Weighted-average remaining lease term |
|
|||
Weighted-average incremental borrowing rate |
|
% |
For the three September 30, |
||||
2019 |
||||
(in millions) |
||||
Cash paid—Operating lease liabilities |
$ |
|
||
Operating lease right-of-use asset obtained in exchange for operating lease liabilities |
$ |
|
As of September 30, 2019 |
||||
(in millions) |
||||
Fiscal 2020 (nine months remaining) |
$ | |
||
Fiscal 2021 |
|
|||
Fiscal 2022 |
|
|||
Fiscal 2023 |
|
|||
Fiscal 2024 |
|
|||
Thereafter |
|
|||
Total future minimum lease payments |
|
|||
Less: interest |
|
|||
Present value of minimum payments |
$ | |
||
For the three months ended September 30, 2019 |
||||||||||||||||||||||||||||||||||||||||
Class A Common Stock |
Class B Common Stock |
Additional Paid-in |
Accumulated |
Accumulated Other Comprehensive |
Total News |
Non- controlling |
Total |
|||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Loss |
Equity |
Interests |
Equity |
|||||||||||||||||||||||||||||||
(in millions) |
||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2019 |
|
$ | |
|
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
$ | |
$ | |
||||||||||||||||||||
Cumulative impact from adoption of new standards |
— |
— |
— |
— |
— |
|
|
|
— |
|
||||||||||||||||||||||||||||||
Net (loss) income |
— |
— |
— |
— |
— |
( |
) | — |
( |
) | |
( |
) | |||||||||||||||||||||||||||
Other comprehensive loss |
— |
— |
— |
— |
— |
— |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
Dividends |
— |
— |
— |
— |
( |
) | — |
— |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
Other |
|
— |
— |
— |
( |
) |
— |
— |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
Balance, September 30, 2019 |
|
$ | |
|
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|
$ | |
|
$ | |
||||||||||||||||||
For the three months ended September 30, 2018 |
||||||||||||||||||||||||||||||||||||||||
Class A Common Stock |
Class B Common Stock |
Additional Paid-in |
Accumulated |
Accumulated Other Comprehensive |
Total News |
Non controlling |
Total |
|||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Capital |
Deficit |
Loss |
Equity |
Interests |
Equity |
|||||||||||||||||||||||||||||||
(in millions) |
||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2018 |
|
$ | |
|
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
$ | |
$ | |
||||||||||||||||||||
Cumulative impact f rom adoption of new standards |
|
( |
) |
|
|
|
||||||||||||||||||||||||||||||||||
Net |
— |
— |
— |
— |
— |
|
— |
|
|
|
||||||||||||||||||||||||||||||
Other comprehensive loss |
— |
— |
— |
— |
— |
— |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
Dividends |
— |
— |
— |
— |
( |
) |
— |
— |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
Other |
|
— |
— |
— |
( |
) | ( |
) | |
( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||
Balance, September 30, 2018 |
|
$ | |
|
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|
$ | |
$ | |
|||||||||||||||||||
• | Level 1 |
• | Level 2 |
• | Level 3 |
As of September 30, 2019 |
As of June 30, 2019 |
|||||||||||||||||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||||||||||||||
(in millions) |
||||||||||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||||||||||
Foreign currency derivatives - cash flow hedges |
$ | — |
|
$ |
— |
|
$ |
— |
|
$ | — |
|
$ | — |
|
$ | |
|
$ | — |
|
$ | |
|||||||||
Cross currency interest rate derivatives - fair value hedges |
— |
|
— |
|
— |
|
— |
|
||||||||||||||||||||||||
Cross currency interest rate derivatives - economic hedges |
— |
— |
— |
— |
— |
|
— |
|
||||||||||||||||||||||||
