Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

3K characters. Original on sec.gov · Markdown

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

| --- | --- |

The Company has exposure to two types of market risk: changes in interest rates and stock prices. The Company neither holds nor issues financial instruments for trading purposes.

The following sections provide quantitative and qualitative information on the Company’s exposure to interest rate risk and stock price risk. The Company makes use of sensitivity analyses that are inherently limited in estimating actual losses in fair value that can occur from changes in market conditions.

Interest Rates

The Company’s current financing arrangements and facilities include $6.8 billion of outstanding fixed-rate debt, before adjustments for unamortized debt issuance costs (See Note 9—Borrowings to the accompanying Financial Statements of FOX).

Fixed and variable-rate debts are impacted differently by changes in interest rates. A change in the interest rate or yield of fixed-rate debt will only impact the fair market value of such debt, while a change in the interest rate of variable-rate debt will impact interest expense, as well as the amount of cash required to service such debt. As of June 30, 2019, all of the Company's financial instruments with exposure to interest rate risk were denominated in U.S. dollars and no variable-rate debt was outstanding. Information on financial instruments with exposure to interest rate risk is presented below:

	As of June 30,
	2019			2018
	(in millions)
Fair Value
Borrowings: liability(a)	$	(7,643	)	$	-

Sensitivity Analysis
Potential change in fair values resulting from a 10% adverse change in quoted interest rates: loss	$	(259	)	$	-

(a)	In January 2019, the Company issued approximately $6.8 billion of senior notes (See Note 9—Borrowings to the accompanying Financial Statements of FOX).

Stock Prices

The Company has common stock investments in publicly traded companies that are subject to market price volatility. Information on the Company’s investments with exposure to stock price risk is presented below:

	As of June 30,
	2019			2018
	(in millions)
Fair Value
Total fair value of common stock investments	$	761		$	257
Sensitivity Analysis
Potential change in fair values resulting from a 10% adverse change in quoted market prices: loss(a)	$	(76	)	$	(26	)

(a)	These investments are recorded at fair value each reporting period and, beginning July 1, 2018, any associated unrealized gains and losses are recorded in the Statements of Operations (See Note 2—Summary of Significant Accounting Policies to the accompanying Financial Statements of FOX under the heading “Recently Adopted and Recently Issued Accounting Guidance and U.S. Tax Reform”).

Concentrations of Credit Risk

See Note 2—Summary of Significant Accounting Policies to the accompanying Financial Statements of FOX under the heading “Concentrations of credit risk.”

Previous: Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS · Next: Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA