FISCAL 2017 FULL YEAR KEY FINANCIAL
HIGHLIGHTS
- Revenues of $8.14 billion compared
to $8.29 billion in the prior year
- (Loss) income from continuing
operations was ($643) million compared to $235 million in the prior
year. The loss includes approximately $1 billion of pre-tax
non-cash impairments and write-downs and a one-time pre-tax gain of
$107 million as a result of the sale of REA Group’s European
business
- Total Segment EBITDA was $885
million compared to $684 million in the prior year; fiscal 2016
included the NAM Group settlement charge of $280 million and the
$122 million gain from the Zillow settlement
- Strong growth in the Digital Real
Estate Services segment, which represented 37% of Total Segment
EBITDA, driven by strong audience gains and new product
offerings
- Reported EPS were ($1.27) compared
to $0.28 in the prior year – Adjusted EPS were $0.36 compared to
$0.40 in the prior year
- Digital revenues represented 25% of
News and Information Services segment revenues, compared to 22% in
the prior year
News Corporation (“News Corp” or the “Company”) (NASDAQ: NWS,
NWSA; ASX: NWS, NWSLV) today reported financial results for the
three months and fiscal year ended June 30, 2017 (includes 13 and
52 weeks, respectively, compared to 14 and 53 weeks in the three
months and fiscal year ended June 30, 2016, respectively).
Commenting on the results, Chief Executive Robert Thomson
said:
“Fiscal 2017 was a significant year for News Corp as we saw
tangible improvement in profitability, powered by the fast-growing
Digital Real Estate Services segment, and we charged a premium for
premium content while focusing on operating efficiencies.
News Corp led the global debate about content value and values,
prompting the digital platforms to address a dysfunctional content
eco-system, in which the fake and the fraudulent have flourished.
We are now in advanced discussions with those platforms over the
creation of payment mechanisms for news of verified veracity.
Move, the operator of realtor.com®, and REA Group continue to
post record revenues driven by higher traffic and improved yields.
Digital real estate overall accounted for nearly 40% of our profits
and we expect to expand earnings in coming years as the sector is
still at a relatively early stage of its e-evolution.
HarperCollins posted higher EBITDA and margins this year through
poignant books with broad appeal in the U.S., such as The Magnolia
Story and Hillbilly Elegy. We believe that the emergence of digital
audio and our expanding global footprint are potent sources of
long-term growth.
FOX SPORTS Australia reinforced its leadership in Australia with
the successful launch of the Fox League Channel and by extending
its domestic soccer rights for another six years. Foxtel and FOX
SPORTS Australia are capitalizing on the growing SVOD market with
the recent rollout of its rebranded Foxtel Now streaming service,
which has been well received and is improving subscriber
volume.”
FULL YEAR RESULTS FROM CONTINUING OPERATIONS
The Company reported fiscal 2017 full year total revenues of
$8.14 billion, a 2% decline as compared to the prior year revenues
of $8.29 billion. The decline reflects lower print advertising
revenues at the News and Information Services segment, a $147
million negative impact from foreign currency fluctuations and the
absence of $112 million from the additional week in the prior year,
partially offset by strong growth in the Digital Real Estate
Services segment and the acquisitions of Wireless Group plc
(“Wireless Group”) and Australian Regional Media (“ARM”).
(Loss) income from continuing operations was ($643) million for
fiscal 2017 as compared to $235 million in the prior year. The
decline was driven by pre-tax non-cash impairment charges of
approximately $785 million, primarily related to the write-down of
fixed assets at the U.K. and Australian newspapers. The decline was
also due to lower equity earnings of affiliates, primarily from a
$227 million pre-tax non-cash write-down of the Company’s
investment in Foxtel, and higher tax expense, due in large part to
the release of U.S. tax asset valuation allowances associated with
the divestiture of Amplify in the prior year. These charges were
partially offset by a gain of $107 million ($91 million, net of
tax) from the sale of REA Group’s European businesses and higher
Total Segment EBITDA, as discussed below.
The Company reported full year Total Segment EBITDA of $885
million, a 29% increase as compared to $684 million in the prior
year. Total Segment EBITDA in the prior year included a one-time
charge of $280 million for the settlement of litigation and related
claims at News America Marketing (the “NAM Group settlement
charge”) and a one-time gain of $122 million for the settlement of
the Zillow litigation. Excluding these items, full year Total
Segment EBITDA for fiscal 2016 would have been $842 million.
Adjusted Total Segment EBITDA (as defined in Note 1), which
excludes the impact of the settlements noted above, as well as the
other items described in Note 1, increased 5% compared to the prior
year, as strong growth at the Digital Real Estate Services segment
and improvement in the Book Publishing segment were partially
offset by the declines at the News and Information Services
segment.
Earnings per share from continuing operations available to News
Corporation stockholders were ($1.27) for the full year as compared
to $0.28 in the prior year.
Adjusted EPS (as defined in Note 3) were $0.36 compared to $0.40
in the prior year.
FOURTH QUARTER RESULTS FROM CONTINUING OPERATIONS
The Company reported fiscal 2017 fourth quarter total revenues
of $2.08 billion, a 7% decline as compared to $2.23 billion in the
prior year period. The decline reflects the $112 million impact
from the additional week in the prior year quarter, lower print
advertising revenues at the News and Information Services segment
and a $37 million negative impact from foreign currency
fluctuations, partially offset by continued strong performance at
the Digital Real Estate Services segment and the acquisitions of
ARM and Wireless Group.
(Loss) income from continuing operations for the quarter was
($424) million as compared to $114 million in the prior year. The
decrease was primarily due to a pre-tax non-cash impairment charge
of $464 million, mainly related to the write-down of fixed assets
at the U.K. newspapers. The decline was also driven by lower Total
Segment EBITDA, as discussed below, which reflects the absence of a
one-time pre-tax gain of $122 million ($75 million, net of tax)
related to the Zillow litigation settlement in the prior year
quarter, and lower equity earnings of affiliates, primarily related
to the loss resulting from the change in the fair value of Foxtel’s
investment in Ten Network Holdings. The decline was partially
offset by lower tax expense compared to the prior year quarter,
which was driven by the absence of the tax expense associated with
the Zillow litigation settlement in the prior year and the benefits
from the aforementioned impairment charges, partially offset by the
resolution of certain tax matters in a foreign jurisdiction. The
decline was also offset by lower depreciation and amortization and
higher contribution from Other, net.
