Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

NEWS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; millions, except per share amounts)


		For the three months ended December 31,				For the six months ended December 31,
	Notes	2023		2022		2023		2022
Revenues:
Circulation and subscription		$	1,119	$	1,085	$	2,248	$	2,196
Advertising		438		464		829		870
Consumer		527		512		1,029		979
Real estate		327		301		638		624
Other		175		159		341		330
Total Revenues	2	2,586		2,521		5,085		4,999
Operating expenses		(1,281)		(1,294)		(2,554)		(2,567)
Selling, general and administrative		(832)		(818)		(1,694)		(1,673)
Depreciation and amortization		(179)		(174)		(350)		(353)
Impairment and restructuring charges	3	(13)		(19)		(51)		(40)
Equity losses of affiliates	4	(1)		(29)		(3)		(33)
Interest expense, net		(25)		(26)		(48)		(53)
Other, net	12	22		(6)		(13)		(24)
Income before income tax expense		277		155		372		256
Income tax expense	10	(94)		(61)		(131)		(96)
Net income		183		94		241		160
Net income attributable to noncontrolling interests		(27)		(27)		(55)		(53)
Net income attributable to News Corporation stockholders		$	156	$	67	$	186	$	107
Net income attributable to News Corporation stockholders per share:	8
Basic		$	0.27	$	0.12	$	0.33	$	0.18
Diluted		$	0.27	$	0.12	$	0.32	$	0.18

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NEWS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited; millions)


	For the three months ended December 31,				For the six months ended December 31,
	2023		2022		2023		2022
Net income	$	183	$	94	$	241	$	160
Other comprehensive income:
Foreign currency translation adjustments	215		279		70		(1)
Net change in the fair value of cash flow hedges(a)	(17)		(4)		(18)		13
Benefit plan adjustments, net(b)	(2)		(6)		13		6
Other comprehensive income	196		269		65		18
Comprehensive income	379		363		306		178
Net income attributable to noncontrolling interests	(27)		(27)		(55)		(53)
Other comprehensive income attributable to noncontrolling interests(c)	(49)		(59)		(18)		(3)
Comprehensive income attributable to News Corporation stockholders	$	303	$	277	$	233	$	122

(a) Net of income tax expense (benefit) of $(6) million and $(2) million for the three months ended December 31, 2023 and 2022, respectively, and $(7) million and $4 million for the six months ended December 31, 2023 and 2022, respectively.

(b) Net of income tax expense (benefit) of $(1) million and ($3) million for the three months ended December 31, 2023 and 2022, respectively, and $4 million and $1 million for the six months ended December 31, 2023 and 2022, respectively.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NEWS CORPORATION

CONSOLIDATED BALANCE SHEETS

(Millions, except share and per share amounts)


	Notes	As of December 31, 2023		As of June 30, 2023
		(unaudited)		(audited)
Assets:
Current assets:
Cash and cash equivalents		$	1,724	$	1,833
Receivables, net	12	1,516		1,425
Inventory, net		297		311
Other current assets		466		484
Total current assets		4,003		4,053
Non-current assets:
Investments	4	424		427
Property, plant and equipment, net		1,985		2,042
Operating lease right-of-use assets		1,007		1,036
Intangible assets, net		2,423		2,489
Goodwill		5,214		5,140
Deferred income tax assets, net	10	305		393
Other non-current assets	12	1,320		1,341
Total assets		$	16,681	$	16,921
Liabilities and Equity:
Current liabilities:
Accounts payable		$	243	$	440
Accrued expenses		1,095		1,123
Deferred revenue	2	510		622
Current borrowings	5	58		27
Other current liabilities	12	878		953
Total current liabilities		2,784		3,165
Non-current liabilities:
Borrowings	5	2,984		2,940
Retirement benefit obligations		136		134
Deferred income tax liabilities, net	10	129		163
Operating lease liabilities		1,090		1,128
Other non-current liabilities		456		446
Commitments and contingencies	9
Class A common stock(a)		4		4
Class B common stock(b)		2		2
Additional paid-in capital		11,334		11,449
Accumulated deficit		(1,958)		(2,144)
Accumulated other comprehensive loss		(1,200)		(1,247)
Total News Corporation stockholders’ equity		8,182		8,064
Noncontrolling interests		920		881
Total equity	6	9,102		8,945
Total liabilities and equity		$	16,681	$	16,921

(a) Class A common stock, $0.01 par value per share (“Class A Common Stock”), 1,500,000,000 shares authorized, 380,210,295 and 379,945,907 shares issued and outstanding, net of 27,368,413 treasury shares at par, at December 31, 2023 and June 30, 2023, respectively.

(b) Class B common stock, $0.01 par value per share (“Class B Common Stock”), 750,000,000 shares authorized, 191,177,032 and 192,013,909 shares issued and outstanding, net of 78,430,424 treasury shares at par, at December 31, 2023 and June 30, 2023, respectively.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NEWS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; millions)


		For the six months ended December 31,
	Notes	2023		2022
Operating activities:
Net income		$	241	$	160
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		350		353
Operating lease expense		48		57
Equity losses of affiliates	4	3		33
Cash distributions received from affiliates		3		5
Impairment charges	3	24		—
Deferred income taxes and taxes payable	10	67		17
Other, net	12	13		24
Change in operating assets and liabilities, net of acquisitions:
Receivables and other assets		(69)		(351)
Inventories, net		50		(11)
Accounts payable and other liabilities		(425)		(126)
Net cash provided by operating activities		305		161
Investing activities:
Capital expenditures		(236)		(217)
Acquisitions, net of cash acquired		(20)		(15)
Investments in equity affiliates and other, net		(22)		(92)

Proceeds from property, plant and equipment and other asset dispositions		—		8
Other, net		—		(21)
Net cash used in investing activities		(278)		(337)
Financing activities:
Borrowings	5	1,049		407
Repayment of borrowings	5	(1,044)		(462)
Repurchase of shares	6	(56)		(178)
Dividends paid		(85)		(89)
Other, net		(8)		10
Net cash used in financing activities		(144)		(312)
Net change in cash and cash equivalents		(117)		(488)

Cash and cash equivalents, beginning of period		1,833		1,822
Effect of exchange rate changes on cash and cash equivalents		8		(6)
Cash and cash equivalents, end of period		$	1,724	$	1,328

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

News Corporation (together with its subsidiaries, “News Corporation,” “News Corp,” the “Company,” “we” or “us”) is a global diversified media and information services company comprised of businesses across a range of media, including: digital real estate services, subscription video services in Australia, news and information services and book publishing.

