News Corporation (NASDAQ:NWSA) Q1 2021 Earnings Conference Call November 5, 2020 5:00 PM ET Company Participants Mike Florin - Senior Vice President & Head of Investor Relations Robert Thomson - Chief Executive Officer Susan Panuccio - Chief Financial Officer Conference Call Participants Kane Hannan - Goldman Sachs Entcho Raykovski - Crédit Suisse Craig Huber - Huber Research Partners Brian Han - Morningstar Operator Good day. And welcome to the News Corp 1Q Fiscal 2021 Conference Call. Today's conference i ...

Part I - Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements for Q1 FY2021 vs Q1 FY2020, detailing operations, balance sheets, cash flows, and notes on segment changes Consolidated Statement of Operations (Unaudited) | (In millions) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | | :--- | :--- | :--- | | **Total Revenues** | **$2,117** | **$2,340** | | Operating expenses | $(1,164) | $(1,338) | | Selling, general and administrative | $(685) | $(781) | | Impairment and restructuring charges | $(40) | $(297) | | Income (loss) before income tax | $72 | $(232) | | **Net income (loss)** | **$47** | **$(211)** | | **Net income (loss) attributable to News Corporation stockholders** | **$34** | **$(227)** | Consolidated Balance Sheet Highlights | (In millions) | As of Sep 30, 2020 (unaudited) | As of June 30, 2020 (audited) | | :--- | :--- | :--- | | Cash and cash equivalents | $1,539 | $1,517 | | **Total Assets** | **$14,400** | **$14,261** | | Total current liabilities | $2,738 | $2,682 | | Total borrowings | $1,284 | $1,259 | | **Total Liabilities** | **$5,946** | **$5,872** | | **Total Equity** | **$8,454** | **$8,389** | Consolidated Statement of Cash Flows (Unaudited) | (In millions) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$155** | **$27** | | Net cash used in investing activities | $(96) | $(118) | | Net cash used in financing activities | $(50) | $(95) | | **Net change in cash and cash equivalents** | **$9** | **$(186)** | - In the fourth quarter of fiscal 2020, the Company disaggregated its **Dow Jones operating segment** as a separate reportable segment, revising historical disclosures to reflect this change[20](index=20&type=chunk) [Note 2. Revenues](index=9&type=section&id=Note%202.%20Revenues) Total revenues decreased to **$2.117 billion** in Q1 FY2021, mainly due to News Media advertising decline, with growth in Book Publishing and Digital Real Estate Services Revenues by Segment (Three months ended Sep 30, 2020 vs 2019) | Segment | 2020 (in millions) | 2019 (in millions) | | :--- | :--- | :--- | | Digital Real Estate Services | $290 | $272 | | Subscription Video Services | $496 | $514 | | Dow Jones | $386 | $382 | | Book Publishing | $458 | $405 | | News Media | $487 | $767 | | **Total Revenues** | **$2,117** | **$2,340** | [Note 3. Restructuring Programs](index=10&type=section&id=Note%203.%20Restructuring%20Programs) Restructuring charges of **$40 million** were recorded in Q1 FY2021, mainly for exit costs related to the planned Bronx print plant closure - Restructuring charges of **$40 million** were recorded in Q1 FY2021, with **$31 million** related to the News Media segment, primarily for exit costs associated with the planned closure of the Bronx print plant in Q3 FY2021[39](index=39&type=chunk) [Note 5. Borrowings](index=11&type=section&id=Note%205.%20Borrowings) Total borrowings were **$1.284 billion** as of September 30, 2020, mainly non-recourse debt of subsidiaries, supplemented by an undrawn **$750 million** revolving credit facility - Outstanding borrowings are primarily incurred by the **Foxtel Debt Group** and **REA Group**, with this debt being non-recourse to News Corp[47](index=47&type=chunk) - The Company has access to an unsecured **$750 million** revolving credit facility, which was undrawn as of September 30, 2020[47](index=47&type=chunk) [Note 9. Commitments and Contingencies](index=17&type=section&id=Note%209.%20Commitments%20and%20Contingencies) The company faces legal proceedings, including retained liabilities from News America Marketing sale and U.K. Newspaper Matters, with a **$54 million** accrual for U.K. matters indemnified by FOX - The Company retained liabilities from the sale of its **News America Marketing business**, including ongoing antitrust lawsuits with **Insignia Systems, Inc.** and **Valassis Communications, Inc.**[79](index=79&type=chunk)[80](index=80&type=chunk)[82](index=82&type=chunk) - For the **U.K. Newspaper Matters**, the Company is indemnified by FOX for payments related to civil claims, with an accrued liability of approximately **$54 million** and a corresponding receivable from FOX of approximately **$61 million** as of September 30, 2020[85](index=85&type=chunk)[86](index=86&type=chunk) [Note 11. Segment Information](index=20&type=section&id=Note%2011.%20Segment%20Information) Details performance of six reporting segments, highlighting strong Segment EBITDA growth in Digital Real Estate Services, Dow Jones, and Book Publishing, despite a News Media loss Segment EBITDA (Three months ended Sep 30) | Segment (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | Digital Real Estate Services | $119 | $82 | | Subscription Video Services | $78 | $81 | | Dow Jones | $72 | $49 | | Book Publishing | $71 | $49 | | News Media | $(22) | $7 | | Other | $(50) | $(47) | | **Total Segment EBITDA** | **$268** | **$221** | [Note 13. Subsequent Events](index=24&type=section&id=Note%2013.%20Subsequent%20Events) In October 2020, REA Group and News Corp agreed to increase their ownership in Elara Technologies, resulting in a combined controlling interest upon completion - In October 2020, **REA Group** agreed to increase its ownership in **Elara**, with News Corp also increasing its interest for **$34.5 million**, leading to a consolidated combined interest of **86.1% to 100%** in Elara[117](index=117&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a **10%** revenue decrease to **$2.12 billion**, improved net income to **$47 million**, and **21%** Segment EBITDA growth to **$268 million**, highlighting segment performance, COVID-19 impacts, and liquidity [Overview of the Company's Businesses](index=26&type=section&id=Overview%20of%20the%20Company%27s%20Businesses) Outlines the company's six segments and key developments, focusing on COVID-19's mixed impact on real estate and advertising versus digital subscriptions, and notes increased investment in Elara - The **COVID-19 pandemic** negatively impacted real estate markets and print advertising volumes, but also led to increases in **digital paid subscribers** and audience gains for **online news properties**[128](index=128&type=chunk)[129](index=129&type=chunk) - Sports programming costs in the Subscription Video Services segment were negatively impacted by the deferral of approximately **$36 million** in costs from fiscal 2020 into Q1 FY2021 due to postponed sporting events[130](index=130&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Consolidated revenues fell **10%** to **$2.117 billion** in Q1 FY2021, net income swung to a **$47 million** profit, and Total Segment EBITDA increased **21%** to **$268 million**, driven by strong segment performance Segment Performance (Q1 FY2021 vs Q1 FY2020) | Segment (in millions) | Revenues 2020 | Revenues 2019 | Segment EBITDA 2020 | Segment EBITDA 2019 | | :--- | :--- | :--- | :--- | :--- | | Digital Real Estate Services | $290 | $272 | $119 | $82 | | Subscription Video Services | $496 | $514 | $78 | $81 | | Dow Jones | $386 | $382 | $72 | $49 | | Book Publishing | $458 | $405 | $71 | $49 | | News Media | $487 | $767 | $(22) | $7 | | **Total** | **$2,117** | **$2,340** | **$268** | **$221** | - Digital revenues at the Dow Jones segment represented **73%** of its total revenues for the quarter, up from **65%** in the prior year[157](index=157&type=chunk) Dow Jones Digital-Only Subscriptions (Average Daily) | Publication | Q1 FY2021 (thousands) | Q1 FY2020 (thousands) | % Change | | :--- | :--- | :--- | :--- | | The Wall Street Journal | 2,354 | 1,854 | +27% | | Barron's | 458 | 321 | +43% | | **Total Consumer** | **2,914** | **2,259** | **+29%** | - The News Media segment's revenue decline of **$280 million** was primarily driven by a **$200 million** impact from the sale of **News America Marketing**[166](index=166&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) The company ended the quarter with **$1.5 billion** in cash, with net cash from operating activities increasing to **$155 million**, and free cash flow available to News Corp improving to **$65 million**, ensuring sufficient liquidity - The company's principal source of liquidity is internally generated funds and cash on hand, which stood at **$1.5 billion** as of September 30, 2020[170](index=170&type=chunk) Reconciliation of Free Cash Flow Available to News Corporation | (in millions) | Three months ended Sep 30, 2020 | Three months ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $155 | $27 | | Less: Capital expenditures | $(93) | $(117) | | Free cash flow | $62 | $(90) | | Less: REA Group free cash flow | $(29) | $(28) | | Plus: Cash dividends received from REA Group | $32 | $35 | | **Free cash flow available to News Corporation** | **$65** | **$(83)** | - In August 2020, the Board of Directors declared a semi-annual cash dividend of **$0.10 per share**, paid in October 2020[174](index=174&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material change in the company's sensitivity to market risk has been reported since the fiscal year ended June 30, 2020 - There has been **no material change** in the Company's assessment of its sensitivity to market risk since its presentation in the 2020 Form 10-K[189](index=189&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including CEO and CFO, deemed disclosure controls and procedures effective as of September 30, 2020, with no material changes in internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were **effective** as of the end of the reporting period[191](index=191&type=chunk) - **No changes** in the Company's internal control over financial reporting occurred during the first quarter of fiscal 2021 that materially affected, or are reasonably likely to materially affect, these controls[192](index=192&type=chunk) Part II - Other Information [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) This section refers readers to **Note 9—Commitments and Contingencies** of the Consolidated Financial Statements for details on the company's legal proceedings - For details on legal proceedings, the report refers to **Note 9—Commitments and Contingencies** in the financial statements[194](index=194&type=chunk) [Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) Updates risk factors, noting that FCC rules and the agreement with FOX may restrict the company's ability to acquire certain U.S. media assets, particularly where FOX owns broadcast stations - **FCC's Broadcast Ownership Rules** and **Program Access Rules**, combined with the **Murdoch Family Trust's ownership** in both **News Corp** and **FOX**, may restrict the Company from acquiring certain U.S. media assets, such as a newspaper in a market where FOX owns a television station[196](index=196&type=chunk)[197](index=197&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported **no unregistered sales of equity securities or use of proceeds** during the period - **None reported**[198](index=198&type=chunk) [Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section is **not applicable** - **Not applicable**[198](index=198&type=chunk) [Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is **not applicable** - **Not applicable**[198](index=198&type=chunk) [Other Information](index=41&type=section&id=Item%205.%20Other%20Information) This section is **not applicable** - **Not applicable**[198](index=198&type=chunk) [Exhibits](index=42&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the quarterly report, including **CEO and CFO certifications** and financial data in **Inline XBRL format** - Exhibits filed include **CEO/CFO certifications** (31.1, 31.2, 32.1) and financial statements in **Inline XBRL format** (101, 104)[200](index=200&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________________________ FORM 10-K ________________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2020 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-35769 ________________________________ NEWS CORPORATI ...

Financial Data and Key Metrics Changes - Total revenues for Q4 2020 were approximately $1.9 billion, down 22% year-over-year, reflecting the impacts of COVID-19 and the divestment of News America Marketing [33] - Total segment EBITDA was $195 million, down 28% year-over-year, with adjusted revenues falling 13% and adjusted total segment EBITDA decreasing 10% [33] - The net loss per share was $0.67 compared to a net loss per share of $0.09 in the prior year, including $292 million of non-cash impairment charges [33] Business Line Data and Key Metrics Changes - Dow Jones revenues for Q4 were $381 million, down 4% year-over-year, with digital revenues accounting for a record 71% of total revenues [34] - News Media segment revenues were $490 million, down 41% year-over-year, with advertising revenue falling 58% [37] - Digital Real Estate Services revenues decreased 16% to $238 million, primarily due to a decline in listings related to COVID-19 [40] Market Data and Key Metrics Changes - Digital advertising at Dow Jones was down only 7% in the quarter, while print advertising was down 43% [36] - Unique visitors across Dow Jones Digital platforms more than doubled in the quarter compared to the prior year [36] - The New York Post digital network reached 177 million monthly unique users during Q4 [23] Company Strategy and Development Direction - The company is focusing on digital transformation, with significant cost reductions and restructuring efforts across its publishing business [30][31] - A shared service program is being launched to centralize functions and reduce costs, expected to have a materially positive impact on the bottom line [12][13] - The creation of the Dow Jones segment allows for better performance comparison with peers, highlighting its growth potential [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by COVID-19 but expressed confidence in the company's ability to adapt and thrive in a digital-first environment [7][8] - The company expects continued growth in digital subscriptions and is taking steps to stabilize the News Media segment through aggressive cost targets [32][39] - Management noted that the advertising environment is expected to improve gradually, with strong digital trends observed [51] Other Important Information - The company reported a cash balance increase of $129 million to over $1.5 billion as of June 30 [8] - Digital subscriptions across News Corp Australia rose 25% to nearly 650,000 by the end of the fiscal year [22] - The company plans to hold an Investor Day in mid-September to provide more insights into Dow Jones' potential [21] Q&A Session Summary Question: Cost program for Foxtel and simplification agenda - Management confirmed that the $100 million in savings includes sports rights savings and emphasized that simplification is an ongoing process [56][58] Question: COVID-19 impact on revenue - Management clarified that the COVID-19 impact is net of all potential costs and revenue impacts, and noted that advertising trends at Dow Jones have improved since May [61][65] Question: Digital advertising trends at Dow Jones - Management attributed strong digital advertising performance to a unique media property structure and a growing subscription funnel [66][69] Question: Revenue impact from Australian newspaper closures - Management indicated that the closure of 112 mastheads in Australia represented about $20 million in revenue impact for Q4 [71][72] Question: Binge subscriber numbers and Telstra - Management confirmed that Telstra's sales channel numbers are included in Binge's subscriber counts [75][76]

News Corporation (NASDAQ:NWSA) Q3 2020 Earnings Conference Call May 7, 2020 5:00 PM ET Company Participants Michael Florin - Senior Vice President and Head-Investor Relations Robert Thomson - Chief Executive Susan Panuccio - Chief Financial Officer Conference Call Participants Alexia Quadrani - JPMorgan Entcho Raykovski - Credit Suisse Craig Huber - Huber Research Partners Brian Han - Morningstar Operator Good day, and welcome to the News Corp’s 3Q Fiscal 2020 Conference Call. Today’s conference is being re ...

