What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-08-11 compared with 2022-08-12 · 308 added, 326 removed, 1186 unchanged (35% of the section changed)

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In our opinion, Fox Corporation (the “Company”) maintained, in all material respects, effective internal control over financial reporting as of June 30, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Fox Corporation as of June 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income, cash flows and equity for each of the three years in the period ended June 30, 2022, and the related notes and our report dated August 12, 2022 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Fox Corporation as of June 30, 2023 and 2022, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended June 30, 2023, and the related notes and our report dated August 11, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Fox Corporation (the " Company " ) as of June 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income, cash flows and equity for each of the three years in the period ended June 30, 2022, and the related notes (collectively referred to as the " consolidated financial statements " ).

We have audited the accompanying consolidated balance sheets of Fox Corporation (the Company) as of June 30, 2023 and 2022, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended June 30, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2023, in conformity with U.S.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Assessment of realizability of deferred tax assets

Description of the Matter As disclosed in Note 2 to the consolidated financial statements, the Company records a valuation allowance based on the assessment of the realizability of the Company's deferred tax assets.

For the year ended June 30, 2022, the Company had deferred tax assets before valuation allowances of $3.7 billion as disclosed in Note 16.

Auditing management's assessment of realizability of deferred tax assets involved subjective estimation and complex auditor judgment in determining whether sufficient future taxable income will be generated to support the realization of the existing deferred tax assets.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls that address the risks of material misstatement relating to the realizability of deferred tax assets, including controls over management's estimates of future taxable income.

Among other audit procedures performed, we evaluated the significant assumptions used by the Company to develop estimated future taxable income and tested the completeness and accuracy of the underlying data.

For example, we evaluated management's estimates of future taxable income by performing a look-back analysis of management's historical estimates compared to actual results as well as compared management's estimates to current industry and economic trends.

We also performed a sensitivity analysis of future taxable income to evaluate the recoverability of deferred tax assets resulting from changes in assumptions.

Program rights amortization – National sports programming

Description of the Matter As disclosed in Note 2 to the consolidated financial statements, the Company has single and multi-year contracts for sports programming.

The costs of multi-year sports contracts at the Company are primarily amortized based on the ratio of each contract's current period attributable revenue to the estimated total remaining attributable revenue.

Description of the Matter As disclosed in Note 2 to the consolidated financial statements, the Company has single and multi-year contracts for national sports programming.

The costs of multi-year sports contracts at the Company are primarily amortized based on the ratio of each contract’s current period's attributable revenue to the estimated total remaining attributable revenue.

Auditing the amortization of the Company’s national sports programming involved subjective estimation and complex auditor judgment because the analysis that the Company relies upon to determine the amortization of this programming is based on estimates of future revenues from the programming.

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We also performed a sensitivity analysis of the estimated future revenues to evaluate the change in the amortization of the Company’s national sports programming resulting from changes in the assumptions.

Defamation and disparagement claims

Description of the Matter As disclosed in Note 14 to the consolidated financial statements, the Company and its news businesses and their employees are subject to lawsuits alleging defamation or disparagement.

The Company records a liability for those legal proceedings when management determines it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

The Company also discloses when it is reasonably possible that a material loss may be incurred.

The Company continues to believe the pending lawsuits alleging defamation or disparagement are without merit and intends to defend against them vigorously, including through any appeals.

The Company is unable to predict the final outcome of these matters and has determined that a loss is neither probable nor reasonably estimable.

Accounting for contingencies related to defamation and disparagement claims requires management to exercise judgment related to the likelihood of a loss and if necessary, the estimate of the amount or range of loss.

Auditing management’s accounting for such claims involves complex auditor judgment in determining whether the final outcome is probable or reasonably estimable.

Significant judgment is required to determine the likelihood of a loss and if necessary, the estimate of the amount or range of loss related to such matters.

Auditing management’s accounting for and disclosure of these matters involved challenging, and subjective auditor judgment in assessing the Company’s evaluation of the probability of a loss, and the estimated amount or range of loss.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls that address the risks of material misstatement relating to management’s evaluation of defamation and disparagement claims, including controls over determining whether a loss is probable and whether the amount of loss can be reasonably estimated, as well as financial statement disclosures.

Among other audit procedures, we tested management’s evaluation of the probability of outcome and range of loss, if estimable, through inspection of responses to inquiry letters sent to both internal and external legal counsel, discussions with internal legal counsel to confirm our understanding of the allegations and related merits, and by obtaining written representations from executives of the Company.

In addition, we evaluated the adequacy of financial disclosures.

/s/ Ernst & Young LLP

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Net income $ 1,253 $ 1,233 $ 2,201

Other comprehensive income (loss), net of tax:

Other comprehensive income, net of tax:

Benefit plan adjustments and other 77 92 99

Other comprehensive income (loss), net of tax 92 99 ( 109 )

Other comprehensive income, net of tax 77 92 99

Comprehensive income 1,330 1,325 2,300

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Proceeds from dispositions, net — 83 93

Sale of investments — — 349

Purchase of investments ( 54 ) ( 28 ) ( 86 )

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Repayment of borrowings — ( 750 ) —

Borrowings — — 1,191

Repurchase of shares ( 2,000 ) ( 1,000 ) ( 1,001 )

Non-operating cash flows from (to) The Walt Disney Company — 112 ( 95 )

Non-operating cash flows from The Walt Disney Company — — 112

Settlement of Divestiture Tax Prepayment — — 462

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Other financing activities, net ( 26 ) ( 25 ) ( 46 )

Net cash (used in) provided by financing activities ( 2,057 ) ( 870 ) 146

Net cash used in financing activities ( 2,290 ) ( 2,057 ) ( 870 )

Net (decrease) increase in cash and cash equivalents ( 928 ) ( 686 ) 1,241

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Net income — — — — — 2,150 — 2,150 26 2,176

Other comprehensive loss — — — — — — ( 109 ) ( 109 ) — ( 109 )

Other comprehensive income — — — — — — 99 99 — 99

Dividends — — — — — ( 272 ) — ( 272 ) — ( 272 )

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Cable Network Programming, Television and Other, Corporate and Eliminations.

The Distribution

On March 19, 2019, the Company became a standalone publicly traded company through the pro rata distribution by Twenty-First Century Fox, Inc.

("21CF") of all of the issued and outstanding common stock of FOX to 21CF stockholders (other than holders that were subsidiaries of 21CF) (the "Distribution") in accordance with the Amended and Restated Distribution Agreement and Plan of Merger, dated as of June 20, 2018, by and between 21CF and 21CF Distribution Merger Sub, Inc.

Following the Distribution, the Company's Class A Common Stock, par value $ 0.01 per share (the "Class A Common Stock"), and Class B Common Stock, par value $ 0.01 per share (the "Class B Common Stock" and, together with the Class A Common Stock, the "Common Stock") began trading independently on The Nasdaq Global Select Market.

In connection with the Distribution, the Company entered into the Separation and Distribution Agreement, dated as of March 19, 2019 (the "Separation Agreement"), with 21CF, which effected the internal restructuring (the "Separation") whereby The Walt Disney Company ("Disney") acquired the remaining 21CF assets and 21CF became a wholly-owned subsidiary of Disney.

The Separation and the Distribution were effected as part of a series of transactions contemplated by the Amen ded and Restated Merger Agreement and Plan of Merger, dated as of June 20, 2018 (the "21CF Disney Merger Agreement"), by and among 21CF, Disney and certain subsidiaries of Disney.

In connection with the Separation, the Company entered into several agreements that govern certain aspects of the Company's relationship wi th 21CF and Disney following the Separation including the Separation Agreement and a tax matters agreement.

The Separation Agreement contains the key provisions relating to the Separation and the Distribution.

The Separation Agreement identifies the assets that were transferred, the liabilities that were assumed and the contracts that were assigned to each of the Company and 21CF as part of the Separation and describes how these transfers, assumptions and assignments occurred.

It also provides for cross-indemnities between the Company and 21CF.

Other matters governed by the Separation Agreement include access to financial and other information, confidentiality, access to and provision of records, continued access for the Company to 21CF insurance policies and shared contracts and certain third-party consent provisions.

Pursuant to the Separation Agreement, the Company is the owner of all "FOX" brands and related trademarks, as well as all other intellectual property primarily related to the Company's business.

In addition, the Company entered into certain trademark and other intellectual property license agreements in connection with the use of certain intellectual property by 21CF.

The tax matters agreement among the Company, Disney and 21CF governs the parties' respective rights, responsibilities and obligations with respect to certain tax matters.

Under this agreement, 21CF will generally indemnify the Company against any taxes required to be reported on a consolidated or separate tax return of 21CF and/or any of its subsidiaries, including any taxes resulting from the Separation and the Distribution, and the Company will generally indemnify 21CF against any taxes required to be reported on a separate tax return of the Company or any of its subsidiaries.

The Company also entered into an employee matters agreement with 21CF that governs the parties' obligations with respect to certain employee-related liabilities (See Note 12—Equity-Based Compensation).

The core transition services agreements entered into in connection with the Separation terminated in accordance with their terms in fiscal 2022.

The Transaction

FOX became a standalone publicly traded company on March 19, 2019, when Twenty-First Century Fox, Inc.

(“21CF”) spun off the Company to 21CF stockholders and FOX's Class A Common Stock, par value $ 0.01 per share (the “Class A Common Stock”), and Class B Common Stock, par value $ 0.01 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”) began trading independently on The Nasdaq Global Select Market (“the Transaction”).

In connection with the Transaction, the Company entered into the Separation and Distribution Agreement, dated as of March 19, 2019 (the “Separation Agreement”), with 21CF, which effected the internal restructuring (the “Separation”) whereby The Walt Disney Company (“Disney”) acquired the remaining 21CF assets and 21CF became a wholly-owned subsidiary of Disney.

The Separation and the Transaction were effected as part of a series of transactions contemplated by the Amen ded and Restated Merger Agreement and Plan of Merger, dated as of June 20, 2018 (the “21CF Disney Merger Agreement”), by and among 21CF, Disney and certain subsidiaries of Disney.

In connection with the Separation, the Company entered into a tax matters agreement among the Company, Disney and 21CF which governs the parties’ respective rights, responsibilities and obligations with respect to certain tax matters.

Under this agreement, 21CF will generally indemnify the Company against any taxes required to be reported on a consolidated or separate tax return of 21CF and/or any of its subsidiaries, including any taxes resulting from the Separation and the Transaction, and the Company will generally indemnify 21CF against any taxes required to be reported on a separate tax return of the Company or any of its subsidiaries.

Pursuant to the 21CF Disney Merger Agreement, immediately prior to the Transaction, the Company paid 21CF a dividend (the “Dividend”) for the estimated taxes associated with the Transaction.

The final determination of the taxes included an estimated $ 5.8 billion in respect of the Separation and the Transaction for which the Company is responsible pursuant to the 21CF Disney Merger Agreement and an estimated $ 700 million prepayment in respect of divestitures (collectively, the “Transaction Tax”).