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company, which are referred to herein as the “Consolidated Financial Statements,” have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting only of normal recurring adjustments necessary for a fair presentation have been reflected in these Consolidated Financial Statements. Operating results for the interim period presented are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2024. The preparation of the Company’s Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts that are reported in the Consolidated Financial Statements and accompanying disclosures. Actual results could differ from those estimates.

Intercompany transactions and balances have been eliminated. Equity investments in which the Company exercises significant influence but does not exercise control and is not the primary beneficiary are accounted for using the equity method. Investments in which the Company is not able to exercise significant influence over the investee are measured at fair value, if the fair value is readily determinable. If an investment’s fair value is not readily determinable, the Company will measure the investment at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer.

The consolidated statements of operations are referred to herein as the “Statements of Operations.” The consolidated balance sheets are referred to herein as the “Balance Sheets.” The consolidated statements of cash flows are referred to herein as the “Statements of Cash Flows.”

The accompanying Consolidated Financial Statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2023 as filed with the Securities and Exchange Commission (the “SEC”) on August 15, 2023 (the “2023 Form 10-K”).

The Company’s fiscal year ends on the Sunday closest to June 30. Fiscal 2024 and fiscal 2023 include 52 weeks. All references to the three and six months ended December 31, 2023 and 2022 relate to the three and six months ended December 31, 2023 and January 1, 2023, respectively. For convenience purposes, the Company continues to date its Consolidated Financial Statements as of December 31.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). The amendments in ASU 2023-07 expand public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of other segment items and expanded interim disclosures that align with those required annually, among other provisions. ASU 2023-07 requires the amendments to be applied retrospectively and is effective for the Company for annual reporting periods beginning on July 1, 2024 and interim reporting periods beginning on July 1, 2025, with early adoption permitted. The Company is currently evaluating the impact ASU 2023-07 will have on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The amendments in ASU 2023-09 require disaggregated disclosure of material categories in effective tax rate reconciliations as well as disclosure of income taxes paid by specific domestic and foreign jurisdictions. Additionally, the amendments eliminate certain disclosures currently required under Topic 740. ASU 2023-09 is effective for the Company for annual reporting periods beginning on July 1, 2025, with early adoption permitted. The Company is currently evaluating the impact ASU 2023-09 will have on its consolidated financial statements.

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NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. REVENUES

The following tables present the Company’s disaggregated revenues by type and segment for the three and six months ended December 31, 2023 and 2022:


	For the three months ended December 31, 2023
	Digital Real Estate Services		Subscription Video Services		Dow Jones		Book Publishing		News Media		Other		Total Revenues
	(in millions)
Revenues:
Circulation and subscription	$	2	$	404	$	441	$	—	$	272	$	—	$	1,119
Advertising	32		51		126		—		229		—		438
Consumer	—		—		—		527		—		—		527
Real estate	327		—		—		—		—		—		327
Other	58		15		17		23		62		—		175
Total Revenues	$	419	$	470	$	584	$	550	$	563	$	—	$	2,586


	For the three months ended December 31, 2022
	Digital Real Estate Services		Subscription Video Services		Dow Jones		Book Publishing		News Media		Other		Total Revenues
	(in millions)
Revenues:
Circulation and subscription	$	3	$	405	$	417	$	—	$	260	$	—	$	1,085
Advertising	33		47		131		—		253		—		464
Consumer	—		—		—		512		—		—		512
Real estate	301		—		—		—		—		—		301
Other	49		10		15		19		66		—		159
Total Revenues	$	386	$	462	$	563	$	531	$	579	$	—	$	2,521


	For the six months ended December 31, 2023
	Digital Real Estate Services		Subscription Video Services		Dow Jones		Book Publishing		News Media		Other		Total Revenues
	(in millions)
Revenues:
Circulation and subscription	$	5	$	819	$	877	$	—	$	547	$	—	$	2,248
Advertising	67		113		217		—		432		—		829
Consumer	—		—		—		1,029		—		—		1,029
Real estate	638		—		—		—		—		—		638
Other	112		24		27		46		132		—		341
Total Revenues	$	822	$	956	$	1,121	$	1,075	$	1,111	$	—	$	5,085

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NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


	For the six months ended December 31, 2022
	Digital Real Estate Services		Subscription Video Services		Dow Jones		Book Publishing		News Media		Other		Total Revenues
	(in millions)
Revenues:
Circulation and subscription	$	6	$	830	$	831	$	—	$	529	$	—	$	2,196
Advertising	68		111		225		—		466		—		870
Consumer	—		—		—		979		—		—		979
Real estate	624		—		—		—		—		—		624
Other	109		23		22		39		137		—		330
Total Revenues	$	807	$	964	$	1,078	$	1,018	$	1,132	$	—	$	4,999

Contract liabilities and assets

The Company’s deferred revenue balance primarily relates to amounts received from customers for subscriptions paid in advance of the services being provided. The following table presents changes in the deferred revenue balance for the three and six months ended December 31, 2023 and 2022:


	For the three months ended December 31,				For the six months ended December 31,
	2023		2022		2023		2022
	(in millions)
Balance, beginning of period	$	624	$	592	$	622	$	604
Deferral of revenue	806		893		1,743		1,790
Recognition of deferred revenue(a)	(930)		(917)		(1,859)		(1,813)
Other	10		23		4		10
Balance, end of period	$	510	$	591	$	510	$	591

(a)For the three and six months ended December 31, 2023, the Company recognized $330 million and $499 million, respectively, of revenue which was included in the opening deferred revenue balance. For the three and six months ended December 31, 2022, the Company recognized $320 million and $490 million, respectively, of revenue which was included in the opening deferred revenue balance.

Contract assets were immaterial for disclosure as of December 31, 2023 and 2022.

Other revenue disclosures

The Company typically expenses sales commissions to obtain a customer contract as incurred as the amortization period is 12 months or less. These costs are recorded within Selling, general and administrative in the Statements of Operations. The Company also does not capitalize significant financing components when the transfer of the good or service is paid within 12 months or less, or consideration is received within 12 months or less of the transfer of the good or service.

For the three and six months ended December 31, 2023, the Company recognized approximately $106 million and $210 million, respectively, in revenues related to performance obligations that were satisfied or partially satisfied in a prior reporting period. The remaining transaction price related to unsatisfied performance obligations as of December 31, 2023 was approximately $1,240 million, of which approximately $263 million is expected to be recognized over the remainder of fiscal 2024, approximately $372 million is expected to be recognized in fiscal 2025 and approximately $212 million is expected to be recognized in fiscal 2026, with the remainder to be recognized thereafter. These amounts do not include (i) contracts with an expected duration of one year or less, (ii) contracts for which variable consideration is determined based on the customer’s subsequent sale or usage and (iii) variable consideration allocated to performance obligations accounted for under the series guidance that meets the allocation objective under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.

