Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FOX CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

			Page
Management's Report on Internal Control Over Financial Reporting			59
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)			60
Consolidated Statements of Operations for the fiscal years ended June 30, 2022, 2021 and 2020			63
Consolidated Statements of Comprehensive Income for the fiscal years ended June 30, 2022, 2021 and 2020			64
Consolidated Balance Sheets as of June 30, 2022 and 2021			65
Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2022, 2021 and 2020			66
Consolidated Statements of Equity for the fiscal years ended June 30, 2022, 2021 and 2020			67
Notes to the Consolidated Financial Statements			68

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of Fox Corporation is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. The Company's internal control over financial reporting includes those policies and procedures that:

• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Fox Corporation;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America;

• provide reasonable assurance that receipts and expenditures of Fox Corporation are being made only in accordance with authorization of management and directors of Fox Corporation; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.

Fox Corporation's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting, no matter how well designed, may not prevent or detect misstatements. Also, the assessment of the effectiveness of internal control over financial reporting was made as of a specific date. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management, including the Company's principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of Fox Corporation's internal control over financial reporting as of June 30, 2022, based on the framework set forth in "Internal Control — Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this evaluation, management determined that, as of June 30, 2022, Fox Corporation maintained effective internal control over financial reporting.

Ernst & Young LLP, the independent registered public accounting firm who audited and reported on the Consolidated Financial Statements of Fox Corporation included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2022, has audited the Company's internal control over financial reporting. Their report appears on the following page.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Fox Corporation:

Opinion on Internal Control Over Financial Reporting

We have audited Fox Corporation's internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Fox Corporation (the "Company") maintained, in all material respects, effective internal control over financial reporting as of June 30, 2022, based on the COSO criteria.

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

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

New York, New York

August 12, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Fox Corporation:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Fox Corporation (the "Company") as of June 30, 2022 and 2021, the related consolidated statements of operations, comprehensive income, cash flows and equity for each of the three years in the period ended June 30, 2022, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated August 12, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the Audit Committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

			Assessment of realizability of deferred tax assets
Description of the Matter			As disclosed in Note 2 to the consolidated financial statements, the Company records a valuation allowance based on the assessment of the realizability of the Company's deferred tax assets. For the year ended June 30, 2022, the Company had deferred tax assets before valuation allowances of $3.7 billion as disclosed in Note 16.
			Auditing management's assessment of realizability of deferred tax assets involved subjective estimation and complex auditor judgment in determining whether sufficient future taxable income will be generated to support the realization of the existing deferred tax assets.
How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls that address the risks of material misstatement relating to the realizability of deferred tax assets, including controls over management's estimates of future taxable income. Among other audit procedures performed, we evaluated the significant assumptions used by the Company to develop estimated future taxable income and tested the completeness and accuracy of the underlying data. For example, we evaluated management's estimates of future taxable income by performing a look-back analysis of management's historical estimates compared to actual results as well as compared management's estimates to current industry and economic trends. We also performed a sensitivity analysis of future taxable income to evaluate the recoverability of deferred tax assets resulting from changes in assumptions.
			Program rights amortization – National sports programming
Description of the Matter			As disclosed in Note 2 to the consolidated financial statements, the Company has single and multi-year contracts for sports programming. The costs of multi-year sports contracts at the Company are primarily amortized based on the ratio of each contract's current period attributable revenue to the estimated total remaining attributable revenue. Auditing the amortization of the Company's national sports programming involved subjective estimation and complex auditor judgment because the analysis that the Company relies upon to determine the amortization of this programming is based on estimates of future revenues from the programming. Differing estimates of future revenues could materially affect the timing of sports programming amortization.
How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls that address the risks of material misstatement relating to the amortization of the Company's national sports programming, including controls over management's review of the analysis and the significant assumptions used to develop the estimated future revenues. We also tested management's controls to validate that the data used in the analysis was complete and accurate. Among other audit procedures performed, we evaluated the significant assumptions used by the Company to develop the estimated future revenues and tested the completeness and accuracy of the underlying data used in the analysis. For example, we evaluated management's forecasts of estimated future revenues by performing a look-back analysis of management's historical estimates compared to actual results. We also performed a sensitivity analysis of the estimated future revenues to evaluate the change in the amortization of the Company's national sports programming resulting from changes in the assumptions.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 2018.

New York, New York

August 12, 2022

FOX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

			For the years ended June 30,
			2022						2021						2020
Revenues			$	13,974					$	12,909					$	12,303
Operating expenses			(9,117)						(8,037)						(7,807)
Selling, general and administrative			(1,920)						(1,807)						(1,741)
Depreciation and amortization			(363)						(300)						(258)
Impairment and restructuring charges			—						(35)						(451)
Interest expense, net			(371)						(391)						(334)
Other, net			(509)						579						(248)
Income before income tax expense			1,694						2,918						1,464
Income tax expense			(461)						(717)						(402)
Net income			1,233						2,201						1,062
Less: Net income attributable to noncontrolling interests			(28)						(51)						(63)
Net income attributable to Fox Corporation stockholders			$	1,205					$	2,150					$	999
EARNINGS PER SHARE DATA
Net income attributable to Fox Corporation stockholders per share:
Basic			$	2.13					$	3.64					$	1.63
Diluted			$	2.11					$	3.61					$	1.62

The accompanying notes are an integral part of these Consolidated Financial Statements.

FOX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN MILLIONS)

			For the years ended June 30,
			2022						2021						2020
Net income			$	1,233					$	2,201					$	1,062
Other comprehensive income (loss), net of tax:
Benefit plan adjustments and other			92						99						(109)
Other comprehensive income (loss), net of tax			92						99						(109)
Comprehensive income			1,325						2,300						953
Less: Net income attributable to noncontrolling interests(a)			(28)						(51)						(63)
Comprehensive income attributable to Fox Corporation stockholders			$	1,297					$	2,249					$	890

(a)			Net income attributable to noncontrolling interests includes $(12) million, $25 million and $33 million for the fiscal years ended June 30, 2022, 2021 and 2020, respectively, relating to redeemable noncontrolling interests.

The accompanying notes are an integral part of these Consolidated Financial Statements.

FOX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)

			As of June 30,
			2022						2021
ASSETS
Current assets
Cash and cash equivalents			$	5,200					$	5,886
Receivables, net			2,128						2,029
Inventories, net			791						729
Other			162						105
Total current assets			8,281						8,749
Non-current assets
Property, plant and equipment, net			1,682						1,708
Intangible assets, net			3,157						3,154
Goodwill			3,554						3,435
Deferred tax assets			3,440						3,822
Other non-current assets			2,071						2,058
Total assets			$	22,185					$	22,926
LIABILITIES AND EQUITY
Current liabilities
Borrowings			$	—					$	749
Accounts payable, accrued expenses and other current liabilities			2,296						2,253
Total current liabilities			2,296						3,002
Non-current liabilities
Borrowings			7,206						7,202
Other liabilities			1,120						1,336
Redeemable noncontrolling interests			188						261
Commitments and contingencies
Equity
Class A Common Stock(a)			3						3
Class B Common Stock(b)			3						3
Additional paid-in capital			9,098						9,453
Retained earnings			2,461						1,982
Accumulated other comprehensive loss			(226)						(318)
Total Fox Corporation stockholders' equity			11,339						11,123
Noncontrolling interests			36						2
Total equity			11,375						11,125
Total liabilities and equity			$	22,185					$	22,926

(a)			Class A Common Stock, $0.01 par value per share, 2,000,000,000 shares authorized, 307,496,876 shares and 324,361,864 shares issued and outstanding at par as of June 30, 2022 and 2021, respectively.
(b)			Class B Common Stock, $0.01 par value per share, 1,000,000,000 shares authorized, 243,122,595 shares and 251,821,556 shares issued and outstanding at par as of June 30, 2022 and 2021, respectively.

The accompanying notes are an integral part of these Consolidated Financial Statements.

FOX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS)

			For the years ended June 30,
			2022						2021						2020
OPERATING ACTIVITIES
Net income			$	1,233					$	2,201					$	1,062
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization			363						300						258
Amortization of cable distribution investments			18						22						24
Impairment and restructuring charges			—						35						133
Equity-based compensation			102						147						137
Other, net			509						(579)						248
Deferred income taxes			342						534						283
Change in operating assets and liabilities, net of acquisitions and dispositions
Receivables and other assets			(79)						(269)						224
Inventories net of programming payable			(301)						190						181
Accounts payable and accrued expenses			(54)						282						(87)
Other changes, net			(249)						(224)						(98)
Net cash provided by operating activities			1,884						2,639						2,365
INVESTING ACTIVITIES
Property, plant and equipment			(307)						(484)						(359)
Acquisitions, net of cash acquired			(243)						(51)						(1,061)
Proceeds from dispositions, net			83						93						60
Sale of investments			—						—						349
Purchase of investments			(28)						(86)						(103)
Other investing activities, net			(18)						—						14
Net cash used in investing activities			(513)						(528)						(1,100)
FINANCING ACTIVITIES
Repayment of borrowings			(750)						—						—
Borrowings			—						—						1,191
Repurchase of shares			(1,000)						(1,001)						(600)
Non-operating cash flows from (to) The Walt Disney Company			—						112						(95)
Settlement of Divestiture Tax Prepayment			—						462						—
Dividends paid and distributions			(307)						(330)						(335)
Purchase of subsidiary noncontrolling interest			—						(67)						—
Sale of subsidiary noncontrolling interest			25						—						—
Other financing activities, net			(25)						(46)						(15)
Net cash (used in) provided by financing activities			(2,057)						(870)						146
Net (decrease) increase in cash and cash equivalents			(686)						1,241						1,411
Cash and cash equivalents, beginning of year			5,886						4,645						3,234
Cash and cash equivalents, end of year			$	5,200					$	5,886					$	4,645

The accompanying notes are an integral part of these Consolidated Financial Statements.

FOX CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(IN MILLIONS)

			Class A												Class B												Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive (Loss)						Total Fox Corporation Stockholders' Equity						Noncontrolling Interests**(a)**						Total Equity
			Common Stock									Common Stock
			Shares						Amount			Shares						Amount
Balance, June 30, 2019			354						$	4					266						$	3					$	9,891					$	357					$	(308)					$	9,947					$	11					$	9,958
Net income			—						—						—						—						—						999						—						999						30						1,029
Other comprehensive loss			—						—						—						—						—						—						(109)						(109)						—						(109)
Dividends			—						—						—						—						—						(282)						—						(282)						—						(282)
Shares repurchased			(12)						(1)						(5)						—						(273)						(326)						—						(600)						—						(600)
Other			2						—						—						—						213						(74)						—						139						(24)						115
Balance, June 30, 2020			344						$	3					261						$	3					$	9,831					$	674					$	(417)					$	10,094					$	17					$	10,111
Net income			—						—						—						—						—						2,150						—						2,150						26						2,176
Other comprehensive income			—						—						—						—						—						—						99						99						—						99
Dividends			—						—						—						—						—						(272)						—						(272)						—						(272)
Shares repurchased			(22)						—						(9)						—						(514)						(487)						—						(1,001)						—						(1,001)
Other			2						—						—						—						136						(83)						—						53						(41)						12
Balance, June 30, 2021			324						$	3					252						$	3					$	9,453					$	1,982					$	(318)					$	11,123					$	2					$	11,125
Net income			—						—						—						—						—						1,205						—						1,205						40						1,245
Other comprehensive income			—						—						—						—						—						—						92						92						—						92
Dividends			—						—						—						—						—						(273)						—						(273)						—						(273)
Shares repurchased			(19)						—						(8)						—						(450)						(550)						—						(1,000)						—						(1,000)
Other			3						—						(1)						—						95						97						—						192						(6)						186
Balance, June 30, 2022			308						$	3					243						$	3					$	9,098					$	2,461					$	(226)					$	11,339					$	36					$	11,375

(a)			Excludes Redeemable noncontrolling interests which are reflected in temporary equity (See Note 6—Fair Value under the heading "Redeemable Noncontrolling Interests").

The accompanying notes are an integral part of these Consolidated Financial Statements.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Fox Corporation, ("FOX" or the "Company"), is a news, sports and entertainment company, which manages and reports its businesses in the following segments: Cable Network Programming, Television and Other, Corporate and Eliminations.