Part I. Financial Information [Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents News Corporation's unaudited consolidated financial statements, encompassing Statements of Operations, Balance Sheets, and Cash Flows, with detailed notes [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) The company reported a significant net loss for the three and nine months ended March 31, 2020, driven by impairment charges and declining revenues Consolidated Statements of Operations Highlights (in millions) | Metric | Three Months Ended Mar 31, 2020 | Three Months Ended Mar 31, 2019 | Nine Months Ended Mar 31, 2020 | Nine Months Ended Mar 31, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $2,266 | $2,457 | $7,085 | $7,608 | | **Impairment and restructuring charges** | $(1,125) | $(34) | $(1,451) | $(71) | | **(Loss) income before income tax** | $(1,046) | $30 | $(1,123) | $382 | | **Net (loss) income** | $(1,036) | $23 | $(1,144) | $270 | | **Net (loss) income attributable to News Corp stockholders** | $(730) | $10 | $(872) | $206 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2020, shows decreased total assets and equity, primarily due to reductions in Goodwill and Intangible assets Consolidated Balance Sheet Highlights (in millions) | Metric | As of Mar 31, 2020 (unaudited) | As of Jun 30, 2019 (audited) | | :--- | :--- | :--- | | Cash and cash equivalents | $1,388 | $1,643 | | Goodwill | $3,831 | $5,147 | | Intangible assets, net | $1,846 | $2,426 | | **Total assets** | **$14,428** | **$15,711** | | Total current liabilities | $2,689 | $3,340 | | Borrowings (non-current) | $1,115 | $1,004 | | **Total liabilities** | **$5,860** | **$5,400** (Calculated) | | **Total equity** | **$8,568** | **$10,311** | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased for the nine months ended March 31, 2020, alongside lower cash used in investing and financing activities Consolidated Cash Flow Highlights (in millions) | Metric | Nine Months Ended Mar 31, 2020 | Nine Months Ended Mar 31, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $462 | $661 | | Net cash used in investing activities | $(327) | $(523) | | Net cash used in financing activities | $(341) | $(501) | | **Net change in cash and cash equivalents** | **$(206)** | **$(363)** | [Notes to the Unaudited Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Unaudited%20Consolidated%20Financial%20Statements) Detailed notes explain the company's accounting policies and financial results, covering revenue, impairment, borrowings, and legal contingencies - The company adopted the new lease accounting standard (ASU 2016-02) on July 1, 2019, resulting in the recognition of operating lease right-of-use assets of approximately **$1.4 billion** and corresponding lease liabilities[21](index=21&type=chunk)[87](index=87&type=chunk) - On March 31, 2020, the company entered into a definitive agreement to sell its News America Marketing business, which was completed on May 5, 2020. The business was classified as held for sale, and a **$175 million** impairment charge was recognized[44](index=44&type=chunk)[45](index=45&type=chunk) - Significant non-cash impairment charges of **$1.1 billion** were recognized in Q3 2020, primarily related to goodwill and intangible assets at the Foxtel (**$931 million**) and News America Marketing (**$175 million**) reporting units[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) - The company is involved in ongoing legal proceedings related to its former News America Marketing business (with Insignia and Valassis) and the U.K. Newspaper Matters. Liabilities are accrued, with a corresponding indemnification receivable from FOX for the U.K. matters[148](index=148&type=chunk)[152](index=152&type=chunk)[154](index=154&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=39&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, covering consolidated and segment results, COVID-19 impact, liquidity, and capital resources [COVID-19 Impact](index=41&type=section&id=COVID-19%20Impact) The COVID-19 pandemic materially impacted operations, adversely affecting advertising, sales, and real estate, while impacting subscription video and book publishing - News and Information Services: Advertising and single-copy sales are expected to be adversely affected, though digital subscriptions have increased[207](index=207&type=chunk) - Subscription Video Services: Cancellation of sports events has led to fewer sports subscribers (e.g., Kayo) and is expected to impact churn and advertising revenue[208](index=208&type=chunk) - Digital Real Estate Services: Real estate markets in Australia and the U.S. are negatively impacted by social distancing, leading to lower listing volumes and revenue[209](index=209&type=chunk) - The company has implemented cost-savings initiatives, including reductions in discretionary spending, capital expenditures, and headcount, to offset the pandemic's impact[210](index=210&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Consolidated revenues decreased by **8%** and **7%** for the quarter and nine-month periods respectively, leading to a net loss primarily due to **$1.1 billion** in impairment charges Consolidated Results Summary (in millions) | Metric | Three Months Ended Mar 31, 2020 | Change (YoY) | Nine Months Ended Mar 31, 2020 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $2,266 | -8% | $7,085 | -7% | | **Operating expenses** | $(1,281) | +9% | $(3,968) | +6% | | **Impairment and restructuring charges** | $(1,125) | N/M | $(1,451) | N/M | | **Net (loss) income attributable to News Corp** | $(730) | N/M | $(872) | N/M | - Foreign currency fluctuations had a negative impact on revenues of **$78 million** for the third quarter and **$212 million** for the nine-month period[220](index=220&type=chunk)[222](index=222&type=chunk) - The significant increase in impairment charges was primarily due to a **$931 million** write-down at Foxtel and a **$175 million** charge related to the classification of News America Marketing as held for sale[230](index=230&type=chunk)[231](index=231&type=chunk) [Segment Analysis](index=47&type=section&id=Segment%20Analysis) Total Segment EBITDA was relatively flat in Q3 at **$242 million** but decreased **16%** for the nine-month period, with varied performance across segments Segment EBITDA (in millions) | Segment | Q3 2020 | Q3 2019 | % Change | Nine Months 2020 | Nine Months 2019 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | News and Information Services | $75 | $65 | 15% | $273 | $286 | -5% | | Subscription Video Services | $68 | $98 | -31% | $219 | $295 | -26% | | Book Publishing | $55 | $53 | 4% | $167 | $209 | -20% | | Digital Real Estate Services | $74 | $73 | 1% | $274 | $299 | -8% | | **Total Segment EBITDA** | **$242** | **$247** | **-2%** | **$818** | **$975** | **-16%** | - Foxtel's total paid subscribers increased to **2.93 million** from **2.90 million** a year ago, driven by growth in Kayo OTT subscribers, which more than offset the decline in broadcast residential subscribers[270](index=270&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity relies on **$1.39 billion** cash on hand and internally generated funds, with net cash from operations decreasing to **$462 million** and free cash flow to **$63 million** - As of March 31, 2020, the company held **$1.39 billion** in cash and cash equivalents[284](index=284&type=chunk) - Free cash flow available to News Corporation for the nine months ended March 31, 2020 was **$63 million**, a decrease from **$149 million** in the prior year period, primarily due to lower cash from operations[297](index=297&type=chunk) - In December 2019, the company terminated its **$650 million** credit facility and entered into a new unsecured **$750 million** revolving credit facility, which was undrawn as of March 31, 2020[302](index=302&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material change in its assessment of market risk sensitivity since its last annual report - There has been no material change in the Company's assessment of its sensitivity to market risk since its last annual report[309](index=309&type=chunk) [Controls and Procedures](index=60&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[310](index=310&type=chunk) - No changes in internal control over financial reporting occurred during the third quarter of fiscal 2020 that have materially affected, or are reasonably likely to materially affect, these controls[311](index=311&type=chunk) Part II. Other Information [Legal Proceedings](index=61&type=section&id=Item%201.