The Company reported fourth quarter Total Segment EBITDA of $215
million, a decline of 40% compared to $361 million in the prior
year. Prior year Total Segment EBITDA included the $122 million
settlement gain mentioned above. Adjusted Total Segment EBITDA,
which excludes that settlement gain and the other items described
in Note 1, declined 11% compared to the prior year, primarily due
to lower revenues at the News and Information Services and Book
Publishing segments and the absence of the additional week in the
prior year quarter, partially offset by continued growth in the
Digital Real Estate Services segment.
Earnings per share from continuing operations available to News
Corporation stockholders were ($0.74) as compared to $0.16 in the
prior year.
Adjusted EPS were $0.11 compared to $0.10 in the prior year.
SEGMENT REVIEW
For the three months ended
For the fiscal years ended June 30, June 30, 2017
2016 % Change 2017 2016
% Change (in millions) Better/
(Worse)
(in millions) Better/
(Worse)
Revenues: News and Information Services $ 1,281 $
1,417 (10) % $ 5,069 $ 5,338 (5) % Book Publishing 407 433 (6) %
1,636 1,646 (1) % Digital Real Estate Services 251 229 10 % 938 822
14 % Cable Network Programming 140 147 (5) % 494 484 2 % Other
1 - ** 2 2 **
Total
Revenues $ 2,080 $ 2,226 (7) % $ 8,139 $ 8,292 (2) %
Segment EBITDA: News and Information Services (a) $ 103 $
160 (36) % $ 414 $ 214 93 % Book Publishing 39 50 (22) % 199 185 8
% Digital Real Estate Services (b) 87 175 (50) % 324 344 (6) %
Cable Network Programming 24 23 4 % 123 124 (1) % Other (c)
(38) (47) 19 % (175) (183) 4 %
Total
Segment EBITDA $ 215 $ 361 (40) % $ 885 $ 684 29 % ** -
Not meaningful
(a)
News and Information Services Segment EBITDA for the fiscal
year ended June 30, 2016 included the NAM Group settlement charge
of $280 million.
(b)
Digital Real Estate Services Segment EBITDA for the three months
and fiscal year ended June 30, 2016 included a one-time gain of
$122 million from the settlement of the Zillow litigation at Move.
(c)
Other Segment EBITDA included $4 million and $10 million of fees
and costs, net of indemnification, related to the U.K. Newspaper
Matters during the three months and fiscal year ended June 30,
2017, respectively. Other Segment EBITDA included $4 million and
$19 million of fees and costs, net of indemnification, related to
the U.K. Newspaper Matters during the three months and fiscal year
ended June 30, 2016, respectively.
News and Information Services
Full Year Segment Results
Fiscal 2017 full year revenues decreased $269 million, or 5%,
compared to the prior year.
Advertising revenues declined $202 million, or 7%, to $2.61
billion, reflecting weakness in the print advertising market, the
$33 million impact from the absence of the additional week in the
prior year and $28 million of negative impact from foreign currency
fluctuations. Excluding the impact of negative foreign currency
fluctuations and the additional week, advertising revenues would
have declined 5%.
Circulation and subscription revenues declined $97 million, or
5%, to $2.01 billion, reflecting $88 million of negative impact
from foreign currency fluctuations and the $39 million impact from
the absence of the additional week in the prior year. Excluding the
impact of negative foreign currency fluctuations and the additional
week, circulation and subscription revenues would have increased
1%.
Full year Segment EBITDA increased $200 million, or 93%, as
compared to the prior year. The prior year’s results included the
NAM Group settlement charge of $280 million. Adjusted Segment
EBITDA, which excludes that settlement charge and the other items
described in Note 1, decreased 14% compared to the prior year,
driven by lower contributions across the newspaper businesses. The
decline was partially offset by lower costs due to ongoing cost
initiatives, combined with savings from lower print volume.
Fourth Quarter Segment Results
Revenues in the quarter declined $136 million, or 10%, compared
to the prior year, primarily due to the absence of $77 million from
the additional week in the prior year period.
Advertising revenues declined $86 million, or 12%, to $650
million due to weakness in the print advertising market, the $33
million impact from the absence of the additional week in the prior
year, lower in-store product revenues at News America Marketing due
to a shift in timing between the third and fourth quarter and an $8
million negative impact from foreign currency fluctuations. The
decline was partially offset by $22 million from the acquisition of
ARM and $20 million from the acquisition of Wireless Group.
Excluding the impact of negative foreign currency fluctuations and
the absence of an additional week, advertising revenues would have
declined 6%.
Circulation and subscription revenues declined $50 million, or
9%, to $511 million due to the $39 million impact from the absence
of the additional week in the prior year, the $18 million impact
from negative foreign currency fluctuations and lower print volume.
Excluding the impact of negative foreign currency fluctuations and
the absence of the additional week, circulation and subscription
revenues would have increased 1% due to higher subscription
pricing, selected cover price increases as well as healthy
contribution from Dow Jones, which saw a 10% increase in its
circulation revenues, led by The Wall Street Journal.
Segment EBITDA for the quarter declined $57 million, or 36%,
compared to the prior year. The decline was driven by lower
advertising revenues across the businesses, the timing shift at
News America Marketing and the absence of the additional week,
partially offset by lower expenses due to volume declines and
ongoing cost efficiencies.
Digital revenues represented 26% of segment revenues in the
quarter, compared to 23% in the prior year; for the quarter,
digital revenues for Dow Jones and the newspaper mastheads
represented 30% of their revenues. Digital subscribers and users
across key properties within the News and Information Services
segment are summarized below:
- The Wall Street Journal average daily
digital-only subscribers in the three months ended June 30, 2017
were 1,270,000, compared to 948,000 in the prior year (Source:
Internal data)
- Closing digital subscribers at News
Corp Australia’s mastheads as of June 30, 2017 were 363,600
(including ARM), compared to 271,000 in the prior year (Source:
Internal data; adjusted for divested mastheads)
- The Times and Sunday Times closing
digital-only subscribers as of June 30, 2017 were 201,000, compared
to 182,500 in the prior year (Source: Internal data)
- The Sun’s digital offering reached 85
million global average monthly unique users in June 2017, compared
to 42 million in the prior year, based on ABCe (Source:
Omniture)
Book Publishing
Full Year Segment Results
Fiscal 2017 full year revenues declined $10 million, or 1%,
compared to the prior year, as strong sales of both frontlist and
backlist titles, such as Hillbilly Elegy by J.D. Vance, The
Magnolia Story by Chip and Joanna Gaines and Jesus Calling and
Jesus Always by Sarah Young, as well as the continued expansion of
HarperCollins’ global footprint, were offset by the absence of
sales of Harper Lee’s Go Set a Watchman, the negative impact from
foreign currency fluctuations and the $19 million impact from the
absence of the additional week in the prior year. Digital sales
represented 19% of Consumer revenues for fiscal 2017, which was
consistent with the prior year. Full year Segment EBITDA increased
$14 million, or 8%, from the prior year primarily due to the mix of
titles as compared to the prior year.