As a result of the Separation and the Transaction, which was a taxable transaction for which an estimated tax liability of $ 5.8 billion was included in the Transaction Tax paid by the Company, FOX obtained a tax basis in its assets equal to their respective fair market values.

This resulted in estimated annual tax deductions of approximately $ 1.5 billion, which is expected to continue over the next several years due to the amortization of the additional tax basis.

Such estimates are subject to revisions, which could be material, based upon the occurrence of future events.

This amortization is estimated to reduce the Company’s fiscal 2023 cash tax liability by approximately $ 360 million at the current combined federal and state applicable tax rate of approximately 24 %.

Included in the Transaction Tax was the Company’s share of the estimated tax liabilities of $ 700 million related to the anticipated divestitures by Disney of certain assets, principally the FOX Sports Regional Sports Networks (“RSNs”), which Disney sold during calendar year 2019 (“Divestiture Tax”) .

During fiscal 2021, the Company and Disney reached an agreement to settle the majority of the Divestiture Tax and the Company received $ 462 million from Disney as reimbursement of the Company’s prepayment based upon the sales price of the RSNs.

This reimbursement was recorded in Other, net in the Statement of Operations (See Note 20—Additional Financial Information under the heading “Other, net”).

The balance of the Divestiture Tax is subject to adjustment in the future, but any such adjustment is not expected to have a material impact on the financial results of the Company.

Basis of Presentation

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to the 21CF Disney Merger Agreement, immediately prior to the Distribution, the Company paid to 21CF a dividend in the amount of $ 8.5 billion (the "Dividend").

The final determination of the taxes in respect of the Separation and the Distribution for which the Company is responsible pursuant to the 21CF Disney Merger Agreement and a prepayment of the estimated taxes in respect of divestitures (collectively, the "Transaction Tax") was $ 6.5 billion.

Following the Distribution, on March 20, 2019 the Company received a cash payment in the amount of $ 2.0 billion from Disney, which had the net effect of reducing the Dividend the Company paid to 21CF.

The Transaction Tax included a prepayment of the Company's share of the estimated tax liabilities resulting from the anticipated divestitures by Disney of certain assets, principally the FOX Sports Regional Sports Networks ("RSNs"), which were sold by Disney during calendar year 2019 ("Divestiture Tax") .

This prepayment was in the amount of approximately $ 700 million.

During the first quarter of fiscal 2021, the Company and Disney reached an agreement to settle the majority of the prepaid Divestiture Tax and the Company received $ 462 million from Disney as reimbursement of the Company's prepayment based upon the sales price of the RSNs.

This reimbursement was recorded in Other, net in the Statement of Operations (See Note 20—Additional Financial Information under the heading "Other, net").

The balance of the prepaid Divestiture Tax is subject to adjustment in the future, but any such adjustment is not expected to have a material impact on the results of the Company.

As a result of the Separation and the Distribution, which was a taxable transaction for which the estimated tax liability of $ 5.8 billion was included in the Transaction Tax paid by the Company, FOX obtained a tax basis in its assets equal to their respective fair market values.

This will result in estimated annual tax deductions of approximately $ 1.5 billion, principally over the next several years related to the amortization of the additional tax basis.

This amortization is estimated to reduce the Company's annual cash tax liability by approximately $ 370 million per year at the current combined federal and state applicable tax rate of approximately 25 %.

Such estimates are subject to revisions, which could be material, based upon the occurrence of future events.

The consolidated financial statements are referred to as the “Financial Statements” herein.

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The Financial Statements include the accounts of all majority-owned and controlled subsidiaries.

In addition, the Company evaluates its relationships with other entities to identify whether they are variable interest entities as defined by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810-10, "Consolidation" ("ASC 810-10") and whether the Company is the primary beneficiary.

In addition, the Company evaluates its relationships with other entities to identify whether they are variable interest entities and whether the Company is the primary beneficiary.

Consolidation is required if both of these criteria are met.

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Any change in the Company’s ownership interest in a consolidated subsidiary, where a controlling financial interest is retained, is accounted for as an equity transaction.

When the Company ceases to have a controlling financial interest in a consolidated subsidiary, the Company will recognize a gain or loss in net income upon deconsolidation.

When the Company ceases to have a controlling financial interest in a consolidated subsidiary, the Company recognizes a gain or loss in net income upon deconsolidation.

The Company’s fiscal year ends on June 30 (“fiscal”) of each year.

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The preparation of the Company’s Financial Statements in conformity with U.S.

generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

amounts that are reported in the Financial Statements and accompanying disclosures.

generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts that are reported in the Financial Statements and accompanying disclosures.

Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates.

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Cash and cash equivalents consist of cash on hand and marketable securities with original maturities of three months or less.

Receivables are presented net of an allowance for doubtful accounts, which is an estimate of amounts that may not be collectible.

The allowance for doubtful accounts is estimated based on historical experience, receivable aging, current expected collections, current economic trends and specific identification of certain receivables that are at risk of not being paid.

Receivables are presented net of an allowance for credit losses, which is an estimate of amounts that may not be collectible.

The allowance for credit losses is estimated based on historical experience, receivable aging, current expected collections, current economic trends and specific identification of certain receivables that are at risk of not being paid.

Receivables, net consist of:

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Total receivables $ 2,221 $ 2,182

Allowances for doubtful accounts ( 54 ) ( 77 )

Allowance for credit losses ( 44 ) ( 54 )

Total receivables, net $ 2,177 $ 2,128

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Licensed and Owned Programming

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Licensed programming is recorded at the earlier of payment or when the license period has begun, the cost of the program is known or reasonably determinable and the program is accepted and available for airing.

Licensed programming is predominately amortized as the associated programs are broadcast.

Advances paid for the right to broadcast sports events within one year and programming with an initial license period of one year or less are classified as current inventories, and license fees for programming with an initial license period of greater than one year are classified as non-current inventories.

Licensed programming is predominantly amortized as the associated programs are made available.

The costs of multi-year sports contracts are primarily amortized based on the ratio of each contract’s current period attributable revenue to the estimated total remaining attributable revenue.

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Capitalized costs for owned programming are predominantly amortized using the individual-film-forecast-computation method, which is based on the ratio of current period revenue to estimated total future remaining revenue, and related costs to be incurred throughout the life of the respective program.

Future remaining revenue includes imputed license fees for content used by FOX as well as revenue expected to be earned based on distribution strategy and historical performance of similar content.

Changes to estimated future revenues may result in impairments or changes in amortization patterns.

When production partners distribute owned programming on the Company’s behalf, the net participation in profits is recorded as content license revenue.

The Company may receive government incentives in connection with the production of owned programming.

The Company records government incentives as a reduction of capitalized costs for owned programming when the monetization of the incentive is probable.

Government incentives were not material in fiscal 2023, 2022 and 2021.

Inventories are evaluated for recoverability when an event or circumstance occurs that indicates that fair value may be less than unamortized costs.

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Owned programming is monetized and tested for impairment on an individual basis.

Licensed programming is predominately monetized as a group and tested for impairment on a channel, network, or daypart basis.

Licensed programming is predominantly monetized as a group and tested for impairment on a channel, network, or daypart basis.

The recoverability of certain sports rights is assessed on an aggregate basis.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Investments in and advances to entities or joint ventures in which the Company has significant influence, but less than a controlling financial interest, are accounted for using the equity method.

Significant influence generally exists when the Company owns an interest between 20% and 50%.

In accordance with ASC 321 "Investments—Equity Securities" ("ASC 321"), equity securities which the Company has no significant influence (generally less than a 20% ownership interest) with readily determinable fair values are accounted for at fair value based on quoted market prices.

Equity securities in which the Company has no significant influence (generally less than a 20% ownership interest) with readily determinable fair values are accounted for at fair value based on quoted market prices.

Equity securities without readily determinable fair values are accounted for either at fair value or using the measurement alternative which is at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

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The Company determines the fair value of its private company investments by considering available information, including recent investee equity transactions, discounted cash flow analyses, estimates based on comparable public company operating multiples and, in certain situations, balance sheet liquidation values.

If the fair value of the investment has dropped below the carrying amount, management considers several factors when determining whether an other-than-temporary decline in market value has occurred, including the length of time and extent to which the market value has been below cost, the financial condition and near-term prospects of the issuer of the security, the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value and other factors influencing the fair market value, such as general market conditions.

If the fair value of the investment has dropped below the carrying amount, management considers

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

several factors when determining whether an other-than-temporary decline in market value has occurred, including the length of time and extent to which the market value has been below cost, the financial condition and near-term prospects of the issuer of the security, the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value and other factors influencing the fair market value, such as general market conditions.

The Company regularly reviews equity securities not accounted for using the equity method or at fair value for impairment based on a qualitative assessment which includes, but is not limited to (i) significant deterioration in the earnings performance, credit rating, asset quality or business prospects of the investee, (ii) significant adverse changes in the regulatory, economic or technological environment of the investee and (iii) significant adverse changes in the general market condition of either the geographical area or the industry in which the investee operates.

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Goodwill and Other Intangible Assets

The Company's intangible assets include goodwill, Federal Communications Commission ("FCC") licenses, traditional MVPD affiliate agreements and relationships, software and trademarks and other copyrighted products.

Intangible assets acquired in business combinations are recorded at their estimated fair value at the date of acquisition.

The Company’s intangible assets include goodwill, Federal Communications Commission (“FCC”) licenses, traditional and virtual multi-channel video programming distributor (“MVPD”) affiliate agreements and relationships, software and trademarks and other copyrighted products.

Intangible assets other than goodwill acquired in business combinations are recorded at their estimated fair value at the date of acquisition.

Goodwill is recorded as the difference between the consideration transferred to acquire entities and the estimated fair values assigned to their tangible and identifiable intangible net assets.

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The impairment assessment of indefinite-lived intangibles compares the fair value of the assets to their carrying value.

Intangible assets with finite lives are generally amortized over their

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

estimated useful lives.

The weighted average useful life of amortizable intangible assets is approximately 10 years.

Intangible assets with finite lives are generally amortized over their estimated useful lives.

The weighted average original amortization period of amortizable intangible assets is approximately 10 years.

Annual Impairment Review

Goodwill is tested for impairment at the reporting unit level, which is an operating segment, or one level below.

If the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount after a qualitative assessment, the Company performs a quantitative impairment test to compare the fair value of each reporting unit to its carrying amount, including goodwill.

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Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting units.

In assessing the reasonableness of its determined fair values, the Company evaluates its results against other value indicators, such as comparable public company trading values.

In assessing the reasonableness of its determined fair values, the

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Company evaluates its results against other value indicators, such as comparable public company trading values.

If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired.

If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

During fiscal 2022, the Company determined that the goodwill and indefinite-lived intangible assets included in the Balance Sheet as of June 30, 2022, were not impaired based on the Company's annual assessment.

While the Company believes its judgments represent reasonably possible outcomes based on available facts and circumstances, adverse changes to the assumptions, including those related to macroeconomic factors, comparable public company trading values and prevailing conditions in the capital markets, could lead to future declines in the fair value of a reporting unit in the Other, Corporate and Eliminations segment and a potential non-cash goodwill impairment charge.

