Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Readers should carefully review this document and the other documents filed by Fox Corporation (“FOX” or the “Company”) with the Securities and Exchange Commission (the “SEC”). This section should be read together with the unaudited interim consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the Annual Report on Form 10-K for the fiscal year ended June 30, 2021 as filed with the SEC on August 10, 2021 (the “2021 Form 10-K”). The unaudited consolidated financial statements are referred to as the “Financial Statements” herein.

INTRODUCTION

Management’s discussion and analysis of financial condition and results of operations is intended to help provide an understanding of the Company’s financial condition, changes in financial condition and results of operations. This discussion is organized as follows:

• Overview of the Company’s Business**—This section provides a general description of the Company’s businesses, as well as developments that occurred during the three and nine months ended March 31, 2022 and 2021 that the Company believes are important in understanding its results of operations and financial condition or to disclose known trends.

• Results of Operations**—This section provides an analysis of the Company’s results of operations for the three and nine months ended March 31, 2022 and 2021. This analysis is presented on both a consolidated and a segment basis. In addition, a brief description is provided of significant transactions and events that impact the comparability of the results being analyzed.

• Liquidity and Capital Resource****s**—This section provides an analysis of the Company’s cash flows for the nine months ended March 31, 2022 and 2021, as well as a discussion of the Company’s outstanding debt and commitments, both firm and contingent, that existed as of March 31, 2022. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to fund the Company’s future commitments and obligations, as well as a discussion of other financing arrangements.

• Caution Concerning Forward-Looking Statements**—This section provides a description of the use of forward-looking information appearing in this Quarterly Report on Form 10-Q, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations. Such information is based on management’s current expectations about future events which are subject to change and to inherent risks and uncertainties. Refer to Part I., Item 1A. “Risk Factors” in the 2021 Form 10-K and Part II., Item 1A. “Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2021, as filed with the SEC on November 3, 2021 (the “Q1 2022 Form 10-Q”), for a discussion of the risk factors applicable to the Company.

OVERVIEW OF THE COMPANY’S BUSINESS

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

• Cable Network Programming**, which principally consists of the production and licensing of news and sports content distributed primarily through traditional cable television systems, direct broadcast satellite operators and telecommunication companies (“traditional MVPDs”) and online multi-channel video programming distributors (“digital MVPDs”), primarily in the U.S.

• Television**, which principally consists of the production, acquisition, marketing and distribution of broadcast network programming and free advertising-supported video-on-demand (“AVOD”) services under the FOX and Tubi brands, respectively, and the operation of 29 full power broadcast television stations, including 11 duopolies, in the U.S. Of these stations, 18 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 Labs Inc. (“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.

RESULTS OF OPERATIONS

Results of Operations—For the three and nine months ended March 31, 2022 versus the three and nine months ended March 31, 2021.

The following table sets forth the Company’s operating results for the three and nine months ended March 31, 2022**,** as compared to the three and nine months ended March 31, 2021:

			For the three months ended March 31,																								For the nine months ended March 31,
			2022						2021						Change						% Change						2022						2021						Change						% Change
(in millions, except %)															Better/(Worse)																								Better/(Worse)
Revenues
Affiliate fee			$	1,797					$	1,719					$	78					5		%				$	5,152					$	4,770					$	382					8		%
Advertising			1,307						1,198						109						9		%				4,845						4,449						396						9		%
Other			351						298						53						18		%				944						800						144						18		%
Total revenues			3,455						3,215						240						7		%				10,941						10,019						922						9		%
Operating expenses			(2,164)						(1,885)						(279)						(15)		%				(7,402)						(6,399)						(1,003)						(16)		%
Selling, general and administrative			(485)						(437)						(48)						(11)		%				(1,368)						(1,267)						(101)						(8)		%
Depreciation and amortization			(92)						(78)						(14)						(18)		%				(264)						(216)						(48)						(22)		%
Impairment and restructuring charges			—						—						—						—		%				—						(35)						35						100		%
Interest expense, net			(91)						(98)						7						7		%				(285)						(293)						8						3		%
Other, net			(233)						61						(294)						**						(375)						752						(1,127)						**
Income before income tax expense			390						778						(388)						(50)		%				1,247						2,561						(1,314)						(51)		%
Income tax expense			(100)						(196)						96						49		%				(322)						(632)						310						49		%
Net income			290						582						(292)						(50)		%				925						1,929						(1,004)						(52)		%
Less: Net income attributable to noncontrolling interests			(7)						(15)						8						53		%				(26)						(32)						6						19		%
Net income attributable to Fox Corporation stockholders			$	283					$	567					$	(284)					(50)		%				$	899					$	1,897					$	(998)					(53)		%