Fourth Quarter Segment Results
Revenues in the quarter declined $26 million, or 6%, compared to
the prior year, driven by $19 million from the absence of the
additional week in the prior year, the negative impact from foreign
currency fluctuations and lower sales at the Children’s division,
which had bigger title releases in the prior year. The decline was
partially offset by strong sales at the General Books division,
driven by Dragon Teeth by Michael Crichton, The Subtle Art of Not
Giving a F*ck by Mark Manson, Hillbilly Elegy by J.D. Vance and The
Force by Don Winslow. Digital sales represented 20% of Consumer
revenues for the quarter, compared to 19% in the prior year.
Segment EBITDA declined $11 million, or 22%, from the prior year
due to the factors noted above, higher employee related expenses
and higher royalty costs related to certain new releases in the
fiscal year.
Digital Real Estate Services
Full Year Segment Results
Fiscal 2017 full year revenues increased $116 million, or 14%,
compared to the prior year, primarily due to higher revenues at REA
Group and Move, partially offset by REA Group’s divestiture of its
European business and Move’s sale of its TigerLead® product.
Segment EBITDA declined $20 million, or 6%, compared to the prior
year, primarily due to the absence of the one-time gain of $122
million related to the settlement of the Zillow litigation at Move
in the prior year. Adjusted Segment EBITDA, which excludes the
settlement gain and the other items described in Note 1, increased
44%, driven by higher revenues and lower legal costs at Move,
partially offset by increased costs related to the higher revenues
and increased marketing expenses.
In the fiscal year, revenues at REA Group increased 14% to $525
million from $459 million in the prior year, driven by greater
listing depth product penetration and the $18 million impact from
positive foreign currency fluctuations, partially offset by an $18
million, or 4%, decline in revenue associated with the sale of REA
Group’s European business in December 2016.
Move’s revenues in the fiscal year increased 10% to $394 million
from $357 million in the prior year, primarily due to the strength
in its ConnectionsSM for Buyers product, as well as growth in
non-listing Media revenues, partially offset by a $12 million, or
3%, decline in revenue associated with the sale of TigerLead® in
November 2016 and a $6 million, or 2%, impact from the absence of
the additional week in the prior year.
Fourth Quarter Segment Results
Revenues in the quarter increased $22 million, or 10%, compared
to the prior year, primarily due to the continued growth at REA
Group and Move. The growth was partially offset by the $10 million
and $4 million impacts from REA Group’s divestiture of its European
business and Move’s sale of its TigerLead® product, respectively.
Segment EBITDA in the quarter was $87 million, a 50% decline
compared to $175 million in the prior year. The decline in Segment
EBITDA was primarily due to a one-time gain of $122 million related
to the settlement of the Zillow litigation at Move in the prior
year, which more than offset the higher revenues noted above and
lower legal costs at Move. Adjusted Revenues (as defined in Note 1)
and Adjusted Segment EBITDA increased 16% and 67%,
respectively.
In the quarter, revenues at REA Group increased 7% to $135
million from $126 million in the prior year due to an increase in
Australian depth revenue, driven by favorable product mix and
pricing increases. The growth was partially offset by the $10
million, or 8%, decline in revenue resulting from the sale of its
European business.
Move’s revenues in the quarter increased 10% to $108 million
from $98 million in the prior year, primarily due to the continued
growth in its ConnectionsSM for Buyers product and non-listing
Media revenues. The growth was partially offset by the $6 million
impact from the absence of the additional week in the prior year
period and a $4 million decline in revenue associated with the sale
of TigerLead®. Excluding the impact of the items mentioned above on
the prior year period, Move’s revenues would have increased by $20
million, or 23%. Based on Move’s internal data, average monthly
unique users of realtor.com®’s web and mobile sites for the fiscal
fourth quarter grew 9% year-over-year to approximately 58
million.
Cable Network Programming
Full Year Segment Results
Fiscal 2017 full year revenues increased $10 million, or 2%,
compared to the prior year, primarily due to the $20 million impact
from the acquisition of Australian News Channel Pty Ltd (“ANC”),
operator of Australia’s SKY NEWS network, and favorable foreign
currency fluctuations, partially offset by lower affiliate revenues
at FOX SPORTS Australia and the absence of $10 million from the
additional week in the prior year. Segment EBITDA was relatively
flat compared to the prior year, primarily due to lower programming
rights costs from the absence of Rugby World Cup and English
Premier League rights, offset by lower affiliate revenues as noted
above. Adjusted Revenues and Adjusted Segment EBITDA, which exclude
the impact from favorable foreign currency fluctuations and the ANC
acquisition as described in Note 1, decreased 5% and increased 2%,
respectively.
Fourth Quarter Segment Results
Revenues in the quarter decreased $7 million, or 5%, compared to
the prior year, primarily due to the absence of $10 million from
the additional week in the prior year and lower affiliate revenues
at FOX SPORTS Australia, partially offset by the $11 million impact
from the acquisition of ANC and favorable foreign currency
fluctuations. Segment EBITDA increased $1 million, or 4%, from the
prior year, primarily due to lower programming rights costs,
partially offset by lower revenues as noted above. Adjusted
Revenues and Adjusted Segment EBITDA, which exclude the impact from
favorable foreign currency fluctuations and the ANC acquisition as
described in Note 1, decreased 13% and increased 4%,
respectively.
REVIEW OF EQUITY (LOSSES) EARNINGS OF AFFILIATES’
RESULTS
Full year equity (losses) earnings from affiliates were ($295)
million compared to $30 million in the prior year. Equity (losses)
earnings from affiliates for the fourth quarter were ($19) million
compared to $5 million in the prior year.
For the three months ended For
the fiscal years ended June 30, June 30, 2017 2016
2017 2016 (in millions) (in millions) Foxtel
(a) $ (5) $ 12 $ (265) $ 38 Other equity affiliates, net (b)
(14) (7) (30) (8) Total equity earnings of
affiliates $ (19) $ 5 $ (295) $ 30
(a)
The Company amortized $15 million and $68 million related to
excess cost over the Company’s proportionate share of its
investment’s underlying net assets allocated to finite-lived
intangible assets during the three months and fiscal year ended
June 30, 2017, respectively, and $15 million and $52 million in the
corresponding periods of fiscal 2016, respectively. Such
amortization is reflected in Equity earnings of affiliates in the
Statements of Operations.