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NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. IMPAIRMENT AND RESTRUCTURING CHARGES

Fiscal 2024 Impairment

During the three and six months ended December 31, 2023, the Company recognized non-cash impairment charges of $1 million and $22 million, respectively, at the News Media segment related to the write-down of fixed assets associated with the proposed combination of certain United Kingdom (“U.K.”) printing operations with those of a third party.

Fiscal 2024 Restructuring

During the three and six months ended December 31, 2023, the Company recorded restructuring charges of $10 million and $27 million, respectively, related to employee termination benefits. The employee termination benefits recorded in fiscal 2024 resulted from actions taken by the Company’s businesses in response to the 5% headcount reduction initiative announced in February 2023.

Fiscal 2023 Restructuring

During the three and six months ended December 31, 2022, the Company recorded restructuring charges of $19 million and $40 million, respectively. The restructuring charges recorded in fiscal 2023 primarily related to employee termination benefits.

Changes in restructuring program liabilities were as follows:


	For the three months ended December 31,
	2023				2022
	One time employee termination benefits		Other costs		Total		One time employee termination benefits		Other costs		Total
	(in millions)
Balance, beginning of period	$	29	$	41	$	70	$	22	$	40	$	62
Additions	10		—		10		16		3		19
Payments	(17)		(2)		(19)		(12)		(2)		(14)
Other	1		—		1		(1)		—		(1)
Balance, end of period	$	23	$	39	$	62	$	25	$	41	$	66


	For the six months ended December 31,
	2023				2022
	One time employee termination benefits		Other costs		Total		One time employee termination benefits		Other costs		Total
	(in millions)
Balance, beginning of period	$	53	$	41	$	94	$	25	$	41	$	66
Additions	26		1		27		36		4		40
Payments	(56)		(3)		(59)		(34)		(4)		(38)
Other	—		—		—		(2)		—		(2)
Balance, end of period	$	23	$	39	$	62	$	25	$	41	$	66

As of December 31, 2023, restructuring liabilities of approximately $35 million were included in the Balance Sheet in Other current liabilities and $27 million were included in Other non-current liabilities.

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NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. INVESTMENTS

The Company’s investments were comprised of the following:


	Ownership Percentage as of December 31, 2023	As of December 31, 2023		As of June 30, 2023
		(in millions)
Equity method investments(a)	various	$	197	$	192
Equity and other securities(b)	various	227		235
Total Investments		$	424	$	427

(a)Equity method investments are primarily comprised of REA Group’s ownership interest in PropertyGuru Group Ltd. (“PropertyGuru”).

(b)Equity and other securities are primarily comprised of Nexxen International, Ltd. (formerly Tremor International Ltd.), certain investments in China, the Company’s investment in ARN Media Limited, which operates a portfolio of Australian radio media assets, and Dow Jones’ investment in an artificial intelligence-focused data analytics company.

The Company has equity securities with quoted prices in active markets as well as equity securities without readily determinable fair market values. Equity securities without readily determinable fair market values are valued at cost, less any impairment, plus or minus changes in fair value resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. The components comprising total gains and losses on equity securities are set forth below:


	For the three months ended December 31,				For the six months ended December 31,
	2023		2022		2023		2022
	(in millions)				(in millions)
Total gains (losses) recognized on equity securities	$	13	$	(11)	$	(10)	$	(14)
Less: Net gains recognized on equity securities sold	—		2		—		2
Unrealized gains (losses) recognized on equity securities held at end of period	$	13	$	(13)	$	(10)	$	(16)

Equity Losses of Affiliates

The Company’s share of the losses of its equity affiliates was $1 million and $3 million for the three and six months ended December 31, 2023, respectively, and $29 million and $33 million for the corresponding periods of fiscal 2023, respectively. The decrease was primarily due to the absence of losses from an investment in an Australian sports wagering venture in the prior year.

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NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5. BORROWINGS

The Company’s total borrowings consist of the following:


	Interest rate at December 31, 2023		Maturity at December 31, 2023	As of December 31, 2023		As of June 30, 2023
				(in millions)
News Corporation
2022 Term loan A(a)	6.948	%	Mar 31, 2027	$	491	$	497
2022 Senior notes	5.125	%	Feb 15, 2032	493		492
2021 Senior notes	3.875	%	May 15, 2029	990		989
Foxtel Group(b)
2024 Foxtel credit facility — tranche 1(c)(d)	7.26	%	Aug 1, 2026	405		—
2024 Foxtel credit facility — USD portion — tranche 2(e)	8.63	%	Aug 1, 2027	49		—
2024 Foxtel credit facility — tranche 3(d)	7.41	%	Aug 1, 2027	212		—
2017 Working capital facility(c)	7.26	%	Aug 1, 2026	—		—
Telstra facility	11.95	%	Dec 22, 2027	101		100
2019 Credit facility(f)	—	%	May 31, 2024	—		320
2019 Term loan facility(f)	—	%	Nov 22, 2024	—		167
2012 US private placement — USD portion — tranche 3(f)	—	%	Jul 25, 2024	—		149
REA Group(b)
2024 REA credit facility — tranche 1(g)	5.85	%	Sep 15, 2028	81		—
2024 REA credit facility — tranche 2(g)	5.55	%	Sep 16, 2025	136		—
2024 Subsidiary facility(g)	5.75	%	Sep 28, 2025	54		—
2022 Credit facility — tranche 1(f)	—	%	Sep 16, 2024	—		211
2022 Credit facility — tranche 2(f)	—	%	Sep 16, 2025	—		—
Finance lease liability				30		42
Total borrowings				3,042		2,967
Less: current portion(h)				(58)		(27)
Long-term borrowings				$	2,984	$	2,940

(a)The Company entered into an interest rate swap derivative to fix the floating rate interest component of its Term A Loans at 2.083%. For the three months ended December 31, 2023 the Company was paying interest at an effective interest rate of 3.583%. See Note 7—Financial Instruments and Fair Value Measurements.

(b)These borrowings were incurred by certain subsidiaries of NXE Australia Pty Limited (the “Foxtel Group” and together with such subsidiaries, the “Foxtel Debt Group”) and REA Group and certain of its subsidiaries (REA Group and certain of its subsidiaries, the “REA Debt Group”), consolidated but non wholly-owned subsidiaries of News Corp, and are only guaranteed by the Foxtel Group and REA Group and their respective subsidiaries, as applicable, and are non-recourse to News Corp.

(c)As of December 31, 2023, the Foxtel Debt Group had total undrawn commitments of A$255 million available under these facilities.