Cross currency interest rate derivatives - cash flow hedges |
— |
|
— |
|
— |
|
— |
|
||||||||||||||||||||||||
Equity securities (a) |
|
— |
|
|
|
— |
|
|
||||||||||||||||||||||||
Total assets |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||
Liabilities: |
||||||||||||||||||||||||||||||||
Interest rate derivatives - cash flow hedges |
$ | — |
$ | |
$ | — |
$ | |
$ | — |
$ | |
$ | — |
$ | |
||||||||||||||||
Mandatorily redeemable noncontrolling interests |
— |
— |
— |
— |
— |
— |
|
|
||||||||||||||||||||||||
Cross currency interest rate derivatives - cash flow hedges |
— |
|
— |
|
— |
|
— |
|
||||||||||||||||||||||||
Total liabilities |
$ | — |
$ | |
$ | — |
$ | |
$ | — |
$ | |
$ | |
$ | |
||||||||||||||||
(a) | See Note 4 —Investments. |
For the three months ended September 30, |
||||||||
2019 |
2018 |
|||||||
(in millions) |
||||||||
Balance - beginning of period(a) |
$ | |
$ | |
||||
Purchases |
|
|
||||||
Sales |
— |
( |
) | |||||
Foreign exchange and other |
( |
) | ( |
) | ||||
Balance - end of period |
$ | |
$ | |
||||
(a) |
As a result of the adoption of ASU 2016-01 during the first quarter of fiscal 2019 the cumulative net unrealized gains (losses) for these investments contained within Accumulated other comprehensive loss were reclassified through Accumulated deficit as of July 1, 2018., |
For the three months ended September 30, |
||||||||
2019 |
2018 |
|||||||
(in millions) |
||||||||
Balance - beginning of period |
|
$ |
|
|
|
$ |
|
|
Payments (a) |
( |
) | |
|||||
Other |
( |
) | — |
|||||
Balance - end of period |
$ | — |
$ | |
||||
(a) |
In July 2019, REA Group acquired the remaining |
• |
foreign currency exchange rate risk: arising primarily through Foxtel Debt Group borrowings denominated in U.S. dollars and payments for customer premise equipment; and |
• |
interest rate risk: arising from fixed and floating rate Foxtel Debt Group borrowings. |
Balance Sheet Location |
|
As of September 30, 2019 |
|
As of June 30, 2019 |
||||||
(in millions) |
||||||||||
Foreign currency derivatives - cash flow hedges |
Other current assets |
$ | — |
$ | ||||||
Cross currency interest rate derivatives - fair value hedges |
Other current assets |
— |
||||||||
Cross currency interest rate derivatives - economic hedges |
Other current assets |
— |
||||||||
Cross currency interest rate derivatives - cash flow hedges |
Other current assets |
— |
||||||||
Cross currency interest rate derivatives - fair value hedges |
Other non-current assets |
|||||||||
Cross currency interest rate derivatives - cash flow hedges |
Other non-current assets |
|||||||||
Interest rate derivatives - cash flow hedges |
Other current liabilities |
( |
) | ( |
) | |||||
Interest rate derivatives - cash flow hedges |
Other non-current liabilities |
( |
) | ( |
) | |||||
C ross currency interest rate derivatives - cash flow hedges |
Other non-current liabilities |
( |
) | ( |
) |
As of September 30, 2019 |
||||
(in millions) | ||||
Borrowings: |
||||
Carrying amount of hedged item |
$ | |||
Cumulative hedging adjustments included in the carrying amount |
( |
) |
Gain (loss) recognized in Accumulated |
(Gain) loss reclassified from Accumulated |
|||||||||||||||||
o c omprehensive l ossfor the three months ended September 30, |
o ther c omprehensive l ossthe three months ended September 30, |
Income statement location | ||||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||||
(in millions) |
||||||||||||||||||
Derivative instruments designated as cash flow hedges: |
||||||||||||||||||
Foreign currency derivatives - cash flow hedges |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | Operating expenses | |||||||