(b)
Other equity affiliates, net for the fiscal year ended June 30,
2017 primarily includes losses from the Company’s interest in Elara
Technologies, which owns PropTiger. Additionally, during the three
months ended June 30, 2017, the Company recognized write-offs and
impairments of $9 million on certain other equity method
investments.
On a U.S. GAAP basis, Foxtel revenues for the fiscal year ended
June 30, 2017 increased $32 million, or 1%, to $2,411 million from
$2,379 million in the prior year period. In local currency, Foxtel
revenues decreased 2% due to lower subscriber volumes. Foxtel’s
total closing subscribers were 2.8 million as of June 30, 2017,
which was lower than the prior year, primarily due to the shutdown
of Presto. Total subscribers improved slightly compared to the
third quarter due to the launch of Foxtel Now. In the fourth
quarter, cable and satellite churn was 13.3% compared to 14.0% in
the prior year. Broadcast residential ARPU for the full year was
A$86, a 3% decline compared to the prior year.
Foxtel’s net income declined to $59 million, compared to $180
million in the prior year period, primarily due to the $58 million
loss resulting from the change in the fair value of Foxtel’s
investment in Ten Network Holdings and $53 million in losses
related to Foxtel management’s decision to cease Presto operations
in January 2017. Equity (losses) earnings of affiliates for Foxtel
of ($265) million and $38 million for the fiscal years ended June
30, 2017 and 2016, respectively, reflect the Company's share of
Foxtel's net income, less the Company's amortization of $68 million
and $52 million, respectively, related to the Company's excess cost
over its share of Foxtel's finite-lived intangible assets, and the
$227 million pre-tax non-cash write-down of the Company’s
investment in Foxtel in fiscal 2017.
Foxtel EBITDA decreased $36 million, or 6%, to $568 million from
$604 million in the prior year. In local currency, Foxtel EBITDA
decreased 9%, primarily due to decreased revenues from lower
subscribers and planned increases in programming costs,
specifically investments in sports. Foxtel operating income for the
fiscal year ended June 30, 2017 and 2016 was $353 million and $373
million, respectively, after depreciation and amortization of $215
million and $231 million, respectively. Operating income decreased
primarily as a result of the lower revenues and increased
programming spend noted above, partially offset by lower
depreciation cost and the positive impact of foreign currency
fluctuations.
FULL YEAR CASH FLOW
The following table presents a reconciliation of net cash
provided by continuing operating activities to free cash flow
available to News Corporation:
For the fiscal years endedJune 30,
2017 2016 (in millions) Net cash provided by
continuing operating activities $ 499 $ 952 Less: Capital
expenditures (256) (256) 243 696 Less: REA Group free
cash flow (183) (131) Plus: Cash dividends received from REA Group
53 45 Free cash flow available to News Corporation $
113 $ 610
Net cash provided by continuing operating activities decreased
by $453 million for the fiscal year ended June 30, 2017 as compared
to the prior year period, which was primarily due to higher NAM
Group settlement payments of $234 million during the period, the
absence of net proceeds received in the prior year of $122 million
related to the litigation settlement with Zillow, higher
restructuring payments of $41 million, lower dividends received of
$30 million, as well as higher net tax payments of $30 million in
fiscal 2017.
Free cash flow available to News Corporation in the fiscal year
ended June 30, 2017 was $113 million compared to $610 million in
the prior year period. The decrease was primarily due to lower cash
provided by continuing operating activities as discussed above
along with higher REA Group free cash flow.
Free cash flow available to News Corporation is a non-GAAP
financial measure defined as net cash provided by continuing
operating activities, less capital expenditures (“free cash flow”),
less REA Group free cash flow, plus cash dividends received from
REA Group. Free cash flow available to News Corporation excludes
cash flows from discontinued operations.
The Company considers free cash flow available to News
Corporation to provide useful information to management and
investors about the amount of cash that is available to be used to
strengthen the Company’s balance sheet and for strategic
opportunities including, among others, investing in the Company’s
business, strategic acquisitions, dividend payouts and repurchasing
stock. A limitation of free cash flow available to News Corporation
is that it does not represent the total increase or decrease in the
cash balance for the period. Management compensates for the
limitation of free cash flow available to News Corporation by also
relying on the net change in cash and cash equivalents as presented
in the Company’s consolidated statements of cash flows prepared in
accordance with GAAP which incorporates all cash movements during
the period.
OTHER ITEMS
Smartline Home Loans Pty Limited
In July 2017, REA Group acquired an 80.3% interest in Smartline
Home Loans Pty Limited ("Smartline") for A$69 million in cash
(approximately $55 million). The minority shareholders have the
option to sell the remaining 19.7% interest to REA Group beginning
three years after closing at a price dependent on the financial
performance of Smartline. If the option is not exercised, the
minority interest will become mandatorily redeemable four years
after closing. As a result, REA Group will recognize a liability in
the first quarter of fiscal 2018 for the present value of the
amount expected to be paid for the remaining interest based on the
formula specified in the acquisition agreement. Smartline is one of
Australia's premier mortgage broking franchise groups, and the
investment provides REA Group's financial services business with
greater scale and capability.
Dividends
The Company today declared a semi-annual cash dividend of $0.10
per share for Class A Common Stock and Class B Common Stock. This
dividend is payable on October 18, 2017 to stockholders of record
as of September 13, 2017.
COMPARISON OF ADJUSTED INFORMATION TO U.S. GAAP
INFORMATION
Adjusted Revenues, Total Segment EBITDA, Adjusted Total Segment
EBITDA, Adjusted Segment EBITDA, adjusted net income from
continuing operations available to News Corporation stockholders,
Adjusted EPS and free cash flow available to News Corporation are
non-GAAP financial measures contained in this earnings release. The
Company believes these measures are important tools for investors
and analysts to use in assessing the Company’s underlying business
performance and to provide for more meaningful comparisons of the
Company’s operating performance between periods. These measures
also allow investors and analysts to view the Company’s business
from the same perspective as Company management. These non-GAAP
measures may be different than similar measures used by other
companies and should be considered in addition to, not as a
substitute for, measures of financial performance calculated in
accordance with GAAP. Reconciliations for the differences between
non-GAAP measures used in this earnings release and comparable
financial measures calculated in accordance with U.S. GAAP are
included in Notes 1, 2 and 3 and the reconciliation of net cash
provided by continuing operating activities to free cash flow
available to News Corporation is included above.
Conference call
News Corporation’s earnings conference call can be heard live at
5:00 p.m. EDT on August 10, 2017. To listen to the call, please
visit http://investors.newscorp.com.