(d)The Company entered into A$610 million of interest rate swap derivatives to fix the floating rate interest components of tranche 1 and tranche 3 of its 2024 Foxtel Credit Facility (described below) at approximately 4.30%. For the three months ended December 31, 2023 the Company was paying interest at an effective interest rate of 7.20% and 7.30% for tranche 1 and tranche 3, respectively. See Note 7—Financial Instruments and Fair Value Measurements.

(e)The Company entered into a cross-currency interest rate swap derivative to fix the floating rate interest component of tranche 2 of its 2024 Foxtel Credit Facility at 4.38%. For the three months ended December 31, 2023 the Company was paying interest at an effective interest rate of 7.64%. See Note 7—Financial Instruments and Fair Value Measurements.

(f)These borrowings were repaid during the six months ended December 31, 2023 using proceeds from the 2024 Foxtel Credit Facility and 2024 REA Credit Facility (described below), as applicable.

(g)As of December 31, 2023, REA Group had total undrawn commitments of A$285 million available under these facilities.

(h)The Company classifies the current portion of long term debt as non-current liabilities on the Balance Sheets when it has the intent and ability to refinance the obligation on a long-term basis, in accordance with ASC 470-50, Debt. $25 million and $27 million relates to the current portion of finance lease liabilities as of December 31, 2023 and June 30, 2023, respectively, with the remainder as of December 31, 2023 consisting of required principal repayments on the 2022 Term Loan A and 2024 Foxtel Credit Facility — tranches 2 and 3.

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NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Foxtel Group Debt Refinancing

During the six months ended December 31, 2023, the Foxtel Group refinanced its A$610 million 2019 revolving credit facility, A$250 million term loan facility and tranche 3 of its 2012 U.S. private placement senior unsecured notes with the proceeds of a new A$1.2 billion syndicated credit facility (the “2024 Foxtel Credit Facility”). The 2024 Foxtel Credit Facility consists of three sub-facilities: (i) an A$817.5 million three year revolving credit facility (the “2024 Foxtel Credit Facility — tranche 1”), (ii) a US$48.7 million four year term loan facility (the “2024 Foxtel Credit Facility — tranche 2”) and (iii) an A$311.0 million four year term loan facility (the “2024 Foxtel Credit Facility — tranche 3”). In addition, the Foxtel Group amended its 2017 working capital facility to extend the maturity to August 2026 and modify the pricing.

Depending on the Foxtel Group’s net leverage ratio, (i) borrowings under the 2024 Foxtel Credit Facility — tranche 1 and 2017 working capital facility bear interest at a rate of the Australian BBSY plus a margin of between 2.35% and 3.60%; (ii) borrowings under the 2024 Foxtel Credit Facility — tranche 2 bear interest at a rate based on a Term SOFR formula, as set forth in the 2024 Foxtel Credit Agreement, plus a margin of between 2.50% and 3.75%; and (iii) borrowings under the 2024 Foxtel Credit Facility — tranche 3 bear interest at a rate of the Australian BBSY plus a margin of between 2.50% and 3.75%. All tranches carry a commitment fee of 45% of the applicable margin on any undrawn balance during the relevant availability period. Tranches 2 and 3 of the 2024 Foxtel Credit Facility amortize on a proportionate basis in an aggregate annual amount equal to A$35 million in each of the first two years following closing and A$40 million in each of the two years thereafter.

The agreements governing the Foxtel Debt Group’s external borrowings contain customary affirmative and negative covenants and events of default, with customary exceptions, including specified financial and non-financial covenants calculated in accordance with Australian International Financial Reporting Standards. Subject to certain exceptions, these covenants restrict or prohibit members of the Foxtel Debt Group from, among other things, undertaking certain transactions, disposing of certain properties or assets (including subsidiary stock), merging or consolidating with any other person, making financial accommodation available, giving guarantees, entering into certain other financing arrangements, creating or permitting certain liens, engaging in transactions with affiliates, making repayments of certain other loans and undergoing fundamental business changes. In addition, the agreements require the Foxtel Debt Group to maintain a ratio of net debt to Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”), as adjusted under the applicable agreements, of not more than 3.25 to 1.0. The agreements also require the Foxtel Debt Group to maintain a net interest coverage ratio of not less than 3.5 to 1.0. There are no assets pledged as collateral for any of the borrowings.

REA Group Debt

REA Group Debt Refinancing

During the six months ended December 31, 2023, REA Group entered into a new unsecured syndicated credit facility (the “2024 REA Credit Facility”) which replaces the 2022 Credit Facility and consists of two sub-facilities: (i) a five-year A$400 million revolving loan facility (the “2024 REA Credit Facility—tranche 1”) which was used to refinance tranche 1 of the 2022 Credit Facility and (ii) an A$200 million revolving loan facility representing the continuation of tranche 2 of the 2022 Credit Facility (the “2024 REA Credit Facility—tranche 2”). REA Group may request increases in the amount of the 2024 REA Credit Facility up to a maximum amount of A$500 million, subject to the terms and limitations set forth in the syndicated facility agreement.

Borrowings under the 2024 REA Credit Facility — tranche 1 accrue interest at a rate of the Australian BBSY plus a margin of between 1.45% and 2.35%, depending on REA Group’s net leverage ratio. Borrowings under the 2024 REA Credit Facility — tranche 2 continue to accrue interest at a rate of the Australian BBSY plus a margin of between 1.15% and 2.25%, depending on REA Group’s net leverage ratio. Both tranches carry a commitment fee of 40% of the applicable margin on any undrawn balance.

The syndicated facility agreement governing the 2024 REA Credit Facility requires REA Group to maintain (i) a net leverage ratio of not more than 3.5 to 1.0 and (ii) an interest coverage ratio of not less than 3.0 to 1.0. The agreement also contains certain other customary affirmative and negative covenants and events of default. Subject to certain exceptions, these covenants restrict or prohibit REA Group and its subsidiaries from, among other things, incurring or guaranteeing debt, disposing of certain properties or assets, merging or consolidating with any other person, making financial accommodation available, entering into certain other financing arrangements, creating or permitting certain liens, engaging in non arms’ length transactions with affiliates, undergoing fundamental business changes and making restricted payments.

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Subsidiary Financing

During the six months ended December 31, 2023, REA Group entered into an A$83 million unsecured bilateral revolving credit facility (the “2024 Subsidiary Facility”). Proceeds of the 2024 Subsidiary Facility will be used to refinance an existing facility at one of its subsidiaries and to fund its business of providing short-term financing to real estate agents and vendors. Borrowings under the 2024 Subsidiary Facility accrue interest at a rate of the Australian BBSY plus a margin of 1.40% and undrawn balances carry a commitment fee of 40% of the applicable margin. The facility agreement governing the 2024 Subsidiary Facility permits the lender to cancel its commitment and declare all outstanding amounts immediately due and payable after a consultation period in specified circumstances, including if certain key operating measures of its subsidiary fall below the budgeted amount for two consecutive quarters. The agreement also contains certain other customary affirmative and negative covenants and events of default that are similar to those governing the 2024 REA Credit Facility.