%20Legal%20Proceedings) This section updates ongoing legal proceedings involving News America Marketing, detailing antitrust litigation with Insignia Systems and Valassis Communications - In the case with Insignia Systems, Inc., the court denied motions to dismiss from both parties in April 2020, and the case is proceeding[314](index=314&type=chunk) - In the case with Valassis Communications, Inc., the court granted Valassis's motion to supplement its expert and pre-trial damages disclosures in April 2020, postponing the June 1, 2020 trial date[316](index=316&type=chunk) [Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) A new significant risk factor details the material adverse effects of the COVID-19 pandemic on the company's business, operations, and financial position - A new, detailed risk factor has been added concerning the COVID-19 pandemic, highlighting potential adverse impacts on revenues, supply chains, mitigation efforts, and the workforce[319](index=319&type=chunk) - The pandemic is expected to continue adversely impacting advertising revenues, print sales, commercial subscriptions, and real estate revenues due to economic downturns and business closures[319](index=319&type=chunk) - The ultimate impact of the pandemic is highly uncertain and depends on its duration, severity, and the effectiveness of containment measures, making it challenging for management to estimate future performance[321](index=321&type=chunk)

PART I. FINANCIAL INFORMATION This section details News Corporation's unaudited consolidated financial statements, management's analysis, market risk, and internal controls [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents News Corporation's unaudited consolidated financial statements, notes, and key financial highlights, including a net loss for the six months ended December 31, 2019, primarily due to impairment charges [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents News Corporation's consolidated statements of operations, detailing revenues, expenses, and net income (loss) Consolidated Statements of Operations (Unaudited; millions, except per share amounts) | Metric | For the three months ended December 31, 2019 ($M) | For the three months ended December 31, 2018 ($M) | For the six months ended December 31, 2019 ($M) | For the six months ended December 31, 2018 ($M) | |:---|:---|:---|:---|:---| | Revenues: ||||| | Circulation and subscription | 990 | 1,029 | 1,985 | 2,063 | | Advertising | 677 | 718 | 1,285 | 1,382 | | Consumer | 421 | 478 | 808 | 878 | | Real estate | 242 | 248 | 460 | 475 | | Other | 149 | 154 | 281 | 353 | | **Total Revenues** | **2,479** | **2,627** | **4,819** | **5,151** | | Operating expenses | (1,350) | (1,484) | (2,687) | (2,824) | | Selling, general and administrative | (774) | (773) | (1,556) | (1,599) | | Depreciation and amortization | (162) | (163) | (324) | (326) | | Impairment and restructuring charges | (29) | (19) | (326) | (37) | | Equity losses of affiliates | (3) | (6) | (5) | (9) | | Interest expense, net | (8) | (15) | (4) | (31) | | Other, net | 2 | 7 | 6 | 27 | | Income (loss) before income tax expense | 155 | 174 | (77) | 352 | | Income tax expense | (52) | (55) | (31) | (105) | | Net income (loss) | 103 | 119 | (108) | 247 | | Less: Net income attributable to noncontrolling interests | (18) | (24) | (34) | (51) | | Net income (loss) attributable to News Corporation stockholders | 85 | 95 | (142) | 196 | | Net income (loss) attributable to News Corporation stockholders per share: ||||| | Basic | 0.15 | 0.16 | (0.24) | 0.34 | | Diluted | 0.14 | 0.16 | (0.24) | 0.33 | [Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) This section presents News Corporation's consolidated statements of comprehensive income (loss), including net income and other comprehensive income components Consolidated Statements of Comprehensive Income (Loss) (Unaudited; millions) | Metric | For the three months ended December 31, 2019 ($M) | For the three months ended December 31, 2018 ($M) | For the six months ended December 31, 2019 ($M) | For the six months ended December 31, 2018 ($M) | |:---|:---|:---|:---|:---|\ | Net income (loss) | 103 | 119 | (108) | 247 | | Other comprehensive income (loss): ||||| | Foreign currency translation adjustments | 199 | (147) | 14 | (257) | | Net change in the fair value of cash flow hedges | — | 5 | (14) | 7 | | Benefit plan adjustments, net | (13) | 8 | (2) | 13 | | Other comprehensive income (loss) | 186 | (134) | (2) | (237) | | Comprehensive income (loss) | 289 | (15) | (110) | 10 | | Less: Net income attributable to noncontrolling interests | (18) | (24) | (34) | (51) | | Less: Other comprehensive (income) loss attributable to noncontrolling interests | (36) | 28 | 9 | 56 | | Comprehensive income (loss) attributable to News Corporation stockholders | 235 | (11) | (135) | 15 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section presents News Corporation's consolidated balance sheets, detailing assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheets (Millions, except share and per share amounts) | Metric | As of December 31, 2019 (unaudited) ($M) | As of June 30, 2019 (audited) ($M) | |:---|:---|:---| | Assets: ||| | Current assets: ||| | Cash and cash equivalents | 1,272 | 1,643 | | Receivables, net | 1,570 | 1,544 | | Inventory, net | 358 | 348 | | Other current assets | 518 | 515 | | **Total current assets** | **3,718** | **4,050** | | Non-current assets: ||| | Investments | 325 | 335 | | Property, plant and equipment, net | 2,476 | 2,554 | | Operating lease right-of-use assets | 1,299 | — | | Intangible assets, net | 2,257 | 2,426 | | Goodwill | 4,976 | 5,147 | | Deferred income tax assets | 283 | 269 | | Other non-current assets | 948 | 930 | | **Total assets** | **16,282** | **15,711** | | Liabilities and Equity: ||| | Current liabilities: ||| | Accounts payable | 375 | 411 | | Accrued expenses | 1,072 | 1,328 | | Deferred revenue | 411 | 428 | | Current borrowings | — | 449 | | Other current liabilities | 869 | 724 | | **Total current liabilities** | **2,727** | **3,340** | | Non-current liabilities: ||| | Borrowings | 1,201 | 1,004 | | Retirement benefit obligations | 258 | 266 | | Deferred income tax liabilities | 268 | 295 | | Operating lease liabilities | 1,343 | — | | Other non-current liabilities | 358 | 495 | | Total News Corporation stockholders' equity | 8,958 | 9,144 | | Noncontrolling interests | 1,169 | 1,167 | | **Total equity** | **10,127** | **10,311** | | **Total liabilities and equity** | **16,282** | **15,711** | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents News Corporation's consolidated statements of cash flows, categorizing cash movements from operating, investing, and financing activities Consolidated Statements of Cash Flows (Unaudited; millions) | Metric | For the six months ended December 31, 2019 ($M) | For the six months ended December 31, 2018 ($M) | |:---|:---|:---|\ | Operating activities: ||| | Net (loss) income | (108) | 247 | | Depreciation and amortization | 324 | 326 | | Operating lease expense | 86 | — | | Equity losses of affiliates | 5 | 9 | | Impairment charges | 292 | — | | Net cash provided by operating activities | 192 | 358 | | Investing activities: ||| | Capital expenditures | (237) | (264) | | Acquisitions, net of cash acquired | (2) | (185) | | Net cash used in investing activities | (234) | (409) | | Financing activities: ||| | Borrowings | 917 | 263 | | Repayment of borrowings | (1,161) | (470) | | Dividends paid | (81) | (81) | | Net cash used in financing activities | (328) | (333) | | Net change in cash and cash equivalents | (370) | (384) | | Cash and cash equivalents, beginning of year | 1,643 | 2,034 | | Exchange movement on opening cash balance | (1) | (32) | | Cash and cash equivalents, end of year | 1,272 | 1,618 | [Notes to the Unaudited Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed notes to News Corporation's unaudited consolidated financial statements, offering additional context and disclosures [NOTE 1. Description of Business and Basis of Presentation](index=7&type=section&id=NOTE%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) This note describes News Corporation's business and the basis of presentation for its unaudited consolidated financial statements - News Corporation is a global diversified media and information services company, comprising businesses in news and information services, subscription video services in Australia, book publishing, and digital real estate services[19](index=19&type=chunk) - The company adopted ASU 2016-02 (Leases) on a modified retrospective basis as of July 1, 2019, resulting in the recognition of approximately **$1.4 billion** in operating lease right-of-use assets and **$1.6 billion** in total lease liabilities (**$0.2 billion** current and **$1.4 billion** noncurrent)[23](index=23&type=chunk) [NOTE 2. Revenues](index=9&type=section&id=NOTE%202.%20Revenues) This note provides a detailed breakdown of News Corporation's revenues by segment and changes in deferred revenue balances Disaggregated Revenues by Segment (Three Months Ended December 31, 2019 and 2018) | Segment | 2019 ($M) | 2018 ($M) | |:---|:---|:---|\ | News and Information Services | 1,241 | 1,257 | | Subscription Video Services | 501 | 562 | | Book Publishing | 442 | 496 | | Digital Real Estate Services | 294 | 311 | | Other | 1 | 1 | | **Total Revenues** | **2,479** | **2,627** | Disaggregated Revenues by Segment (Six Months Ended December 31, 2019 and 2018) | Segment | 2019 ($M) | 2018 ($M) | |:---|:---|:---|\ | News and Information Services | 2,390 | 2,505 | | Subscription Video Services | 1,015 | 1,127 | | Book Publishing | 847 | 914 | | Digital Real Estate Services | 566 | 604 | | Other | 1 | 1 | | **Total Revenues** | **4,819** | **5,151** | Changes in Deferred Revenue Balance (Six Months Ended December 31, 2019 and 2018) | Metric | 2019 ($M) | 2018 ($M) | |:---|:---|:---|\ | Balance, beginning of period | 428 | 510 | | Deferral of revenue | 1,575 | 1,337 | | Recognition of deferred revenue | (1,591) | (1,417) | | Other | (1) | — | | **Balance, end of period** | **411** | **430** | [NOTE 3. Impairment and Restructuring Charges](index=11&type=section&id=NOTE%203.%20Impairment%20and%20Restructuring%20Charges) This note details News Corporation's impairment and restructuring charges, including non-cash impairment of goodwill and intangible assets - During the six months ended December 31, 2019, the Company recognized non-cash impairment charges of **$292 million**, primarily related to goodwill (**$122 million**) and indefinite-lived intangible assets (**$113 million**) at the News America Marketing reporting unit[44](index=44&type=chunk) Restructuring Charges (Three and Six Months Ended December 31, 2019 and 2018) | Metric | For the three months ended December 31, 2019 ($M) | For the three months ended December 31, 2018 ($M) | For the six months ended December 31, 2019 ($M) | For the six months ended December 31, 2018 ($M) | |:---|:---|:---|:---|:---|\ | Restructuring charges | 10 | 19 | 34 | 37 | [NOTE 4. Investments](index=13&type=section&id=NOTE%204.%20Investments) This note outlines News Corporation's investments, including equity method investments and equity securities, and associated losses Company's Investments (As of December 31, 2019 and June 30, 2019) | Investment Type | As of December 31, 2019 ($M) | As of June 30, 2019 ($M) | |:---|:---|:---|\ | Equity method investments | 139 | 148 | | Equity securities | 186 | 187 | | **Total Investments** | **325** | **335** | Equity Losses of Affiliates (Three and Six Months Ended December 31, 2019 and 2018) | Metric | For the three months ended December 31, 2019 ($M) | For the three months ended December 31, 2018 ($M) | For the six months ended December 31, 2019 ($M) | For the six months ended December 31, 2018 ($M) | |:---|:---|:---|:---|:---|\ | Equity losses of affiliates | (3) | (6) | (5) | (9) | [NOTE 5. Borrowings](index=14&type=section&id=NOTE%205.%20Borrowings) This note details News Corporation's borrowings, including debt refinancing activities by Foxtel Group and REA Group Company's Total Borrowings (As of December 31, 2019 and June 30, 2019) | Entity | As of December 31, 2019 ($M) | As of June 30, 2019 ($M) | |:---|:---|:---|\ | Foxtel Group | 1,033 | 1,230 | | REA Group | 168 | 217 | | **Total borrowings** | **1,201** | **1,453** | | Less: current portion | — | (449) | | **Long-term borrowings** | **1,201** | **1,004** | - The Foxtel Debt Group completed a debt refinancing in November 2019, repaying **A$1.1 billion** of existing debt and securing approximately **A$1.1 billion** in new facilities, including a **A$610 million** revolving credit facility and a **A$250 million** term loan facility[60](index=60&type=chunk) - REA Group completed a debt refinancing in December 2019, repaying its **A$480 million** revolving loan facility and entering into a new **A$170 million** unsecured syndicated revolving loan facility[64](index=64&type=chunk) - News Corporation terminated its existing **$650 million** revolving credit facility and entered into a new **$750 million** unsecured revolving credit facility in December 2019, maturing in December 2024, which was undrawn as of December 31, 2019[67](index=67&type=chunk)[68](index=68&type=chunk) [NOTE 6. Leases](index=16&type=section&id=NOTE%206.%20Leases) This note details News Corporation's lease accounting, including the impact of ASU 2016-02 adoption and future lease payment commitments - Upon adoption of ASU 2016-02 (Leases) on July 1, 2019, the Company recognized approximately **$1.4 billion** in operating lease right-of-use assets and **$1.6 billion** in total lease liabilities (**$0.2 billion** current and **$1.4 billion** noncurrent)[71](index=71&type=chunk) Total Lease Costs (Six Months Ended December 31, 2019) | Income Statement Location | Amount ($M) | |:---|:---|\ | Selling, general and administrative (Operating lease costs) | 99 | | Operating expenses (Operating lease costs) | 6 | | Operating expenses (Short term lease costs) | 5 | | Selling, general and administrative (Variable lease costs) | 19 | | **Total lease costs** | **129** | Future Minimum Lease Payments (As of December 31, 2019) | Period | Amount ($M) | |:---|:---|\ | Fiscal 2020 (six months remaining) | 119 | | Fiscal 2021 | 207 | | Fiscal 2022 | 206 | | Fiscal 2023 | 193 | | Fiscal 2024 | 177 | | Thereafter | 968 | | **Total future minimum lease payments** | **1,870** | | Less: interest | (344) | | **Present value of minimum payments** | **1,526** | [NOTE 7. Equity](index=19&type=section&id=NOTE%207.%20Equity) This note details News Corporation's equity, including common stock, additional paid-in capital, and accumulated deficit Total News Corporation Stockholders' Equity (As of December 31, 2019 and June 30, 2019) | Metric | As of December 31, 2019 ($M) | As of June 30, 2019 ($M) | |:---|:---|:---|\ | Class A Common Stock Amount | 4 | 4 | | Class B Common Stock Amount | 2 | 2 | | Additional Paid-in Capital | 12,183 | 12,243 | | Accumulated Deficit | (2,114) | (1,979) | | Accumulated Other Comprehensive Loss | (1,117) | (1,126) | | **Total News Corporation Stockholders' Equity** | **8,958** | **9,144** | - The Board of Directors authorized a **$500 million** stock repurchase program for Class A Common Stock in May 2013, with approximately **$429 million** remaining as of January 31, 2020[92](index=92&type=chunk) - A semi-annual cash dividend of **$0.10 per share** for Class A Common Stock and Class B Common Stock was declared in August 2019 and paid on October 16, 2019[94](index=94&type=chunk) [NOTE 8. Financial Instruments and Fair Value Measurements](index=21&type=section&id=NOTE%208.