Cautionary Statement Concerning Forward-Looking
Statements
This document contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are based on management’s views and
assumptions regarding future events and business performance as of
the time the statements are made. Actual results may differ
materially from these expectations due to changes in global
economic, business, competitive market and regulatory factors. More
detailed information about these and other factors that could
affect future results is contained in our filings with the
Securities and Exchange Commission. The “forward-looking
statements” included in this document are made only as of the date
of this document and we do not have any obligation to publicly
update any “forward-looking statements” to reflect subsequent
events or circumstances, except as required by law.
About News Corporation
News Corporation (NASDAQ: NWS, NWSA; ASX: NWS, NWSLV) is a
global, diversified media and information services company focused
on creating and distributing authoritative and engaging content to
consumers throughout the world. The company comprises businesses
across a range of media, including: news and information services,
book publishing, digital real estate services, cable network
programming in Australia, and pay-TV distribution in Australia.
Headquartered in New York, the activities of News Corporation are
conducted primarily in the United States, Australia, and the United
Kingdom. More information is available at: www.newscorp.com.
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited; in millions, except share
and per share amounts)
For the three months ended For the fiscal years ended June
30, June 30, 2017 2016 2017 2016
Revenues: Advertising $ 737 $ 803 $ 2,860 $ 3,025 Circulation and
subscription 636 694 2,470 2,569 Consumer 390 414 1,573 1,578 Real
estate 171 169 696 619 Other 146 146 540
501 Total Revenues 2,080 2,226 8,139 8,292
Operating expenses (1,145) (1,252) (4,529) (4,728) Selling, general
and administrative (720) (735) (2,725) (2,722) NAM Group and Zillow
settlements, net - 122 - (158) Depreciation and amortization (100)
(135) (449) (505) Impairment and restructuring charges (518) (26)
(927) (89) Equity (losses) earnings of affiliates (19) 5 (295) 30
Interest, net 9 9 39 43 Other, net 5 (14) 132
18
(Loss) income from continuing operations
beforeincome tax (expense) benefit
(408) 200 (615) 181 Income tax (expense) benefit (16)
(86) (28) 54 (Loss) income from continuing operations
(424) 114 (643) 235 Income (loss) from discontinued operations, net
of tax - (5) - 15 Net (loss) income
(424) 109 (643) 250
Less: Net income attributable to
noncontrollinginterests
(5) (19) (95) (71)
Net (loss) income attributable to News
Corporationstockholders
(429) 90 (738) 179
Less: Adjustments to Net (loss) income
attributable toNews Corporation stockholders – Redeemablepreferred
stock dividends
(1) (1) (2) (2)
Net (loss) income available to News
Corporationstockholders
$ (430) $ 89 $ (740) $ 177 Weighted average shares
outstanding: Basic 582 580 581 581 Diluted 582 582 581 583
(Loss) income from continuing operations
available toNews Corporation stockholders per share - basic
anddiluted
$ (0.74) $ 0.16 $ (1.27) $ 0.28
(Loss) income from discontinued operations
availableto News Corporation stockholders per share - basicand
diluted
$ - $ (0.01) $ - $ 0.02
Net (loss) income available to News
Corporationstockholders per share - basic and diluted
$ (0.74) $ 0.15 $ (1.27) $ 0.30
NEWS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)
As of June 30,2017
As of June 30,2016
ASSETS Current assets: Cash and cash equivalents $ 2,016 $
1,832 Restricted cash - 315 Receivables, net 1,276 1,229 Other
current assets 523 513 Total current assets
3,815 3,889 Non-current assets: Investments 2,027
2,270 Property, plant and equipment, net 1,624 2,405 Intangible
assets, net 2,281 2,207 Goodwill 3,838 3,714 Deferred income tax
assets 525 602 Other non-current assets 442 396 Total
assets $ 14,552 $ 15,483
LIABILITIES AND EQUITY
Current liabilities: Accounts payable $ 222 $ 217 Accrued expenses
1,204 1,371 Deferred revenue 426 388 Other current liabilities
600 466 Total current liabilities 2,452
2,442 Non-current liabilities: Borrowings 276 369 Retirement
benefit obligations 319 350 Deferred income tax liabilities 61 171
Other non-current liabilities 351 349 Commitments and
contingencies Redeemable preferred stock 20 20
Equity: Class A common stock 4 4 Class B common stock 2 2
Additional paid-in capital 12,395 12,434 (Accumulated deficit)
retained earnings (648) 150 Accumulated other comprehensive loss
(964) (1,026) Total News Corporation stockholders'
equity 10,789 11,564 Noncontrolling interests 284 218
Total equity 11,073 11,782 Total liabilities and
equity $ 14,552 $ 15,483
NEWS CORPORATION
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited; in millions)
For the fiscal years ended June 30, 2017 2016
Operating activities: Net (loss) income $ (643) $ 250
Less: Income from discontinued operations - 15 (Loss)
income from continuing operations (643) 235
Adjustments to reconcile (loss) income
from continuing operations to cashprovided by operating
activities:
Depreciation and amortization 449 505 Equity losses (earnings) of
affiliates 295 (30) Cash distributions received from affiliates 4
34 Impairment charges 785 - Other, net (132) (18) Deferred income
taxes and taxes payable (95) (147) Change in operating assets and
liabilities, net of acquisitions: Receivables and other assets (58)
22 Inventories, net 15 35 Accounts payable and other liabilities
137 58 NAM Group settlement (258) 258 Net cash
provided by operating activities from continuing operations
499 952 Net cash used in operating activities from
discontinued operations (5) (74) Net cash provided by
operating activities 494 878
Investing
activities: Capital expenditures (256) (256) Changes in
restricted cash for Wireless Group acquisition 315 (315)
Acquisitions, net of cash acquired (347) (520) Investments in
equity affiliates and other (59) (51) Other investments (39) (54)
Proceeds from business dispositions 162 1 Proceeds from property,
plant and equipment and other asset dispositions 109 41 Other
10 30 Net cash used in investing activities from
continuing operations (105) (1,124) Net cash provided
by investing activities from discontinued operations -
13 Net cash used in investing activities (105)
(1,111)
Financing activities: Borrowings - 342
Repayment of borrowings acquired in acquisitions (23) - Repurchase
of shares - (41) Dividends paid (152) (147) Other, net (42)
(4) Net cash (used in) provided by financing activities from
continuing operations (217) 150 Net cash used in
financing activities from discontinued operations - -
Net cash (used in) provided by financing activities (217)
150 Net increase (decrease) in cash and cash equivalents 172
(83) Cash and cash equivalents, beginning of year 1,832 1,951
Exchange movement on opening cash balance 12 (36)
Cash and cash equivalents, end of year $ 2,016 $ 1,832
NOTE 1 – ADJUSTED REVENUES, ADJUSTED TOTAL SEGMENT EBITDA AND
ADJUSTED SEGMENT EBITDA
The Company uses revenues, Total Segment EBITDA and Segment
EBITDA excluding the impact of acquisitions, divestitures, costs
associated with the U.K. Newspaper Matters, the NAM Group and
Zillow settlements, where applicable, and foreign currency
fluctuations (“Adjusted Revenues, Adjusted Total Segment EBITDA and
Adjusted Segment EBITDA,” respectively) to evaluate the performance
of the Company’s core business operations exclusive of certain
items that impact the comparability of results from period to
period such as the unpredictability and volatility of currency
fluctuations. The Company calculates the impact of foreign currency
fluctuations for businesses reporting in currencies other than the
U.S. dollar by multiplying the results for each quarter in the
current period by the difference between the average exchange rate
for that quarter and the average exchange rate in effect during the
corresponding quarter of the prior year and totaling the impact for
all quarters in the current period.