The estimated fair value of this reporting unit was determined using a combination of the income approach, which incorporates the use of a discounted cash flow analysis, and the market approach, which incorporates the use of revenue multiples based on market data.

Fair value exceeded the carrying value of this reporting unit by less than 20% as of June 30, 2022.

Further adverse changes in market conditions may result in a partial or full impairment of the approximately $ 250 million of goodwill in this reporting unit as of June 30, 2022.

The Company determined that there are no other reporting units at risk of impairment as of June 30, 2022, and will continue to monitor its goodwill and indefinite-lived intangible assets for any possible future non-cash impairment charges.

The Company performs impairment reviews by comparing the estimated fair value of the Company’s FCC licenses with their carrying amount on a station-by-station basis using a discounted cash flow valuation method, assuming a hypothetical start-up scenario for a broadcast station in each of the markets the Company operates in.

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These assumptions are based on actual third-party historical performance and estimates of future performance in each market.

During fiscal 2023, the Company determined that the goodwill and indefinite-lived intangible assets included in the Balance Sheet as of June 30, 2023, were not impaired based on the Company’s annual assessments.

The Company determined that there are no reporting units at risk of impairment as of June 30, 2023, and will continue to monitor its goodwill and indefinite-lived intangible assets for any possible future non-cash impairment charges.

The Company has lease agreements primarily for office facilities and other equipment.

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ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the present value of the Company’s obligation to make lease payments, primarily escalating fixed payments, over the lease term.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The discount rate used to determine the present value of the lease payments is generally the Company’s incremental borrowing rate because the rate implicit in the lease is generally not readily determinable.

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The Company recognizes lease expense for operating leases on a straight-line basis over the lease term.

The Company's operating ROU assets are included in Other non-current assets and the Company’s current and non-current operating lease liabilities are included in Accounts payable, accrued expenses and other current liabilities and Other liabilities, respectively, in the Company's Balance Sheet (See Note 20—Additional Financial Information).

The Company’s operating ROU assets are included in Other non-current assets and the Company’s current and non-current operating lease liabilities are included in Accounts payable, accrued expenses and other current liabilities and Other liabilities, respectively, in the Company’s Balance Sheets (See Note 20—Additional Financial Information).

Long-Lived Asset Impairments

ASC 360, "Property, Plant, and Equipment," ASC 842, "Leases" and ASC 350 require that the Company periodically review the carrying amounts of its long-lived assets, including property, plant and equipment, ROU assets and finite-lived intangible assets, to determine whether current events or circumstances indicate that such carrying amounts may not be recoverable.

The Company periodically reviews the carrying amounts of its long-lived assets, including property, plant and equipment, ROU assets and finite-lived intangible assets, to determine whether current events or circumstances indicate that such carrying amounts may not be recoverable.

If the carrying amount of the asset or asset group is greater than the expected undiscounted cash flows to be generated by such asset or asset group, an impairment adjustment is recognized and is measured as the amount by which the carrying value of such asset or asset group exceeds its fair value.

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Considerable management judgment is necessary to estimate the fair value of assets;

accordingly, actual results could vary significantly from such estimates.

accordingly, actual

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

results could vary significantly from such estimates.

Assets to be disposed of are carried at the lower of their financial statement carrying amount or fair value less their costs to sell.

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The Company considers the terms of each arrangement to determine the appropriate accounting treatment.

The Company generates advertising revenue from sales of commercial time within the Company's network programming to be aired by television networks and cable channels, and from sales of advertising on the Company's owned and operated television stations and various digital properties.

The Company generates advertising revenue from sales of commercial time within the Company’s network programming, and from sales of advertising on the Company’s owned and operated television stations and various digital properties.

Advertising revenue from customers, primarily advertising agencies, is recognized as the commercials are aired.

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Revenues for any audience deficiencies are deferred until the guaranteed number of impressions is met, by providing additional advertisements.

Advertising contracts, which are generally short-term, are billed monthly for the spots aired during the month, with payments due shortly after the invoice date.

The Company generates affiliate fee revenue from agreements with traditional and virtual MVPDs (as defined in Note 17—Segment Information) for cable network programming and for the broadcast of the Company's owned and operated television stations.

In addition, the Company generates affiliate fee revenue from agreements with independently owned television stations that are affiliated with the FOX Network and receives retransmission consent fees from traditional and virtual MVPDs for their signals.

Affiliate fee revenue is recognized at a point in time when the network programming is made available to the customer.

Advertising contracts, which are generally short-term, are billed monthly for the spots aired during the month, with payments due shortly thereafter.

The Company generates affiliate fee revenue from agreements with MVPDs for cable network programming and for the broadcast of the Company’s owned and operated television stations.

Affiliate fee revenue is recognized as we continuously make the programming available to the customer over the term of the agreement.

For contracts with affiliate fees based on the number of the affiliate’s subscribers, revenues are recognized based on the contractual rate multiplied by the estimated number of subscribers each period.

For contracts with fixed affiliate fees, revenues are recognized based on the relative standalone selling price of the network programming provided over the contract term, which generally reflects the invoiced amount.

Affiliate contracts are generally multi-year contracts with payments due monthly.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company classifies the amortization of cable distribution investments (capitalized fees paid to traditional MVPDs to facilitate carriage of a cable network) against affiliate fee revenue.

Affiliate contracts are generally multi-year contracts billed monthly with payments due shortly thereafter.

The Company classifies the amortization of cable distribution investments (capitalized fees paid to MVPDs to facilitate carriage of a cable network) against affiliate fee revenue.

The Company amortizes the cable distribution investments on a straight-line basis over the contract period.

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The Company incurred advertising expenses of $ 680 million, $ 708 million and $ 558 million for fiscal 2023, 2022 and 2021, respectively.

The Company accounts for income taxes in accordance with ASC 740, "Income Taxes" ("ASC 740").

ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes.

Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The Company uses an asset and liability approach for financial accounting and reporting for income taxes.

Under this approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Valuation allowances are established where management determines that it is more likely than not that some portion or all of a deferred tax asset will not be realized.

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Basic earnings per share for the Class A Common Stock and Class B Common Stock is calculated by dividing Net income attributable to Fox Corporation stockholders by the weighted average number of outstanding shares of Class A Common Stock, including vested restricted stock units (“RSUs”), and Class B Common Stock.

Diluted earnings per share for the Class A Common Stock and Class B Common Stock is calculated similarly, except that the calculation for the Class A Common Stock includes the dilutive effect of the assumed issuance of the shares issuable under the Company's equity-based compensation plan.

Diluted earnings per share for the Class A Common Stock and Class B Common Stock is

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

calculated similarly, except that the calculation for the Class A Common Stock includes the dilutive effect of the assumed issuance of the shares issuable under the Company’s equity-based compensation plan.

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 Financial Statements.

ASC 718 establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all companies to apply a fair value-based measurement method in accounting for generally all share-based payment transactions with employees.

The Company applies a fair value-based measurement method in accounting for generally all share-based payment transactions with employees.

The Company recognizes compensation cost for awards granted that have only service requirements and a graded vesting schedule on a straight-line basis over the requisite service period for the entire award.

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Financial Instruments

The carrying value of the Company's financial instruments, such as cash and cash equivalents, receivables, payables and investments accounted for using the measurement alternative in accordance with ASC 321, approximates fair value.

The carrying value of the Company’s financial instruments, such as cash and cash equivalents, receivables, payables and investments accounted for using the measurement alternative, approximates fair value.

The fair value of financial instruments is generally determined by reference to market values resulting from trading on a national securities exchange or in an over-the-counter market.

Redeemable Noncontrolling Interests

The Company accounts for redeemable noncontrolling interests in accordance with ASC 480-10-S99-3A, "Distinguishing Liabilities from Equity," because their exercise is outside the control of the Company.

The redeemable noncontrolling interests recorded are put rights held by Credible Labs Inc.

Redeemable noncontrolling interests are presented outside of permanent equity on the Company’s Balance Sheets as their redemption is outside the control of the Company.

The redeemable noncontrolling interests recorded are put rights held in Credible Labs Inc.

(“Credible”) and an entertainment production company.

The Company accretes the changes in the redemption value of the redeemable noncontrolling interests over the period of issuance to the earliest redemption date.

The Company accretes the changes in the redemption value of the redeemable noncontrolling interests over the period from issuance to the earliest redemption date.

If a redeemable noncontrolling interest is redeemable at fair value, adjustments to the carrying amount are recorded in retained earnings.

If a redeemable noncontrolling interest is redeemable at an amount in excess of fair value, the portion

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

of the adjustment that reflects a redemption in excess of fair value is presented within net income attributable to noncontrolling interests in the Statements of Operations.

If a redeemable noncontrolling interest is redeemable at an amount in excess of fair value, the portion of the adjustment that reflects a redemption in excess of fair value is presented within net income attributable to noncontrolling interests in the Statements of Operations.

Concentrations of Credit Risk

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Generally, the Company does not require collateral to secure receivables.

As of June 30, 2022, the Company had no customers that accounted for 10% or more of the Company's receivables.

As of June 30, 2021, the Company had one individual customer that accounted for approximately 11 % of the Company's receivables.

As of June 30, 2023, the Company had one customer that accounted for approximately 11 % of the Company’s receivables.

As of June 30, 2022, the Company had no individual customers that accounted for 10% or more of the Company’s receivables.

Recently Adopted, Recently Issued Accounting Guidance and Other

Inflation Reduction Act

In August 2022, the U.S.

government enacted the Inflation Reduction Act which, among other changes, imposes a 15% corporate alternative minimum tax (“CAMT”) and a 1% excise tax on stock repurchases.

Once subject to the CAMT, a taxpayer will compute both its CAMT liability and its regular federal tax liability and pay the higher of the two.

To the extent that the CAMT liability exceeds the regular federal tax liability, a taxpayer will receive a credit (“CAMT credit”) which can be used against its regular federal tax liability in the future when the taxpayer is no longer subject to the CAMT.

The CAMT credit does not expire.

The CAMT is effective for tax years beginning after December 31, 2022, which means it will be applicable to the Company starting in fiscal 2024.

The excise tax on stock repurchases applies to stock repurchases occurring after December 31, 2022.

The Company continues to evaluate the impact the CAMT will have on its financial statements but expects that, when applicable, the Company will be subject to the CAMT.

The CAMT will impact the timing of the cash tax benefit the Company receives from the amortization of the additional tax basis received as a result of the Transaction Tax.

This change in timing will result in an increase to the Company’s annual cash tax liability which could be material.

However, as noted above, if the Company pays CAMT it will receive a CAMT credit that can be carried forward indefinitely and applied against its regular federal tax liability in future years.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Company has been subject to the excise tax on stock repurchases occurring after December 31, 2022, but the impact to the financial statements is not material.