Covenants

The Company’s borrowings and those of its consolidated subsidiaries contain customary representations, covenants and events of default, including those discussed in the Company’s 2023 Form 10-K. If any of the events of default occur and are not cured within applicable grace periods or waived, any unpaid amounts under the applicable debt agreements may be declared immediately due and payable. The Company was in compliance with all such covenants at December 31, 2023.

NOTE 6. EQUITY

The following tables summarize changes in equity for the three and six months ended December 31, 2023 and 2022:


	For the three months ended December 31, 2023
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total News Corp Equity		Non-controlling Interests		Total Equity
	Shares	Amount		Shares	Amount
	(in millions)
Balance, September 30, 2023	381	$	4	192	$	2	$	11,347	$	(2,114)	$	(1,347)	$	7,892	$	844	$	8,736

Net income	—	—		—	—		—		156		—		156		27		183
Other comprehensive income	—	—		—	—		—		—		147		147		49		196
Dividends	—	—		—	—		—		—		—		—		—		—
Share repurchases	(1)	—		(1)	—		(26)		—		—		(26)		—		(26)
Other	—	—		—	—		13		—		—		13		—		13
Balance, December 31, 2023	380	$	4	191	$	2	$	11,334	$	(1,958)	$	(1,200)	$	8,182	$	920	$	9,102


	For the three months ended December 31, 2022
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total News Corp Equity		Non-controlling Interests		Total Equity
	Shares	Amount		Shares	Amount
	(in millions)
Balance, September 30, 2022	384	$	4	194	$	2	$	11,584	$	(2,253)	$	(1,465)	$	7,872	$	856	$	8,728

Net income	—	—		—	—		—		67		—		67		27		94
Other comprehensive income	—	—		—	—		—		—		210		210		59		269
Dividends	—	—		—	—		—		—		—		—		—		—
Share repurchases	(2)	—		(1)	—		(47)		—		—		(47)		—		(47)
Other	—	—		—	—		13		—		—		13		(1)		12
Balance, December 31, 2022	382	$	4	193	$	2	$	11,550	$	(2,186)	$	(1,255)	$	8,115	$	941	$	9,056

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	For the six months ended December 31, 2023
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total News Corp Equity		Non-controlling Interests		Total Equity
	Shares	Amount		Shares	Amount
	(in millions)
Balance, June 30, 2023	380	$	4	192	$	2	$	11,449	$	(2,144)	$	(1,247)	$	8,064	$	881	$	8,945

Net income	—	—		—	—		—		186		—		186		55		241
Other comprehensive income	—	—		—	—		—		—		47		47		18		65
Dividends	—	—		—	—		(57)		—		—		(57)		(28)		(85)
Share repurchases	(2)	—		(1)	—		(55)		—		—		(55)		—		(55)
Other	2	—		—	—		(3)		—		—		(3)		(6)		(9)
Balance, December 31, 2023	380	$	4	191	$	2	$	11,334	$	(1,958)	$	(1,200)	$	8,182	$	920	$	9,102


	For the six months ended December 31, 2022
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total News Corp Equity		Non-controlling Interests		Total Equity
	Shares	Amount		Shares	Amount
	(in millions)
Balance, June 30, 2022	388	$	4	197	$	2	$	11,779	$	(2,293)	$	(1,270)	$	8,222	$	921	$	9,143

Net income	—	—		—	—		—		107		—		107		53		160
Other comprehensive income	—	—		—	—		—		—		15		15		3		18
Dividends	—	—		—	—		(58)		—		—		(58)		(31)		(89)
Share repurchases	(7)	—		(4)	—		(174)		—		—		(174)		—		(174)
Other	1	—		—	—		3		—		—		3		(5)		(2)
Balance, December 31, 2022	382	$	4	193	$	2	$	11,550	$	(2,186)	$	(1,255)	$	8,115	$	941	$	9,056

Stock Repurchases

The Company’s Board of Directors (the “Board of Directors”) has authorized a repurchase program to purchase up to $1 billion in the aggregate of the Company’s outstanding Class A Common Stock and Class B Common Stock (the “Repurchase Program”). The manner, timing, number and share price of any repurchases will be determined by the Company at its discretion and will depend upon such factors as the market price of the stock, general market conditions, applicable securities laws, alternative investment opportunities and other factors. The Repurchase Program has no time limit and may be modified, suspended or discontinued at any time. As of December 31, 2023, the remaining authorized amount under the Repurchase Program was approximately $522 million.

During the three and six months ended December 31, 2023, the Company repurchased and subsequently retired 0.8 million and 1.8 million shares, respectively, of Class A Common Stock for approximately $18 million and $38 million, respectively, and 0.4 million and 0.8 million shares, respectively, of Class B Common Stock for approximately $8 million and $17 million, respectively. During the three and six months ended December 31, 2022, the Company repurchased and subsequently retired 1.9 million and 6.9 million shares, respectively, of Class A Common Stock for approximately $31 million and $115 million, respectively, and 1.0 million and 3.5 million shares, respectively, of Class B Common Stock for approximately $16 million and $59 million, respectively.

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Dividends

In August 2023, the Board of Directors declared a semi-annual cash dividend of $0.10 per share for Class A Common Stock and Class B Common Stock. The dividend was paid on October 11, 2023 to stockholders of record as of September 13, 2023. The timing, declaration, amount and payment of future dividends to stockholders, if any, is within the discretion of the Board of Directors. The Board of Directors’ decisions regarding the payment of future dividends will depend on many factors, including the Company’s financial condition, earnings, capital requirements and debt facility covenants, other contractual restrictions, as well as legal requirements, regulatory constraints, industry practice, market volatility and other factors that the Board of Directors deems relevant.

NOTE 7. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

In accordance with ASC 820, Fair Value Measurements (“ASC 820”) fair value measurements are required to be disclosed using a three-tiered fair value hierarchy which distinguishes market participant assumptions into the following categories:

Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices included in Level 1. The Company could value assets and liabilities included in this level using dealer and broker quotations, certain pricing models, bid prices, quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. For the Company, this primarily includes the use of forecasted financial information and other valuation related assumptions such as discount rates and long term growth rates in the income approach as well as the market approach which utilizes certain market and transaction multiples.

Under ASC 820, certain assets and liabilities are required to be remeasured to fair value at the end of each reporting period.

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The following table summarizes those assets and liabilities measured at fair value on a recurring basis:


	As of December 31, 2023								As of June 30, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)
Assets:
Interest rate derivatives - cash flow hedges	$	—	$	25	$	—	$	25	$	—	$	41	$	—	$	41
Foreign currency derivatives - cash flow hedges	—		—		—		—		—		2		—		2

Cross-currency interest rate derivatives - fair value hedges	—		—		—		—		—		9		—		9

Cross-currency interest rate derivatives(a)	—		—		—		—		—		37		—		37
Equity and other securities	96		—		131		227		105		—		130		235
Total assets	$	96	$	25	$	131	$	252	$	105	$	89	$	130	$	324

Liabilities:
Interest rate derivatives - cash flow hedges	$	—	$	(5)	$	—	$	(5)	$	—	$	—	$	—	$	—
Foreign currency derivatives - cash flow hedges	$	—	$	(1)	$	—	$	(1)	$	—	$	—	$	—	$	—

Cross-currency interest rate derivatives - fair value hedges	—		—		—		—		—		(1)		—		(1)
Cross-currency interest rate derivatives - cash flow hedges	—		(3)		—		(3)		—		—		—		—
Cross-currency interest rate derivatives(a)	—		—		—		—		—		(2)		—		(2)
Total liabilities	$	—	$	(9)	$	—	$	(9)	$	—	$	(3)	$	—	$	(3)

(a) These cross-currency interest rate derivatives were initially designated as cash flow hedges. Hedge accounting for these derivatives was discontinued as of December 31, 2020.

Equity and other securities

The fair values of equity and other securities with quoted prices in active markets are determined based on the closing price at the end of each reporting period. These securities are classified as Level 1 in the fair value hierarchy outlined above. The fair values of equity and other securities without readily determinable fair market values are determined based on cost, less any impairment, plus or minus changes in fair value resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. These securities are classified as Level 3 in the fair value hierarchy outlined above.

A rollforward of the Company’s equity and other securities classified as Level 3 is as follows:


	For the six months ended December 31,
	2023		2022
	(in millions)
Balance - beginning of period	$	130	$	103
Additions(a)	3		30
Sales	—		(2)
Returns of capital	(4)		(1)
Measurement adjustments	—		1
Foreign exchange and other	2		1
Balance - end of period	$	131	$	132

(a) The additions for the six months ended December 31, 2022 primarily relate to Dow Jones’ investment in an artificial intelligence-focused data analytics company.

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Derivative Instruments

The Company is directly and indirectly affected by risks associated with changes in certain market conditions. When deemed appropriate, the Company uses derivative instruments to mitigate the potential impact of these market risks. The primary market risks managed by the Company through the use of derivative instruments include:

foreign currency exchange rate risk: arising primarily through Foxtel Debt Group borrowings denominated in United States (“U.S.”) dollars, payments for customer premise equipment, certain programming rights, product development costs and inventory purchases; and
interest rate risk: arising from fixed and floating rate Foxtel Debt Group and News Corporation borrowings.

During the six months ended December 31, 2023, in connection with the 2024 Foxtel Credit Facility, the Company entered into (i) a cross-currency interest rate swap derivative with a notional amount of $49 million to exchange the U.S. dollar-denominated floating rate interest component of its 2024 Foxtel Credit Facility — Tranche 2 for an Australian dollar-denominated fixed rate of 4.375% and (ii) interest rate swap derivatives with notional amounts totaling A$610 million to exchange the floating rate interest component of the remaining tranches to fixed rates ranging from 4.248% to 4.338%. These cross-currency interest rate swap and interest rate swap derivatives are accounted for as cash flow hedges under ASC 815, Derivatives and Hedging.

During the six months ended December 31, 2023, the Company settled its hedges and derivatives related to the 2019 Credit facility and the 2012 U.S. private placement - USD portion - tranche 3. A gain of $5 million was recognized in Other, net related to the settlement of cross-currency interest rate swap derivatives for which hedge accounting was previously discontinued, and a gain of $7 million was recognized within Interest expense, net related to the remaining net derivative gains in Accumulated other comprehensive loss.

The Company formally designates qualifying derivatives as hedge relationships and applies hedge accounting when considered appropriate. The Company does not use derivative financial instruments for trading or speculative purposes.

Derivatives are classified as current or non-current in the Balance Sheets based on their maturity dates. Refer to the table below for further details:


	Balance Sheet Classification	As of December 31, 2023		As of June 30, 2023
		(in millions)
Interest rate derivatives - cash flow hedges	Other current assets	$	13	$	21
Foreign currency derivatives - cash flow hedges	Other current assets	—		2



Cross currency interest rate derivatives(a)	Other current assets	—		1
Interest rate derivatives - cash flow hedges	Other non-current assets	12		20
Cross-currency interest rate derivatives - fair value hedges	Other non-current assets	—		9

Cross-currency interest rate derivatives(a)	Other non-current assets	—		36

Foreign currency derivatives - cash flow hedges	Other current liabilities	(1)		—
Cross-currency interest rate derivatives - fair value hedges	Other current liabilities	—		(1)
Cross-currency interest rate derivatives(a)	Other current liabilities	—		(2)
Interest rate derivatives - cash flow hedges	Other non-current liabilities	(5)		—
Cross-currency interest rate derivatives - cash flow hedges	Other non-current liabilities	(3)		—

(a) These cross-currency interest rate derivatives were initially designated as cash flow hedges. Hedge accounting for these derivatives was discontinued as of December 31, 2020.

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Cash flow hedges

The Company utilizes a combination of interest rate derivatives, foreign currency derivatives and cross-currency interest rate derivatives to mitigate currency exchange rate risk and interest rate risk in relation to future interest and principal payments and payments for customer premise equipment, certain programming rights, product development costs and inventory purchases.

The total notional value of interest rate swap derivatives designated for hedging was approximately $491 million and A$610 million as of December 31, 2023 for News Corporation and Foxtel Debt Group borrowings, respectively. The maximum hedged term over which the Company is hedging exposure to variability in interest payments is to July 2027. As of December 31, 2023, the Company estimates that approximately $13 million of net derivative gains related to its interest rate swap derivative cash flow hedges included in Accumulated other comprehensive loss will be reclassified into the Statements of Operations within the next 12 months.

The total notional value of foreign currency contract derivatives designated for hedging was $63 million as of December 31, 2023. The maximum hedged term over which the Company is hedging exposure to foreign currency fluctuations is less than one year. As of December 31, 2023, the Company estimates that approximately $1 million of net derivative losses related to its foreign currency contract derivative cash flow hedges included in Accumulated other comprehensive loss will be reclassified into the Statements of Operations within the next 12 months.