%20Financial%20Instruments%20and%20Fair%20Value%20Measurements) This note details News Corporation's financial instruments and fair value measurements, including derivative instruments and impairment charges Assets and Liabilities Measured at Fair Value on a Recurring Basis (As of December 31, 2019) | Asset/Liability | Level 1 ($M) | Level 2 ($M) | Level 3 ($M) | Total ($M) | |:---|:---|:---|:---|:---|\ | **Assets:** ||||| | Foreign currency derivatives - cash flow hedges | — | — | — | — | | Cross currency interest rate derivatives - fair value hedges | — | 21 | — | 21 | | Cross currency interest rate derivatives - economic hedges | — | — | — | — | | Cross currency interest rate derivatives - cash flow hedges | — | 82 | — | 82 | | Equity securities | 77 | — | 109 | 186 | | **Total assets** | **77** | **103** | **109** | **289** | | **Liabilities:** ||||| | Foreign currency derivatives - cash flow hedges | — | 2 | — | 2 | | Interest rate derivatives - cash flow hedges | — | 16 | — | 16 | | Mandatorily redeemable noncontrolling interests | — | — | — | — | | Cross currency interest rate derivatives - cash flow hedges | — | 17 | — | 17 | | **Total liabilities** | **—** | **35** | **—** | **35** | - The Company uses derivative instruments (foreign currency, interest rate, and cross currency interest rate derivatives) to mitigate foreign currency exchange rate risk and interest rate risk, with a total notional value of cash flow hedges of approximately **$918 million** as of December 31, 2019[107](index=107&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk) - During the first quarter of fiscal 2020, the Company recognized non-cash impairment charges of **$122 million** for goodwill and **$113 million** for indefinite-lived intangible assets at the News America Marketing reporting unit[122](index=122&type=chunk) [NOTE 9. Earnings (Loss) Per Share](index=27&type=section&id=NOTE%209.%20Earnings%20(Loss)%20Per%20Share) This note details News Corporation's earnings (loss) per share calculations, including basic and diluted figures Earnings (Loss) Per Share (Three and Six Months Ended December 31, 2019 and 2018) | Metric | For the three months ended December 31, 2019 | For the three months ended December 31, 2018 | For the six months ended December 31, 2019 | For the six months ended December 31, 2018 | |:---|:---|:---|:---|:---|\ | Net income (loss) attributable to News Corporation stockholders ($M) | 85 | 95 | (142) | 196 | | Weighted-average number of shares of common stock outstanding - basic (M) | 588.2 | 584.9 | 587.4 | 584.4 | | Dilutive effect of equity awards (M) | 2.1 | 2.2 | — | 1.9 | | Weighted-average number of shares of common stock outstanding - diluted (M) | 590.3 | 587.1 | 587.4 | 586.3 | | Net income (loss) attributable to News Corporation stockholders per share - basic | $0.15 | $0.16 | $(0.24) | $0.34 | | Net income (loss) attributable to News Corporation stockholders per share - diluted | $0.14 | $0.16 | $(0.24) | $0.33 | [NOTE 10. Commitments and Contingencies](index=27&type=section&id=NOTE%2010.%20Commitments%20and%20Contingencies) This note outlines News Corporation's commitments and contingencies, including legal proceedings and accrued liabilities Commitments for Borrowings and Interest Payments (As of December 31, 2019) | Commitment Type | Total ($M) | Less than 1 year ($M) | 1-3 years ($M) | 3-5 years ($M) | More than 5 years ($M) | |:---|:---|:---|:---|:---|:---|\ | Borrowings | 1,199 | — | 875 | 324 | — | | Interest payments on borrowings | 170 | 50 | 89 | 31 | — | - The Company is involved in various legal proceedings, including antitrust lawsuits against News America Marketing (Insignia Systems, Inc. and Valassis Communications, Inc.) and civil claims related to U.K. Newspaper Matters[133](index=133&type=chunk)[136](index=136&type=chunk)[138](index=138&type=chunk) - As of December 31, 2019, the Company accrued approximately **$58 million** for the U.K. Newspaper Matters, with approximately **$60 million** indemnified by FOX[140](index=140&type=chunk) [NOTE 11. Income Taxes](index=30&type=section&id=NOTE%2011.%20Income%20Taxes) This note details News Corporation's income tax expense and effective tax rates, explaining factors influencing tax variations - For the three months ended December 31, 2019, income tax expense was **$52 million** on pre-tax income of **$155 million**, resulting in a higher effective tax rate primarily due to valuation allowances against tax benefits in certain foreign jurisdictions and higher foreign tax rates[145](index=145&type=chunk) - For the six months ended December 31, 2019, income tax expense was **$31 million** on a pre-tax loss of **$77 million**, with the effective tax rate impacted by the lower tax benefit recorded on the impairment of News America Marketing's goodwill and indefinite-lived intangible assets[146](index=146&type=chunk) [NOTE 12. Segment Information](index=31&type=section&id=NOTE%2012.%20Segment%20Information) This note provides detailed segment information for News Corporation, including revenues, EBITDA, goodwill, and intangible assets - The Company manages and reports its businesses in five segments: News and Information Services, Subscription Video Services, Book Publishing, Digital Real Estate Services, and Other[152](index=152&type=chunk)[153](index=153&type=chunk) Segment Revenues and EBITDA (Three Months Ended December 31, 2019 and 2018) | Segment | 2019 Revenues ($M) | 2018 Revenues ($M) | 2019 Segment EBITDA ($M) | 2018 Segment EBITDA ($M) | |:---|:---|:---|:---|:---|\ | News and Information Services | 1,241 | 1,257 | 142 | 112 | | Subscription Video Services | 501 | 562 | 70 | 84 | | Book Publishing | 442 | 496 | 63 | 88 | | Digital Real Estate Services | 294 | 311 | 118 | 121 | | Other | 1 | 1 | (38) | (35) | | **Total** | **2,479** | **2,627** | **355** | **370** | Segment Revenues and EBITDA (Six Months Ended December 31, 2019 and 2018) | Segment | 2019 Revenues ($M) | 2018 Revenues ($M) | 2019 Segment EBITDA ($M) | 2018 Segment EBITDA ($M) | |:---|:---|:---|:---|:---|\ | News and Information Services | 2,390 | 2,505 | 198 | 221 | | Subscription Video Services | 1,015 | 1,127 | 151 | 197 | | Book Publishing | 847 | 914 | 112 | 156 | | Digital Real Estate Services | 566 | 604 | 200 | 226 | | Other | 1 | 1 | (85) | (72) | | **Total** | **4,819** | **5,151** | **576** | **728** | Goodwill and Intangible Assets, net by Segment (As of December 31, 2019 and June 30, 2019) | Segment | As of December 31, 2019 ($M) | As of June 30, 2019 ($M) | |:---|:---|:---|\ | News and Information Services | 2,338 | 2,617 | | Subscription Video Services | 2,552 | 2,595 | | Book Publishing | 767 | 772 | | Digital Real Estate Services | 1,576 | 1,589 | | **Total Goodwill and intangible assets, net** | **7,233** | **7,573** | [NOTE 13. ADDITIONAL FINANCIAL INFORMATION](index=34&type=section&id=NOTE%2013.