ACQUISITIONS, DISPOSALS AND OTHER TRANSACTIONS

Acquisitions are accounted for under ASC 805, "Business Combinations" ("ASC 805"), which requires, among other things, that an acquirer record any noncontrolling interests in an acquiree at their acquisition date fair value.

The Company's acquisitions support the Company's strategy to strengthen its core brands and to selectively enhance production capabilities for its digital and linear platforms.

For these acquisitions, the initial accounting for the business combination, including the allocation of the consideration transferred, is based on provisional amounts.

The Company’s acquisitions support the Company’s strategy to strengthen its core brands, grow its digital businesses and selectively enhance production capabilities for its digital and linear platforms.

The Company records any noncontrolling interests in an acquiree at their acquisition date fair value.

The initial accounting for a business combination, including the allocation of the consideration transferred, is based on provisional amounts.

The amounts allocated to intangible assets and goodwill, the estimates of useful lives and the related amortization expense are subject to changes pending the completion of the final valuations of certain assets and liabilities.

A change in the allocation of consideration transferred and any estimates of useful lives could result in a change in the value allocated to the intangible assets that could impact future amortization expense.

Fiscal 2022 and 2021

During fiscal 2023, the Company made no acquisitions.

During fiscal 2022, the Company made acquisitions, primarily consisting of three entertainment production companies, for total cash consideration of approximately $ 240 million.

During fiscal 2021, the Company made one acquisition consisting of a digital media company and disposed of its sports marketing businesses.

The incremental revenues and Segment EBITDA (as defined in Note 17—Segment Information) related to the fiscal 2022 acquisitions and the fiscal 2021 acquisition and disposals, included in the Company's consolidated results of operations, were not material individually or in the aggregate.

The Company finalized its purchase price accounting for the fiscal 2021 acquisition during the fourth quarter of fiscal 2022 without any material adjustments.

Acquisitions and Disposals

Credible Acquisition

In October 2019, the Company acquired 67 % of the equity in Credible, a U.S.

consumer finance marketplace, for approximately $ 260 million in cash (the "Credible Acquisition"), net of cash acquired.

The remaining 33 % of Credible not owned by the Company was recorded at fair value on the acquisition date based on the Company's valuation of Credible's business using a market approach (a Level 3 measurement as defined in Note 6—Fair Value).

The consideration transferred of approximately $ 260 million has been allocated, based on a final valuation of 100 % of Credible, as follows:

approximately $ 75 million to intangible assets with useful lives ranging from five to 10 years;

approximately $ 285 million representing goodwill;

approximately $( 110 ) million to redeemable noncontrolling interests and the remainder to other net assets.

The goodwill, which is not tax deductible, reflects the increased market penetration and synergies expected from combining the operations of Credible and the Company.

The Company finalized its purchase price accounting for the acquisition during the second quarter of fiscal 2021 without any material adjustments.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Television Stations Acquisition and Divestiture

In March 2020, the Company acquired three television stations (FOX-affiliate KCPQ and MyNetworkTV-affiliate KZJO located in Seattle, Washington and FOX-affiliate WITI located in Milwaukee, Wisconsin) for approximately $ 350 million in cash from Nexstar Media Group, Inc.

As part of this transaction, the Company sold Nexstar two television stations (FOX-affiliate WJZY and MyNetworkTV-affiliate WMYT located in Charlotte, North Carolina) for approximately $ 45 million in cash.

The consideration transferred of approximately $ 350 million for the stations the Company acquired has been allocated, based on a final valuation, as follows:

approximately $ 210 million to intangible assets, of which approximately $ 110 million has been allocated to FCC licenses with indefinite lives and approximately $ 100 million to amortizable intangible assets, primarily retransmission agreements with useful lives of eight years ;

approximately $ 30 million to property, plant and equipment;

and the balance to goodwill.

The goodwill, which is tax deductible, reflects the increased synergies and market penetration expected from combining the operations of the three television stations with those of the Company.

The Company finalized its purchase price accounting for the acquisition during the third quarter of fiscal 2021 without any material adjustments.

TUBI Acquisition

In April 2020, the Company acquired Tubi, Inc.

("TUBI"), a free advertising-supported video-on-demand ("AVOD") service, for approximately $ 445 million in cash (the "TUBI Acquisition"), net of cash acquired.

The consideration transferred of approximately $ 470 million has been allocated, based on a final valuation, as follows:

approximately $ 130 million to intangible assets with useful lives ranging from three to 10 years;

approximately $ 320 million representing goodwill;

and the remainder to other net assets.

The goodwill, which is not tax deductible, reflects the synergies and increased market penetration expected from combining the operations of TUBI and the Company.

Additional consideration, in the form of deferred consideration and unvested options, totaling approximately $ 45 million, may be due over a three-year period following the closing of the transaction and will be recognized as compensation expense over that period.

The Company finalized its purchase price accounting for the acquisition during the fourth quarter of fiscal 2021 without any material adjustments.

The Company financed the TUBI Acquisition principally with the net proceeds from the sale of its investment in Roku, Inc.

("Roku") as discussed below.

Other Transactions

In May 2019, the Company and The Stars Group Inc.

("The Stars Group"), now a subsidiary of Flutter Entertainment plc ("Flutter") and part of Flutter's U.S.

operations, announced plans to launch FOX Bet, a national media and sports wagering partnership in the U.S.

The partnership was launched in the first quarter of fiscal 2020 and FOX Sports and The Stars Group entered into a long-term commercial arrangement through which FOX Sports provides Flutter with an exclusive license to use certain FOX Sports trademarks.

In addition, the Company invested $ 236 million to acquire a 4.99 % equity interest in The Stars Group, and, subject to certain conditions and applicable gaming regulatory approvals, FOX Sports has an option until August 2029 to acquire up to 50 % of the equity in the U.S.

business of The Stars Group.

In May of 2020, the Company's equity interest in The Stars Group was converted into Flutter equity in connection with the combination of The Stars Group and Flutter (the "Combination").

In connection with the Combination, FOX Sports received the right to acquire an approximately 18.5 % equity interest in FanDuel Group, a majority-owned subsidiary of Flutter, at a price set forth in the relevant agreement (structured as a 10 -year option from 2021, subject to a carrying value adjustment), which is currently the subject of ongoing arbitration proceedings.

The Company made additional equity investments in Flutter in fiscal 2021 and fiscal 2020 of approximately $ 55 million and $ 100 million, respectively.

As of June 30, 2022, the Company has an approximately 2.5 % equity stake in Flutter.

The Company accounts for the investment in Flutter at fair value (See Note 6—Fair Valu e).

In March 2020, the Co mpany sold its investment in Roku for approximately $ 340 million.

The Company recorded a loss of approximately $ 210 million for fiscal 2020 related to the change in the fair value of its investment in Roku prior to disposition, which was recorded in Other, net in the Statement of Operations (See Note 20—Additional Financial Information).

The Company purchased its investment in Roku for approximately $ 40 million.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

During fiscal 2021, the Company mad e one acquisition consisting of a digital media company and disposed of its sports marketing businesses.

The incremental revenues and Segment EBITDA (as defined in Note 17—Segment Information) related to the fiscal 2022 acquisitions and the fiscal 2021 acquisition and disposals, included in the Company's results of operations, were not material individually or in the aggregate.

RESTRUCTURING PROGRAMS

During fiscal 2021, the Company recorded $ 35 million in restructuring charges, which were primarily comprised of severance costs at the Cable Network Programming segment.

During fiscal 2020, the Company recorded restructuring charges at the Cable Network Programming and Television segments of approximately $ 425 million reflecting contract termination costs related to a programming rights agreement with the United States Golf Association (the "USGA") for the broadcast of USGA events on the Company's networks, including the write-off of approximately $ 75 million of programming rights advances.

The Company paid approximately $ 320 million to the USGA in June 2020 for the contract termination.

During fiscal 2023, 2022 and 2021, the Company recognized restructuring charges of $ 111 million, nil and $ 35 million, respectively, which were recorded in Impairment and restructuring charges in the Statements of Operations.

These charges were primarily comprised of severance costs at the Cable Network Programming, Television and Other, Corporate and Eliminations segments for fiscal 2023 and the Cable Network Programming segment for fiscal 2021.

Changes in the restructuring program liabilities were as follows:

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Additions ( 39 ) 4 ( 35 )

Payments 26 397 (a)

Payments 61 4 65

Balance, June 30, 2021

$ ( 16 ) $ ( 22 ) $ ( 38 )

Additions ( 39 ) 4 ( 35 )

Payments 8 3 11

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$ ( 8 ) $ ( 19 ) $ ( 27 )

Additions ( 111 ) — ( 111 )

Payments 52 2 54

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$ ( 67 ) $ ( 17 ) $ ( 84 )

Includes the write-off of approximately $ 75 million of programming rights advances.

Restructuring charges are recorded in Impairment and restructuring charges in the Statements of Operations.

As of June 30, 2022 and 2021, restructuring liabilities of approximately $ 15 million and $ 20 million, respectively, were included in Accounts payable, accrued expenses and other current liabilities in the Balance Sheets and the balance of the accrual was included in Non-current Other liabilities in the Balance Sheets.

As of June 30, 2023 and 2022, restructuring liabilities of $ 74 million and $ 16 million, respectively, were included in Accounts payable, accrued expenses and other current liabilities in the Balance Sheets with the remaining liability balances of $ 10 million and $ 11 million, respectively, included in Non-current Other liabilities in the Balance Sheets.

FOX CORPORATION

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For the years ended June 30,

2023 2022 2021

(in millions)

Amortization expense $ 5,379 $ 4,721

Total amortization expense $ 6,036 $ 5,379 $ 4,721

Based on the balance of inventories, net as of June 30, 2023, the estimated amortization expense for each of the succeeding three fiscal years is as follows:

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The Company will determine if there is an impairment by evaluating the fair value of the inventories, which are primarily supported by internal forecasts as compared to unamortized costs.

The Company recognized impairments of approximately $ 50 million, nil and $ 95 million in fiscal 2022, 2021 and 2020, respectively, related to licensed and owned programming at the Cable Network Programming and Television segments, which were recorded in Operating expenses in the Statements of Operations.

In accordance with ASC 820, "Fair Value Measurement," fair value measurements are required to be disclosed using a three-tiered fair value hierarchy which distinguishes market participant assumptions into the following categories:

The Company recognized impairments of approximately $ 10 million, $ 50 million and nil in fiscal 2023, 2022 and 2021, respectively, related to owned programming at the Cable Network Programming and Television segments, which were recorded in Operating expenses in the Statements of Operations.

Fair value measurements are disclosed using a three-tiered fair value hierarchy which distinguishes market participant assumptions into the following categories:

(i) inputs that are quoted prices in active markets (“Level 1”);

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Total $ 247 $ 435 $ — $ ( 188 )

The investment categorized as Level 1 represents an investment in equity securities of Flutter with a readily determinable fair value (See Note 3—Acquisitions, Disposals and Other Transactions under the heading "Flutter" for further discussion).

The investment categorized as Level 1 primarily represents an investment in equity securities of Flutter Entertainment plc (“Flutter”) with a readily determinable fair value.