The total notional value of cross-currency interest rate swap derivatives designated for hedging was approximately $49 million as of December 31, 2023. The maximum hedged term over which the Company is hedging exposure to variability in interest and principal payments is to July 2027. As of December 31, 2023, the Company estimates that approximately nil of net derivative gains related to its cross-currency interest rate swap derivative cash flow hedges included in Accumulated other comprehensive loss will be reclassified into the Statements of Operations within the next 12 months.

The following tables present the impact that changes in the fair values had on Accumulated other comprehensive loss and the Statements of Operations during the three and six months ended December 31, 2023 and 2022 for both derivatives designated as cash flow hedges that continue to be highly effective and derivatives initially designated as cash flow hedges but for which hedge accounting was discontinued as of December 31, 2020:

Gains (losses) recognized in Accumulated other comprehensive loss for the three and six months ended December 31, 2023 and 2022, by derivative instrument:


	For the three months ended December 31,				For the six months ended December 31,
	2023		2022		2023		2022
	(in millions)
Interest rate derivatives - cash flow hedges	$	(14)	$	(1)	$	(7)	$	21
Foreign currency derivatives - cash flow hedges	(2)		(2)		—		(1)
Cross-currency interest rate derivatives - cash flow hedges	(3)		—		(3)		—

Total	$	(19)	$	(3)	$	(10)	$	20

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(Gains) losses reclassified from Accumulated other comprehensive loss into the Statements of Operations for the three and six months ended December 31, 2023 and 2022, by derivative instrument:


	Income Statement Classification	For the three months ended December 31,				For the six months ended December 31,
		2023		2022		2023		2022
		(in millions)
Interest rate derivatives - cash flow hedges	Interest expense, net	$	(4)	$	(3)	$	(14)	$	(3)
Foreign currency derivatives - cash flow hedges	Operating expenses	(2)		1		(2)		—
Cross-currency interest rate derivatives - cash flow hedges	Interest expense, net	3		—		3		—
Cross-currency interest rate derivatives(a)	Interest expense, net	—		(1)		(1)		(1)
Total		$	(3)	$	(3)	$	(14)	$	(4)

(a) These cross-currency interest rate derivatives were initially designated as cash flow hedges. Hedge accounting for these derivatives was discontinued as of December 31, 2020.

The amounts recognized in Other, net in the Statements of Operations resulting from the changes in fair value of cross-currency interest rate derivatives that were discontinued as cash flow hedges due to hedge ineffectiveness as of December 31, 2020 was a gain of approximately nil and $3 million for the three and six months ended December 31, 2023, respectively, and a loss of approximately $1 million and a gain of approximately $2 million for the three and six months ended December 31, 2022, respectively.

Other Fair Value Measurements

As of December 31, 2023, the carrying value of the Company’s outstanding borrowings approximates the fair value. The 2022 Senior Notes and the 2021 Senior Notes are classified as Level 2 and the remaining borrowings are classified as Level 3 in the fair value hierarchy.

NOTE 8. EARNINGS (LOSS) PER SHARE

The following table set forth the computation of basic and diluted earnings (loss) per share under ASC 260, Earnings per Share:


	For the three months ended December 31,				For the six months ended December 31,
	2023		2022		2023		2022
	(in millions, except per share amounts)
Net income	$	183	$	94	$	241	$	160
Net income attributable to noncontrolling interests	(27)		(27)		(55)		(53)
Net income attributable to News Corporation stockholders	$	156	$	67	$	186	$	107
Weighted-average number of shares of common stock outstanding - basic	571.9		576.0		572.1		578.7
Dilutive effect of equity awards	1.6		1.8		1.7		1.8
Weighted-average number of shares of common stock outstanding - diluted	573.5		577.8		573.8		580.5
Net income attributable to News Corporation stockholders per share - basic	$	0.27	$	0.12	$	0.33	$	0.18
Net income attributable to News Corporation stockholders per share - diluted	$	0.27	$	0.12	$	0.32	$	0.18

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NOTE 9. COMMITMENTS AND CONTINGENCIES

Commitments

The Company has commitments under certain firm contractual arrangements to make future payments. These firm commitments secure the current and future rights to various assets and services to be used in the normal course of operations. As a result of entering into the 2024 Foxtel Credit Facility, the 2024 REA Credit Facility and the 2024 Subsidiary Facility during the six months ended December 31, 2023, the Company has presented its commitments associated with its borrowings and the related interest payments in the table below.


	As of December 31, 2023
	Payments Due by Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in millions)
Borrowings(a)	$	3,029	$	36	$	694	$	799	$	1,500
Interest payments on borrowings(b)	686		155		269		153		109

(a)See Note 5—Borrowings.

(b)Reflects the Company’s expected future interest payments based on borrowings outstanding and interest rates applicable at December 31, 2023. Such rates are subject to change in future periods.

The Company’s other commitments as of December 31, 2023 have not changed significantly from the disclosures included in the 2023 Form 10-K.

Contingencies

The Company routinely is involved in various legal proceedings, claims and governmental inspections or investigations, including those discussed below. The outcome of these matters and claims is subject to significant uncertainty, and the Company often cannot predict what the eventual outcome of pending matters will be or the timing of the ultimate resolution of these matters. Fees, expenses, fines, penalties, judgments or settlement costs which might be incurred by the Company in connection with the various proceedings could adversely affect its results of operations and financial condition.

The Company establishes an accrued liability for legal claims when it determines that a loss is 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. Legal fees associated with litigation and similar proceedings are expensed as incurred. Except as otherwise provided below, for the contingencies disclosed for which there is at least a reasonable possibility that a loss may be incurred, the Company was unable to estimate the amount of loss or range of loss. The Company recognizes gain contingencies when the gain becomes realized or realizable.

News America Marketing

In May 2020, the Company sold its News America Marketing business. In the transaction, the Company retained certain liabilities, including those arising from the legal proceeding with Insignia Systems, Inc. (“Insignia”). In July 2019, Insignia filed a complaint in the U.S. District Court for the District of Minnesota against News America Marketing FSI L.L.C., News America Marketing In-Store Services L.L.C. and News Corporation alleging violations of federal and state antitrust laws and common law business torts. The complaint sought treble damages, injunctive relief and attorneys’ fees and costs. In July 2022, the parties agreed to settle the litigation and Insignia’s claims were dismissed with prejudice.