The calculation of Adjusted Revenues, Adjusted Total Segment
EBITDA and Adjusted Segment EBITDA may not be comparable to
similarly titled measures reported by other companies, since
companies and investors may differ as to what type of events
warrant adjustment. Adjusted Revenues, Adjusted Total Segment
EBITDA and Adjusted Segment EBITDA are not measures of performance
under generally accepted accounting principles and should not be
construed as substitutes for amounts determined under GAAP as
measures of performance. However, management uses these measures in
comparing the Company’s historical performance and believes that
they provide meaningful and comparable information to investors to
assist in their analysis of our performance relative to prior
periods and our competitors.
The following tables reconcile reported revenues and reported
Total Segment EBITDA to Adjusted Revenues and Adjusted Total
Segment EBITDA for the three months and fiscal years ended June 30,
2017 and 2016.
Revenues Total Segment EBITDA For the
three months ended June 30, For the three months ended June 30,
2017 2016 Difference 2017
2016 Difference (in millions) (in millions)
As reported $ 2,080 $ 2,226 $ (146) $ 215 $ 361 $ (146)
Impact of acquisitions (69) - (69) (1) - (1) Impact
of divestitures - (26) 26 - - - Impact of foreign currency
fluctuations 37 - 37 (1) - (1) Net impact of U.K. Newspaper
Matters - - - 4 4 - Zillow settlement - - - - (122) 122
As adjusted $ 2,048 $ 2,200 $ (152) $
217 $ 243 $ (26) Revenues Total Segment EBITDA For the
fiscal years ended June 30, For the fiscal years ended June 30,
2017 2016 Difference 2017 2016 Difference (in millions) (in
millions)
As reported $ 8,139 $ 8,292 $ (153) $ 885 $
684 $ 201 Impact of acquisitions (221) - (221) 12 7 5
Impact of divestitures (40) (97) 57 2 (5) 7 Impact of
foreign currency fluctuations 147 - 147 1 - 1 Net impact of
U.K. Newspaper Matters - - - 10 19 (9) NAM Group and Zillow
settlements, net - - - - 158 (158)
As
adjusted $ 8,025 $ 8,195 $ (170) $ 910 $ 863 $ 47
Adjusted Revenues and Adjusted Segment EBITDA by segment for the
three months and fiscal years ended June 30, 2017 and 2016 are as
follows:
For the three months ended June 30,
2017 2016 % Change (in millions)
Better/(Worse)
Adjusted Revenues: News and
Information Services $ 1,255 $ 1,405 (11) % Book Publishing 415 433
(4) % Digital Real Estate Services 249 215 16 % Cable Network
Programming 128 147 (13) % Other 1 - **
Adjusted Total Revenues $ 2,048 $ 2,200 (7) %
Adjusted Segment EBITDA: News and Information Services $ 100
$ 161 (38) % Book Publishing 40 50 (20) % Digital Real Estate
Services 87 52 67 % Cable Network Programming 24 23 4 % Other
(34) (43) 21 %
Adjusted Total Segment EBITDA $
217 $ 243 (11) % For the fiscal years
ended June 30, 2017 2016 % Change (in millions)
Better/(Worse)
Adjusted Revenues: News and
Information Services $ 5,043 $ 5,295 (5) % Book Publishing 1,647
1,646 ** Digital Real Estate Services 871 768 13 % Cable Network
Programming 462 484 (5) % Other 2 2 **
Adjusted Total Revenues $ 8,025 $ 8,195 (2) %
Adjusted Segment EBITDA: News and Information Services $ 429
$ 497 (14) % Book Publishing 201 185 9 % Digital Real Estate
Services 318 221 44 % Cable Network Programming 127 124 2 % Other
(165) (164) (1) %
Adjusted Total Segment
EBITDA $ 910 $ 863 5 % ** - Not meaningful
The following tables reconcile reported revenues and Segment
EBITDA by segment to Adjusted Revenues and Adjusted Segment EBITDA
by segment for the three months ended June 30, 2017 and 2016.
For the three months ended June 30,
2017
AsReported
Impact ofAcquisitions
Impact ofForeignCurrencyFluctuations
Net Impactof U.K.NewspaperMatters.
ZillowSettlement
AsAdjusted
(in millions)
Revenues: News and Information Services
$ 1,281 $ (57) $ 31 $ - $ - $ 1,255 Book Publishing 407 - 8 - - 415
Digital Real Estate Services 251 (1) (1) - - 249 Cable Network
Programming 140 (11) (1) - - 128 Other 1 - -
- - 1
Total Revenues $ 2,080 $ (69) $
37 $ - $ - $ 2,048
Segment EBITDA: News and
Information Services $ 103 $ (2) $ (1) $ - $ - $ 100 Book
Publishing 39 - 1 - - 40 Digital Real Estate Services 87 1 (1) - -
87 Cable Network Programming 24 - - - - 24 Other (38)
- - 4 - (34)
Total Segment
EBITDA $ 215 $ (1) $ (1) $ 4 $ - $ 217
For the three months ended June 30, 2016
AsReported
Impact ofAcquisitions
Impact ofDivestitures
Net Impactof U.K.NewspaperMatters
ZillowSettlement
AsAdjusted
(in millions)
Revenues: News and Information Services
$ 1,417 $ - $ (12) $ - $ - $ 1,405 Book Publishing 433 - - - - 433
Digital Real Estate Services 229 - (14) - - 215 Cable Network
Programming 147 - - - - 147 Other - - -
- - -
Total Revenues $ 2,226 $ - $ (26) $ - $
- $ 2,200
Segment EBITDA: News and Information
Services $ 160 $ - $ 1 $ - $ - $ 161 Book Publishing 50 - - - - 50
Digital Real Estate Services 175 - (1) - (122) 52 Cable Network
Programming 23 - - - - 23 Other (47) - -
4 - (43)
Total Segment EBITDA $ 361 $ -
$ - $ 4 $ (122) $ 243
The following tables reconcile reported revenues and Segment
EBITDA by segment to Adjusted Revenues and Adjusted Segment EBITDA
by segment for the fiscal years ended June 30, 2017 and 2016.