** not meaningful

Overview

For the three months ended March 31, 2022 and 2021

The Company’s revenues increased 7% for the three months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, due to higher affiliate fee, advertising and other revenues. The increase in affiliate fee revenue was primarily due to higher average rates per subscriber, led by contractual rate increases on existing affiliate agreements, partially offset by a lower average number of subscribers. The increase in advertising revenue was primarily attributable to higher pricing and ratings at FOX News Media, growth at Tubi, and higher sports ratings and pricing partially offset by lower entertainment ratings at the FOX Network. The increase in other revenues was primarily attributable to higher sports sublicensing revenues due to the impact of coronavirus disease 2019 ("COVID-19") in the prior year quarter, the current year quarter impact of acquisitions of entertainment production companies, and higher FOX Nation subscription revenues, partially offset by the

impact of the divestiture of the Company's sports marketing businesses (See Note 3—Acquisitions, Disposals and Other Transactions in the 2021 Form 10-K under the heading “Acquisitions and Disposals").

Operating expenses increased 15% for the three months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, primarily due to higher sports programming rights amortization and production costs primarily related to National Football League (“NFL”) and college basketball content, which was impacted by COVID-19 in the prior year quarter. Also contributing to this increase was increased digital investment at Tubi and FOX News Media, and higher entertainment programming rights amortization principally due to the recognition of an approximately $30 million write-down of unamortized production costs related to a television series as a result of COVID-19 related costs and production delays.

For the nine months ended March 31, 2022 and 2021

The Company’s revenues increased 9% for the nine months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, due to higher affiliate fee, advertising and other revenues. The increase in affiliate fee revenue was primarily due to higher average rates per subscriber, led by contractual rate increases on existing affiliate agreements and from affiliate agreement renewals, partially offset by a lower average number of subscribers. Also impacting the increase was the absence of prior year affiliate fee credits as a result of the COVID-19 related under-delivery of college football games. The increase in advertising revenue was primarily due to higher pricing at the FOX Network and FOX News Media, growth at Tubi, and a higher number of live events at the national sports networks due to the impact of COVID-19 in the prior year period. Partially offsetting this increase was lower political advertising revenue at the FOX Television Stations due to the absence of the prior year presidential and congressional elections. The increase in other revenues was primarily due to higher sports sublicensing revenues which were impacted by COVID-19 in the prior year period, the current year period impact of acquisitions of entertainment production companies, and higher FOX Nation subscription revenues, partially offset by the impact of the divestiture of the Company's sports marketing businesses.

Operating expenses increased 16% for the nine months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, primarily due to higher sports programming rights amortization and production costs related to NFL, Major League Baseball (“MLB”) and college football content including a higher number of live events due to the impact of COVID-19 in the prior year period, increased digital investment at Tubi, and higher entertainment programming rights amortization and marketing costs due to more hours of original scripted programming as compared to the prior year period, which was impacted by COVID-19. This increase was partially offset by the absence of events that were shifted into the prior year period as a result of COVID-19 rescheduling, including National Association of Stock Car Auto Racing (“NASCAR”) Cup Series races and additional MLB regular season games, and the impact of the divestiture of the Company's sports marketing businesses.

Selling, general and administrative—Selling, general and administrative expenses increased 11% and 8% for the three and nine months ended March 31, 2022, respectively, as compared to the corresponding periods of fiscal 2021, primarily due to higher technology costs related to the Company's digital initiatives and higher marketing expenses at FOX News Media, partially offset by the impact of the divestiture of the Company's sports marketing businesses.

Depreciation and amortization—Depreciation and amortization expense increased 18% and 22% for the three and nine months ended March 31, 2022, respectively, as compared to the corresponding periods of fiscal 2021, primarily due to assets placed into service during the fourth quarter of fiscal 2021 for the Company's standalone broadcast technical facilities.

Other, net—See Note 11—Additional Financial Information to the accompanying Financial Statements under the heading “Other, net.”

Income tax expense—The Company's tax provision and related effective tax rate of 26% for the three and nine months ended March 31, 2022 was higher than the statutory rate of 21% primarily due to state taxes.

The Company’s tax provision and related effective tax rate of 25% for the three and nine months ended March 31, 2021 was higher than the statutory rate of 21% primarily due to state taxes and, for the nine months ended March 31, 2021, was partially offset by a benefit from the reduction of uncertain tax positions for state tax audits.

Net income—Net income decreased 50% and 52% for the three and nine months ended March 31, 2022, respectively, as compared to the corresponding periods of fiscal 2021, primarily due to the change in fair value

of the Company’s investment in Flutter Entertainment plc and lower Segment EBITDA (as defined below) at the Television segment. Also contributing to the decrease for the nine months ended March 31, 2022 was the absence of the reimbursement from The Walt Disney Company ("Disney") of $462 million related to the substantial settlement of the Company’s prepayment of its share of the Divestiture Tax, which occurred during the nine months ended March 31, 2021 (See Note 11—Additional Financial Information to the accompanying Financial Statements under the heading “Other, net”).

Segment Analysis

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 the three and nine months ended March 31, 2022, as compared to the three and nine months ended March 31, 2021:

			For the three months ended March 31,																								For the nine months ended March 31,
			2022						2021						Change						% Change						2022						2021						Change						% Change
(in millions, except %)															Better/(Worse)																								Better/(Worse)
Revenues
Cable Network Programming			$	1,583					$	1,471					$	112					8		%				$	4,637					$	4,284					$	353					8		%
Television			1,820						1,695						125						7		%				6,160						5,601						559						10		%
Other, Corporate and Eliminations			52						49						3						6		%				144						134						10						7		%
Total revenues			$	3,455					$	3,215					$	240					7		%				$	10,941					$	10,019					$	922					9		%

			For the three months ended March 31,																								For the nine months ended March 31,
			2022						2021						Change						% Change						2022						2021						Change						% Change
(in millions, except %)															Better/(Worse)																								Better/(Worse)
Segment EBITDA
Cable Network Programming			$	864					$	850					$	14					2		%				$	2,306					$	2,202					$	104					5		%
Television			35						135						(100)						(74)		%				121						407						(286)						(70)		%
Other, Corporate and Eliminations			(88)						(86)						(2)						(2)		%				(242)						(239)						(3)						(1)		%
Adjusted EBITDA(a)			$	811					$	899					$	(88)					(10)		%				$	2,185					$	2,370					$	(185)					(8)		%

(a)			For a discussion of Adjusted EBITDA and a reconciliation of Net income to Adjusted EBITDA, see “Non-GAAP Financial Measures” below.

Cable Network Programming (43% of the Company’s revenues for the first nine months of fiscal 2022 and 2021)

			For the three months ended March 31,																								For the nine months ended March 31,
			2022						2021						Change						% Change						2022						2021						Change						% Change
(in millions, except %)															Better/(Worse)																								Better/(Worse)
Revenues
Affiliate fee			$	1,097					$	1,068					$	29					3		%				$	3,162					$	2,969					$	193					7		%
Advertising			339						283						56						20		%				1,104						1,023						81						8		%
Other			147						120						27						23		%				371						292						79						27		%
Total revenues			1,583						1,471						112						8		%				4,637						4,284						353						8		%
Operating expenses			(580)						(505)						(75)						(15)		%				(1,940)						(1,725)						(215)						(12)		%
Selling, general and administrative			(144)						(122)						(22)						(18)		%				(405)						(374)						(31)						(8)		%
Amortization of cable distribution investments			5						6						(1)						(17)		%				14						17						(3)						(18)		%
Segment EBITDA			$	864					$	850					$	14					2		%				$	2,306					$	2,202					$	104					5		%

For the three months ended March 31, 2022 and 2021

Revenues at the Cable Network Programming segment increased 8% for the three months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, due to higher affiliate fee, advertising and other revenues. The increase in affiliate fee revenue was primarily due to contractual rate increases on existing affiliate agreements, partially offset by a lower average number of subscribers. The decrease in the average number of subscribers was due to a reduction in traditional MVPD subscribers, partially offset by an increase in digital MVPD subscribers. The increase in advertising revenue was primarily due to higher pricing and ratings, partially offset by the effect of higher preemptions associated with breaking news coverage at FOX News Media. The increase in other revenues was primarily due to higher sports sublicensing revenues, which were impacted by COVID-19 in the prior year quarter, and higher FOX Nation subscription revenues, partially offset by the impact of the divestiture of the Company's sports marketing businesses.

Cable Network Programming Segment EBITDA increased 2% for the three months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, primarily due to the revenue increases noted above, partially offset by higher expenses. Operating expenses increased primarily due to higher sports programming rights amortization and production costs principally related to college basketball content, which was impacted by COVID-19 in the prior year quarter, and higher investment in digital growth initiatives at FOX News Media. Selling, general and administrative expenses increased principally due to higher marketing

expenses at FOX News Media, partially offset by the impact of the divestiture of the Company's sports marketing businesses.

For the nine months ended March 31, 2022 and 2021

Revenues at the Cable Network Programming segment increased 8% for the nine months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, due to higher affiliate fee, advertising and other revenues. The increase in affiliate fee revenue was primarily due to contractual rate increases on existing affiliate agreements and from affiliate agreement renewals, partially offset by a lower average number of subscribers. Also impacting the increase was the absence of prior year affiliate fee credits as a result of the COVID-19 related under-delivery of college football games. The decrease in the average number of subscribers was due to a reduction in traditional MVPD subscribers, partially offset by an increase in digital MVPD subscribers. The increase in advertising revenue was primarily due to the impact of a higher number of live events at the national sports networks, primarily the result of additional MLB postseason games and the return of a full college football schedule that was shortened due to COVID-19 in the prior year period. Also contributing to this increase was higher MLB and FOX News Media pricing, partially offset by lower political advertising revenue due to the absence of the prior year presidential elections. The increase in other revenues was primarily due to higher sports sublicensing revenues, which were impacted by COVID-19 in the prior year, and higher FOX Nation subscription revenues, partially offset by the impact of the divestiture of the Company's sports marketing businesses.

Cable Network Programming Segment EBITDA increased 5% for the nine months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, primarily due to the revenue increases noted above, partially offset by higher expenses. Operating expenses increased due to higher sports programming rights amortization and production costs primarily related to the return of a full college football and basketball season as a result of the impact of COVID-19 in the prior year period and higher investment in digital growth initiatives at FOX News Media. This increase was partially offset by the absence of events in the current year period that were shifted into the prior year period as a result of COVID-19 rescheduling, including NASCAR Cup Series races and additional MLB regular season games, and the impact of the divestiture of the Company's sports marketing businesses. Selling, general and administrative expenses increased principally due to higher marketing expenses at FOX News Media, partially offset by the impact of the divestiture of the Company's sports marketing businesses.

Television (56% of the Company’s revenues for the first nine months of fiscal 2022 and 2021)

			For the three months ended March 31,																								For the nine months ended March 31,
			2022						2021						Change						% Change						2022						2021						Change						% Change
(in millions, except %)															Better/(Worse)																								Better/(Worse)
Revenues
Advertising			$	969					$	915					$	54					6		%				$	3,742					$	3,426					$	316					9		%
Affiliate fee			700						651						49						8		%				1,990						1,801						189						10		%
Other			151						129						22						17		%				428						374						54						14		%
Total revenues			1,820						1,695						125						7		%				6,160						5,601						559						10		%
Operating expenses			(1,557)						(1,359)						(198)						(15)		%				(5,392)						(4,613)						(779)						(17)		%
Selling, general and administrative			(228)						(201)						(27)						(13)		%				(647)						(581)						(66)						(11)		%
Segment EBITDA			$	35					$	135					$	(100)					(74)		%				$	121					$	407					$	(286)					(70)		%

For the three months ended March 31, 2022 and 2021

Revenues at the Television segment increased 7% for the three months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, due to higher advertising, affiliate fee and other revenues. The increase in advertising revenue was primarily attributable to growth at Tubi, one additional week of NFL regular season games as a result of the NFL schedule expansion, and higher sports ratings and pricing at the FOX Network, partially offset by the absence of the rotating NFL Divisional playoff game in the current year quarter and lower entertainment ratings at the FOX Network. The increase in affiliate fee revenue was primarily due to higher fees received from television stations that are affiliated with the FOX Network, and higher average

rates per subscriber partially offset by a lower average number of subscribers at the Company’s owned and operated television stations. The increase in other revenues was primarily due to the current year quarter impact of acquisitions of entertainment production companies.

Television Segment EBITDA decreased 74% for the three months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, as the revenue increases noted above were more than offset by higher expenses. Operating expenses increased primarily due to increased digital investment at Tubi, higher sports programming rights amortization and production costs primarily related to NFL content, and higher entertainment programming rights amortization principally due to the recognition of an approximately $30 million write-down of unamortized production costs related to a television series as a result of COVID-19 related costs and production delays. Selling, general and administrative expenses increased primarily due to the current year impact of acquisitions of entertainment production companies and higher technology costs related to the Company's digital initiatives.

For the nine months ended March 31, 2022 and 2021

Revenues at the Television segment increased 10% for the nine months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, due to higher advertising, affiliate fee and other revenues. The increase in advertising revenue was primarily attributable to higher sports ratings and pricing as well as the return of a full schedule of college football in the current year period at the FOX Network and growth at Tubi, partially offset by lower political advertising revenue at the FOX Television Stations due to the absence of the prior year presidential and congressional elections. The increase in affiliate fee revenue was primarily due to higher fees received from television stations that are affiliated with the FOX Network, and higher average rates per subscriber partially offset by a lower average number of subscribers at the Company’s owned and operated television stations. The increase in other revenues was primarily due to the current year period impact of acquisitions of entertainment production companies and higher content revenues at FOX Entertainment.

Television Segment EBITDA decreased 70% for the nine months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, as the revenue increases noted above were more than offset by higher expenses. Operating expenses increased primarily due to increased digital investment at Tubi, higher sports programming rights amortization and production costs primarily related to NFL, MLB and college football content including a higher number of live events as compared to the COVID-19 impacted prior year period, and higher entertainment programming rights amortization and marketing costs due to more hours of original scripted programming as compared to the prior year period, which was impacted by COVID-19. Selling, general and administrative expenses increased primarily due to higher technology costs related to the Company's digital initiatives.

Other, Corporate and Eliminations (1% of the Company’s revenues for the first nine months of fiscal 2022 and 2021)

			For the three months ended March 31,																								For the nine months ended March 31,
			2022						2021						Change						% Change						2022						2021						Change						% Change
(in millions, except %)															Better/(Worse)																								Better/(Worse)
Revenues			$	52					$	49					$	3					6		%				$	144					$	134					$	10					7		%
Operating expenses			(27)						(21)						(6)						(29)		%				(70)						(61)						(9)						(15)		%
Selling, general and administrative			(113)						(114)						1						1		%				(316)						(312)						(4)						(1)		%
Segment EBITDA			$	(88)					$	(86)					$	(2)					(2)		%				$	(242)					$	(239)					$	(3)					(1)		%

For the three and nine months ended March 31, 2022 and 2021

Revenues at the Other, Corporate and Eliminations segment for the three and nine months ended March 31, 2022 and 2021 include revenues generated by Credible and the operation of the FOX Studios lot for third parties. Operating expenses for the three and nine months ended March 31, 2022 and 2021 include advertising and promotional expenses at Credible and the costs of operating the FOX Studios lot for third parties. Selling, general and administrative expenses for the three and nine months ended March 31, 2022 and 2021 primarily relate to employee costs and professional fees, the costs of operating the FOX Studios lot for third parties and advertising and promotional expenses at Credible.

Non-GAAP Financial Measures

Adjusted EBITDA is defined as Revenues less Operating expenses and Selling, general and administrative expenses. Adjusted 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 information about Adjusted EBITDA assists all users of the Company’s Financial Statements by allowing them to evaluate changes in the operating results of the Company’s portfolio of businesses separate from non-operational factors that affect Net income, thus providing insight into both operations and the other factors that affect reported results. Adjusted EBITDA provides management, investors and equity analysts a measure to analyze the operating performance of the Company’s business and its enterprise value against historical data and competitors’ data, although historical results, including Adjusted EBITDA, may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences and the impact of COVID-19 and other widespread health emergencies or pandemics and measures to contain their spread).

Adjusted EBITDA is considered a non-GAAP financial measure and should be considered in addition to, not as a substitute for, net income, cash flow and other measures of financial performance reported in accordance with U.S. generally accepted accounting principles (“GAAP”). In addition, this measure does not reflect cash available to fund requirements and excludes items, such as depreciation and amortization and impairment charges, which are significant components in assessing the Company’s financial performance. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

The following table reconciles Net income to Adjusted EBITDA for the three and nine months ended March 31, 2022, as compared to the three and nine months ended March 31, 2021:

			For the three months ended March 31,												For the nine months ended March 31,
			2022						2021						2022						2021
			(in millions)
Net income			$	290					$	582					$	925					$	1,929
Add
Amortization of cable distribution investments			5						6						14						17
Depreciation and amortization			92						78						264						216
Impairment and restructuring charges			—						—						—						35
Interest expense, net			91						98						285						293
Other, net			233						(61)						375						(752)
Income tax expense			100						196						322						632
Adjusted EBITDA			$	811					$	899					$	2,185					$	2,370

The following table sets forth the computation of Adjusted EBITDA for the three and nine months ended March 31, 2022, as compared to the three and nine months ended March 31, 2021.

			For the three months ended March 31,												For the nine months ended March 31,
			2022						2021						2022						2021
			(in millions)
Revenues			$	3,455					$	3,215					$	10,941					$	10,019
Operating expenses			(2,164)						(1,885)						(7,402)						(6,399)
Selling, general and administrative			(485)						(437)						(1,368)						(1,267)
Amortization of cable distribution investments			5						6						14						17
Adjusted EBITDA			$	811					$	899					$	2,185					$	2,370

LIQUIDITY AND CAPITAL RESOURCES

Current Financial Condition

The Company has approximately $4.6 billion of cash and cash equivalents as of March 31, 2022 and an unused five-year $1.0 billion unsecured revolving credit facility (See Note 5—Borrowings to the accompanying Financial Statements). The Company also has access to the worldwide capital markets, subject to market conditions. As of March 31, 2022, the Company was in compliance with all of the covenants under the revolving credit facility, and it does not anticipate any noncompliance with such covenants.

The principal uses of cash that affect the Company’s liquidity position include the following: the acquisition of rights and related payments for entertainment and sports programming; operational expenditures including production costs; marketing and promotional expenses; expenses related to broadcasting the Company’s programming; employee and facility costs; capital expenditures; acquisitions; interest and dividend payments; debt repayments; and stock repurchases.

In addition to the acquisitions, sales and possible acquisitions disclosed elsewhere, the Company has evaluated, and expects to continue to evaluate, possible acquisitions and dispositions of certain businesses and assets. Such transactions may be material and may involve cash, the Company’s securities or the assumption of additional indebtedness.

Sources and Uses of Cash

Net cash provided by operating activities for the nine months ended March 31, 2022 and 2021 was as follows (in millions):

For the nine months ended March 31,						2022						2021
Net cash provided by operating activities						$	951					$	1,866

The decrease in net cash provided by operating activities during the nine months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, was primarily due to higher sports and entertainment programming payments, investments in our AVOD and other digital platforms, as well as lower Adjusted EBITDA and higher tax payments.

Net cash used in investing activities for the nine months ended March 31, 2022 and 2021 was as follows (in millions):

For the nine months ended March 31,						2022						2021
Net cash used in investing activities						$	(386)					$	(329)

The increase in net cash used in investing activities during the nine months ended March 31, 2022, as compared to the corresponding period of fiscal 2021, was primarily due to the fiscal 2022 acquisitions (See Note 2—Acquisitions, Disposals, and Other Transactions to the accompanying Financial Statements), partially offset by lower capital expenditures as a result of the Company's new standalone broadcast technical facilities being placed into service in fiscal 2021.

Net cash used in financing activities for nine months ended March 31, 2022 and 2021 was as follows (in millions):

For the nine months ended March 31,						2022						2021
Net cash used in financing activities						$	(1,817)					$	(417)

The increase in net cash used in financing activities during the nine months ended March 31, 2022, as compared to the corresponding prior year period of fiscal 2021, was primarily due to the $750 million repayment of senior notes that matured in January 2022 (See Note 5—Borrowings to the accompanying Financial Statements), the absence of cash received from Disney in fiscal 2021, including the $462 million reimbursement related to the Divestiture Tax, and the timing of the dividends paid to the Company's stockholders in fiscal 2022.

Stock Repurchase Program

See Note 6—Stockholders’ Equity to the accompanying Financial Statements under the heading “Stock Repurchase Program.”

Dividends

The Company declared a semi-annual dividend of $0.24 per share on both the Class A Common Stock and the Class B Common Stock during the three months ended March 31, 2022, which was paid on March 30, 2022 with a record date for determining dividend entitlements of March 2, 2022.

Debt Instruments

Borrowings include senior notes (See Note 9—Borrowings in the 2021 Form 10-K under the heading “Public Debt – Senior Notes Issued”). In January 2022, $750 million of 3.666% senior notes matured and were repaid in full (See Note 5—Borrowings to the accompanying Financial Statements).

Ratings of the senior notes

The following table summarizes the Company’s credit ratings as of March 31, 2022:

Rating Agency						Senior Debt						Outlook
Moody's						Baa2						Stable
Standard & Poor's						BBB						Stable

Revolving Credit Agreement

The Company has an unused five-year $1.0 billion unsecured revolving credit facility with a maturity date of March 2024 (See Note 5—Borrowings to the accompanying Financial Statements).

Commitments and Contingencies

See Note 8—Commitments and Contingencies to the accompanying Financial Statements.

Recent Accounting Pronouncements

See Note 1—Description of Business and Basis of Presentation to the accompanying Financial Statements under the heading “Recently Adopted and Recently Issued Accounting Guidance.”

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical or current fact are “forward-looking statements” for purposes of federal and state securities laws, including any statements regarding (i) future earnings, revenues or other measures of the Company’s financial performance; (ii) the Company’s plans, strategies and objectives for future operations; (iii) proposed new programming or other offerings; (iv) future economic conditions or performance; and (v) assumptions underlying any of the foregoing. Forward-looking statements may include, among others, the words “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook” or any other similar words.