The Distribution

On March 19, 2019, the Company became a standalone publicly traded company through the pro rata distribution by Twenty-First Century Fox, Inc. ("21CF") of all of the issued and outstanding common stock of FOX to 21CF stockholders (other than holders that were subsidiaries of 21CF) (the "Distribution") in accordance with the Amended and Restated Distribution Agreement and Plan of Merger, dated as of June 20, 2018, by and between 21CF and 21CF Distribution Merger Sub, Inc. Following the Distribution, the Company's Class A Common Stock, par value $0.01 per share (the "Class A Common Stock"), and Class B Common Stock, par value $0.01 per share (the "Class B Common Stock" and, together with the Class A Common Stock, the "Common Stock") began trading independently on The Nasdaq Global Select Market. In connection with the Distribution, the Company entered into the Separation and Distribution Agreement, dated as of March 19, 2019 (the "Separation Agreement"), with 21CF, which effected the internal restructuring (the "Separation") whereby The Walt Disney Company ("Disney") acquired the remaining 21CF assets and 21CF became a wholly-owned subsidiary of Disney. The Separation and the Distribution were effected as part of a series of transactions contemplated by the Amended and Restated Merger Agreement and Plan of Merger, dated as of June 20, 2018 (the "21CF Disney Merger Agreement"), by and among 21CF, Disney and certain subsidiaries of Disney.

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

The Separation Agreement contains the key provisions relating to the Separation and the Distribution. The Separation Agreement identifies the assets that were transferred, the liabilities that were assumed and the contracts that were assigned to each of the Company and 21CF as part of the Separation and describes how these transfers, assumptions and assignments occurred. It also provides for cross-indemnities between the Company and 21CF. Other matters governed by the Separation Agreement include access to financial and other information, confidentiality, access to and provision of records, continued access for the Company to 21CF insurance policies and shared contracts and certain third-party consent provisions. Pursuant to the Separation Agreement, the Company is the owner of all "FOX" brands and related trademarks, as well as all other intellectual property primarily related to the Company's business. In addition, the Company entered into certain trademark and other intellectual property license agreements in connection with the use of certain intellectual property by 21CF.

The tax matters agreement among the Company, Disney and 21CF governs the parties' respective rights, responsibilities and obligations with respect to certain tax matters. Under this agreement, 21CF will generally indemnify the Company against any taxes required to be reported on a consolidated or separate tax return of 21CF and/or any of its subsidiaries, including any taxes resulting from the Separation and the Distribution, and the Company will generally indemnify 21CF against any taxes required to be reported on a separate tax return of the Company or any of its subsidiaries.

The Company also entered into an employee matters agreement with 21CF that governs the parties' obligations with respect to certain employee-related liabilities (See Note 12—Equity-Based Compensation). The core transition services agreements entered into in connection with the Separation terminated in accordance with their terms in fiscal 2022.

Basis of Presentation

The Company's financial statements as of and for the years ended June 30, 2022, 2021 and 2020 are presented on a consolidated basis.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to the 21CF Disney Merger Agreement, immediately prior to the Distribution, the Company paid to 21CF a dividend in the amount of $8.5 billion (the "Dividend"). The final determination of the taxes in respect of the Separation and the Distribution for which the Company is responsible pursuant to the 21CF Disney Merger Agreement and a prepayment of the estimated taxes in respect of divestitures (collectively, the "Transaction Tax") was $6.5 billion. Following the Distribution, on March 20, 2019 the Company received a cash payment in the amount of $2.0 billion from Disney, which had the net effect of reducing the Dividend the Company paid to 21CF. The Transaction Tax included a prepayment of the Company's share of the estimated tax liabilities resulting from the anticipated divestitures by Disney of certain assets, principally the FOX Sports Regional Sports Networks ("RSNs"), which were sold by Disney during calendar year 2019 ("Divestiture Tax"). This prepayment was in the amount of approximately $700 million. During the first quarter of fiscal 2021, the Company and Disney reached an agreement to settle the majority of the prepaid Divestiture Tax and the Company received $462 million from Disney as reimbursement of the Company's prepayment based upon the sales price of the RSNs. This reimbursement was recorded in Other, net in the Statement of Operations (See Note 20—Additional Financial Information under the heading "Other, net"). The balance of the prepaid Divestiture Tax is subject to adjustment in the future, but any such adjustment is not expected to have a material impact on the results of the Company.

As a result of the Separation and the Distribution, which was a taxable transaction for which the estimated tax liability of $5.8 billion was included in the Transaction Tax paid by the Company, FOX obtained a tax basis in its assets equal to their respective fair market values. This will result in estimated annual tax deductions of approximately $1.5 billion, principally over the next several years related to the amortization of the additional tax basis. This amortization is estimated to reduce the Company's annual cash tax liability by approximately $370 million per year at the current combined federal and state applicable tax rate of approximately 25%. Such estimates are subject to revisions, which could be material, based upon the occurrence of future events.

The consolidated financial statements are referred to as the "Financial Statements" herein. The consolidated statements of operations are referred to as the "Statements of Operations" herein. The consolidated statements of comprehensive income are referred to as the "Statements of Comprehensive Income" herein. The consolidated balance sheets are referred to as the "Balance Sheets" herein. The consolidated statements of cash flows are referred to as the "Statements of Cash Flows" herein. The consolidated statements of equity are referred to as the "Statements of Equity" herein.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The Financial Statements include the accounts of all majority-owned and controlled subsidiaries. In addition, the Company evaluates its relationships with other entities to identify whether they are variable interest entities as defined by Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810-10, "Consolidation" ("ASC 810-10") and whether the Company is the primary beneficiary. Consolidation is required if both of these criteria are met. All significant intercompany accounts and transactions within the Company's consolidated businesses have been eliminated in consolidation.

Any change in the Company's ownership interest in a consolidated subsidiary, where a controlling financial interest is retained, is accounted for as an equity transaction. When the Company ceases to have a controlling financial interest in a consolidated subsidiary, the Company will recognize a gain or loss in net income upon deconsolidation.

The Company's fiscal year ends on June 30 ("fiscal") of each year.

Reclassifications and adjustments

Certain fiscal 2021 and 2020 amounts have been reclassified to conform to the fiscal 2022 presentation.

Use of estimates

The preparation of the Company's Financial Statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

amounts that are reported in the Financial Statements and accompanying disclosures. Although these estimates are based on management's best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates.

Cash and cash equivalents

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

Receivables

Receivables are presented net of an allowance for doubtful accounts, which is an estimate of amounts that may not be collectible. The allowance for doubtful accounts is estimated based on historical experience, receivable aging, current expected collections, current economic trends and specific identification of certain receivables that are at risk of not being paid.

Receivables, net consist of:

			As of June 30,
			2022						2021
			(in millions)
Total receivables			$	2,182					$	2,106
Allowances for doubtful accounts			(54)						(77)
Total receivables, net			$	2,128					$	2,029

Inventories

Licensed and Owned Programming

The Company incurs costs to license programming rights and to produce owned programming. Licensed programming includes costs incurred by the Company for access to content owned by third parties. The Company has single and multi-year contracts for sports and non-sports programming. Licensed programming is recorded at the earlier of payment or when the license period has begun, the cost of the program is known or reasonably determinable and the program is accepted and available for airing. Licensed programming is predominately amortized as the associated programs are broadcast. The costs of multi-year sports contracts are primarily amortized based on the ratio of each contract's current period attributable revenue to the estimated total remaining attributable revenue. Estimates can change and, accordingly, are reviewed periodically and amortization is adjusted as necessary. Such changes in the future could be material.

Owned programming includes content internally developed and produced as well as co-produced content. Capitalized costs for owned programming are predominantly amortized using the individual-film-forecast-computation method, which is based on the ratio of current period revenue to estimated total future remaining revenue, and related costs to be incurred throughout the life of the respective program. When production partners distribute owned programming on the Company's behalf, the net participation in profits is recorded as content license revenue.

Inventories are evaluated for recoverability when an event or circumstance occurs that indicates that fair value may be less than unamortized costs. The Company will determine if there is an impairment by evaluating the fair value of the inventories, which are primarily supported by internal forecasts as compared to unamortized costs. Where an evaluation indicates unamortized costs, including advances on multi-year sports rights contracts, are not recoverable, amortization of rights is accelerated in an amount equal to the amount by which the unamortized costs exceed fair value. Owned programming is monetized and tested for impairment on an individual basis. Licensed programming is predominately monetized as a group and tested for impairment on a channel, network, or daypart basis. The recoverability of certain sports rights is assessed on an aggregate basis.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Investments

Investments in and advances to entities or joint ventures in which the Company has significant influence, but less than a controlling financial interest, are accounted for using the equity method. Significant influence generally exists when the Company owns an interest between 20% and 50%.

In accordance with ASC 321 "Investments—Equity Securities" ("ASC 321"), equity securities which the Company has no significant influence (generally less than a 20% ownership interest) with readily determinable fair values are accounted for at fair value based on quoted market prices. Equity securities without readily determinable fair values are accounted for either at fair value or using the measurement alternative which is at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. All gains and losses on investments in equity securities are recognized in the Statements of Operations.

Equity method investments are reviewed for impairment by comparing their fair value to their respective carrying amounts. The Company determines the fair value of its private company investments by considering available information, including recent investee equity transactions, discounted cash flow analyses, estimates based on comparable public company operating multiples and, in certain situations, balance sheet liquidation values. If the fair value of the investment has dropped below the carrying amount, management considers several factors when determining whether an other-than-temporary decline in market value has occurred, including the length of time and extent to which the market value has been below cost, the financial condition and near-term prospects of the issuer of the security, the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value and other factors influencing the fair market value, such as general market conditions.

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

Property, plant and equipment

Property, plant and equipment are stated at cost. Depreciation is provided using the straight-line method over an estimated useful life of three to 40 years for buildings and leaseholds and three to 10 years for machinery and equipment. Leasehold improvements are amortized using the straight-line method over the shorter of their useful lives or the life of the lease. Costs associated with the repair and maintenance of property are expensed as incurred. Changes in circumstances, such as technological advances, or changes to the Company's business model or capital strategy, could result in the actual useful lives differing from the Company's estimates. In those cases where the Company determines that the estimated useful life of property, plant and equipment should be shortened, the Company depreciates the asset over its revised remaining useful life, thereby increasing depreciation expense.

Goodwill and other intangible assets

The Company's intangible assets include goodwill, Federal Communications Commission ("FCC") licenses, traditional MVPD affiliate agreements and relationships, software and trademarks and other copyrighted products. Intangible assets acquired in business combinations are recorded at their estimated fair value at the date of acquisition. Goodwill is recorded as the difference between the consideration transferred to acquire entities and the estimated fair values assigned to their tangible and identifiable intangible net assets. Amounts recorded as goodwill are assigned to more than one reporting unit as of the acquisition date when more than one reporting unit is expected to benefit from the synergies of the combination. The Company's goodwill and indefinite-lived intangible assets, which primarily consist of FCC licenses, are tested annually for impairment, or earlier, if events occur or circumstances change that would more likely than not reduce the fair value below its carrying amount. The impairment assessment of indefinite-lived intangibles compares the fair value of the assets to their carrying value. Intangible assets with finite lives are generally amortized over their

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

Annual Impairment Review

Goodwill

If the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount after a qualitative assessment, the Company performs a quantitative impairment test to compare the fair value of each reporting unit to its carrying amount, including goodwill. In performing the quantitative assessment, the Company determines the fair value of a reporting unit primarily by using discounted cash flow analysis and market-based valuation approach methodologies. Determining fair value requires the exercise of significant judgments, including judgments about appropriate discount rates, long-term growth rates, company earnings multiples and relevant comparable transactions, as applicable, and the amount and timing of expected future cash flows. The cash flows employed in the analyses are based on the Company's estimated outlook and various growth rates have been assumed for years beyond the long-term business plan period. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting units. In assessing the reasonableness of its determined fair values, the Company evaluates its results against other value indicators, such as comparable public company trading values. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

During fiscal 2022, the Company determined that the goodwill and indefinite-lived intangible assets included in the Balance Sheet as of June 30, 2022, were not impaired based on the Company's annual assessment. While the Company believes its judgments represent reasonably possible outcomes based on available facts and circumstances, adverse changes to the assumptions, including those related to macroeconomic factors, comparable public company trading values and prevailing conditions in the capital markets, could lead to future declines in the fair value of a reporting unit in the Other, Corporate and Eliminations segment and a potential non-cash goodwill impairment charge. The estimated fair value of this reporting unit was determined using a combination of the income approach, which incorporates the use of a discounted cash flow analysis, and the market approach, which incorporates the use of revenue multiples based on market data. Fair value exceeded the carrying value of this reporting unit by less than 20% as of June 30, 2022. Further adverse changes in market conditions may result in a partial or full impairment of the approximately $250 million of goodwill in this reporting unit as of June 30, 2022. The Company determined that there are no other reporting units at risk of impairment as of June 30, 2022, and will continue to monitor its goodwill and indefinite-lived intangible assets for any possible future non-cash impairment charges.