The Company utilizes both the market and income approach valuation techniques for its Level 3 fair value measures.

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It is the Company’s policy to maximize the use of observable inputs in the measurement of its Level 3 fair value measurements.

To the extent observable inputs are not available, the Company utilizes unobservable inputs based upon the assumptions market participants would use in valuing the liability.

To the extent observable inputs are not available, the Company utilizes unobservable inputs based upon the assumptions market participants would use in valuing the redeemable noncontrolling interests.

Examples of utilized unobservable inputs are future cash flows and long-term growth rates.

In connection with the combination of The Stars Group Inc.

and Flutter in May 2020, FOX Sports received the right to acquire an 18.6 % equity interest in FanDuel Group (“FanDuel”), a majority-owned subsidiary of Flutter, at a price set forth in the relevant agreement (structured as a 10 -year option), which has been the subject of arbitration proceedings.

In January 2023, the U.S.

District Court for the Southern District of New York confirmed and entered the arbitrator’s ruling affirming FOX Sports’ 10 -year call option expiring in December 2030 to acquire 18.6 % of FanDuel for $ 3.7 billion, with a 5 % annual escalator.

As of June 30, 2023, the option price is approximately $ 4 billion.

FOX has no obligation to commit capital towards this opportunity unless and until it exercises the option.

In addition, Flutter cannot pursue an initial public offering for FanDuel without FOX’s consent or approval from the arbitrator.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Redeemable Noncontrolling Interests

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Acquisitions (a)

( 58 ) — ( 109 )

Net loss (income) 16 12 ( 25 )

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Accretion and other (c)

( 41 ) 116 ( 81 )

End of year $ ( 213 ) $ ( 188 ) $ ( 261 )

The amount issued in fiscal 2022 was primarily due to the acquisition of an entertainment production company.

The amount issued in fiscal 2020 was due to the Credible Acquisition (See Note 3—Acquisitions, Disposals and Other Transactions).

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As a result of the exercise of a portion of the put rights held by the sports network minority shareholder during fiscal 2021, approximately $ 135 million was reclassified out of Redeemable noncontrolling interests into equity.

At closing, the Company paid half of the purchase price in cash and delivered a three -year promissory note for the remaining balance, which was recorded in Non-current liabilities on the Balance Sheet.

As a result of the expiration of a portion of the put rights held by the sports network minority shareholder during fiscal 2022 and 2020, approximately $ 110 million and $ 120 million, respectively, were reclassified into equity.

As a result of the expiration of the sports network minority shareholder’s final put right during fiscal 2022, approximately $ 110 million was reclassified into equity.

The fair values of the redeemable noncontrolling interests held in the entertainment production company and in Credible were determined by using discounted cash flow analysis and market-based valuation approach methodologies.

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Financial Instruments

The carrying value of the Company's financial instruments, such as cash and cash equivalents, receivables, payables and investments, accounted for using the measurement alternative method in accordance with ASC 321, approximates fair value.

The carrying value of the Company’s financial instruments exclusive of borrowings, such as cash and cash equivalents, receivables, payables and investments, accounted for using the measurement alternative method, approximates fair value.

As of June 30,

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Fair value is generally determined by reference to market values resulting from trading on a national securities exchange or in an over-the-counter market (a Level 1 measurement).

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company's assets measured at fair value on a nonrecurring basis include investments accounted for using the equity method and the measurement alternative method in accordance with ASC 321, long-lived assets, indefinite-lived intangible assets and goodwill.

The Company’s assets measured at fair value on a nonrecurring basis include investments accounted for using the equity method and the measurement alternative method, long-lived assets, indefinite-lived intangible assets and goodwill.

The Company reviews the carrying amounts of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable or at least annually for indefinite-lived intangible assets and goodwill.

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The resulting fair value measurements of the assets are considered to be Level 3 measurements.

In addition, investments accounted for using the measurement alternative method in accordance with ASC 321 are recorded at fair value as a result of observable price changes in orderly transactions for the identical or a similar investment of the same issuer .

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In addition, investments accounted for using the measurement alternative method are recorded at fair value as a result of observable price changes in orderly transactions for the identical or a similar investment of the same issuer .

PROPERTY, PLANT AND EQUIPMENT, NET

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Total property, plant and equipment, net $ 1,708 $ 1,682

Depreciation and amortization related to Property, plant and equipment was $ 297 million, $ 237 million and $ 222 million for fiscal 2022, 2021 and 2020, respectively.

Depreciation and amortization expense related to Property, plant and equipment was $ 337 million, $ 297 million and $ 237 million for fiscal 2023, 2022 and 2021, respectively.

GOODWILL AND INTANGIBLE ASSETS, NET

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Acquisitions (b)

Amortization — — — ( 63 ) ( 63 )

Amortization and other — — — ( 68 ) ( 68 )

Balance, June 30, 2022

$ 2,250 $ 642 $ 2,892 $ 265 $ 3,157

Acquisitions (b)

Amortization and other — — — ( 73 ) ( 73 )

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See Note 3—Acquisitions, Disposals and Other Transactions under the heading “Acquisitions and Disposals.”

Amortization related to finite-lived intangible assets was $ 66 million, $ 63 million and $ 36 million for fiscal 2022, 2021 and 2020, respectively.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Amortization expense related to finite-lived intangible assets was $ 74 million, $ 66 million and $ 63 million for fiscal 2023, 2022 and 2021, respectively.

Based on the balance of finite-lived intangible assets as of June 30, 2023, the estimated amortization expense for each of the succeeding five fiscal years is as follows:

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These amounts may vary as acquisitions and dispositions occur in the future.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The changes in the carrying value of goodwill, by segment, are as follows:

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$ 1,059 $ 2,155 $ 221 $ 3,435

Acquisitions (a)

Disposals (a)

( 5 ) — ( 1 ) ( 6 )

Acquisitions and other (a)

Balance, June 30, 2022

$ 1,059 $ 2,241 $ 254 $ 3,554

Acquisitions and other (a)

Acquisitions and other

Balance, June 30, 2023

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

incurred in connection with the issuance of such notes and the Separation and the Distribution (as summarized below).

incurred in connection with the issuance of such notes and the Separation and the Transaction.

The following table summarizes the Company’s senior notes, net of repayments:

Outstanding as of June 30,

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4.030 % senior notes due 2024

$ 1,250 $ 1,250

3.050 % senior notes due 2025

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Current Borrowings

Included in Borrowings within Current liabilities as of June 30, 2021 was $ 750 million of 3.666 % senior notes which matured and were repaid in full in January 2022.

Included in Borrowings within Current liabilities as of June 30, 2023 was $ 1.25 billion of 4.030 % senior due in January 2024.

Revolving Credit Agreement

On March 15, 2019, the Company entered into a credit agreement (the "Revolving Credit Agreement") among the Company, as Borrower, the initial lenders named therein, the initial issuing banks named therein, Citibank, N.A., as Administrative Agent, Deutsche Bank Securities Inc.

and Goldman Sachs Bank USA, as Co-Syndication Agents, JPMorgan Chase Bank, N.A.

and Morgan Stanley Bank, N.A., as Co-Documentation Agents, and the other parties party thereto.

The Revolving Credit Agreement provides for a $ 1.0 billion unsecured revolving credit facility with a sub-limit of $ 150 million available for the issuance of letters of credit and a maturity date of March 2024.

On June 14, 2023, the Company entered into a credit agreement (the “Revolving Credit Agreement”) among the Company, as Borrower, the initial lenders named therein, the initial issuing banks named therein, Citibank, N.A., as Administrative Agent, Deutsche Bank Securities Inc.

and Goldman Sachs Bank USA, as Co-Syndication Agents and JPMorgan Chase Bank, N.A.

and Morgan Stanley Senior Funding Inc., as Co-Documentation Agents.

The Company entered into the Revolving Credit Agreement in anticipation of the transition away from the London Interbank Offered Rate (“LIBOR”) as a result of reference rate reform and to replace the Company’s previous unsecured revolving credit facility, dated as of March 15, 2019, which was scheduled to mature in March 2024.

Under the Revolving Credit Agreement, the Company may request an increase in the amount of the credit facility commitments up to a maximum facility amount of $ 1.75 billion and the Company may request that the maturity date be extended for up to two additional one-year periods.

The material terms of the Revolving Credit Agreement include the requirement that the Company maintain specific leverage ratios and limitations on indebtedness.

In April 2020, the Company entered into an amendment to the Revolving Credit Agreement, which, among other things, deducts cash in excess of $ 500 million from indebtedness for purposes of calculating the operating income leverage ratio under the agreement.

The interest rates and fees under the Revolving Credit Agreement are based on the Company’s long-term senior unsecured non-credit enhanced debt ratings.

Given the current credit ratings, the interest rate on borrowings under the Revolving Credit Agreement would be London Interbank Offered Rate ("LIBOR") plus 1.1 % and the facility fee is 0.15 %.

Given the current credit ratings, the interest rate on borrowings under the Revolving Credit Agreement would be the forward-looking term rate based on the Secured Overnight Financing Rate plus 1.125 % and the facility fee is 0.125 %.

As of June 30, 2023, there were no borrowings outstanding under the Revolving Credit Agreement.

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The following amounts were recorded in the Company’s Balance Sheet relating to its operating leases and other supplemental information:

For the years ended June 30,

As of June 30,

(in millions)

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Weighted average discount rate 5 % 3 %

In December 2022, the Company renewed the operating lease for its corporate headquarters at 1211 Avenue of the Americas in New York through fiscal 2042.

In connection with this extension, the Company recorded additional operating lease assets and liabilities of approximately $ 540 million as of June 30, 2023.

The following table presents information about the Company’s lease costs and supplemental cash flows information for leases:

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ROU assets obtained in exchange for operating lease liabilities $ 568 $ 137 $ 49

Total lease costs of $ 128 million, $ 126 million and $ 126 million for the years ended June 30, 2022, 2021 and 2020 are net of sublease income of approximately $ 15 million, $ 30 million and $ 50 million, respectively.

Approximately $ 15 million and $ 40 million of the sublease income for the years ended June 30, 2021 and 2020, respectively, relates to office facilities that were subleased through November 2020 to News Corporation, a related party (see Note 13—Related Party Transactions).

Total lease costs of $ 145 million, $ 128 million and $ 126 million for fiscal 2023, 2022 and 2021 are net of sublease income of approximately $ 15 million, $ 15 million and $ 30 million, respectively.

Approximately $ 15 million of the sublease income for fiscal 2021 relates to office facilities that were subleased through November 2020 to News Corporation, a related party (see Note 13—Related Party Transactions).

FOX CORPORATION

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Stock Repurchase Program

The Board has authorized a stock repurchase program under which the Company can repurchase $ 4 billion of Class A Common Stock and Class B Common Stock.

The Board previously authorized a stock repurchase program under which the Company can repurchase $ 4 billion of Class A Common Stock and Class B Common Stock.

In February 2023, the Board authorized incremental stock repurchases of an additional $ 3 billion of Common Stock.

With this increase, the Company’s total stock repurchase authorization is now $ 7 billion.

The program has no time limit and may be modified, suspended or discontinued at any time.

As of June 30, 2023 , the Company’s remaining stock repurchase authorization was approximately $ 2.4 billion.

In connection with the stock repurchase program, the Company entered into two accelerated share repurchase ( " ASR " ) agreements in August 2020 to repurchase $ 154 million of Class A Common Stock and $ 66 million of Class B Common Stock.

In connection with the stock repurchase program, the Company entered into an accelerated share repurchase (“ASR”) agreement in February 2023 under which the Company paid a third-party financial institution $ 1 billion and received an initial delivery of approximately 22.5 million shares of Class A Common Stock, representing 80 % of the shares expected to be repurchased under the ASR agreement, at a price of $ 35.54 per share, which was the Nasdaq Global Select Market (“Nasdaq”) closing share price of the Class A Common Stock on February 8, 2023.

Upon settlement of the ASR agreement in August 2023, the Company received a final delivery of approximately 7.8 million shares of Class A Common Stock.

The final number of shares purchased under the ASR agreement was determined using a price of $ 33.03 per share (the volume-weighted average market price of the Class A Common Stock on the Nasdaq during the term of the ASR agreement less a discount).

The Company accounted for the ASR agreement as two separate transactions.

The initial delivery of Class A Common Stock was accounted for as a treasury stock transaction recorded on the acquisition date.

The final settlement of Class A Common Stock was accounted for as a forward contract indexed to the Class A Common Stock and qualified as an equity transaction.

In connection with the stock repurchase program, the Company entered into two ASR agreements in August 2020 to repurchase $ 154 million of Class A Common Stock and $ 66 million of Class B Common Stock.

In accordance with the ASR agreements, the Company paid a third-party financial institution $ 154 million and $ 66 million and received initial deliveries of approximately 4.7 million and 2.0 million shares of Class A Common Stock and Class B Common Stock, respectively, representing 80 % of the shares expected to be repurchased under each ASR agreement, at a price of $ 26.00 and $ 26.01 per share, which was the Nasdaq closing share price of the Class A Common Stock and Class B Common Stock, respectively, on August 21, 2020 .

Upon settlement of the ASR agreements in September 2020 , the Company received final deliveries of approximately 0.9 million and 0.4 million shares of Class A Common Stock and Class B Common Stock, respectively.

The final number of shares purchased under the ASR agreements was determined using a price of $ 27.57 and $ 27.67 per share (the volume-weighted average market price of the Class A Common Stock and Class B Common Stock, respectively, during the terms of the ASR agreements less a discount applicable for the Class A Common Stock).

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

number of shares purchased under the ASR agreements was determined using a price of $ 27.57 and $ 27.67 per share (the volume-weighted average market price on the Nasdaq of the Class A Common Stock and Class B Common Stock, respectively, during the terms of the ASR agreements less a discount applicable for the Class A Common Stock).

The Company accounted for each ASR agreement as two separate transactions.

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The final settlements of Class A Common Stock and Class B Common Stock were accounted for as forward contracts indexed to the Class A Common Stock or Class B Common Stock, as applicable, and qualified as equity transactions.

In connection with the stock repurchase program, the Company entered into an ASR agreement in November 2019 to repurchase $ 350 million of Class A Common Stock and announced its intention to promptly repurchase $ 150 million of Class B Common Stock.

In accordance with the ASR agreement, the Company paid a third-party financial institution $ 350 million and received an initial delivery of approximately eight million shares of Class A Common Stock, representing 80 % of the shares expected to be repurchased under the ASR agreement, at a price of $ 34.99 per share, which was the Nasdaq closing share price of the Class A Common Stock on November 11, 2019 .

Upon settlement of the ASR agreement in January 2020 , the Company received

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

a final delivery of approximately two million shares of Class A Common Stock.

The final number of shares purchased under the ASR agreement was determined using a price of $ 36.05 per share (the volume-weighted average market price of the Class A Common Stock during the term of the ASR agreement less a discount).

The Company accounted for the ASR agreement as two separate transactions.

The initial delivery of Class A Common Stock was accounted for as a treasury stock transaction recorded on the acquisition date.

The final settlement of Class A Common Stock was accounted for as a forward contract indexed to the Class A Common Stock and qualified as an equity transaction.

In addition to the shares purchased under the ASR agreements, the Company repurchased shares of Class A Common Stock and Class B Common Stock in the open market during fiscal 2023, 2022 and 2021.

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(in millions)

Total cost of repurchases $ 1,000 $ 1,001 $ 600

Total cost of repurchases (a)

$ 2,000 $ 1,000 $ 1,001

Total number of shares repurchased 54 27 31

These amounts exclude any fees, commissions or other costs associated with the share repurchases.

Stockholders Agreement

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Cash dividend per share $ 0.50 $ 0.48 $ 0.46

Comprehensive Income (Loss)

Comprehensive income is reported in the Statements of Comprehensive Income and consists of Net income and Other comprehensive income (loss), including benefit plan adjustments, which affect stockholders' equity, and under GAAP, are excluded from Net income.

Comprehensive Income

Comprehensive income is reported in the Statements of Comprehensive Income and consists of Net income and Other comprehensive income, including benefit plan adjustments, which affect stockholders’ equity, and under GAAP, are excluded from Net income.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following tables summarize the activity within Other comprehensive income (loss):

The following tables summarize the activity within Other comprehensive income:

For the year ended June 30, 2023

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(in millions)

Benefit plan and cumulative translation adjustments

Benefit plan, cumulative translation adjustments and other

Unrealized gains $ 79 $ ( 19 ) $ 60

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(in millions)

Benefit plan adjustments

Benefit plan and cumulative translation adjustments

Unrealized gains $ 100 $ ( 25 ) $ 75

Reclassifications realized in net income (a)

Cumulative translation adjustment ( 7 ) — ( 7 )

Other comprehensive income $ 125 $ ( 33 ) $ 92

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(in millions)

Benefit plan adjustments and other

Unrealized losses $ ( 175 ) $ 44 $ ( 131 )

Benefit plan adjustments

Unrealized gains $ 87 $ ( 21 ) $ 66

Reclassifications realized in net income (a)

Other comprehensive loss $ ( 146 ) $ 37 $ ( 109 )

Other comprehensive income $ 132 $ ( 33 ) $ 99

Reclassifications of amounts related to benefit plan adjustments are included in Other, net in the Statements of Operations (See Note 15—Pension and Other Postretirement Benefits for additional information).

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EQUITY-BASED COMPENSATION

2019 Shareholder Alignment Plan

The Company maintains the Fox Corporation 2019 Shareholder Alignment Plan (the "SAP"), under which equity-based compensation, including stock options (including performance-based stock options ("PSOs")), stock appreciation rights, restricted and unrestricted stock, RSUs, performance stock units "PSUs") an d other

The Company has equity-based compensation plans, including the Fox Corporation 2019 Shareholder Alignment Plan (the “SAP”), under which stock options (including performance-based stock options (“PSOs”),

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

types of FOX equity awards may be granted.

stock appreciation rights, restricted and unrestricted stock, RSUs, performance stock units “PSUs”) an d other types of FOX or subsidiary equity awards may be granted.

2019 Shareholder Alignment Plan

The Company’s officers, directors and employees are eligible to participate in the SAP.

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and (iv) expected dividend yield.

During fiscal 2020, the Company granted approximately 3.8 million stock options, which generally have a term of seven years and vest in equal annual installments over a three-year period subject to the participants' continued employment with the Company.

Performance-Based Stock Options

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Compensation cost related to the PSO will be recognized even if the market condition is not met.

During fiscal 2022 and 2021, the Company granted approximately 4.0 million and 5.0 million PSOs, respectively.

As the market condition has been met for fiscal 2022 and 2021, the PSOs will vest in full at the end of the applicable three-year performance period and have a term of seven years thereafter.

During fiscal 2023, 2022 and 2021, the Company granted approximately 4.3 million, 4.0 million and 5.0 million PSOs, respectively.

The PSOs will vest in full at the end of the applicable three-year performance period if the market condition is met, and have a term of seven years thereafter.

FOX CORPORATION

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Weighted average remaining contractual term of options exercisable at the end of the year 2.96 years 3.89 years 4.81 years

During fiscal 2022 and fiscal 2021, the Company received approximately $ 17 million and $ 12 million, respectively, in cash payments from the exercise of stock options.

During fiscal 2023, 2022 and 2021, the Company received approximately $ 7 million, $ 17 million and $ 12 million, respectively, in cash payments from the exercise of stock options.

The intrinsic value of options outstanding as of June 30, 2023, 2022 and 2021 was $ 37.1 million, $ 26.9 million and $ 65.6 million, respectively.

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In the ordinary course of business, the Company enters into transactions with related parties to buy and/or sell programming and purchase and/or sell advertising.

For the years ended June 30, 2022, 2021 and 2020, the related party revenue and expense were not material (See Note 10—Leases for information related to office facilities that were subleased to News Corporation for fiscal 2020 and a portion of fiscal 2021 and Note 14—Commitments and Contingencies and Note 20—Additional Financial Information for information related to U.K.

For fiscal 2023, 2022 and 2021, the related party revenue and expense were not material (See Note 10—Leases for information related to office facilities that were subleased to News Corporation for a portion of fiscal 2021 and Note 14—Commitments and Contingencies and Note 20—Additional Financial Information for information related to U.K.

Newspaper Matters Indemnity obligation to News Corporation).

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Other commitments and contractual obligations 1,032 318 336 138 240

Total commitments, borrowings and contractual obligations $ 42,119 $ 5,336 $ 10,255 $ 7,901 $ 18,627

Total commitments $ 39,397 $ 6,670 $ 9,116 $ 8,182 $ 15,429

Licensed programming

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The NFL has a one-time right to terminate the agreement after the 2029 NFL season.

The Company’s contract with Major League Baseball (“MLB”) gives the Company rights to broadcast certain regular season and post-season games, as well as exclusive rights to broadcast MLB’s World Series and All-Star Game through the 2028 MLB season.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company's contract with Major League Baseball ("MLB") gives the Company rights to broadcast certain regular season and post-season games, as well as exclusive rights to broadcast MLB's World Series and All-Star Game through the 2028 MLB season.

The Company’s contracts with the National Association of Stock Car Auto Racing (“NASCAR”) give the Company rights to broadcast certain races and ancillary content through calendar year 2024.

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Pension and other postretirement benefits

In accordance with ASC 715, "Compensation—Retirement Benefits" ("ASC 715"), the total accrued net benefit liability for pension and other postretirement benefit plans recognized as of June 30, 2022 was $ 461 million (See Note 15—Pension and Other Postretirement Benefits).

The total accrued net benefit liability for pension and other postretirement benefit plans recognized as of June 30, 2023 was $ 374 million (See Note 15—Pension and Other Postretirement Benefits).

This amount is affected by, among other items, statutory funding levels, changes in plan demographics and assumptions and investment returns on plan assets.