Cross currency interest rate derivatives - cash flow hedges |
( |
) | ( |
) | Interest income (expense), net | |||||||||||||
Interest rate derivatives - cash flow hedges |
( |
) | ( |
) | ( |
) | Interest income (expense), net | |||||||||||
Total |
$ | $ | ( |
) | $ | ( |
) | $ | ||||||||||
For the three months ended September 30, |
||||||||
2019 |
2018 |
|||||||
(in millions, except per share amounts) |
||||||||
Net (l income oss) |
$ | ( |
) | $ | ||||
Less: Net income attributable to noncontrolling interests |
( |
) | ( |
) | ||||
Net (loss) income attributable to News Corporation stockholders |
$ | ( |
) | $ | ||||
Weighted-average number of shares of common stock outstanding - basic |
||||||||
Dilutive effect of equity awards (a) |
— |
|||||||
Weighted-average number of shares of common stock outstanding - diluted |
||||||||
Net (loss) income attributable to News Corporation stockholders per share - basic and diluted |
$ | ( |
) | $ |
(a) | The dilutive impact of the Company’s performance stock units, restricted stock units and stock options has been excluded from the calculation of diluted loss per share for the three months ended September 30, 2019 because their inclusion would have an antidilutive effect on the net loss per share. |
• | News and Information Services The Wall Street Journal Barron’s The Australian The Daily Telegraph, Herald Sun, The Courier Mail The Advertiser The Times, The Sunday Times, The Sun The Sun on Sunday New York Post in-store marketing products and services, home-delivered shopper media and digital marketing solutions, including Checkout 51’s mobile app, as well as Unruly, a global video advertising marketplace, Wireless Group, operator of talkSPORT, the leading sports radio network in the U.K., and Storyful, a social media content agency. |
• | Subscription Video Services pay-TV subscribers and other commercial licensees, primarily via cable, satellite and internet distribution, and consists of (i) the Company’s Australian News Channel (“ANC”) . Foxtel is the largest pay-TV provider in Australia, with nearly over-the-top, or OTT, service and Kayo, a sports-only OTT service. |
• | Book Publishing The Hobbit, Goodnight Moon, To Kill a Mockingbird, Jesus Calling and Hillbilly Elegy |
• | Digital Real Estate Services end-to-end digital property search and financing experience and a mortgage broking offering. |
• | Other |
For the three months ended |
||||||||
September 30, |
||||||||
2019 |
2018 |
|||||||
(in millions) |
||||||||
Revenues: |
||||||||
News and Information Services |
$ |
|
$ |
|||||
Subscription Video Services |
||||||||
Book Publishing |
||||||||
Digital Real Estate Services |
||||||||
Total revenues |
$ | $ | ||||||
Segment EBITDA: |
||||||||
News and Information Services |
$ | $ | ||||||
Subscription Video Services |
||||||||
Book Publishing |
||||||||
Digital Real Estate Services |
||||||||
Other |
( |
) | ( |
) | ||||
Depreciation and amortization |
( |
) | ( |
) | ||||
Impairment and restructuring charges |
( |
) | ( |
) | ||||
Equity losses of affiliates |
( |
) | ( |
) | ||||
Interest income (expense), net |
( |
) | ||||||
Other, net |
||||||||
(Loss) i ncome before income tax benefit ( expense) |
( |
) | ||||||
Income tax benefit ( expense) |
( |
) | ||||||
Net (loss) income |
$ |
( |
) | $ |
||||
As of |
As of |
|||||||
September 30, 2019 |
June 30, 2019 |
|||||||
(in millions) |
||||||||
Total assets: |
||||||||
News and Information Services |
$ | $ | ||||||
Subscription Video Services |
||||||||
Book Publishing |
||||||||
Digital Real Estate Services |
||||||||
Other (a) |