FCC licenses

The Company performs impairment reviews by comparing the estimated fair value of the Company's FCC licenses with their carrying amount on a station-by-station basis using a discounted cash flow valuation method, assuming a hypothetical start-up scenario for a broadcast station in each of the markets the Company operates in. The significant assumptions used are the discount rate and terminal growth rates and operating margins, as well as industry data on future advertising revenues in the markets where the Company owns television stations. These assumptions are based on actual third-party historical performance and estimates of future performance in each market.

Leases

The Company has lease agreements primarily for office facilities and other equipment. At contract inception, the Company determines if a contract is or contains a lease and whether it is an operating or finance lease. The Company does not separate lease components from nonlease components for real estate leases.

For operating leases that have a lease term of greater than one year, the Company initially recognizes operating lease liabilities and right-of-use ("ROU") assets at the lease commencement date, which is the date that the lessor makes an underlying asset available for use by the Company. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the present value of the Company's obligation to make lease payments, primarily escalating fixed payments, over the lease term.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The discount rate used to determine the present value of the lease payments is generally the Company's incremental borrowing rate because the rate implicit in the lease is generally not readily determinable. The incremental borrowing rate for the lease term is determined by adjusting the Company's unsecured borrowing rate for a similar term to approximate a collateralized borrowing rate. The Company's lease terms for each of its leases represents the noncancelable period for which the Company has the right to use an underlying asset, together with all of the following: (i) periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option; (ii) periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise that option; and (iii) periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor. The Company recognizes lease expense for operating leases on a straight-line basis over the lease term.

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

Long-lived asset impairments

ASC 360, "Property, Plant, and Equipment," ASC 842, "Leases" and ASC 350 require that the Company periodically review the carrying amounts of its long-lived assets, including property, plant and equipment, ROU assets and finite-lived intangible assets, to determine whether current events or circumstances indicate that such carrying amounts may not be recoverable. If the carrying amount of the asset or asset group is greater than the expected undiscounted cash flows to be generated by such asset or asset group, an impairment adjustment is recognized and is measured as the amount by which the carrying value of such asset or asset group exceeds its fair value. The Company generally measures fair value by considering sale prices for similar assets or by discounting estimated future cash flows using an appropriate discount rate. Considerable management judgment is necessary to estimate the fair value of assets; accordingly, actual results could vary significantly from such estimates. Assets to be disposed of are carried at the lower of their financial statement carrying amount or fair value less their costs to sell.

Revenue recognition

Revenue is recognized when control of the promised goods or services is transferred to the Company's customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company considers the terms of each arrangement to determine the appropriate accounting treatment.

The Company generates advertising revenue from sales of commercial time within the Company's network programming to be aired by television networks and cable channels, and from sales of advertising on the Company's owned and operated television stations and various digital properties. Advertising revenue from customers, primarily advertising agencies, is recognized as the commercials are aired. Certain of the Company's advertising contracts have guarantees of a certain number of targeted audience views, referred to as impressions. Revenues for any audience deficiencies are deferred until the guaranteed number of impressions is met, by providing additional advertisements. Advertising contracts, which are generally short-term, are billed monthly for the spots aired during the month, with payments due shortly after the invoice date.

The Company generates affiliate fee revenue from agreements with traditional and virtual MVPDs (as defined in Note 17—Segment Information) for cable network programming and for the broadcast of the Company's owned and operated television stations. In addition, the Company generates affiliate fee revenue from agreements with independently owned television stations that are affiliated with the FOX Network and receives retransmission consent fees from traditional and virtual MVPDs for their signals. Affiliate fee revenue is recognized at a point in time when the network programming is made available to the customer. For contracts with affiliate fees based on the number of the affiliate's subscribers, revenues are recognized based on the contractual rate multiplied by the estimated number of subscribers each period. For contracts with fixed affiliate fees, revenues are recognized based on the relative standalone selling price of the network programming provided over the contract term, which generally reflects the invoiced amount. Affiliate contracts are generally multi-year contracts with payments due monthly.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company classifies the amortization of cable distribution investments (capitalized fees paid to traditional MVPDs to facilitate carriage of a cable network) against affiliate fee revenue. The Company amortizes the cable distribution investments on a straight-line basis over the contract period.

Other revenue primarily includes revenue generated from the Company's content licensing agreements and revenue from production services and rentals. Revenue from content licensing agreements is recognized when the content is made available under the content licensing agreements. Production services and rental revenues are recognized as the goods or services are delivered.

Advertising expenses

The Company expenses advertising costs as incurred. The Company incurred advertising expenses of $708 million, $558 million and $425 million for fiscal 2022, 2021 and 2020, respectively.

Income taxes

The Company accounts for income taxes in accordance with ASC 740, "Income Taxes" ("ASC 740"). ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are established where management determines that it is more likely than not that some portion or all of a deferred tax asset will not be realized.

Earnings per share

Basic earnings per share for the Class A Common Stock and Class B Common Stock is calculated by dividing Net income attributable to Fox Corporation stockholders by the weighted average number of outstanding shares of Class A Common Stock, including vested restricted stock units ("RSUs"), and Class B Common Stock. Diluted earnings per share for the Class A Common Stock and Class B Common Stock is calculated similarly, except that the calculation for the Class A Common Stock includes the dilutive effect of the assumed issuance of the shares issuable under the Company's equity-based compensation plan.

Equity-based compensation

The Company accounts for share-based payments in accordance with ASC 718, "Compensation—Stock Compensation" ("ASC 718"). ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the Financial Statements. ASC 718 establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all companies to apply a fair value-based measurement method in accounting for generally all share-based payment transactions with employees. The Company recognizes compensation cost for awards granted that have only service requirements and a graded vesting schedule on a straight-line basis over the requisite service period for the entire award. The Company accounts for forfeitures when they occur.

Financial instruments

The carrying value of the Company's financial instruments, such as cash and cash equivalents, receivables, payables and investments accounted for using the measurement alternative in accordance with ASC 321, approximates fair value. The fair value of financial instruments is generally determined by reference to market values resulting from trading on a national securities exchange or in an over-the-counter market.

Redeemable noncontrolling interests

The Company accounts for redeemable noncontrolling interests in accordance with ASC 480-10-S99-3A, "Distinguishing Liabilities from Equity," because their exercise is outside the control of the Company. The redeemable noncontrolling interests recorded are put rights held by Credible Labs Inc. ("Credible") and an entertainment production company. The Company accretes the changes in the redemption value of the redeemable noncontrolling interests over the period of issuance to the earliest redemption date. If a redeemable noncontrolling interest is redeemable at fair value, adjustments to the carrying amount are recorded in retained earnings. If a redeemable noncontrolling interest is redeemable at an amount in excess of fair value, the portion

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

Concentrations of credit risk

Cash and cash equivalents are maintained with several financial institutions. The Company has deposits held with banks that exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and, therefore, bear minimal credit risk.

Generally, the Company does not require collateral to secure receivables. As of June 30, 2022, the Company had no customers that accounted for 10% or more of the Company's receivables. As of June 30, 2021, the Company had one individual customer that accounted for approximately 11% of the Company's receivables.

NOTE 3. ACQUISITIONS, DISPOSALS AND OTHER TRANSACTIONS

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

The Company's acquisitions support the Company's strategy to strengthen its core brands and to selectively enhance production capabilities for its digital and linear platforms. For these acquisitions, the initial accounting for the business combination, including the allocation of the consideration transferred, is based on provisional amounts. The amounts allocated to intangible assets and goodwill, the estimates of useful lives and the related amortization expense are subject to changes pending the completion of the final valuations of certain assets and liabilities. A change in the allocation of consideration transferred and any estimates of useful lives could result in a change in the value allocated to the intangible assets that could impact future amortization expense.

Fiscal 2022 and 2021

During fiscal 2022, the Company made acquisitions, primarily consisting of three entertainment production companies, for total cash consideration of approximately $240 million. During fiscal 2021, the Company made one acquisition consisting of a digital media company and disposed of its sports marketing businesses. The incremental revenues and Segment EBITDA (as defined in Note 17—Segment Information) related to the fiscal 2022 acquisitions and the fiscal 2021 acquisition and disposals, included in the Company's consolidated results of operations, were not material individually or in the aggregate. The Company finalized its purchase price accounting for the fiscal 2021 acquisition during the fourth quarter of fiscal 2022 without any material adjustments.

Fiscal 2020

Acquisitions and Disposals

Credible Acquisition

In October 2019, the Company acquired 67% of the equity in Credible, a U.S. consumer finance marketplace, for approximately $260 million in cash (the "Credible Acquisition"), net of cash acquired. The remaining 33% of Credible not owned by the Company was recorded at fair value on the acquisition date based on the Company's valuation of Credible's business using a market approach (a Level 3 measurement as defined in Note 6—Fair Value). The consideration transferred of approximately $260 million has been allocated, based on a final valuation of 100% of Credible, as follows: approximately $75 million to intangible assets with useful lives ranging from five to 10 years; approximately $285 million representing goodwill; approximately $(110) million to redeemable noncontrolling interests and the remainder to other net assets. The goodwill, which is not tax deductible, reflects the increased market penetration and synergies expected from combining the operations of Credible and the Company. The Company finalized its purchase price accounting for the acquisition during the second quarter of fiscal 2021 without any material adjustments.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Television Stations Acquisition and Divestiture

In March 2020, the Company acquired three television stations (FOX-affiliate KCPQ and MyNetworkTV-affiliate KZJO located in Seattle, Washington and FOX-affiliate WITI located in Milwaukee, Wisconsin) for approximately $350 million in cash from Nexstar Media Group, Inc. ("Nexstar"). As part of this transaction, the Company sold Nexstar two television stations (FOX-affiliate WJZY and MyNetworkTV-affiliate WMYT located in Charlotte, North Carolina) for approximately $45 million in cash. The consideration transferred of approximately $350 million for the stations the Company acquired has been allocated, based on a final valuation, as follows: approximately $210 million to intangible assets, of which approximately $110 million has been allocated to FCC licenses with indefinite lives and approximately $100 million to amortizable intangible assets, primarily retransmission agreements with useful lives of eight years; approximately $30 million to property, plant and equipment; and the balance to goodwill. The goodwill, which is tax deductible, reflects the increased synergies and market penetration expected from combining the operations of the three television stations with those of the Company. The Company finalized its purchase price accounting for the acquisition during the third quarter of fiscal 2021 without any material adjustments.

TUBI Acquisition

In April 2020, the Company acquired Tubi, Inc. ("TUBI"), a free advertising-supported video-on-demand ("AVOD") service, for approximately $445 million in cash (the "TUBI Acquisition"), net of cash acquired. The consideration transferred of approximately $470 million has been allocated, based on a final valuation, as follows: approximately $130 million to intangible assets with useful lives ranging from three to 10 years; approximately $320 million representing goodwill; and the remainder to other net assets. The goodwill, which is not tax deductible, reflects the synergies and increased market penetration expected from combining the operations of TUBI and the Company. Additional consideration, in the form of deferred consideration and unvested options, totaling approximately $45 million, may be due over a three-year period following the closing of the transaction and will be recognized as compensation expense over that period. The Company finalized its purchase price accounting for the acquisition during the fourth quarter of fiscal 2021 without any material adjustments. The Company financed the TUBI Acquisition principally with the net proceeds from the sale of its investment in Roku, Inc. ("Roku") as discussed below.

Other Transactions

Flutter

In May 2019, the Company and The Stars Group Inc. ("The Stars Group"), now a subsidiary of Flutter Entertainment plc ("Flutter") and part of Flutter's U.S. operations, announced plans to launch FOX Bet, a national media and sports wagering partnership in the U.S. The partnership was launched in the first quarter of fiscal 2020 and FOX Sports and The Stars Group entered into a long-term commercial arrangement through which FOX Sports provides Flutter with an exclusive license to use certain FOX Sports trademarks. In addition, the Company invested $236 million to acquire a 4.99% equity interest in The Stars Group, and, subject to certain conditions and applicable gaming regulatory approvals, FOX Sports has an option until August 2029 to acquire up to 50% of the equity in the U.S. business of The Stars Group. In May of 2020, the Company's equity interest in The Stars Group was converted into Flutter equity in connection with the combination of The Stars Group and Flutter (the "Combination"). In connection with the Combination, FOX Sports received the right to acquire an approximately 18.5% equity interest in FanDuel Group, a majority-owned subsidiary of Flutter, at a price set forth in the relevant agreement (structured as a 10-year option from 2021, subject to a carrying value adjustment), which is currently the subject of ongoing arbitration proceedings. The Company made additional equity investments in Flutter in fiscal 2021 and fiscal 2020 of approximately $55 million and $100 million, respectively. As of June 30, 2022, the Company has an approximately 2.5% equity stake in Flutter. The Company accounts for the investment in Flutter at fair value (See Note 6—Fair Value).

Roku

In March 2020, the Company sold its investment in Roku for approximately $340 million. The Company recorded a loss of approximately $210 million for fiscal 2020 related to the change in the fair value of its investment in Roku prior to disposition, which was recorded in Other, net in the Statement of Operations (See Note 20—Additional Financial Information). The Company purchased its investment in Roku for approximately $40 million.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. RESTRUCTURING PROGRAMS

Fiscal 2021

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

Fiscal 2020

During fiscal 2020, the Company recorded restructuring charges at the Cable Network Programming and Television segments of approximately $425 million reflecting contract termination costs related to a programming rights agreement with the United States Golf Association (the "USGA") for the broadcast of USGA events on the Company's networks, including the write-off of approximately $75 million of programming rights advances. The Company paid approximately $320 million to the USGA in June 2020 for the contract termination.

Changes in the restructuring program liabilities were as follows:

			One time termination benefits						Contract termination costs						Total
			(in millions)
Balance, June 30, 2019			$	(40)					$	—					$	(40)
Additions			(24)						(427)						(451)
Payments			26						397			(a)			423
Balance, June 30, 2020			$	(38)					$	(30)					$	(68)
Additions			(39)						4						(35)
Payments			61						4						65
Balance, June 30, 2021			$	(16)					$	(22)					$	(38)
Payments			8						3						11
Balance, June 30, 2022			$	(8)					$	(19)					$	(27)

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

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5. INVENTORIES, NET

The Company's inventories were comprised of the following:

			As of June 30,
			2022						2021
			(in millions)
Licensed programming, including prepaid sports rights			$	975					$	811
Owned programming			337						117
Total inventories, net			1,312						928
Less: current portion of inventories, net			(791)						(729)
Total non-current inventories, net			$	521					$	199
Owned programming
Released			$	205					$	48
In-process or other			132						69
Total			$	337					$	117

The following table presents the aggregate amortization expense related to inventories, net included in Operating Expenses in the Statement of Operations:

			For the years ended June 30,
			2022						2021
			(in millions)
Amortization expense			$	5,379					$	4,721

Based on the balance of inventories, net as of June 30, 2022, the estimated amortization expense for each of the succeeding three fiscal years is as follows:

			For the years ending June 30,
			2023						2024						2025
			(in millions)
Estimated amortization expense			$	934					$	164					$	38

Inventories are evaluated for recoverability when an event or circumstance occurs that indicates that fair value may be less than unamortized costs. The Company will determine if there is an impairment by evaluating the fair value of the inventories, which are primarily supported by internal forecasts as compared to unamortized costs. The Company recognized impairments of approximately $50 million, nil and $95 million in fiscal 2022, 2021 and 2020, respectively, related to licensed and owned programming at the Cable Network Programming and Television segments, which were recorded in Operating expenses in the Statements of Operations.

NOTE 6. FAIR VALUE

In accordance with ASC 820, "Fair Value Measurement," fair value measurements are required to be disclosed using a three-tiered fair value hierarchy which distinguishes market participant assumptions into the following categories: (i) inputs that are quoted prices in active markets ("Level 1"); (ii) inputs other than quoted prices included within Level 1 that are observable, including quoted prices for similar assets or liabilities ("Level 2"); and (iii) inputs that require the entity to use its own assumptions about market participant assumptions ("Level 3").

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following tables present information about financial assets and redeemable noncontrolling interests carried at fair value on a recurring basis:

			Fair value measurements
			As of June 30, 2022
			Total						Level 1						Level 2						Level 3
			(in millions)
Investments in equity securities			$	435					$	435		(a)			$	—					$	—
Redeemable noncontrolling interests			(188)						—						—						(188)			(b)
Total			$	247					$	435					$	—					$	(188)

			Fair value measurements
			As of June 30, 2021
			Total						Level 1						Level 2						Level 3
			(in millions)
Investments in equity securities			$	788					$	788		(a)			$	—					$	—
Redeemable noncontrolling interests			(261)						—						—						(261)			(b)
Total			$	527					$	788					$	—					$	(261)

(a)			The investment categorized as Level 1 represents an investment in equity securities of Flutter with a readily determinable fair value (See Note 3—Acquisitions, Disposals and Other Transactions under the heading "Flutter" for further discussion).
(b)			The Company utilizes both the market and income approach valuation techniques for its Level 3 fair value measures. Inputs to such measures could include observable market data obtained from independent sources such as broker quotes and recent market transactions for similar assets. It is the Company's policy to maximize the use of observable inputs in the measurement of its Level 3 fair value measurements. To the extent observable inputs are not available, the Company utilizes unobservable inputs based upon the assumptions market participants would use in valuing the liability. Examples of utilized unobservable inputs are future cash flows and long-term growth rates.

Redeemable Noncontrolling Interests

The changes in redeemable noncontrolling interests classified as Level 3 measurements were as follows:

			For the years ended June 30,
			2022						2021						2020
			(in millions)
Beginning of year			$	(261)					$	(305)					$	(189)
Acquisitions(a)			(58)						—						(109)
Net loss (income)			12						(25)						(33)
Redemption of noncontrolling interests(b)			—						135						—
Distributions			3						15						24
Accretion and other(c)			116						(81)						2
End of year			$	(188)					$	(261)					$	(305)

(a)			The amount issued in fiscal 2022 was primarily due to the acquisition of an entertainment production company. The amount issued in fiscal 2020 was due to the Credible Acquisition (See Note 3—Acquisitions, Disposals and Other Transactions).

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(b)			As a result of the exercise of a portion of the put rights held by the sports network minority shareholder during fiscal 2021, approximately $135 million was reclassified out of Redeemable noncontrolling interests into equity. At closing, the Company paid half of the purchase price in cash and delivered a three-year promissory note for the remaining balance, which was recorded in Non-current liabilities on the Balance Sheet.
(c)			As a result of the expiration of a portion of the put rights held by the sports network minority shareholder during fiscal 2022 and 2020, approximately $110 million and $120 million, respectively, were reclassified into equity.

The fair values of the redeemable noncontrolling interests held in the entertainment production company and in Credible were determined by using discounted cash flow analysis and market-based valuation approach methodologies. Significant unobservable inputs used in the fair value measurements of the Company's redeemable noncontrolling interests are EBITDA (as defined in Note 17—Segment Information) projections and multiples. Significant increases (decreases) in multiples would result in a significantly higher (lower) fair value measurement.

The put right held by the Credible minority shareholder will become exercisable in fiscal 2025. The put right held by the entertainment production company's minority shareholder will become exercisable in fiscal 2027.

Financial Instruments

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

			As of June 30,
			2022						2021
			(in millions)
Borrowings
Fair value			$	7,084					$	9,474
Carrying value			$	7,206					$	7,951

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

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company's assets measured at fair value on a nonrecurring basis include investments accounted for using the equity method and the measurement alternative method in accordance with ASC 321, long-lived assets, indefinite-lived intangible assets and goodwill. The Company reviews the carrying amounts of such assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable or at least annually for indefinite-lived intangible assets and goodwill. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to be Level 3 measurements. In addition, investments accounted for using the measurement alternative method in accordance with ASC 321 are recorded at fair value as a result of observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7. PROPERTY, PLANT AND EQUIPMENT, NET

			As of June 30,
			2022						2021
			(in millions)
Land			$	199					$	204
Buildings and leaseholds			1,284						1,319
Machinery and equipment			1,743						1,652
			3,226						3,175
Less: accumulated depreciation and amortization			(1,729)						(1,732)
			1,497						1,443
Construction in progress			185						265
Total property, plant and equipment, net			$	1,682					$	1,708

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

NOTE 8. GOODWILL AND INTANGIBLE ASSETS, NET

The changes in the carrying values of the Company's intangible assets and related accumulated amortization were as follows:

			Intangible assets not subject to amortization																		Amortizable intangible assets, net**(a)**						Total intangible assets, net
			FCC licenses						Other						Total
			(in millions)
Balance, June 30, 2020			$	2,250					$	642					$	2,892					$	306					$	3,198
Acquisitions(b)			—						—						—						19						19
Amortization			—						—						—						(63)						(63)
Balance, June 30, 2021			$	2,250					$	642					$	2,892					$	262					$	3,154
Acquisitions(b)			—						—						—						71						71
Amortization and other			—						—						—						(68)						(68)
Balance, June 30, 2022			$	2,250					$	642					$	2,892					$	265					$	3,157

(a)			Net of accumulated amortization of $292 million and $226 million as of June 30, 2022 and 2021, respectively.
(b)			See Note 3—Acquisitions, Disposals and Other Transactions under the heading "Acquisitions and Disposals."

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

Based on the balance of finite-lived intangible assets as of June 30, 2022, the estimated amortization expense for each of the succeeding five fiscal years is as follows:

			For the years ending June 30,
			2023						2024						2025						2026						2027
			(in millions)
Estimated amortization expense(a)			$	65					$	47					$	34					$	33					$	30

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

			Cable Network Programming						Television						Other, Corporate and Eliminations						Total Goodwill
			(in millions)
Balance, June 30, 2020			$	1,032					$	2,155					$	222					$	3,409
Acquisitions(a)			32						—						—						32
Disposals(a)			(5)						—						(1)						(6)
Balance, June 30, 2021			$	1,059					$	2,155					$	221					$	3,435
Acquisitions and other(a)			—						86						33						119
Balance, June 30, 2022			$	1,059					$	2,241					$	254					$	3,554

(a)			See Note 3—Acquisitions, Disposals and Other Transactions under the heading "Acquisitions and Disposals."

The carrying amount of Television segment goodwill was net of accumulated impairments of $371 million as of June 30, 2022 and 2021.

NOTE 9. BORROWINGS

Public Debt - Senior Notes Issued

The Company has issued senior notes (the "Notes") under an Indenture, dated as of January 25, 2019, by and between the Company and The Bank of New York Mellon, as Trustee (the "2019 Indenture"). The Notes are direct unsecured obligations of the Company and rank pari passu with all other senior indebtedness of the Company, including the indebtedness under the Revolving Credit Agreement described below. Redemption may occur, at the option of the holders, at 101% of the principal amount plus an accrued interest amount in certain circumstances where a change of control is deemed to have occurred. The Notes are subject to certain covenants, which, among other things, limit the Company's ability and the ability of the Company's subsidiaries, to create liens and engage in merger, sale or consolidation transactions. The 2019 Indenture does not contain any financial maintenance covenants.

In April 2020, the Company issued $1.2 billion of senior notes and used the net proceeds for general corporate purposes. In January 2019, the Company issued $6.8 billion of senior notes and used the net proceeds, together with available cash on its balance sheet, to fund the Dividend and to pay fees and expenses

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

			Outstanding as of June 30,
			2022						2021
			(in millions)
Public debt
3.666% senior notes due 2022			$	—					$	750
4.030% senior notes due 2024			1,250						1,250
3.050% senior notes due 2025			600						600
4.709% senior notes due 2029			2,000						2,000
3.500% senior notes due 2030			600						600
5.476% senior notes due 2039			1,250						1,250
5.576% senior notes due 2049			1,550						1,550
Total public debt			7,250						8,000
Less: unamortized discount and debt issuance costs			(44)						(49)
Total borrowings			$	7,206					$	7,951

Current Borrowings

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

Revolving Credit Agreement

On March 15, 2019, the Company entered into a credit agreement (the "Revolving Credit Agreement") among the Company, as Borrower, the initial lenders named therein, the initial issuing banks named therein, Citibank, N.A., as Administrative Agent, Deutsche Bank Securities Inc. and Goldman Sachs Bank USA, as Co-Syndication Agents, JPMorgan Chase Bank, N.A. and Morgan Stanley Bank, N.A., as Co-Documentation Agents, and the other parties party thereto. The Revolving Credit Agreement provides for a $1.0 billion unsecured revolving credit facility with a sub-limit of $150 million available for the issuance of letters of credit and a maturity date of March 2024. Under the Revolving Credit Agreement, the Company may request an increase in the amount of the credit facility commitments up to a maximum facility amount of $1.5 billion and the Company may request that the maturity date be extended for up to two additional one-year periods. The material terms of the Revolving Credit Agreement include the requirement that the Company maintain specific leverage ratios and limitations on indebtedness. In April 2020, the Company entered into an amendment to the Revolving Credit Agreement, which, among other things, deducts cash in excess of $500 million from indebtedness for purposes of calculating the operating income leverage ratio under the agreement. The interest rates and fees under the Revolving Credit Agreement are based on the Company's long-term senior unsecured non-credit enhanced debt ratings. Given the current credit ratings, the interest rate on borrowings under the Revolving Credit Agreement would be London Interbank Offered Rate ("LIBOR") plus 1.1% and the facility fee is 0.15%. As of June 30, 2022, there were no borrowings outstanding under the Revolving Credit Agreement.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10. LEASES

Lessee Arrangements

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

			For the years ended June 30,
			2022						2021
			(in millions)
ROU assets			$	477					$	469
Lease liabilities
Current lease liabilities			$	107					$	92
Non-current lease liabilities			405						409
Total lease liabilities			$	512					$	501
Other supplemental information
Weighted average remaining lease term			9 years						8 years
Weighted average discount rate			3		%				3		%

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

			For the years ended June 30,
			2022						2021						2020
			(in millions)
Lease costs
Total lease costs(a)			$	128					$	126					$	126
Supplemental cash flows information
Operating cash flows from operating leases			$	116					$	134					$	166
ROU assets obtained in exchange for operating lease liabilities			$	137					$	49					$	87

(a)			Total lease costs of $128 million, $126 million and $126 million for the years ended June 30, 2022, 2021 and 2020 are net of sublease income of approximately $15 million, $30 million and $50 million, respectively. Approximately $15 million and $40 million of the sublease income for the years ended June 30, 2021 and 2020, respectively, relates to office facilities that were subleased through November 2020 to News Corporation, a related party (see Note 13—Related Party Transactions).

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the lease payments relating to the Company's operating leases:

			As of June 30, 2022
			(in millions)
Fiscal Year
2023			$	119
2024			116
2025			104
2026			57
2027			29
Thereafter			181
Total lease payments			606
Less: imputed interest			(94)
Present value of operating lease liabilities			$	512

Lessor Arrangements

The Company's lessor arrangements primarily relate to its owned production and office facilities at the FOX Studio Lot, which is located in Los Angeles, California. The Company is responsible for the management of the FOX Studio Lot, which includes managing and providing facilities, studio operations, and production services. The Company leases production and office space on the FOX Studio Lot to 21CF for an initial term of seven years, subject to two five-year renewal options exercisable by 21CF. As a result, the FOX Studio Lot will predominantly be utilized by Disney productions until 2026. The Company will receive approximately $50 million annually in lease payments over the remaining lease term.

The Company recorded total lease income of approximately $60 million, $50 million, and $55 million for fiscal 2022, 2021 and 2020 respectively, which is included in Revenues in the Statements of Operations. The Company recognizes lease payments for operating leases as revenue on a straight-line basis over the lease term and variable lease payments as revenue in the period incurred.

NOTE 11. STOCKHOLDERS' EQUITY

Common Stock and Preferred Stock

The Company has two classes of common stock that are authorized and outstanding: Class A Common Stock and Class B Common Stock. As a general matter, holders of Class B Common Stock are entitled to one vote per share on all matters on which stockholders have the right to vote, including director elections. Holders of Class A Common Stock are entitled to vote only in the limited circumstances set forth in the Company's Amended and Restated Certificate of Incorporation (the "Certificate of Incorporation").

As of June 30, 2022, there were approximately 16,700 holders of record of shares of Class A Common Stock and approximately 4,600 holders of record of shares of Class B Common Stock.

In the event of a liquidation or dissolution or winding up of the Company, after distribution in full of the preferential and/or other amounts to be distributed to the holders of shares of any outstanding series of preferred stock or series common stock, holders of Class A Common Stock and Class B Common Stock, to the extent fixed by the Board of Directors (the "Board") with respect thereto, are entitled to receive all of the remaining assets of the Company available for distribution to its stockholders, ratably in proportion to the number of shares held by Class A Common Stock holders and Class B Common Stock holders, respectively. In the event of any merger or consolidation with or into another entity, the holders of Class A Common Stock and the holders of Class B Common Stock generally are entitled to receive substantially identical per share consideration.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Under the Certificate of Incorporation, the Board is authorized to issue shares of preferred stock or common stock at any time, without stockholder approval, and to determine all the terms of those shares, including the following:

(i) the voting rights, if any, except that the issuance of preferred stock or series common stock which entitles holders thereof to more than one vote per share requires the affirmative vote of the holders of a majority of the combined voting power of the then outstanding shares of the Company's capital stock entitled to vote generally in the election of directors;

(ii) the dividend rate and preferences, if any, which that preferred stock or common stock will have compared to any other class; and

(iii) the redemption and liquidation rights and preferences, if any, which that preferred stock or common stock will have compared to any other class.

Any decision by the Board to issue preferred stock or common stock must, however, be taken in accordance with the Board's fiduciary duty to act in the best interests of the Company's stockholders. The Company is authorized to issue 35,000,000 shares of preferred stock, par value $0.01 per share and 35,000,000 shares of series common stock, par value $0.01 per share. The Board has the authority, without any further vote or action by the stockholders, to issue preferred stock and series common stock in one or more series and to fix the number of shares, designations, relative rights (including voting rights), preferences, qualifications and limitations of such series to the full extent permitted by Delaware law.

Stock Repurchase Program

The Board has authorized a stock repurchase program under which the Company can repurchase $4 billion of Class A Common Stock and Class B Common Stock. The program has no time limit and may be modified, suspended or discontinued at any time. As of June 30, 2022, the Company's remaining stock repurchase authorization was approximately $1.4 billion.

Fiscal 2021

In connection with the stock repurchase program, the Company entered into two accelerated share repurchase ("ASR") agreements in August 2020 to repurchase $154 million of Class A Common Stock and $66 million of Class B Common Stock. In accordance with the ASR agreements, the Company paid a third-party financial institution $154 million and $66 million and received initial deliveries of approximately 4.7 million and 2.0 million shares of Class A Common Stock and Class B Common Stock, respectively, representing 80% of the shares expected to be repurchased under each ASR agreement, at a price of $26.00 and $26.01 per share, which was the Nasdaq closing share price of the Class A Common Stock and Class B Common Stock, respectively, on August 21, 2020. Upon settlement of the ASR agreements in September 2020, the Company received final deliveries of approximately 0.9 million and 0.4 million shares of Class A Common Stock and Class B Common Stock, respectively. The final number of shares purchased under the ASR agreements was determined using a price of $27.57 and $27.67 per share (the volume-weighted average market price of the Class A Common Stock and Class B Common Stock, respectively, during the terms of the ASR agreements less a discount applicable for the Class A Common Stock). The Company accounted for each ASR agreement as two separate transactions. The initial deliveries of Class A Common Stock and Class B Common Stock were accounted for as treasury stock transactions recorded on the acquisition date. The final settlements of Class A Common Stock and Class B Common Stock were accounted for as forward contracts indexed to the Class A Common Stock or Class B Common Stock, as applicable, and qualified as equity transactions.

Fiscal 2020

In connection with the stock repurchase program, the Company entered into an ASR agreement in November 2019 to repurchase $350 million of Class A Common Stock and announced its intention to promptly repurchase $150 million of Class B Common Stock. In accordance with the ASR agreement, the Company paid a third-party financial institution $350 million and received an initial delivery of approximately eight million shares of Class A Common Stock, representing 80% of the shares expected to be repurchased under the ASR agreement, at a price of $34.99 per share, which was the Nasdaq closing share price of the Class A Common Stock on November 11, 2019. Upon settlement of the ASR agreement in January 2020, the Company received

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

a final delivery of approximately two million shares of Class A Common Stock. The final number of shares purchased under the ASR agreement was determined using a price of $36.05 per share (the volume-weighted average market price of the Class A Common Stock during the term of the ASR agreement less a discount). The Company accounted for the ASR agreement as two separate transactions. The initial delivery of Class A Common Stock was accounted for as a treasury stock transaction recorded on the acquisition date. The final settlement of Class A Common Stock was accounted for as a forward contract indexed to the Class A Common Stock and qualified as an equity transaction.

In addition to the shares purchased under the ASR agreements, the Company repurchased shares of Class A Common Stock and Class B Common Stock in the open market during fiscal 2022, 2021 and 2020. Repurchased shares are retired and reduce the number of shares issued and outstanding. The Company allocates the amount of the repurchase price over par value between additional paid-in capital and retained earnings.

The following table summarizes the Company's repurchases of its Class A Common Stock and Class B Common Stock:

			For the years ended June 30,
			2022						2021						2020
			(in millions)
Total cost of repurchases			$	1,000					$	1,001					$	600
Total number of shares repurchased			27						31						17

Stockholders Agreement

The Company announced on November 6, 2019 that it had entered into a stockholders agreement with the Murdoch Family Trust pursuant to which the Company and the Murdoch Family Trust have agreed not to take actions that would result in the Murdoch Family Trust and Murdoch family members together owning more than 44% of the outstanding voting power of the shares of Class B Common Stock or would increase the Murdoch Family Trust's voting power by more than 1.75% in any rolling twelve-month period. The Murdoch Family Trust would forfeit votes to the extent necessary to ensure that the Murdoch Family Trust and the Murdoch family collectively do not exceed 44% of the outstanding voting power of the Class B shares, except where a Murdoch family member votes their own shares differently from the Murdoch Family Trust on any matter.

Dividends

The following table summarizes the dividends declared and paid per share on both the Company's Class A Common Stock and Class B Common Stock:

			For the years ended June 30,
			2022						2021						2020
Cash dividend per share			$	0.48					$	0.46					$	0.46

Comprehensive Income (Loss)

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

			For the year ended June 30, 2022
			Before tax						Tax benefit (provision)						Net of tax
			(in millions)
Benefit plan and cumulative translation adjustments
Unrealized gains			$	100					$	(25)					$	75
Reclassifications realized in net income(a)			32						(8)						24
Cumulative translation adjustment			(7)						—						(7)
Other comprehensive income			$	125					$	(33)					$	92

			For the year ended June 30, 2021
			Before tax						Tax benefit (provision)						Net of tax
			(in millions)
Benefit plan adjustments
Unrealized gains			$	87					$	(21)					$	66
Reclassifications realized in net income(a)			45						(12)						33
Other comprehensive income			$	132					$	(33)					$	99

			For the year ended June 30, 2020
			Before tax						Tax benefit (provision)						Net of tax
			(in millions)
Benefit plan adjustments and other
Unrealized losses			$	(175)					$	44					$	(131)
Reclassifications realized in net income(a)			29						(7)						22
Other comprehensive loss			$	(146)					$	37					$	(109)

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

Accumulated other comprehensive loss

The following table summarizes the components of Accumulated other comprehensive loss, net of tax:

			As of June 30,
			2022						2021						2020
			(in millions)
Benefit plan adjustments and other			$	(219)					$	(318)					$	(417)
Cumulative translation adjustment			(7)						—						—
Accumulated other comprehensive loss, net of tax			$	(226)					$	(318)					$	(417)

NOTE 12. EQUITY-BASED COMPENSATION

2019 Shareholder Alignment Plan

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

types of FOX equity awards may be granted. The Company's officers, directors and employees are eligible to participate in the SAP. The maximum number of shares of Class A Common Stock that may be issued under the SAP is 65 million shares. As of June 30, 2022, the remaining number of shares of Class A Common Stock available for issuance under the SAP was approximately 43 million.

Awards granted under the SAP (other than stock options or stock appreciation rights) entitle the holder to receive Dividend Equivalents (as defined in the SAP) for each regular cash dividend on the common stock underlying the award paid by the Company during the award period. Dividend equivalents granted with respect to equity awards will be accrued during the applicable award period and such dividend equivalents will vest and be paid only if and when the underlying award vests.

The fair value of equity-based compensation under the SAP was calculated according to the type of award issued.

Restricted Stock Units

RSUs are awards that represent the potential to receive shares of Class A Common Stock at the end of the applicable vesting period, subject to the terms and conditions of the SAP, the applicable award documents and such other terms and conditions as the Compensation Committee of the Board (the "Compensation Committee") may establish. RSUs awarded under the SAP are fair valued based upon the fair market value of Class A Common Stock on the grant date. Any person who holds RSUs has no ownership interest in the shares of Class A Common Stock to which such RSUs relate until and unless shares of Class A Common Stock are delivered to the holder.

In fiscal 2022, 2021 and 2020, a total of approximately 1.7 million, 2.2 million and 1.1 million RSUs were granted, respectively, which vest in equal annual installments over a three-year period subject to the participants' continued employment with the Company.

Performance Stock Units

PSUs are fair valued on the date of grant and expensed over the service period using a straight-line method as the awards cliff vest at the end of a three-year performance period. The Company also estimates the number of shares expected to vest which is based on management's determination of the probable outcome of the performance conditions, which requires considerable judgment. The Company records a cumulative adjustment in periods in which the Company's estimate of the number of shares expected to vest changes. Additionally, the Company ultimately adjusts the expense recognized to reflect the actual vested shares following the resolution of the performance conditions. The number of shares that will be issued upon vesting of PSUs can range from 0% to 200% of the target award, based on the Company's three-year total shareholder return ("TSR") as measured against the three-year TSR of the companies that comprise the Standard and Poor's 500 Index and other performance measures. The fair value of the TSR condition is determined using a Monte Carlo simulation model.

In fiscal 2022, 2021 and 2020, a total of approximately 0.2 million, 0.3 million and 1.4 million PSUs were granted, respectively, which have a three-year performance measurement period. The awards are subject to the achievement of three pre-established objective performance measures determined by the Compensation Committee. The awards issued will be settled in shares of Class A Common Stock upon vesting and are subject to the participants' continued employment with the Company. Any person who holds PSUs has no ownership interest in the shares of Class A Common Stock to which such PSUs relate until and unless shares of Class A Common Stock are delivered to the holder. All shares of Class A Common Stock underlying awards that are cancelled or forfeited become available for future grants. Certain of these awards have a graded vesting provision and the expense recognition is accelerated.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the activity related to RSUs and target PSUs granted to the Company's employees to be settled in stock (RSUs and PSUs in thousands):

			Fiscal 2022												Fiscal 2021												Fiscal 2020
			Number of shares						Weighted average grant- date fair value						Number of shares						Weighted average grant- date fair value						Number of shares									Weighted average grant- date fair value
RSUs and PSUs
Unvested units at beginning of the year			5,695						$	31.75					8,043						$	29.98					7,660									$	32.27
Granted			1,909						35.77						2,495						28.07						2,499									32.44
Vested			(2,417)						33.32						(4,654)						26.71						(1,862)									43.07
Cancelled			(135)						31.44						(189)						32.01						(254)									27.14
Unvested units at the end of the year(a)			5,052						$	32.53					5,695						$	31.75					8,043									$	29.98

(a)			The intrinsic value of unvested RSUs and target PSUs as of June 30, 2022 was approximately $165 million.

Stock Options

Stock options are awards that entitle the holder to purchase a specified number of shares of Class A Common Stock at a specified price for a specified period of time and become exercisable over time, subject to the terms and conditions of the SAP, the applicable award documents and such other terms and conditions as the Compensation Committee of the Board may establish. Stock Options granted under the SAP were fair valued using a Black-Scholes option valuation model that uses the following assumptions: (i) expected volatility was generally based on historical volatility of the Company and the Company's peer group over the expected term of the stock options; (ii) expected term of stock options granted was generally determined by analyzing historical data of the Company's peer group and represented the period of time that stock options granted were expected to be outstanding; (iii) risk-free interest rate was based on the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award; and (iv) expected dividend yield.

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

Performance-Based Stock Options

PSOs are awards that entitle the holder to purchase a specified number of shares of Class A Common Stock at a specified price for a specified period of time, contingent on the performance of the Class A Common Stock over a three-year period, subject to the terms and conditions of the SAP, the applicable award documents and such other terms and conditions as the Compensation Committee of the Board may establish. The PSOs granted under the SAP will vest in full only if the Company's Class A Common Stock exceeds the exercise price of the PSO by a certain threshold over a certain period of time during the performance period (the "market condition"). The PSOs were fair valued using a Monte Carlo simulation model that uses the following assumptions: (i) expected volatility; (ii) expected term; (iii) risk-free interest rate; and (iv) expected dividend yield. Compensation cost related to the PSO will be recognized even if the market condition is not met.

During fiscal 2022 and 2021, the Company granted approximately 4.0 million and 5.0 million PSOs, respectively. As the market condition has been met for fiscal 2022 and 2021, the PSOs will vest in full at the end of the applicable three-year performance period and have a term of seven years thereafter.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes information about the Company's stock options and PSOs granted under the SAP during fiscal 2022, 2021 and 2020 (options in thousands).

			Fiscal 2022												Fiscal 2021												Fiscal 2020
			Number of options						Weighted average exercise price						Number of options						Weighted average exercise price						Number of options						Weighted average exercise price
Outstanding at the beginning of the year			11,150						$	32.09					6,809						$	35.11					3,113						$	40.25
Granted			3,990						34.83						5,003						27.52						3,838						30.87
Exercised(a)			(542)						31.94						(386)						27.21						—						—
Cancelled			(348)						30.38						(276)						30.44						(142)						33.37
Outstanding at the end of the year(b)			14,250						$	32.90					11,150						$	32.09					6,809						$	35.11
Exercisable at the end of the year(c)			4,586						$	37.13					3,981						$	38.12					1,626						$	39.30
Weighted average grant-date fair value of options granted									$	7.48											$	7.37											$	6.87
Weighted average remaining contractual term of options outstanding at the end of the year									6.75 years												6.82 years												5.98 years
Weighted average remaining contractual term of options exercisable at the end of the year									3.89 years												4.81 years												5.50 years

(a)			During fiscal 2022 and fiscal 2021, the Company received approximately $17 million and $12 million, respectively, in cash payments from the exercise of stock options.
(b)			The intrinsic value of options outstanding as of June 30, 2022, 2021 and 2020 was $26.9 million, $65.6 million and $2.8 million, respectively.
(c)			The intrinsic value of options exercisable as of June 30, 2022, 2021 and 2020 was $3.1 million, $5.5 million and $0.7 million, respectively.

The fair value of each PSO and stock option grant is estimated on the date of grant with the following weighted average assumptions used for grants during fiscal 2022, 2021 and 2020:

			For the years ended June 30,
			2022						2021						2020
Expected volatility			35.00		%				35.00		%				26.66		%
Risk-free interest rate			1.20		%				0.66		%				1.43		%
Expected dividend yield			1.31		%				1.67		%				1.46		%
Expected term			5.29 years						5.29 years						3.83 years

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the Company's equity-based compensation:

			For the years ended June 30,
			2022						2021						2020
			(in millions)
Equity-based compensation			$	102					$	147					$	156
Intrinsic value of all settled equity-based awards			$	97					$	139					$	47
Tax benefit on settled equity-based awards			$	21					$	23					$	6

As of June 30, 2022, the Company's total estimated compensation cost, not yet recognized, related to non-vested equity awards held by the Company's employees was approximately $50 million and is expected to be recognized over a weighted average period between one and two years.

NOTE 13. RELATED PARTY TRANSACTIONS

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

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

As of June 30, 2022 and 2021, the amounts due to related parties were $81 million and $59 million, respectively, which were included in Accounts payable, accrued expenses and other current liabilities in the Balance Sheets.

NOTE 14. COMMITMENTS AND CONTINGENCIES

The Company has commitments under certain firm contractual arrangements ("firm commitments") to make future payments. These firm commitments secure the future rights to various assets and services to be used in the normal course of operations. The following table summarizes the Company's material firm commitments as of June 30, 2022:

			As of June 30, 2022
			Payments due by period
			Total						1 year						2 - 3 years						4 - 5 years						After 5 years
			(in millions)
Borrowings			$	7,250					$	—					$	1,850					$	—					$	5,400
Licensed programming			34,160						5,031						8,136						7,782						13,211
Other commitments and contractual obligations			709						305						269						119						16
Total commitments, borrowings and contractual obligations			$	42,119					$	5,336					$	10,255					$	7,901					$	18,627

Licensed programming

Under the Company's contracts with the National Football League ("NFL"), the remaining future minimum payments for program rights to broadcast certain football games are payable over the remaining term of the contract through the 2033 NFL season. The NFL has a one-time right to terminate the agreement after the 2029 NFL season.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

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

Under the Company's contracts with certain collegiate conferences, remaining future minimum payments for program rights to broadcast certain sports events are payable over the remaining terms of the contracts.

Other commitments and contractual obligations

Primarily includes obligations relating to talent costs and television rating services agreements.

Pension and other postretirement benefits

In accordance with ASC 715, "Compensation—Retirement Benefits" ("ASC 715"), the total accrued net benefit liability for pension and other postretirement benefit plans recognized as of June 30, 2022 was $461 million (See Note 15—Pension and Other Postretirement Benefits). This amount is affected by, among other items, statutory funding levels, changes in plan demographics and assumptions and investment returns on plan assets. Because of the current overall funded status of the Company's material plans, the accrued liability does not represent expected near-term liquidity needs and, accordingly, this amount is not included in the contractual obligations table.

Contingencies

FOX News

The Company's FOX News business and certain of its current and former employees have been subject to allegations of sexual harassment and discrimination on the basis of sex and race. The Company has resolved many of these claims and is contesting other claims in litigation. The Company has also received regulatory and investigative inquiries relating to these matters. To date, none of the amounts paid in settlements or reserved for pending or future claims is material, individually or in the aggregate, to the Company. The amount of additional liability, if any, that may result from these or related matters cannot be estimated at this time. However, the Company does not currently anticipate that the ultimate resolution of any such pending matters will have a material adverse effect on its business, financial condition, results of operations or cash flows.

U.K. Newspaper Matters Indemnity

In connection with the separation of 21CF and News Corporation in June 2013 (the "21CF News Corporation Separation"), 21CF agreed to indemnify News Corporation, on an after-tax basis, for payments made after the 21CF News Corporation Separation arising out of civil claims and investigations relating to phone hacking, illegal data access and inappropriate payments to public officials that occurred at subsidiaries of News Corporation before the 21CF News Corporation Separation, as well as legal and professional fees and expenses paid in connection with the related criminal matters, other than fees, expenses and costs relating to employees who are not (i) directors, officers or certain designated employees or (ii) with respect to civil matters, co-defendants with News Corporation (the "U.K. Newspaper Matters Indemnity"). In accordance with the Separation Agreement, the Company assumed certain costs and liabilities related to the U.K. Newspaper Matters Indemnity. The liability recorded in the Balance Sheets related to the indemnity was approximately $65 million and $55 million as of June 30, 2022 and 2021, respectively.

Defamation and Disparagement Claims

From time to time, the Company and its news businesses, including FOX News Media and the FOX Television Stations, and their employees are subject to lawsuits alleging defamation or disparagement. These include lawsuits filed by Smartmatic USA Corp. and certain of its affiliates (collectively, "Smartmatic") in February 2021 and Dominion Voting Systems, Inc. and certain of its affiliates (collectively, "Dominion") in March 2021. The Company believes these lawsuits, including the Smartmatic and Dominion matters, are without merit and intends to defend against them vigorously. To date, none of the amounts the Company has paid in

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

settlements of defamation or disparagement claims or reserved for pending or future claims are material, individually or in the aggregate, to the Company. The amount of additional liability, if any, that may result from these or related matters cannot be estimated at this time. However, the Company does not currently anticipate that the ultimate resolution of any such pending matters will have a material adverse effect on its business, financial condition, results of operations or cash flows.

Other

The Company establishes an accrued liability for legal claims and indemnification claims when the Company determines that a loss is both probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters. Any fees, expenses, fines, penalties, judgments or settlements which might be incurred by the Company in connection with the various proceedings could affect the Company's results of operations and financial condition. For the contingencies disclosed above for which there is at least a reasonable possibility that a loss may be incurred, other than the accrual provided, the Company was unable to estimate the amount of loss or range of loss.

The Company's operations are subject to tax primarily in various domestic jurisdictions and as a matter of course, the Company is regularly audited by federal and state tax authorities. The Company believes it has appropriately accrued for the expected outcome of all pending tax matters and does not currently anticipate that the ultimate resolution of pending tax matters will have a material adverse effect on its consolidated financial condition, future results of operations or liquidity. Each member of the 21CF consolidated group, which includes 21CF, the Company (prior to the Distribution) and 21CF's other subsidiaries, is jointly and severally liable for the U.S. federal income and, in certain jurisdictions, state tax liabilities of each other member of the consolidated group. Consequently, the Company could be liable in the event any such liability is incurred, and not discharged, by any other member of the 21CF consolidated group. The tax matters agreement entered into in connection with the Separation requires 21CF and/or Disney to indemnify the Company for any such liability. Disputes or assessments could arise during future audits by the IRS in amounts that the Company cannot quantify.

NOTE 15. PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company participates in and/or sponsors various pension, savings and postretirement benefit plans. Pension plans and postretirement benefit plans are closed to new participants with the exception of a small group covered by collective bargaining agreements. The Company has a legally enforceable obligation to contribute to some plans and is not required to contribute to others. The plans include both defined benefit pension plans and employee non-contributory and employee contributory accumulation plans covering all eligible employees. The Company makes contributions in accordance with applicable laws or contract terms.