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Contingencies

The Company establishes an accrued liability for legal claims and indemnification claims when the Company determines that a loss is both probable and the amount of the loss can be reasonably estimated.

Once established, accruals are adjusted from time to time, as appropriate, in light of additional information.

The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters.

Any fees, expenses, fines, penalties, judgments or settlements which might be incurred by the Company in connection with the various proceedings could affect the Company’s results of operations and financial condition.

For the contingencies disclosed below for which there is at least a reasonable possibility that a loss may be incurred, other than the accrual provided, the Company was unable to estimate the amount of loss or range of loss.

The Company’s FOX News business and certain of its current and former employees have been subject to allegations of sexual harassment and discrimination on the basis of sex and race.

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The liability recorded in the Balance Sheets related to the indemnity was approximately $ 115 million and $ 65 million as of June 30, 2023 and 2022, respectively.

The increase in the liability recorded was attributable to an increase in the number of civil claims submitted in advance of the September 30, 2022 cutoff date set by the judge for this phase of the litigation.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Defamation and Disparagement Claims

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These include lawsuits filed by Smartmatic USA Corp.

and certain of its affiliates (collectively, "Smartmatic") in February 2021 and Dominion Voting Systems, Inc.

and certain of its affiliates (collectively, "Dominion") in March 2021.

The Company believes these lawsuits, including the Smartmatic and Dominion matters, are without merit and intends to defend against them vigorously.

To date, none of the amounts the Company has paid in

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

settlements of defamation or disparagement claims or reserved for pending or future claims are material, individually or in the aggregate, to the Company.

The amount of additional liability, if any, that may result from these or related matters cannot be estimated at this time.

However, the Company does not currently anticipate that the ultimate resolution of any such pending matters will have a material adverse effect on its business, financial condition, results of operations or cash flows.

Once established, accruals are adjusted from time to time, as appropriate, in light of additional information.

The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters.

Any fees, expenses, fines, penalties, judgments or settlements which might be incurred by the Company in connection with the various proceedings could affect the Company's results of operations and financial condition.

For the contingencies disclosed above for which there is at least a reasonable possibility that a loss may be incurred, other than the accrual provided, the Company was unable to estimate the amount of loss or range of loss.

and certain of its affiliates (collectively, “Smartmatic”) in February 2021 seeking $ 2.7 billion in damages and Dominion Voting Systems, Inc.

and certain of its affiliates (collectively, “Dominion”) in March 2021 seeking $ 1.6 billion in damages.

On March 31, 2023, the court in the Dominion case issued its rulings on summary judgment motions that were unfavorable to the Company.

Following these rulings, on April 18, 2023, the Company and its subsidiary, Fox News Network, LLC, entered into a Release and Settlement Agreement with Dominion pursuant to which the parties agreed to resolve the lawsuits among them.

The Company paid an aggregate of approximately $ 800 million to settle this and a related lawsuit in April 2023, which is included in Other, net in the Consolidated Statement of Operations for fiscal 2023 (See Note 20—Additional Financial Information under the heading “Other, net”).

The Company continues to believe the Smartmatic and other pending lawsuits alleging defamation or disparagement are without merit and intends to defend against them vigorously, including through any appeals.

Discovery in the Smartmatic case remains ongoing and it is likely that depositions, expert discovery and summary judgment and other key motions will follow.

At this time, a trial in the Smartmatic lawsuit is not expected to commence until 2025.

The Company is unable to predict the final outcome of these matters and has determined that a loss in the Smartmatic case is neither probable nor reasonably estimable.

There can be no assurance that the ultimate resolution of these pending matters will not have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

On April 11, 2023 and April 20, 2023, stockholders of the Company filed derivative lawsuits against certain directors of the Company under the captions Schwarz v.

Murdoch et al., C.A.

2023-0418 (Del.

Ch.) and Greenberg et al.

Murdoch et al., C.A.

2023-0440 (Del.

The lawsuits each named the Company as a nominal defendant.

The complaints allege that members of the Company’s Board breached their fiduciary duties by allowing the Company’s news channel to air programming regarding election fraud in connection with the 2020 U.S.

Presidential election, which resulted in significant defamation cases.

The plaintiffs seek orders awarding damages in favor of the Company;

directing the Company to reform and improve its policies and procedures;

and awarding the plaintiffs attorneys' fees and costs.

The Company believes the lawsuits are without merit and intends to vigorously defend against them.

The Company’s operations are subject to tax primarily in various domestic jurisdictions and as a matter of course, the Company is regularly audited by federal and state tax authorities.

The Company believes it has appropriately accrued for the expected outcome of all pending tax matters and does not currently anticipate that the ultimate resolution of pending tax matters will have a material adverse effect on its consolidated financial condition, future results of operations or liquidity.

Each member of the 21CF consolidated group, which includes 21CF, the Company (prior to the Distribution) and 21CF's other subsidiaries, is jointly and severally liable for the U.S.

Each member of the 21CF consolidated group, which includes 21CF, the Company (prior to the Transaction) and 21CF’s other subsidiaries, is jointly and severally liable for the U.S.

federal income and, in certain jurisdictions, state tax liabilities of each other member of the consolidated group.

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The Company makes contributions in accordance with applicable laws or contract terms.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Pension and postretirement plans that are sponsored by the Company are accounted for as defined benefit pension plans.

Accordingly, the funded and unfunded position of each plan is recorded in the Balance Sheets.

Actuarial gains and losses that have not yet been recognized through income are recorded in Accumulated other comprehensive loss net of taxes, and they are systematically amortized as a component of net periodic benefit cost in accordance with ASC 715.

The Company’s benefit obligation for the plans is calculated using assumptions which the Company reviews on a regular basis.

The funded status of the plans can change from year to year, but the assets of the funded plans have been sufficient to pay all benefits that came due in each of fiscal 2023, 2022 and 2021.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company uses a June 30 measurement date for all pension and postretirement benefit plans.

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( 32 ) ( 56 ) — —

Actuarial (gains) losses (b)

Actuarial gains (b)

( 58 ) ( 256 ) ( 5 ) ( 46 )

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Represents the full settlement of former employees’ deferred pension benefit obligations through lump sum payments.

Actuarial (gains) for June 30, 2022 were mainly due to a change in the discount rate assumption utilized in measuring plan obligations.

Actuarial losses for June 30, 2021 were mainly due to a change in the discount rate assumption utilized in measuring plan obligations and changes to other economic assumptions and demographic experience.

Actuarial gains for June 30, 2023 and June 30, 2022 were primarily due to a change in the discount rate assumption utilized in measuring plan obligations.

The Company has established an irrevocable grantor trust (the “Grantor Trust”), administered by an independent trustee, with the intention of making cash contributions to the Trust to fund certain future pension benefit obligations of the Company.

The assets in the Grantor Trust are unsecured funds of the Company and can be used to satisfy the Company’s obligations in the event of bankruptcy or insolvency.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Amounts recognized in the Balance Sheets consist of:

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Accrued pension liabilities ( 327 ) ( 408 ) ( 47 ) ( 53 )

Net amount recognized $ ( 402 ) $ ( 496 ) $ ( 53 ) $ ( 98 )

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Net amounts recognized $ ( 319 ) $ ( 402 ) $ ( 47 ) $ ( 53 )

Amounts recognized in Accumulated other comprehensive loss, before tax, consist of:

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Net amounts recognized $ 229 $ 325 $ ( 34 ) $ ( 33 )

Accumulated pension benefit obligations as of June 30, 2022 and 2021 were $ 1,069 million and $ 1,319 million, respectively.

For the funded plans, as of June 30, 2022, the projected benefit obligation exceeds the fair value of plan assets except for one plan that has assets of $ 81 million, a projected benefit obligation of $ 75 million and an accumulated benefit obligation of $ 75 million.

Accumulated pension benefit obligations as of June 30, 2023 and 2022 were $ 1.04 billion and $ 1.07 billion, respectively.

For the funded plans, as of June 30, 2023, the projected benefit obligation exceeds the fair value of plan assets except for two plans that have assets of $ 123 million, a projected benefit obligation of $ 115 million and an accumulated benefit obligation of $ 112 million.

Information about funded and unfunded pension plans is presented below:

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The fair value of the assets in the Grantor Trust as of June 30, 2023 and 2022 was $ 276 million and $ 270 million, respectively.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Information about funded and unfunded pension plans in which the accumulated benefit obligation exceeds fair value of the plan assets is presented below:

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Projected benefit obligation $ — $ 807 $ 271 $ 273

Accumulated benefit obligation 683 854 268 309

Accumulated benefit obligation — (a)

Fair value of plan assets — (a)

As of June 30, 2023, the fair value of plan assets exceeded the accumulated benefit obligation for the funded plans.

The fair value of the assets in the Grantor Trust as of June 30, 2023 and 2022 was $ 276 million and $ 270 million, respectively.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The components of net periodic benefit costs were as follows:

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N/A – not applicable.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company utilizes a full yield curve approach in the estimation of the service and interest components of net periodic benefit costs for pension and postretirement benefits by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to their underlying projected cash flows.

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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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

same assumptions used to measure the Company's benefit obligation at the end of the fiscal year and include benefits attributable to estimated future employee service:

These payments are estimated based on the same assumptions used to measure the Company’s benefit obligation at the end of the fiscal year and include benefits attributable to estimated future employee service:

Expected benefit payments

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Medicare subsidy receipts per year.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Plan Assets and Grantor Trust

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Fair value measurements at reporting date using Assets measured

Total Level 1 Level 2 at NAV (a)

Total Level 1 at NAV (a)

(in millions)

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Balanced funds 78 78 —

common stocks (d)

Partnership interests 49 — 49

Exchange traded equity funds (d)

( 1 ) ( 1 ) — —

Total fair value of plan assets $ 853 $ 804 $ 49

GRANTOR TRUST ASSETS

Balanced funds (b)

$ 234 $ 234 $ — $ —

Partnership interests 16 — — 16

Pooled funds (b)

Money market funds $ 20 $ 20 $ —

Domestic fixed income funds (c)

Balanced funds

Total fair value of Grantor Trust assets $ 276 $ 276 $ —

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As of June 30, 2022

Fair value measurements at reporting date using Assets measured

Total Level 1 Level 2 at NAV (a)

Fair value measurements at reporting

date using Assets measured

Total Level 1 at NAV (a)

(in millions)

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International equity funds 133 133 —

International fixed income funds (c)

Balanced funds 78 78 —

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Exchange traded funds (d)

( 1 ) ( 1 ) —

Total fair value of plan assets $ 801 $ 768 $ 33

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Pooled funds that have a readily determinable fair value are valued at the regularly published NAV.

Domestic fixed income funds and international fixed income funds consist primarily of investment grade securities.

Domestic fixed income funds consist primarily of investment grade securities.

Exchange traded funds and common stock investments that are publicly traded are valued at the closing price reported on active markets in which the securities are traded.

Includes cash and cash equivalents, plan receivables and payables and certain other fixed income investments.

Includes cash and cash equivalents and plan receivables and payables.