||||||||
Investments |
||||||||
Total assets |
$ | $ | ||||||
( a) |
The Other segment primarily includes Cash and cash equivalents. |
As of |
As of |
|||||||
September 30, 2019 |
June 30, 2019 |
|||||||
(in millions) |
||||||||
Goodwill and intangible assets, net: |
||||||||
News and Information Services |
$ | $ | ||||||
Subscription Video Services |
||||||||
Book Publishing |
||||||||
Digital Real Estate Services |
||||||||
Total Goodwill and intangible assets, net |
$ | $ | ||||||
As of |
As of |
|||||||
September 30, 2019 |
June 30, 2019 |
|||||||
(in millions) |
||||||||
Receivables |
$ | $ | ||||||
Allowance for doubtful accounts |
( |
) | ( |
) | ||||
Receivables, net |
$ | $ | ||||||
As of |
As of |
|||||||
September 30, 2019 |
June 30, 2019 |
|||||||
(in millions) |
||||||||
Royalty advances to authors |
$ | |
$ | |||||
Retirement benefit assets |
||||||||
Inventory (a) |
||||||||
Other |
||||||||
Total Other non-current assets |
$ | $ | ||||||
(a) |
Primarily consists of the non-current portion of programming rights. |
As of |
As of |
|||||||
September 30, 2019 |
June 30, 2019 |
|||||||
(in millions) |
||||||||
Royalties and commissions payable |
$ | $ | ||||||
Current operating lease liabilities (a) |
||||||||
Allowance for sales returns |
||||||||
Current tax payable |
||||||||
Other |
||||||||
Total Other current liabilities |
$ | $ | ||||||
(a) |
As a result of the adoption of ASU 2016-02 during the first quarter of fiscal 2020, the Company has included the current portion of its operating lease liabilities within Other current liabilities as of September 30, 2019. |
For the three months ended |
||||||||
September 30, |
||||||||
2019 |
2018 |
|||||||
(in millions) |
||||||||
Remeasurement of equity securities |
$ | $ | ||||||
Other |
||||||||
Total Other, net |
$ | $ | ||||||
For the three months ended |
||||||||
September 30, |
||||||||
2019 |
2018 |
|||||||
(in millions) |
||||||||
Cash paid for interest |
$ | |
$ | |||||
Cash paid for taxes |
• | Overview of the Company’s Businesses - |
• | Results of Operations - |
• | Liquidity and Capital Resources - |
• | News and Information Services The Wall Street Journal Barron’s The Australian The Daily Telegraph Herald Sun The Courier Mail The Advertiser The Times The Sunday Times The Sun The Sun on Sunday New York Post in-store marketing products and services, home-delivered shopper media, and digital marketing solutions, including Checkout 51’s mobile app, as well as Unruly, a global video advertising marketplace, Wireless Group, operator of talkSPORT, the leading sports radio network in the U.K., and Storyful, a social media content agency. |
• | Subscription Video Services pay-TV subscribers and other commercial licensees, primarily via cable, satellite and internet distribution, and consists of (i) the Company’s 65% interest in Foxtel (with the remaining 35% interest in Foxtel held by Telstra, an Australian Securities Exchange (“ASX”)-listed telecommunications company) and (ii) Australian News Channel (“ANC”). Foxtel is the largest pay-TV provider in Australia, with nearly 200 channels covering sports, general entertainment, movies, documentaries, music, children’s programming and news. Foxtel offers the leading sports programming content in Australia, with broadcast rights to live sporting events including: National Rugby League, Australian Football League, Cricket Australia, the domestic football league, the Australian Rugby Union and various motorsports programming. Foxtel also operates Foxtel Now, an over-the-top, or OTT, service, and Kayo, a sports-only OTT service. |
• | Book Publishing The Hobbit, Goodnight Moon, To Kill a Mockingbird, Jesus Calling Hillbilly Elegy |
• | Digital Real Estate Services end-to-end digital property search and financing experience and a mortgage broking offering. |
• | Other |
For the three months ended September 30, |
||||||||||||||||
2019 |
2018 |
Change |
% Change |
|||||||||||||
(in millions, except %) |
Better/(Worse) |
|||||||||||||||
Revenues: |
||||||||||||||||
Circulation and subscription |
$ | 995 |
$ | 1,034 |
$ | (39 |
) | (4)% |
||||||||
Advertising |
608 |
664 |
(56 |
) | (8)% |
|||||||||||
Consumer |
387 |
400 |
(13 |
) | (3)% |
|||||||||||
Real estate |
218 |
227 |
(9 |
) | (4)% |
|||||||||||
Other |
132 |
199 |
(67 |
) | (34 |
)% | ||||||||||
Total Revenues |
2,340 |
2,524 |
(184 |
) | (7)% |
|||||||||||
Operating expenses |
(1,337 |
) | (1,340 |
) | 3 |
— |
||||||||||
Selling, general and administrative |
(782 |
) | (826 |
) | 44 |
5% |
||||||||||
Depreciation and amortization |
(162 |
) | (163 |
) | 1 |
1% |
||||||||||
Impairment and restructuring charges |
(297 |
) | (18 |
) | (279 |
) | ** |
|||||||||
Equity losses of affiliates |
(2 |
) | (3 |
) | 1 |
33% |
||||||||||
Interest income (expense), net |
4 |
(16 |
) | 20 |
** |
|||||||||||
Other, net |
4 |
20 |
(16 |
) | (80)% |
|||||||||||
(Loss) income before income tax benefit (expense) |
(232 |
) |
178 |
(410 |
) |
** |
||||||||||
Income tax benefit (expense) |
21 |
(50 |
) | 71 |
** |
|||||||||||
Net (loss) income |
(211 |
) | 128 |
(339 |
) | ** |
||||||||||
Less: Net income attributable to noncontrolling interests |
(16 |
) | (27 |
) | 11 |
41% |
||||||||||
Net (loss) income attributable to News Corporation |
$ |
(227 |
) |
$ |
101 |
$ |
(328 |
) |
** |
|||||||
For the three months ended September 30, |
||||||||
2019 |
2018 |
|||||||
(in millions) |
||||||||
Net (loss) income |
$ | (211 |
) | $ | 128 |
|||
Add: |
||||||||
Income tax (benefit) expense |
(21 |
) | 50 |
|||||
Other, net |
(4 |
) | (20 |
) | ||||
Interest (income) expense, net |
(4 |
) | 16 |
|||||
Equity losses of affiliates |
2 |
3 |
||||||
Impairment and restructuring charges |
297 |
18 |
||||||
Depreciation and amortization |
162 |
163 |
||||||
Total Segment EBITDA |
$ | 221 |
$ | 358 |
||||
For the three months ended September 30, |
||||||||||||||||
2019 |
2018 |
|||||||||||||||
(in millions) |
Revenues |
Segment EBITDA |
Revenues |
Segment EBITDA |
||||||||||||
News and Information Services |
$ | 1,149 |
$ | 56 |
$ | 1,248 |
$ | 109 |
||||||||
Subscription Video Services |
514 |
81 |
565 |
113 |
||||||||||||
Book Publishing |
405 |
49 |
418 |
68 |
||||||||||||
Digital Real Estate Services |
272 |
82 |
293 |
105 |
||||||||||||
Other |
— |
(47 |
) | — |
(37 |
) | ||||||||||
Total |
$ | 2,340 |
$ | 221 |
$ | 2,524 |
$ | 358 |
||||||||
For the three months ended September 30, |
||||||||||||||||
2019 |
2018 |
Change |
% Change |
|||||||||||||
(in millions, except %) |
Better/(Worse) |
|||||||||||||||
Revenues: |
||||||||||||||||
Circulation and subscription |
$ | 534 |
$ | 529 |
$ | 5 |
1% |
|||||||||
Advertising |
530 |
576 |
(46 |
) | (8)% |
|||||||||||
Other |
85 |
143 |
(58 |
) | (41)% |
|||||||||||
Total revenues |
1,149 |
1,248 |
(99 |
) |
(8)% |
|||||||||||
Operating expenses |
(670 |
) | (709 |
) | 39 |
6% |
||||||||||
Selling, general and administrative |
(423 |
) | (430 |
) | 7 |
2% |
||||||||||
Segment EBITDA |
$ |
56 |
$ |
109 |
$ |
(53 |
) |
(49)% |
||||||||
For the three months ended September 30, |
||||||||||||||||
2019 |
2018 |
Change |
% Change |
|||||||||||||
(in millions, except %) |
Better/(Worse) |
|||||||||||||||
Revenues: |