Pension and postretirement plans that are sponsored by the Company are accounted for as defined benefit pension plans. Accordingly, the funded and unfunded position of each plan is recorded in the Balance Sheets. Actuarial gains and losses that have not yet been recognized through income are recorded in Accumulated other comprehensive loss net of taxes, and they are systematically amortized as a component of net periodic benefit cost in accordance with ASC 715. The Company's benefit obligation for the plans is calculated using assumptions which the Company reviews on a regular basis. The funded status of the plans can change from year to year, but the assets of the funded plans have been sufficient to pay all benefits that came due in each of fiscal 2022, 2021 and 2020.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company uses a June 30 measurement date for all pension and postretirement benefit plans. The following table sets forth the change in the projected benefit obligation, change in the fair value of plan assets and funded status for the Company's pension and postretirement benefit plans:

			Pension benefits												Postretirement benefits
			As of June 30,
			2022						2021						2022						2021
			(in millions)
Projected benefit obligation, beginning of the year			$	1,468					$	1,409					$	98					$	104
Service cost			38						38						1						2
Interest cost			30						30						2						2
Benefits paid			(22)						(23)						(4)						(4)
Settlements(a)			(56)						(51)						—						—
Actuarial (gains) losses(b)			(256)						65						(46)						(6)
Other			1						—						2						—
Projected benefit obligation, end of the year			1,203						1,468						53						98
Change in the fair value of plan assets for the Company's benefit plans:
Fair value of plan assets, beginning of the year			972						788						—						—
Actual return on plan assets			(152)						195						—						—
Employer contributions			59						63						4						4
Benefits paid			(22)						(23)						(4)						(4)
Settlements(a)			(56)						(51)						—						—
Fair value of plan assets, end of the year			801						972						—						—
Funded status(c)			$	(402)					$	(496)					$	(53)					$	(98)
Grantor Trust assets(c)			$	270					$	304					$	—					$	—

(a)			Represents the full settlement of former employees' deferred pension benefit obligations through lump sum payments.
(b)			Actuarial (gains) for June 30, 2022 were mainly due to a change in the discount rate assumption utilized in measuring plan obligations. Actuarial losses for June 30, 2021 were mainly due to a change in the discount rate assumption utilized in measuring plan obligations and changes to other economic assumptions and demographic experience.
(c)			The Company has established an irrevocable grantor trust (the "Grantor Trust"), administered by an independent trustee, with the intention of making cash contributions to the Trust to fund certain future pension benefit obligations of the Company. The assets in the Grantor Trust are unsecured funds of the Company and can be used to satisfy the Company's obligations in the event of bankruptcy or insolvency.

Amounts recognized in the Balance Sheets consist of:

			Pension benefits												Postretirement benefits
			As of June 30,
			2022						2021						2022						2021
			(in millions)
Pension assets			$	6					$	4					$	—					$	—
Accrued pension liabilities			(408)						(500)						(53)						(98)
Net amount recognized			$	(402)					$	(496)					$	(53)					$	(98)

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

			Pension benefits												Postretirement benefits
			As of June 30,
			2022						2021						2022						2021
			(in millions)
Actuarial losses (gains)			$	322					$	409					$	(33)					$	13
Prior service cost			3						2						—						—
Net amounts recognized			$	325					$	411					$	(33)					$	13

Accumulated pension benefit obligations as of June 30, 2022 and 2021 were $1,069 million and $1,319 million, respectively. For the funded plans, as of June 30, 2022, the projected benefit obligation exceeds the fair value of plan assets except for one plan that has assets of $81 million, a projected benefit obligation of $75 million and an accumulated benefit obligation of $75 million. Information about funded and unfunded pension plans is presented below:

			Funded plans												Unfunded plans
			As of June 30,
			2022						2021						2022									2021
			(in millions)
Projected benefit obligation			$	930					$	1,150					$	273								$	318
Accumulated benefit obligation			801						1,010						268									309
Fair value of plan assets			801						972						—						(a)			—			(a)

(a)			The fair value of the assets in the Grantor Trust as of June 30, 2022 and 2021 was $270 million and $304 million, respectively.

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

			Funded plans												Unfunded plans
			As of June 30,
			2022						2021						2022									2021
			(in millions)
Projected benefit obligation			$	807					$	990					$	273								$	318
Accumulated benefit obligation			683						854						268									309
Fair value of plan assets			675						811						—						(a)			—			(a)

(a)			The fair value of the assets in the Grantor Trust as of June 30, 2022 and 2021 was $270 million and $304 million, respectively.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The components of net periodic benefit costs were as follows:

			Pension benefits																		Postretirement benefits
			For the years ended June 30,
			2022						2021						2020						2022						2021						2020
			(in millions)
Service cost			$	38					$	38					$	35					$	1					$	2					$	2
Interest cost			30						30						39						2						2						3
Expected return on plan assets			(50)						(50)						(55)						—						—						—
Amortization of deferred losses			31						44						28						1						1						1
Other			3						2						1						—						—						—
Net periodic benefit costs			$	52					$	64					$	48					$	4					$	5					$	6

The components of net periodic benefit costs other than the service cost component are included in Other, net in the Statements of Operations.

			Pension benefits																		Postretirement benefits
			For the years ended June 30,
			2022						2021						2020						2022						2021						2020
Additional information
Weighted-average assumptions used to determine benefit obligations
Discount rate			4.8		%				2.7		%				2.8		%				4.8		%				2.7		%				2.8		%
Weighted-average assumptions used to determine net periodic benefit costs
Discount rate for service cost			2.8		%				2.9		%				3.7		%				2.9		%				3.0		%				3.8		%
Discount rate for interest cost			2.1		%				2.2		%				3.2		%				2.2		%				2.2		%				3.2		%
Expected return on plan assets			5.1		%				6.5		%				7.0		%				N/A						N/A						N/A

N/A – not applicable.

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

The following assumed health care cost trend rates as of June 30 were also used in accounting for postretirement benefits:

			Postretirement benefits
			Fiscal 2022						Fiscal 2021
Health care cost trend rate			5.8		%				6.0		%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)			4.0		%				4.0		%
Year that the rate reaches the ultimate trend rate			2047						2047

The following table sets forth the estimated benefit payments and estimated settlements for the next five fiscal years and in aggregate for the five fiscal years thereafter. These payments are estimated based on the

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

			Expected benefit payments
			Pension benefits						Postretirement benefits
			(in millions)
Fiscal year
2023			$	61					$	4
2024			64						4
2025			65						4
2026			65						4
2027			69						4
2028-2032			395						19

The above table presents expected benefit payments for the postretirement benefits net of a nominal amount of U.S. Medicare subsidy receipts per year.

Plan Assets and Grantor Trust

The following tables present Plan assets for the Company's funded pension plans and Grantor Trust assets to fund certain future unfunded pension benefit obligations of the Company. The assets are classified by level within the fair value hierarchy, as described in Note 6—Fair Value, as of June 30, 2022 and 2021:

			As of June 30, 2022
									Fair value measurements at reporting date using												Assets measured
			Total						Level 1						Level 2						at NAV**(a)**
			(in millions)
PENSION PLAN ASSETS
Pooled funds(b)
Money market funds			$	20					$	20					$	—					$	—
Domestic equity funds			82						82						—						—
Domestic fixed income funds(c)			381						381						—						—
International equity funds			133						133						—						—
Balanced funds			78						78						—						—
U.S. common stocks(d)			43						43						—						—
Partnership interests			33						—						—						33
Exchange traded equity funds(d)			32						32						—						—
Other(e)			(1)						(1)						—						—
Total fair value of plan assets			$	801					$	768					$	—					$	33
GRANTOR TRUST ASSETS
Balanced funds(b)			$	234					$	234					$	—					$	—
Partnership interests			16						—						—						16
Other(e)			20						20						—						—
Total fair value of Grantor Trust assets			$	270					$	254					$	—					$	16

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

			As of June 30, 2021
									Fair value measurements at reporting date using												Assets measured
			Total						Level 1						Level 2						at NAV**(a)**
			(in millions)
PENSION PLAN ASSETS
Pooled funds(b)
Money market funds			$	22					$	22					$	—					$	—
Domestic equity funds			67						67						—						—
Domestic fixed income funds(c)			355						355						—						—
International equity funds			193						193						—						—
International fixed income funds(c)			28						28						—						—
Balanced funds			93						93						—						—
U.S. common stocks(d)			136						136						—						—
Partnership interests			10						—						—						10
Exchange traded funds(d)			67						67						—						—
Other(e)			1						—						1						—
Total fair value of plan assets			$	972					$	961					$	1					$	10
GRANTOR TRUST ASSETS
Balanced funds(b)			$	267					$	267					$	—					$	—
Partnership interests			17						—						—						17
Other(e)			20						20						—						—
Total fair value of Grantor Trust assets			$	304					$	287					$	—					$	17

(a)			Investments that are measured at fair value using the net asset value ("NAV") per share (or its equivalent) as a practical expedient are excluded from the fair value hierarchy disclosure. These investments have monthly liquidity.
(b)			Pooled funds that have a readily determinable fair value are valued at the regularly published NAV.
(c)			Domestic fixed income funds and international fixed income funds consist primarily of investment grade securities.
(d)			Exchange traded funds and common stock investments that are publicly traded are valued at the closing price reported on active markets in which the securities are traded.
(e)			Includes cash and cash equivalents, plan receivables and payables and certain other fixed income investments.

The investment objective for the funded pension plans is to grow assets to decrease the deficit and protect improvements in funded status. The asset allocation strategy will change over time by shifting assets from return seeking assets to liability hedging assets upon the achievement of certain funding milestones. The target asset allocation on June 30, 2022 is 50% return seeking assets and 50% liability hedging assets which is consistent with the actual asset allocation as of June 30, 2022. Return seeking assets are diversified across multiple asset classes and liability hedging assets are managed to correlate highly with the pension liabilities to reduce interest rate risk. Assets are generally managed by external investment managers. The expected long-term rate of return on asset assumption is determined using the current target asset allocation and applying expected future returns for the various asset classes and correlations amongst the asset classes.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The funded plans weighted-average asset allocation, by asset category, are as follows:

			Pension benefits
			As of June 30,
			2022						2021
Asset Category
Equity investments			37		%				48		%
Fixed income investments, including cash			52						42
Other			11						10
Total			100		%				100		%

Required pension plan contributions for the next fiscal year are not expected to be material; however, actual contributions may be affected by pension asset and liability valuation changes during the year. The Company will continue to make voluntary contributions as necessary to improve funded status.

Defined Contribution Plans

The Company has defined contribution plans for the benefit of substantially all employees meeting certain eligibility requirements. Employer contributions to such plans were $58 million, $49 million and $44 million for fiscal 2022, 2021 and 2020, respectively.

NOTE 16. INCOME TAXES

Income before income tax expense was attributable primarily to the U.S. jurisdiction. Significant components of the Company's provision for income taxes were as follows:

			For the years ended June 30,
			2022						2021						2020
			(in millions)
U.S.
Federal			$	88					$	181					$	110
State, local and other			31						2						9
Total current			119						183						119
Deferred			342						534						283
Provision for income taxes			$	461					$	717					$	402

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

			For the years ended June 30,
			2022						2021						2020
U.S. federal income tax rate			21		%				21		%				21		%
State and local taxes			4						4						4
Nondeductible compensation			1						1						2
Valuation allowance movements			—						—						1
Adjustments for tax matters, net			—						(1)						(1)
Return to accrual(a)			2						—						—
Other			(1)						—						—
Effective tax rate			27		%				25		%				27		%

(a)			Primarily attributable to a remeasurement of the Company's net deferred tax assets associated with changes in the mix of jurisdictional earnings.

The following is a summary of the components of the deferred tax accounts:

			As of June 30,
			2022						2021
			(in millions)
Deferred tax assets
Basis difference(a)			$	3,371					$	3,676
Operating lease liabilities			123						121
Pension benefit obligations			34						64
Equity-based compensation			30						33
Accrued liabilities			—						37
Net operating loss carryforwards			31						18
Other			104						117
Total deferred tax assets			3,693						4,066
Deferred tax liabilities
Operating lease ROU assets			(116)						(114)
Accrued liabilities			(2)						—
Sports rights contracts			(108)						(108)
Total deferred tax liabilities			(226)						(222)
Net deferred tax asset before valuation allowance			3,467						3,844
Less: valuation allowance			(34)						(24)
Total net deferred tax assets(b)			$	3,433					$	3,820

(a)			As a result of the Separation and the Distribution, which was a taxable transaction for which the estimated tax liability of $5.8 billion was included in the Transaction Tax paid by the Company, FOX obtained a tax basis in its assets equal to their respective fair market values. This amount includes the additional estimated deferred tax asset recorded as a result of the increased tax basis (See Note 1—Description of Business and Basis of Presentation under the heading "Basis of Presentation").
(b)			Includes a $7 million and $2 million deferred tax liability recorded in Other liabilities on the Consolidated Balance Sheet as of June 30, 2022 and 2021, respectively.