Although the Company’s management believes that the expectations reflected in any of the Company’s forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any forward-looking statements. The Company’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the SEC. Important factors that could cause the Company’s actual results, performance and achievements to differ materially from those estimates or projections contained in the Company’s forward-looking statements include, but are not limited to, government regulation, economic, strategic, political and social conditions and the following factors:

• the impact of COVID-19 and other widespread health emergencies or pandemics and measures to contain their spread and related weak macroeconomic conditions and increased market volatility;

• the impact of COVID-19 specifically on the Company, including content disruptions that negatively affect the timing, volume or popularity of the Company’s programming, particularly sports programming, and potential non-cash impairment charges resulting from significant declines in the Company’s estimated revenues or the expected popularity of the Company’s programming;

• evolving technologies and distribution platforms and changes in consumer behavior as consumers seek more control over when, where and how they consume content, and related impacts on advertisers and traditional MVPDs;

• declines in advertising expenditures due to various factors such as the economic prospects of advertisers or the economy, major sports events and elections cycles, evolving technologies and distribution platforms and related changes in consumer behavior and shifts in advertisers’ expenditures, the evolving market for AVOD advertising campaigns, and audience measurement methodologies’ ability to accurately reflect actual viewership levels;

• further declines in the number of subscribers to traditional MVPD services;

• the failure to enter into or renew on favorable terms, or at all, affiliation or carriage agreements or arrangements through which the Company makes its content available for viewing through online video platforms;

• the highly competitive nature of the industry in which the Company’s businesses operate;

• the popularity of the Company’s content, including special sports events; and the continued popularity of the sports franchises, leagues and teams for which the Company has acquired programming rights;

• the Company’s ability to renew programming rights, particularly sports programming rights, on sufficiently favorable terms, or at all;

• damage to the Company’s brands or reputation;

• the inability to realize the anticipated benefits of the Company’s strategic investments and acquisitions;

• the loss of key personnel;

• labor disputes, including labor disputes involving professional sports leagues whose games or events the Company has the right to broadcast;

• lower than expected valuations associated with one of the Company’s reporting units, indefinite-lived intangible assets, investments or long-lived assets;

• a degradation, failure or misuse of the Company’s network and information systems and other technology relied on by the Company that causes a disruption of services or improper disclosure of personal data or other confidential information;

• content piracy and signal theft and the Company’s ability to protect its intellectual property rights;

• the failure to comply with laws, regulations, rules, industry standards or contractual obligations relating to privacy and personal data protection;

• changes in tax, federal communications or other laws, regulations, practices or the interpretations thereof (including changes in legislation currently being considered);

• the impact of any investigations or fines from governmental authorities, including Federal Communications Commission (“FCC”) rules and policies and FCC decisions regarding revocation, renewal or grant of station licenses, waivers and other matters;

• the failure or destruction of satellites or transmitter facilities the Company depends on to distribute its programming;

• unfavorable litigation or investigation results that require the Company to pay significant amounts or lead to onerous operating procedures;

• changes in GAAP or other applicable accounting standards and policies;

• the Company’s ability to achieve the benefits it expects to achieve as a standalone, publicly traded company;

• the Company’s ability to secure additional capital on acceptable terms;

• the impact of any payments the Company is required to make or liabilities it is required to assume under the Separation Agreement (as defined in Note 1—Description of Business and Basis of Presentation in the 2021 Form 10-K) and the indemnification arrangements entered into in connection with the Separation and the Distribution (as defined in Note 1—Description of Business and Basis of Presentation in the 2021 Form 10-K); and

• the other risks and uncertainties detailed in Part I., Item 1A. “Risk Factors” in the 2021 Form 10-K and Part II., Item 1A. “Risk Factors” in the Q1 2022 Form 10-Q.

Forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date hereof, and forward-looking statements in documents that are incorporated by reference hereto speak only as of the date of those documents. The Company does not undertake any obligation to update or release any revisions to any forward-looking statement made herein or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or to conform such statements to actual results or changes in our expectations, except as required by law.