||||||||||||||||
Circulation and subscription |
$ | 451 |
$ | 491 |
$ | (40 |
) | (8)% |
||||||||
Advertising |
51 |
57 |
(6 |
) | (11)% |
|||||||||||
Other |
12 |
17 |
(5 |
) | (29)% |
|||||||||||
Total revenues |
514 |
565 |
(51 |
) |
(9)% |
|||||||||||
Operating expenses |
(344 |
) | (324 |
) | (20 |
) | (6)% |
|||||||||
Selling, general and administrative |
(89 |
) | (128 |
) | 39 |
30% |
||||||||||
Segment EBITDA |
$ |
81 |
$ |
113 |
$ |
(32 |
) |
(28)% |
||||||||
For the three months ended September 30, |
||||||||||||||||
2019 |
2018 |
Change |
% Change |
|||||||||||||
(in millions, except %) |
Better/(Worse) |
|||||||||||||||
Revenues: |
||||||||||||||||
Consumer |
$ | 387 |
$ | 400 |
$ | (13 |
) | (3)% |
||||||||
Other |
18 |
18 |
— |
— |
||||||||||||
Total revenues |
405 |
418 |
(13 |
) |
(3)% |
|||||||||||
Operating expenses |
(279 |
) | (275 |
) | (4 |
) | (1)% |
|||||||||
Selling, general and administrative |
(77 |
) | (75 |
) | (2 |
) | (3)% |
|||||||||
Segment EBITDA |
$ |
49 |
$ |
68 |
$ |
(19 |
) |
(28)% |
||||||||
For the three months ended September 30, |
||||||||||||||||
2019 |
2018 |
Change |
% Change |
|||||||||||||
(in millions, except %) |
Better/(Worse) |
|||||||||||||||
Revenues: |
||||||||||||||||
Circulation and subscription |
$ | 10 |
$ | 14 |
$ | (4 |
) | (29)% |
||||||||
Advertising |
27 |
31 |
(4 |
) | (13)% |
|||||||||||
Real estate |
218 |
227 |
(9 |
) | (4)% |
|||||||||||
Other |
17 |
21 |
(4 |
) | (19)% |
|||||||||||
Total revenues |
272 |
293 |
(21 |
) |
(7)% |
|||||||||||
Operating expenses |
(45 |
) | (35 |
) | (10 |
) | (29)% |
|||||||||
Selling, general and administrative |
(145 |
) | (153 |
) | 8 |
5% |
||||||||||
Segment EBITDA |
$ |
82 |
$ |
105 |
$ |
(23 |
) |
(22)% |
||||||||
For the three months ended September 30, |
2019 |
2018 |
||||||
Net cash provided by operating activities |
$ | 27 |
$ | 113 |
For the three months ended September 30, |
2019 |
2018 |
||||||
Net cash used in investing activities |
$ | (118 |
) | $ | (121 |
) |
For the three months ended September 30, |
2019 |
2018 |
||||||
Net cash used in financing activities |
$ | (95 |
) | $ | (124 |
) |
For the three months ended September 30, |
||||||||
2019 |
2018 |
|||||||
(in millions) |
||||||||
Net cash provided by operating activities |
$ | 27 |
$ | 113 |
||||
Less: Capital expenditures |
(117 |
) | (133 |
) | ||||
(90 |
) | (20 |
) | |||||
Less: REA Group free cash flow |
(28 |
) | (38 |
) | ||||
Plus: Cash dividends received from REA Group |
35 |
37 |
||||||
Free cash flow available to News Corporation |
$ | (83 |
) | $ | (21 |
) | ||
(a) |
Disclosure Controls and Procedures |
(b) |
Internal Control Over Financial Reporting |
31.1 |
||||
31.2 |
||||
32.1 |
||||
101 |
The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 formatted in Inline XBRL: (i) Consolidated Statements of Operations for the three months ended September 30, 2019 and 2018 (unaudited); (ii) Consolidated Statements of Comprehensive (Loss) Income for the three months ended September 30, 2019 and 2018 (unaudited); (iii) Consolidated Balance Sheets as of September 30, 2019 (unaudited) and June 30, 2019 (audited); (iv) Consolidated Statements of Cash Flows for the three months ended September 30, 2019 and 2018 (unaudited); and (v) Notes to the Unaudited Consolidated Financial Statements.* | |||
104 |
The cover page from News Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in Inline XBRL (included as Exhibit 101).* |
* | Filed herewith. |
** | Furnished herewith |
NEWS CORPORATION (Registrant) | ||
By: |
/s/ Susan Panuccio | |
Susan Panuccio | ||
Chief Financial Officer |