As of June 30, 2022, the Company had $31 million of tax attributes from net operating loss carryforwards available to offset future taxable income. A substantial portion of these losses can be carried forward indefinitely.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

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

			For the years ended June 30,
			2022						2021						2020
			(in millions)
Balance, beginning of year			$	30					$	73					$	94
Additions for prior year tax positions			1						—						1
Additions for current year tax positions			2						2						2
Reduction for prior year tax positions			(5)			(a)			(45)			(a)			(24)			(a)
Balance, end of year			$	28					$	30					$	73

(a)			The reduction for prior year tax positions in fiscal 2022 of $5 million is primarily from the expiration of statutes of limitations. The reduction for prior year tax positions in fiscal 2021 includes $31 million from the settlement of audits and $14 million from the expiration of statutes of limitations. The reduction for prior year tax positions in fiscal 2020 includes $21 million from the expiration of statutes of limitations.

The Company recognizes interest and penalty charges related to uncertain tax positions as income tax (expense) benefit. The Company recorded liabilities for accrued interest of $11 million as of June 30, 2022 and 2021 and the amounts of interest income/expense recorded in each of fiscal 2022, 2021 and 2020 were not material.

The Company is subject to tax primarily in various domestic jurisdictions and, as a matter of ordinary course, the Company is regularly audited by federal and state tax authorities. The Company believes it has appropriately accrued for the expected outcome of all pending tax matters and does not anticipate that the resolution of these pending tax matters will have a material adverse effect on its consolidated financial condition, future results of operations or liquidity. The net decrease to the balance of uncertain tax positions in fiscal 2022 is primarily attributable to state matters. The Company does not expect significant changes to these positions over the next 12 months. As of June 30, 2022 and 2021, $22 million and $24 million, respectively, would affect the Company's effective income tax rate if the Company's position with respect to the uncertainties is sustained.

NOTE 17. SEGMENT INFORMATION

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

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

• Television**, which produces, acquires, markets and distributes programming through the FOX broadcast network, advertising supported video-on-demand ("AVOD") service TUBI, 29 full power broadcast television stations, including 11 duopolies, and other digital platforms, primarily in the U.S. Eighteen of the broadcast television stations are affiliated with the FOX Network, 10 are affiliated with MyNetworkTV and one is an independent station.

• Other, Corporate and Eliminations**, which principally consists of the FOX Studio Lot, Credible, corporate overhead costs and intracompany eliminations. The FOX Studio Lot, located in Los Angeles, California, provides television and film production services along with office space, studio operation services and includes all operations of the facility. Credible is a U.S. consumer finance marketplace.

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company's operating segments have been determined in accordance with the Company's internal management structure, which is organized based on operating activities. The Company evaluates performance based upon several factors, of which the primary financial measure is segment operating income before depreciation and amortization, or Segment EBITDA. Due to the integrated nature of these operating segments, estimates and judgments are made in allocating certain assets, revenues and expenses.

Segment EBITDA is defined as Revenues less Operating expenses and Selling, general and administrative expenses. Segment EBITDA does not include: Amortization of cable distribution investments, Depreciation and amortization, Impairment and restructuring charges, Interest expense, net, Other, net and Income tax expense. 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 to the Company's businesses.

The following tables set forth the Company's Revenues and Segment EBITDA for fiscal 2022, 2021 and 2020:

			For the years ended June 30,
			2022						2021						2020
			(in millions)
Revenues
Cable Network Programming			$	6,097					$	5,683					$	5,492
Television			7,685						7,048						6,661
Other, Corporate and Eliminations			192						178						150
Total revenues			$	13,974					$	12,909					$	12,303
Segment EBITDA
Cable Network Programming			$	2,934					$	2,876					$	2,706
Television			347						555						430
Other, Corporate and Eliminations			(326)						(344)						(357)
Amortization of cable distribution investments			(18)						(22)						(24)
Depreciation and amortization			(363)						(300)						(258)
Impairment and restructuring charges			—						(35)						(451)
Interest expense, net			(371)						(391)						(334)
Other, net			(509)						579						(248)
Income before income tax expense			1,694						2,918						1,464
Income tax expense			(461)						(717)						(402)
Net income			1,233						2,201						1,062
Less: Net income attributable to noncontrolling interests			(28)						(51)						(63)
Net income attributable to Fox Corporation stockholders			$	1,205					$	2,150					$	999

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Revenues by Segment by Component

			For the years ended June 30,
			2022						2021						2020
			(in millions)
Cable Network Programming
Affiliate fee			$	4,205					$	3,995					$	3,870
Advertising			1,462						1,337						1,164
Other			430						351						458
Total Cable Network Programming revenues			6,097						5,683						5,492
Television
Advertising			4,440						4,094						4,169
Affiliate fee			2,673						2,440						2,038
Other			572						514						454
Total Television revenues			7,685						7,048						6,661
Other, Corporate and Eliminations			192						178						150
Total revenues			$	13,974					$	12,909					$	12,303

For fiscal 2022, 2021 and 2020, the Company had no individual customers that accounted for 10% or more of Revenues.

			For the years ended June 30,
			2022						2021						2020
			(in millions)
Depreciation and amortization
Cable Network Programming			$	60					$	55					$	59
Television			112						104						73
Other, Corporate and Eliminations			191						141						126
Total depreciation and amortization			$	363					$	300					$	258

			For the years ended June 30,
			2022						2021						2020
			(in millions)
Capital expenditures
Cable Network Programming			$	67					$	53					$	43
Television			104						100						72
Other, Corporate and Eliminations			136						331						244
Total capital expenditures			$	307					$	484					$	359

			As of June 30,
			2022						2021
			(in millions)
Assets
Cable Network Programming			$	2,682					$	2,577
Television			7,915						7,305
Other, Corporate and Eliminations			11,010						12,145
Investments			578						899
Total assets			$	22,185					$	22,926

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

			As of June 30,
			2022						2021
			(in millions)
Goodwill and intangible assets, net
Cable Network Programming			$	1,322					$	1,324
Television			4,671						4,582
Other, Corporate and Eliminations			718						683
Total goodwill and intangible assets, net			$	6,711					$	6,589

NOTE 18. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:

			For the years ended June 30,
			2022						2021						2020
			(in millions, except per share amounts)
Net income attributable to Fox Corporation stockholders			$	1,205					$	2,150					$	999
Weighted average shares - basic			566						591						613
Shares issuable under equity-based compensation plans(a)			4						4						3
Weighted average shares - diluted			570						595						616
Net income attributable to Fox Corporation stockholders per share - basic			$	2.13					$	3.64					$	1.63
Net income attributable to Fox Corporation stockholders per share - diluted			$	2.11					$	3.61					$	1.62

(a)			Weighted average common shares include the incremental shares that would be issued upon the assumed vesting of RSUs, PSUs and stock options (including PSOs) if the effect is dilutive (See Note 12—Equity-Based Compensation).

NOTE 19. VALUATION AND QUALIFYING ACCOUNTS

			Balance as of beginning of year						Additions						Utilization						Other						Balance as of end of year
			(in millions)
FISCAL 2022
Allowances for doubtful accounts			$	(77)					$	(2)					$	19					$	6					$	(54)
Deferred tax valuation allowance			(24)						(23)						13						—						(34)
FISCAL 2021
Allowances for doubtful accounts			$	(93)					$	(4)					$	11					$	9					$	(77)
Deferred tax valuation allowance			(20)						(9)						5						—						(24)
FISCAL 2020
Allowances for doubtful accounts			$	(35)					$	(63)					$	5					$	—					$	(93)
Deferred tax valuation allowance			(6)						(19)						5						—						(20)

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20. ADDITIONAL FINANCIAL INFORMATION

Interest expense, net

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

			For the years ended June 30,
			2022						2021						2020
			(in millions)
Interest expense			$	(377)					$	(395)					$	(369)
Interest income			6						4						35
Interest expense, net			$	(371)					$	(391)					$	(334)

Other, net

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

			For the years ended June 30,
			2022						2021						2020
			(in millions)
Net (losses) gains on investments in equity securities(a)			$	(386)					$	258					$	14
U.K. Newspaper Matters Indemnity(b)			(81)						(64)						(90)
Transaction costs(c)			(69)						421						(125)
Other			27						(36)						(47)
Total other, net			$	(509)					$	579					$	(248)

(a)			Net (losses) gains on investments in equity securities for fiscal 2022 and 2021 included the (losses) gains related to the changes in fair value of the Company's investment in Flutter (See Note 6—Fair Value). Net (losses) gains on investments in equity securities for fiscal 2020 included the loss related to the change in fair value of the Company's investment in Roku, which was sold in March 2020 (See Note 3—Acquisitions, Disposals and Other Transactions under the heading "Roku").
(b)			See Note 14—Commitments and Contingencies under the heading "U.K. Newspaper Matters Indemnity."
(c)			The transaction costs for fiscal 2021 are primarily related to the partial settlement from Disney of $462 million related to the reimbursement of the Company's prepayment of its share of the Divestiture Tax (See Note 1—Description of Business and Basis of Presentation). The transaction costs for fiscal 2020 are primarily related to the Separation and the Distribution, which includes retention related cost, and costs associated with the profits participants litigation (See Note 14—Commitments and Contingencies under the heading "Profits Participants Litigation" to the financial statements included within the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2021 as filed with the SEC on August 10, 2021).

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Other Non-Current Assets

The following table sets forth the components of Other non-current assets included in the Balance Sheets:

			As of June 30,
			2022						2021
			(in millions)
Investments(a)			$	578					$	899
Inventories, net			521						199
Operating lease ROU assets			477						469
Grantor Trust			270						304
Other			225						187
Total other non-current assets			$	2,071					$	2,058

(a)			Includes investments accounted for at fair value on a recurring basis of $435 million and $788 million as of June 30, 2022 and 2021, respectively (See Note 6—Fair Value).

Accounts Payable, Accrued Expenses and Other Current Liabilities

The following table sets forth the components of Accounts payable, accrued expenses and other current liabilities included in the Balance Sheets:

			As of June 30,
			2022						2021
			(in millions)
Accrued expenses			$	992					$	1,077
Programming payable			686						659
Deferred revenue			209						196
Operating lease liabilities			107						92
Other current liabilities			302						229
Total accounts payable, accrued expenses and other current liabilities			$	2,296					$	2,253

Other Liabilities

The following table sets forth the components of Other liabilities included in the Balance Sheets:

			As of June 30,
			2022						2021
			(in millions)
Accrued non-current pension/postretirement liabilities			$	447					$	586
Non-current operating lease liabilities			405						409
Other non-current liabilities			268						341
Total other liabilities			$	1,120					$	1,336

Future Performance Obligations

As of June 30, 2022, approximately $4.5 billion of revenues are expected to be recognized primarily over the next one to three years. The Company's most significant remaining performance obligations relate to affiliate contracts, sports advertising contracts and content licensing contracts with fixed fees. The amount disclosed does not include (i) revenues related to performance obligations that are part of a contract whose original expected duration is one year or less, (ii) revenues that are in the form of sales- or usage-based royalties and

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

Supplemental Information

			For the years ended June 30,
			2022						2021						2020
			(in millions)
Supplemental cash flows information
Cash paid for interest			$	(383)					$	(390)					$	(355)
Cash paid for income taxes			$	(209)					$	(225)					$	(88)
Supplemental information on acquisitions
Fair value of assets acquired, excluding cash			$	348					$	49					$	1,254
Cash acquired			9						—						41
Liabilities assumed			(47)						2						(84)
Redeemable noncontrolling interests issued			(5)						—						(109)
Cash paid			(252)						(51)						(1,102)
Fair value of equity instruments issued as consideration to third parties(a)			53						—						—
Issuance of subsidiary common units			(53)						—						—
Fair value of equity instruments consideration			$	—					$	—					$	—

(a)			Includes Redeemable noncontrolling interests.

NOTE 21. SUBSEQUENT EVENTS

Subsequent to June 30, 2022, the Company increased its semi-annual dividend and declared a semi-annual dividend of $0.25 per share on both the Class A Common Stock and the Class B Common Stock. The dividend declared is payable on September 28, 2022 with a record date for determining dividend entitlements of August 31, 2022.

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