The investment objective for the funded pension plans is to grow assets to decrease the deficit and protect improvements in funded status.

The asset allocation strategy will change over time by shifting assets from return seeking assets to liability hedging assets upon the achievement of certain funding milestones.

The target asset allocation on June 30, 2022 is 50 % return seeking assets and 50 % liability hedging assets which is consistent with the actual asset allocation as of June 30, 2022.

The target asset allocation on June 30, 2023 is 50 % return seeking assets and 50 % liability hedging assets which approximates the actual asset allocation as of June 30, 2023.

Return seeking assets are diversified across multiple asset classes and liability hedging assets are managed to correlate highly with the pension liabilities to reduce interest rate risk.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The reconciliation of income tax computed at the statutory rate to income tax expense was:

The following table is a reconciliation of income tax computed at the statutory rate to income tax expense:

For the years ended June 30,

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State and local taxes 5 4 4

Valuation allowance movement 2 — —

Return to accrual (a)

Nondeductible compensation — 1 1

Valuation allowance movements — — 1

Adjustments for tax matters, net — — ( 1 )

Return to accrual (a)

Other — ( 1 ) —

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Equity-based compensation 34 30

Accrued liabilities — 37

Net operating loss carryforwards 37 31

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$ 3,084 $ 3,433

As a result of the Separation and the Transaction, which was a taxable transaction for which the estimated tax liability of $ 5.8 billion was included in the Transaction Tax paid by the Company, FOX obtained a tax basis in its assets equal to their respective fair market values.

This amount includes the additional estimated deferred tax asset recorded as a result of the increased tax basis (See Note 1—Description of Business and Basis of Presentation under the heading “Basis of Presentation”).

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The net increase in the valuation allowance to $ 34 million as of June 30, 2022 was primarily due to the additional valuation allowance required on net operating loss carryforwards not expected to be utilized, partially offset by the release from the utilization of a capital loss carryforward.

The net increase in the valuation allowance to $ 72 million as of June 30, 2023 was primarily due to the additional valuation allowance required on net operating loss carryforwards and tax credits not expected to be utilized.

The following table sets forth the change in the uncertain tax positions, excluding interest and penalties:

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Reduction for prior year tax positions (a)

( 6 ) ( 5 ) ( 45 )

Balance, end of year $ 26 $ 28 $ 30

The reduction for prior year tax positions in fiscal 2022 of $ 5 million is primarily from the expiration of statutes of limitations.

The reduction for prior year tax positions in fiscal 2021 includes $ 31 million from the settlement of audits and $ 14 million from the expiration of statutes of limitations.

The reduction for prior year tax positions in fiscal 2020 includes $ 21 million from the expiration of statutes of limitations.

The reduction for tax positions in fiscal 2023 of $ 6 million is primarily due to audit settlements and the expiration of statutes of limitations.

The reduction for tax positions in fiscal 2022 of $ 5 million is primarily from the expiration statutes of limitations.

The reduction for tax positions in fiscal 2021 includes $ 31 million from the settlement of audits and $ 14 million from the expiration of statutes of limitations.

The Company recognizes interest and penalty charges related to uncertain tax positions as income tax (expense) benefit.

The Company recorded liabilities for accrued interest of $ 11 million as of June 30, 2022 and 2021 and the amounts of interest income/expense recorded in each of fiscal 2022, 2021 and 2020 were not material.

The Company recorded liabilities for accrued interest of $ 9 million and $ 11 million as of June 30, 2023 and 2022, respectively, and the amounts of interest income/expense recorded in each of fiscal 2023, 2022 and 2021 were not material.

The Company is subject to tax primarily in various domestic jurisdictions and, as a matter of ordinary course, the Company is regularly audited by federal and state tax authorities.

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The Company is a news, sports and entertainment company, which manages and reports its businesses in the following segments:

• Cable Network Programming , which produces and licenses news and sports content distributed through traditional cable television systems, direct broadcast satellite operators and telecommunication companies ("traditional MVPDs"), virtual multi-channel video programming distributors ("virtual MVPDs") and other digital platforms, primarily in the U.S.

• Television , which produces, acquires, markets and distributes programming through the FOX broadcast network, advertising supported video-on-demand ("AVOD") service TUBI, 29 full power broadcast television stations, including 11 duopolies, and other digital platforms, primarily in the U.S.

• Cable Network Programming , which produces and licenses news and sports content distributed through MVPDs and other digital platforms, primarily in the U.S.

• Television , which produces, acquires, markets and distributes programming through the FOX broadcast network, advertising supported video-on-demand service Tubi, 29 full power broadcast television stations, including 11 duopolies, and other digital platforms, primarily in the U.S.

Eighteen of the broadcast television stations are affiliated with the FOX Network, 10 are affiliated with MyNetworkTV and one is an independent station.

The segment also includes various production companies that produce content for the Company and third parties.

• Other, Corporate and Eliminations , which principally consists of the FOX Studio Lot, Credible, corporate overhead costs and intracompany eliminations.

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Total capital expenditures $ 357 $ 307 $ 484

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of June 30,

5 unchanged sentences

Total assets $ 21,866 $ 22,185

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of June 30,

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Net income attributable to Fox Corporation stockholders per share - diluted $ 2.33 $ 2.11 $ 3.61

Weighted average common shares include the incremental shares that would be issued upon the assumed vesting of RSUs, PSUs and stock options (including PSOs) if the effect is dilutive, and, for those shares that are contingently issuable, all necessary conditions have been satisfied for the periods presented (See Note 12—Equity-Based Compensation).

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

VALUATION AND QUALIFYING ACCOUNTS

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(in millions)

Allowances for doubtful accounts $ ( 77 ) $ ( 2 ) $ 19 $ 6 $ ( 54 )

Allowance for credit losses $ ( 54 ) $ — $ 3 $ 7 $ ( 44 )

Deferred tax valuation allowance ( 34 ) ( 38 ) — — ( 72 )

Allowances for doubtful accounts $ ( 93 ) $ ( 4 ) $ 11 $ 9 $ ( 77 )

Allowance for credit losses $ ( 77 ) $ ( 2 ) $ 19 $ 6 $ ( 54 )

Deferred tax valuation allowance ( 24 ) ( 23 ) 13 — ( 34 )

Allowances for doubtful accounts $ ( 35 ) $ ( 63 ) $ 5 $ — $ ( 93 )

Allowance for credit losses $ ( 93 ) $ ( 4 ) $ 11 $ 9 $ ( 77 )

Deferred tax valuation allowance ( 20 ) ( 9 ) 5 — ( 24 )

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ADDITIONAL FINANCIAL INFORMATION

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Interest income 131 6 4

Interest expense, net $ ( 371 ) $ ( 391 ) $ ( 334 )

Total interest expense, net $ ( 218 ) $ ( 371 ) $ ( 391 )

The following table sets forth the components of Other, net included in the Statements of Operations:

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(in millions)

Net (losses) gains on investments in equity securities (a)

Legal settlement costs (a)

$ ( 894 ) $ — $ —

Newspaper Matters Indemnity (b)

Net gains (losses) on investments in equity securities (b)

403 ( 386 ) 258

Newspaper Matters Indemnity (a)

( 117 ) ( 81 ) ( 64 )

Transaction costs (c)

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Total other, net $ ( 699 ) $ ( 509 ) $ 579

Net (losses) gains on investments in equity securities for fiscal 2022 and 2021 included the (losses) gains related to the changes in fair value of the Company's investment in Flutter (See Note 6—Fair Value).

Net (losses) gains on investments in equity securities for fiscal 2020 included the loss related to the change in fair value of the Company's investment in Roku, which was sold in March 2020 (See Note 3—Acquisitions, Disposals and Other Transactions under the heading "Roku").

See Note 14—Commitments and Contingencies under the heading "U.K.

See Note 14—Commitments and Contingencies under the headings “Defamation and Disparagement Claims” and "U.K.

Newspaper Matters Indemnity."

The transaction costs for fiscal 2021 are primarily related to the partial settlement from Disney of $ 462 million related to the reimbursement of the Company's prepayment of its share of the Divestiture Tax (See Note 1—Description of Business and Basis of Presentation).

The transaction costs for fiscal 2020 are primarily related to the Separation and the Distribution, which includes retention related cost, and costs associated with the profits participants litigation (See Note 14—Commitments and Contingencies under the heading "Profits Participants Litigation" to the financial statements included within the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2021 as filed with the SEC on August 10, 2021).

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Net gains (losses) on investments in equity securities includes the gains (losses) related to the changes in fair value of the Company’s investment in Flutter (See Note 6—Fair Value).

The transaction costs for fiscal 2021 are primarily related to the partial settlement from Disney of $ 462 million related to the reimbursement of the Company’s prepayment of its share of the Divestiture Tax (See Note 1—Description of Business and Basis of Presentation).

Other Non-Current Assets

3 unchanged sentences

Investments (a)

$ 1,034 $ 578

Operating lease assets (b)

Inventories, net 642 521

Operating lease ROU assets 477 469

Grantor Trust 276 270

2 unchanged sentences

Includes investments accounted for at fair value on a recurring basis of $ 884 million and $ 435 million as of June 30, 2023 and 2022, respectively (See Note 6—Fair Value).

See Note 10—Leases under the heading “ Lessee Arrangements .”

Accounts Payable, Accrued Expenses and Other Current Liabilities

8 unchanged sentences

Total accounts payable, accrued expenses and other current liabilities $ 2,514 $ 2,296

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Other Liabilities

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(in millions)

Non-current operating lease liabilities (a)

Accrued non-current pension/postretirement liabilities 361 447

Non-current operating lease liabilities 405 409

Other non-current liabilities 198 268

Total other liabilities $ 1,484 $ 1,120

See Note 10—Leases under the heading “ Lessee Arrangements .”

Future Performance Obligations

1 unchanged sentence

The Company’s most significant remaining performance obligations relate to affiliate contracts, sports advertising contracts and content licensing contracts with fixed fees.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(iii) revenues related to performance obligations for which the Company elects to recognize revenue in the amount it has a right to invoice.

The amount disclosed does not include (i) revenues related to performance obligations that are part of a contract whose original expected duration is one year or less, (ii) revenues that are in the form of sales- or usage-based royalties and (iii) revenues related to performance obligations for which the Company elects to recognize revenue in the amount it has a right to invoice.

Supplemental Information

17 unchanged sentences

Subsequent to June 30, 2023 , the Company increased its semi-annual dividend and declared a semi-annual dividend of $ 0.26 per share on both the Class A Common Stock and the Class B Common Stock.

The dividend declared is payable on September 28, 2022 with a record date for determining dividend entitlements of August 31, 2022 .

Subsequent to June 30, 2022 , the Company repurchased a total of approximately 1.5 million shares of Common Stock for $ 50 million in the open market.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

dividend declared is payable on September 27, 2023 with a record date for determining dividend entitlements of August 30, 2023 .

Subsequent to June 30, 2023 , the Company repurchased a total of approximately 1.5 million shares of Class A Common Stock for $ 50 million in the open market.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data