%20Additional%20Financial%20Information) This note provides additional financial information, including details on receivables, other non-current assets, and other current liabilities Receivables, net (As of December 31, 2019 and June 30, 2019) | Metric | As of December 31, 2019 ($M) | As of June 30, 2019 ($M) | |:---|:---|:---|\ | Receivables | 1,624 | 1,590 | | Allowance for doubtful accounts | (54) | (46) | | **Receivables, net** | **1,570** | **1,544** | Other Non-Current Assets (As of December 31, 2019 and June 30, 2019) | Metric | As of December 31, 2019 ($M) | As of June 30, 2019 ($M) | |:---|:---|:---|\ | Royalty advances to authors | 338 | 343 | | Retirement benefit assets | 137 | 117 | | Inventory | 143 | 155 | | Other | 330 | 315 | | **Total Other non-current assets** | **948** | **930** | Other Current Liabilities (As of December 31, 2019 and June 30, 2019) | Metric | As of December 31, 2019 ($M) | As of June 30, 2019 ($M) | |:---|:---|:---|\ | Royalties and commissions payable | 218 | 211 | | Current operating lease liabilities | 183 | — | | Allowance for sales returns | 180 | 192 | | Current tax payable | 19 | 22 | | Other | 269 | 299 | | **Total Other current liabilities** | **869** | **724** | Components of Other, net (Three and Six Months Ended December 31, 2019 and 2018) | Metric | For the three months ended December 31, 2019 ($M) | For the three months ended December 31, 2018 ($M) | For the six months ended December 31, 2019 ($M) | For the six months ended December 31, 2018 ($M) | |:---|:---|:---|:---|:---|\ | Dividends received from equity security investments | — | 22 | 1 | 23 | | Remeasurement of equity securities | (6) | (44) | (5) | (29) | | Gain on sale of Australian property | — | 12 | — | 12 | | Other, net | 8 | 17 | 10 | 21 | | **Total Other, net** | **2** | **7** | **6** | **27** | [NOTE 14. Subsequent Events](index=36&type=section&id=NOTE%2014.%20Subsequent%20Events) This note details significant events occurring after the reporting period, including asset sales and new financing agreements - In January 2020, the Company sold Unruly to Tremor International Ltd for approximately **7%** of Tremor's outstanding shares, including a three-year commercial arrangement with a total minimum revenue guarantee of **£30 million** for News Corp[175](index=175&type=chunk) - In February 2020, the Foxtel Debt Group entered into an **A$170 million** subordinated shareholder loan facility agreement with Telstra to finance cable transmission costs, bearing interest at Australian BBSY plus **7.75%** and maturing in December 2027[176](index=176&type=chunk) - In February 2020, the Board of Directors declared a semi-annual cash dividend of **$0.10 per share** for Class A and Class B Common Stock, payable on April 15, 2020[176](index=176&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an in-depth analysis of News Corporation's financial performance and condition, highlighting revenue decline, a net loss due to impairment, and debt refinancing activities [INTRODUCTION](index=37&type=section&id=Introduction) This section introduces News Corporation as a global diversified media and information services company - News Corporation is a global diversified media and information services company, encompassing news and information services, subscription video services in Australia, book publishing, and digital real estate services[179](index=179&type=chunk) [OVERVIEW OF THE COMPANY'S BUSINESSES](index=38&type=section&id=Overview%20of%20the%20Company's%20Businesses) This section provides an overview of News Corporation's business segments and recent strategic actions - The Company operates in five segments: News and Information Services, Subscription Video Services, Book Publishing, Digital Real Estate Services, and Other[183](index=183&type=chunk)[185](index=185&type=chunk) - The Company is reviewing strategic options for News America Marketing, including a potential sale, and completed the sale of Unruly to Tremor International Ltd in January 2020[186](index=186&type=chunk) [RESULTS OF OPERATIONS](index=40&type=section&id=Results%20of%20Operations) This section details News Corporation's consolidated operating results, including revenues, expenses, and net income (loss) Consolidated Operating Results (Three and Six Months Ended December 31, 2019 vs 2018) | Metric | For the three months ended December 31, 2019 ($M) | For the three months ended December 31, 2018 ($M) | % Change | For the six months ended December 31, 2019 ($M) | For the six months ended December 31, 2018 ($M) | % Change | |:---|:---|:---|:---|:---|:---|:---|\ | Total Revenues | 2,479 | 2,627 | (6)% | 4,819 | 5,151 | (6)% | | Operating expenses | (1,350) | (1,484) | 9% | (2,687) | (2,824) | 5% | | Selling, general and administrative | (774) | (773) | (0)% | (1,556) | (1,599) | 3% | | Depreciation and amortization | (162) | (163) | 1% | (324) | (326) | 1% | | Impairment and restructuring charges | (29) | (19) | (53)% | (326) | (37) | ** | | Equity losses of affiliates | (3) | (6) | 50% | (5) | (9) | 44% | | Interest expense, net | (8) | (15) | 47% | (4) | (31) | 87% | | Other, net | 2 | 7 | (71)% | 6 | 27 | (78)% | | Income (loss) before income tax expense | 155 | 174 | (11)% | (77) | 352 | ** | | Income tax expense | (52) | (55) | 5% | (31) | (105) | 70% | | Net income (loss) | 103 | 119 | (13)% | (108) | 247 | ** | | Less: Net income attributable to noncontrolling interests | (18) | (24) | 25% | (34) | (51) | 33% | | Net income (loss) attributable to News Corporation stockholders | 85 | 95 | (11)% | (142) | 196 | ** | - Consolidated revenues decreased by **$148 million (6%)** for the three months and **$332 million (6%)** for the six months ended December 31, 2019, primarily due to lower revenues in Subscription Video Services, Book Publishing, and News and Information Services, exacerbated by negative foreign currency fluctuations[190](index=190&type=chunk)[191](index=191&type=chunk)[193](index=193&type=chunk) - Net income (loss) for the six months ended December 31, 2019, deteriorated by **$355 million**, primarily due to **$292 million** in non-cash impairment charges related to goodwill and indefinite-lived intangible assets at News America Marketing and lower Total Segment EBITDA[207](index=207&type=chunk) [Segment Analysis](index=43&type=section&id=Segment%20Analysis) This section provides a detailed analysis of News Corporation's performance across its various business segments Total Segment EBITDA Reconciliation (Three and Six Months Ended December 31, 2019 vs 2018) | Metric | For the three months ended December 31, 2019 ($M) | For the three months ended December 31, 2018 ($M) | For the six months ended December 31, 2019 ($M) | For the six months ended December 31, 2018 ($M) | |:---|:---|:---|:---|:---|\ | Net income (loss) | 103 | 119 | (108) | 247 | | Add: Income tax expense | 52 | 55 | 31 | 105 | | Add: Other, net | (2) | (7) | (6) | (27) | | Add: Interest expense, net | 8 | 15 | 4 | 31 | | Add: Equity losses of affiliates | 3 | 6 | 5 | 9 | | Add: Impairment and restructuring charges | 29 | 19 | 326 | 37 | | Add: Depreciation and amortization | 162 | 163 | 324 | 326 | | **Total Segment EBITDA** | **355** | **370** | **576** | **728** | News and Information Services Revenues & Segment EBITDA (Three and Six Months Ended December 31, 2019 vs 2018) | Metric | For the three months ended December 31, 2019 ($M) | For the three months ended December 31, 2018 ($M) | % Change | For the six months ended December 31, 2019 ($M) | For the six months ended December 31, 2018 ($M) | % Change | |:---|:---|:---|:---|:---|:---|:---|\ | Total Revenues | 1,241 | 1,257 | (1)% | 2,390 | 2,505 | (5)% | | Segment EBITDA | 142 | 112 | 27% | 198 | 221 | (10)% | - News and Information Services' three-month Segment EBITDA increased by **$30 million (27%)** due to higher contribution from News UK (**$44 million**) driven by cost savings and a **$22 million** one-time benefit from a warranty settlement[218](index=218&type=chunk) Subscription Video Services Revenues & Segment EBITDA (Three and Six Months Ended December 31, 2019 vs 2018) | Metric | For the three months ended December 31, 2019 ($M) | For the three months ended December 31, 2018 ($M) | % Change | For the six months ended December 31, 2019 ($M) | For the six months ended December 31, 2018 ($M) | % Change | |:---|:---|:---|:---|:---|:---|:---|\ | Total Revenues | 501 | 562 | (11)% | 1,015 | 1,127 | (10)% | | Segment EBITDA | 70 | 84 | (17)% | 151 | 197 | (23)% | - Subscription Video Services' three-month revenue decreased by **$61 million (11%)** primarily due to lower broadcast subscribers, changes in subscriber package mix, and a **$25 million** negative impact from foreign currency fluctuations, partially offset by **$18 million** higher revenues from Kayo and Foxtel Now[233](index=233&type=chunk) Book Publishing Revenues & Segment EBITDA (Three and Six Months Ended December 31, 2019 vs 2018) | Metric | For the three months ended December 31, 2019 ($M) | For the three months ended December 31, 2018 ($M) | % Change | For the six months ended December 31, 2019 ($M) | For the six months ended December 31, 2018 ($M) | % Change | |:---|:---|:---|:---|:---|:---|:---|\ | Total Revenues | 442 | 496 | (11)% | 847 | 914 | (7)% | | Segment EBITDA | 63 | 88 | (28)% | 112 | 156 | (28)% | - Book Publishing's three-month revenue decreased by **$54 million (11%)** primarily due to lower sales of several key titles (e.g., Homebody, Girl, Wash Your Face) and a **$2 million** negative impact from foreign currency fluctuations, partially offset by strong sales of other titles[236](index=236&type=chunk) Digital Real Estate Services Revenues & Segment EBITDA (Three and Six Months Ended December 31, 2019 vs 2018) | Metric | For the three months ended December 31, 2019 ($M) | For the three months ended December 31, 2018 ($M) | % Change | For the six months ended December 31, 2019 ($M) | For the six months ended December 31, 2018 ($M) | % Change | |:---|:---|:---|:---|:---|:---|:---|\ | Total Revenues | 294 | 311 | (5)% | 566 | 604 | (6)% | | Segment EBITDA | 118 | 121 | (2)% | 200 | 226 | (12)% | - Digital Real Estate Services' six-month Segment EBITDA decreased by **$26 million (12%)**, impacted by lower revenues at REA Group and a **$16 million** impact associated with the acquisition of and continued investment in Opcity[243](index=243&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses News Corporation's liquidity and capital resources, including cash position, operating cash flow, and debt facilities - As of December 31, 2019, the Company's cash and cash equivalents were **$1.27 billion**, with **$552 million** held by foreign subsidiaries, of which **$63 million** is not readily accessible by the Company (REA Group)[245](index=245&type=chunk) Net Cash Provided by Operating Activities (Six Months Ended December 31, 2019 vs 2018) | Metric | 2019 ($M) | 2018 ($M) | |:---|:---|:---|\ | Net cash provided by operating activities | 192 | 358 | Free Cash Flow Available to News Corporation (Six Months Ended December 31, 2019 vs 2018) | Metric | 2019 ($M) | 2018 ($M) | |:---|:---|:---|\ | Net cash provided by operating activities | 192 | 358 | | Less: Capital expenditures | (237) | (264) | | Less: REA Group free cash flow | (86) | (105) | | Plus: Cash dividends received from REA Group | 35 | 37 | | **Free cash flow available to News Corporation** | **(96)** | **26** | - The Company has a **$750 million** unsecured revolving credit facility, undrawn as of December 31, 2019, and was in compliance with all debt covenants[262](index=262&type=chunk)[263](index=263&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes to the company's assessment of its sensitivity to market risk since its previous annual report - There has been no material change in the Company's assessment of its sensitivity to market risk since its presentation in the 2019 Form 10-K[271](index=271&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period, and there have been no material changes to internal control over financial reporting during the second quarter of fiscal 2020 - The Company's management, including the Chief Executive Officer and Chief Financial Officer, concluded that the disclosure controls and procedures were effective as of the end of the reporting period[272](index=272&type=chunk) - There has been no material change in the Company's internal control over financial reporting during the second quarter of fiscal 2020[273](index=273&type=chunk) PART II. OTHER INFORMATION This section provides other information, including legal proceedings, risk factors, equity sales, and exhibits [ITEM 1. LEGAL PROCEEDINGS](index=56&type=section&id=Item%201.%20Legal%20Proceedings) This section provides an update on legal proceedings, specifically the Valassis Communications, Inc. antitrust lawsuit against News America Marketing - In November 2019, Valassis Communications, Inc. and the NAM Group agreed to discontinue the unfair competition claim and counterclaim in their antitrust lawsuit[276](index=276&type=chunk) - The N.Y. District Court has set a trial date of June 1, 2020, for the remaining claims in the Valassis lawsuit[277](index=277&type=chunk) [ITEM 1A. RISK FACTORS](index=56&type=section&id=Item%201A.%20Risk%20Factors) This section highlights that there have been no material changes to the risk factors previously described, except for an update regarding the reinstatement of FCC Broadcast Ownership Rules - No material changes to the risk factors described in the Company's 2019 Form 10-K, except for an update regarding certain FCC Rules and Regulations[278](index=278&type=chunk) - The reinstatement of the FCC's Broadcast Ownership Rules may restrict the Company from acquiring or owning certain types of assets in the U.S., potentially impeding FOX's business due to the Murdoch Family Trust's ownership interests in both companies[279](index=279&type=chunk)[281](index=281&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms no unregistered sales of equity securities or use of proceeds were reported during the period - No unregistered sales of equity securities or use of proceeds were reported[282](index=282&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=57&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms no defaults upon senior securities were reported during the period - This item is not applicable[282](index=282&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=57&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section confirms no mine safety disclosures are applicable for the reporting period - This item is not applicable[282](index=282&type=chunk) [ITEM 5. OTHER INFORMATION](index=57&type=section&id=Item%205.%20Other%20Information) This section confirms no other information is required to be reported for the period - This item is not applicable[282](index=282&type=chunk) [ITEM 6. EXHIBITS](index=58&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the News Corporation 2013 Long-Term Incentive Plan, the 2019 Credit Agreement, various syndicated facility agreements for Foxtel, and required certifications - Key exhibits include the News Corporation 2013 Long-Term Incentive Plan, the Credit Agreement dated December 12, 2019, and several Syndicated Facility Agreements related to Foxtel Group[284](index=284&type=chunk) [SIGNATURE](index=60&type=section&id=Signature) The report is duly signed on behalf of News Corporation by Susan Panuccio, Chief Financial Officer, on February 7, 2020 - The report was signed by Susan Panuccio, Chief Financial Officer of News Corporation, on February 7, 2020[289](index=289&type=chunk)

News Corp (NASDAQ:NWSA) Q2 2020 Earnings Conference Call February 6, 2020 5:30 PM ET Company Participants Michael Florin – Senior Vice President and Head-Investor Relations Robert Thomson – Chief Executive Officer Susan Panuccio – Chief Financial Officer Conference Call Participants Kane Hannan – Goldman Sachs Entcho Raykovski – Crédit Suisse Alan Gould – Loop Capital Craig Huber – Huber Research Partners Brian Han – Morningstar Operator Good day, and welcome to the News Corp Second Quarter Fiscal 2020 Conf ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-35769 NEWS CORPORATION (Exact name of registrant as specified in its charter) Delaware 46-2950970 (State o ...