For the fiscal year ended June 30, 2017
AsReported
Impact ofAcquisitions
Impact ofDivestitures
Impact ofForeignCurrencyFluctuations
Net Impactof U.K.NewspaperMatters
AsAdjusted
(in millions)
Revenues: News and Information Services
$ 5,069 $ (153) $ (16) $ 143 $ - $ 5,043 Book Publishing 1,636 (23)
- 34 - 1,647 Digital Real Estate Services 938 (25) (24) (18) - 871
Cable Network Programming 494 (20) - (12) - 462 Other 2
- - - - 2
Total Revenues
$ 8,139 $ (221) $ (40) $ 147 $ - $ 8,025
Segment
EBITDA: News and Information Services $ 414 $ 5 $ 4 $ 6 $ - $
429 Book Publishing 199 (1) - 3 - 201 Digital Real Estate Services
324 7 (2) (11) - 318 Cable Network Programming 123 1 - 3 - 127
Other (175) - - - 10
(165)
Total Segment EBITDA $ 885 $ 12 $ 2 $ 1 $ 10 $ 910
For the fiscal year ended June
30, 2016
AsReported
Impact ofAcquisitions
Impact ofDivestitures
Net Impactof U.K.NewspaperMatters
NAM Groupand ZillowSettlement,net
AsAdjusted
(in millions)
Revenues: News and Information Services
$ 5,338 $ - $ (43) $ - $ - $ 5,295 Book Publishing 1,646 - - - -
1,646 Digital Real Estate Services 822 - (54) - - 768 Cable Network
Programming 484 - - - - 484 Other 2 - -
- - 2
Total Revenues $ 8,292 $ - $ (97) $ - $
- $ 8,195
Segment EBITDA: News and Information
Services $ 214 $ - $ 3 $ - $ 280 $ 497 Book Publishing 185 - - - -
185 Digital Real Estate Services 344 7 (8) - (122) 221 Cable
Network Programming 124 - - - - 124 Other (183) -
- 19 - (164)
Total Segment
EBITDA $ 684 $ 7 $ (5) $ 19 $ 158 $ 863
NOTE 2 – TOTAL SEGMENT EBITDA
Segment EBITDA is defined as revenues less operating expenses
and selling, general and administrative expenses and excluding the
impact from the NAM Group and Zillow legal settlements. Segment
EBITDA does not include: Depreciation and amortization, impairment
and restructuring charges, equity (losses) earnings of affiliates,
interest, net, other, net, income tax (expense) benefit and net
income attributable to noncontrolling interests. Management
believes that Segment EBITDA is an appropriate measure for
evaluating the operating performance of the Company’s business
segments because it is the primary measure used by the Company’s
chief operating decision maker to evaluate the performance of and
allocate resources within the Company’s businesses. Segment EBITDA
provides management, investors and equity analysts with a measure
to analyze the operating performance of each of the Company’s
business segments and its enterprise value against historical data
and competitors’ data, although historical results may not be
indicative of future results (as operating performance is highly
contingent on many factors, including customer tastes and
preferences).
Total Segment EBITDA is a non-GAAP measure and should be
considered in addition to, not as a substitute for, net (loss)
income, cash flow and other measures of financial performance
reported in accordance with GAAP. In addition, this measure does
not reflect cash available to fund requirements and excludes items,
such as depreciation and amortization and impairment and
restructuring charges, which are significant components in
assessing the Company’s financial performance. The Company believes
that the presentation of Total Segment EBITDA provides useful
information regarding the Company’s operations and other factors
that affect the Company’s reported results. Specifically, the
Company believes that by excluding certain one-time or non-cash
items such as impairment and restructuring charges and depreciation
and amortization, as well as potential distortions between periods
caused by factors such as financing and capital structures and
changes in tax positions or regimes, the Company provides users of
its consolidated financial statements with insight into both its
core operations as well as the factors that affect reported results
between periods but which the Company believes are not
representative of its core business. As a result, users of the
Company’s consolidated financial statements are better able to
evaluate changes in the core operating results of the Company
across different periods. The following tables reconcile Total
Segment EBITDA to (Loss) income from continuing operations.
For the three months ended June 30, 2017
2016 Change % Change (in
millions) Better/(Worse)
Revenues $ 2,080 $ 2,226 $
(146) (7) % Operating expenses (1,145) (1,252) 107 9 % Selling,
general and administrative (720) (735) 15 2 % Zillow settlement
- 122 (122) **
Total Segment
EBITDA 215 361 (146) (40) % Depreciation and amortization (100)
(135) 35 26 % Impairment and restructuring charges (518) (26) (492)
** Equity (losses) earnings of affiliates (19) 5 (24) ** Interest,
net 9 9 - ** Other, net 5 (14) 19 **
(Loss) income from continuing operations
beforeincome tax expense
(408) 200 (608) ** Income tax expense (16) (86)
70 **
(Loss) income from continuing operations
$ (424) $ 114 $ (538) ** ** - Not meaningful For the
fiscal years ended June 30, 2017 2016 Change % Change (in millions)
Revenues $ 8,139 $ 8,292 $ (153) (2) % Operating
expenses (4,529) (4,728) 199 4 % Selling, general and
administrative (2,725) (2,722) (3) ** NAM Group and Zillow
settlements, net - (158) 158 **
Total Segment EBITDA 885 684 201 29 % Depreciation and
amortization (449) (505) 56 11 % Impairment and restructuring
charges (927) (89) (838) ** Equity (losses) earnings of affiliates
(295) 30 (325) ** Interest, net 39 43 (4) (9) % Other, net
132 18 114 **
(Loss) income from continuing operations
beforeincome tax (expense) benefit
(615) 181 (796) ** Income tax (expense) benefit (28)
54 (82) **
(Loss) income from continuing
operations $ (643) $ 235 $ (878) ** ** - Not
meaningful
NOTE 3 – ADJUSTED NET INCOME AVAILABLE TO NEWS CORPORATION
STOCKHOLDERS AND ADJUSTED EPS
The Company uses net (loss) income from continuing operations
available to News Corporation stockholders and diluted earnings per
share from continuing operations (“EPS”) excluding expenses related
to U.K. Newspaper Matters, impairment and restructuring charges,
“Other, net” and the NAM Group and Zillow legal settlements, net of
tax, recognized by the Company or its equity investees, as well as
the settlement of certain pre-Separation tax matters (“adjusted net
income from continuing operations available to News Corporation
stockholders and adjusted EPS,” respectively), to evaluate the
performance of the Company’s operations exclusive of certain items
that impact the comparability of results from period to period. The
calculation of adjusted net (loss) income from continuing
operations available to News Corporation stockholders and adjusted
EPS may not be comparable to similarly titled measures reported by
other companies, since companies and investors may differ as to
what type of events warrant adjustment. Adjusted net (loss) income
from continuing operations available to News Corporation
stockholders and adjusted EPS are not measures of performance under
generally accepted accounting principles and should not be
construed as substitutes for consolidated net (loss) income
available to News Corporation stockholders and net (loss) income
per share as determined under GAAP as a measure of performance.
However, management uses these measures in comparing the
Company’s historical performance and believes that they provide
meaningful and comparable information to investors to assist in
their analysis of our performance relative to prior periods and our
competitors.
The following tables reconcile reported net (loss) income from
continuing operations available to News Corporation stockholders
and reported diluted EPS to adjusted net (loss) income from
continuing operations available to News Corporation stockholders
and adjusted EPS for the three months and fiscal years ended June
30, 2017 and 2016.
For the three months ended For the
three months ended June 30, 2017 June 30, 2016
Net (loss)incomeavailable
tostockholders
EPS
Net incomeavailable tostockholders
EPS (in millions, except per share data)
(Loss) income from continuing operations $
(424) $ 114
Less: Net income attributable to
noncontrollinginterests
(5) (19) Less: Redeemable preferred stock dividends
(1) (1)
(Loss) income from continuing
operationsavailable to News
Corporationstockholders
$ (430) $ (0.74) $ 94 $ 0.16 U.K. Newspaper Matters 4 0.01 4
0.01 Impairment and restructuring charges (a) 518 0.88 26
0.04 Other, net (5) (0.01) 14 0.02 Equity losses of
affiliates 12 0.02 - - Zillow settlement - - (122) (0.21)
Tax impact on items above (b) (123) (0.21) 39 0.07
Impact of tax settlement (c) 103 0.18 - -
Impact of noncontrolling interest on
itemsincluded in Other, net above
(14) (0.02) 6 0.01
As adjusted $ 65 $ 0.11 $ 61 $
0.10
(a)
Impairment and restructuring charges for the three months
ended June 30, 2017 included non-cash impairment charges of
approximately $464 million, of which approximately $360 million was
related to the write-down of fixed assets at the U.K. newspapers.
(b)
Tax impact on items above for the three months ended June 30, 2017
included a tax benefit for the non-cash impairment charges. Tax
impact on items above for the three months ended June 30, 2016
included a tax expense of $47 million related to the Zillow
settlement gain.
(c)
In the three months ended June 30, 2017, the Company reached an
agreement with a foreign tax authority to settle certain
pre-Separation tax matters. As a result of the settlement, the
Company recorded current income tax expense of $20 million,
deferred tax expense of $43 million and a valuation allowance of
$40 million. For the fiscal year ended
For the fiscal year ended June 30, 2017
June 30, 2016
Net (loss)incomeavailable
tostockholders
EPS
Net incomeavailable tostockholders
EPS (in millions, except per share data)
(Loss) income from continuing operations $
(643) $ 235 Less: Net income attributable to noncontrolling
interests (95) (71) Less: Redeemable preferred stock
dividends (2) (2)
(Loss) income from continuing
operationsavailable to News
Corporationstockholders
$ (740) $ (1.27) $ 162 $ 0.28 U.K. Newspaper Matters 10 0.02
19 0.03 Impairment and restructuring charges (a) 927 1.58 89
0.15 Other, net (b) (132) (0.23) (18) (0.03) Equity
losses of affiliates (c) 260 0.45 - - NAM Group and Zillow
settlements, net - - 158 0.27 Tax impact on items above (d)
(247) (0.42) (89) (0.15) Impact of tax settlement (e) 103
0.18 - - Tax benefit (f) - - (106) (0.18)
Impact of noncontrolling interest on
itemsincluded in Other, net above
27 0.05 17 0.03
As adjusted $ 208 $ 0.36 $ 232 $
0.40
(a)
Impairment and restructuring charges for the fiscal year
ended June 30, 2017 included non-cash impairment charges of
approximately $785 million, of which approximately $360 million and
approximately $310 million were primarily related to the write-down
of fixed assets at the U.K. and Australian newspapers,
respectively.
(b)
Other, net for the fiscal year ended June 30, 2017 included a
pre-tax gain of $107 million resulting from the sale of REA Group’s
European business. Other, net for the fiscal year ended June 30,
2016 primarily included a non-taxable gain of $29 million resulting
from the revaluation of REA Group’s previously held equity interest
in iProperty.
(c)
During the fiscal year ended June 30, 2017, the Company recognized
a $227 million non-cash write-down of the carrying value of its
investment in Foxtel to fair value. Foxtel’s net income in the
fiscal year ended June 30, 2017 included a $48 million loss
resulting from Foxtel management’s decision to cease Presto
operations in January 2017. Equity losses of affiliates were
negatively affected by $24 million, which represents the Company’s
share of that loss.
(d)
Tax impact on items above included a tax benefit of $211 million
for the non-cash impairment charge and non-cash write-down noted
above. Tax impact on items above for the fiscal year ended June 30,
2016 included a tax benefit of $107 million related to the NAM
Group settlement charge and a tax expense of $47 million related to
the Zillow settlement gain.
(e)
In the fiscal year ended June 30, 2017, the Company reached an
agreement with a foreign tax authority to settle certain
pre-Separation tax matters. As a result of the settlement, the
Company recorded current income tax expense of $20 million,
deferred tax expense of $43 million and a valuation allowance of
$40 million.
(f)
The Company recognized a tax benefit of approximately $106 million
from the release of valuation allowances resulting from the
disposal of the digital education business in the fiscal year ended
June 30, 2016.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170810006124/en/
News CorporationMichael Florin, 212-416-3363Investor
Relationsmflorin@newscorp.comorJim Kennedy, 212-416-4064Corporate
Communicationsjkennedy@newscorp.com
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