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HarperCollins

Beginning in February 2021, a number of purported class action complaints have been filed in the U.S. District Court for the Southern District of New York (the “N.Y. District Court”) against Amazon.com, Inc. (“Amazon”) and certain publishers, including the Company’s subsidiary, HarperCollins Publishers, L.L.C. (“HarperCollins” and together with the other publishers, the “Publishers”), alleging violations of antitrust and competition laws. The complaints seek treble damages, injunctive relief and attorneys’ fees and costs. In September 2022, the N.Y. District Court granted Amazon and the Publishers’ motions to dismiss the complaints but gave the plaintiffs leave to amend. The plaintiffs filed amended complaints in both cases in November 2022, and in January 2023, Amazon and the Publishers filed motions to dismiss the amended complaints. In August 2023, the N.Y. District Court dismissed the complaints in one of the cases with prejudice. While it is not possible at this time to predict with any degree of certainty the ultimate outcome of these actions, HarperCollins believes it has been compliant with applicable laws and intends to defend itself vigorously.

U.K. Newspaper Matters

Civil claims have been brought against the Company with respect to, among other things, voicemail interception and inappropriate payments to public officials at the Company’s former publication, The News of the World, and at The Sun, and related matters (the “U.K. Newspaper Matters”). The Company has admitted liability in many civil cases and has settled a number of cases. The Company also settled a number of claims through a private compensation scheme which was closed to new claims after April 8, 2013.

In connection with the separation of the Company from Twenty-First Century Fox, Inc. (“21st Century Fox”) on June 28, 2013, the Company and 21st Century Fox agreed in the Separation and Distribution Agreement that 21st Century Fox would indemnify the Company for payments made after such date arising out of civil claims and investigations relating to the U.K. Newspaper Matters as well as legal and professional fees and expenses paid in connection with the previously concluded criminal matters, other than fees, expenses and costs relating to employees (i) who are not directors, officers or certain designated employees or (ii) with respect to civil matters, who are not co-defendants with the Company or 21st Century Fox. 21st Century Fox’s indemnification obligations with respect to these matters are settled on an after-tax basis. In March 2019, as part of the separation of FOX Corporation (“FOX”) from 21st Century Fox, the Company, News Corp Holdings UK & Ireland, 21st Century Fox and FOX entered into a Partial Assignment and Assumption Agreement, pursuant to which, among other things, 21st Century Fox assigned, conveyed and transferred to FOX all of its indemnification obligations with respect to the U.K. Newspaper Matters.

The net expense related to the U.K. Newspaper Matters in Selling, general and administrative was $2 million and $3 million for the three months ended December 31, 2023 and 2022, respectively, and $5 million and $9 million for the six months ended December 31, 2023 and 2022, respectively. As of December 31, 2023, the Company has provided for its best estimate of the liability for the claims that have been filed and costs incurred, including liabilities associated with employment taxes, and has accrued approximately $81 million. The amount to be indemnified by FOX of approximately $89 million was recorded as a receivable in Other current assets on the Balance Sheet as of December 31, 2023. It is not possible to estimate the liability or corresponding receivable for any additional claims that may be filed given the information that is currently available to the Company. If more claims are filed and additional information becomes available, the Company will update the liability provision and corresponding receivable for such matters.

The Company is not able to predict the ultimate outcome or cost of the civil claims. It is possible that these proceedings and any adverse resolution thereof could damage its reputation, impair its ability to conduct its business and adversely affect its results of operations and financial condition.

NOTE 10. INCOME TAXES

At the end of each interim period, the Company estimates its annual effective tax rate and applies that rate to ordinary quarterly earnings. The tax expense or benefit related to significant, unusual or extraordinary items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur. In addition, the effects of changes in enacted tax laws or rates or tax status are recognized in the interim period in which the change occurs.

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For the three months ended December 31, 2023, the Company recorded income tax expense of $94 million on pre-tax income of $277 million, resulting in an effective tax rate that was higher than the U.S. statutory tax rate. The tax rate was impacted by foreign operations which are subject to higher tax rates and by valuation allowances recorded against tax benefits in certain businesses.

For the six months ended December 31, 2023, the Company recorded income tax expense of $131 million on pre-tax income of $372 million, resulting in an effective tax rate that was higher than the U.S. statutory tax rate. The tax rate was impacted by foreign operations which are subject to higher tax rates and by valuation allowances recorded against tax benefits in certain businesses.

For the three months ended December 31, 2022, the Company recorded income tax expense of $61 million on pre-tax income of $155 million, resulting in an effective tax rate that was higher than the U.S. statutory tax rate.The tax rate was impacted by foreign operations which are subject to higher tax rates and by valuation allowances recorded against tax benefits in certain businesses.

For the six months ended December 31, 2022, the Company recorded income tax expense of $96 million on pre-tax income of $256 million, resulting in an effective tax rate that was higher than the U.S. statutory tax rate. The tax rate was impacted by foreign operations which are subject to higher tax rates and by valuation allowances recorded against tax benefits in certain businesses.

Management assesses available evidence to determine whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets. Based on management’s assessment of available evidence, it has been determined that it is more likely than not that certain deferred tax assets may not be realized and therefore, a valuation allowance has been established against those tax assets.

The Company’s tax returns are subject to on-going review and examination by various tax authorities. Tax authorities may not agree with the treatment of items reported in the Company’s tax returns, and therefore the outcome of tax reviews and examinations can be unpredictable. The Company is currently undergoing an audit with the Internal Revenue Service for the fiscal year ended June 30, 2018, as well as audits with certain U.S. states and foreign jurisdictions. The Company believes it has appropriately accrued for the expected outcome of uncertain tax matters and believes such liabilities represent a reasonable provision for taxes ultimately expected to be paid. However, the Company may need to accrue additional income tax expense and its liability may need to be adjusted as new information becomes known and as these tax examinations continue to progress, or as settlements or litigations occur.

The Inflation Reduction Act (“IRA”), which was signed into law on August 16, 2022, imposes a 15% corporate minimum tax on corporations with over $1 billion of financial statement income. The Company has evaluated the relevant provisions of IRA along with guidance issued by the U.S. Treasury Department and is not expected to be subject to the corporate minimum tax.

The Organization for Economic Co-operation and Development’s (“OECD”) Inclusive Framework on Base Erosion and Profit Shifting (“BEPS”) has been working to develop an agreement on a two-pillar approach to help address tax challenges arising from taxation of the digital economy. The two-pillar approach seeks to (1) allocate profits to market jurisdictions (“Pillar One”), and (2) ensure multinational enterprises pay a minimum level of tax regardless of where they are headquartered or where they operate (“Pillar Two”).

Pillar One targets multinational groups with global revenue exceeding 20 billion Euros and a profit-to-revenue ratio of more than 10%. Companies subject to Pillar One will be required to allocate their profits and pay taxes to market jurisdictions. Based on the current proposed revenue and profit thresholds, the Company does not expect to be subject to Pillar One taxes.

Pillar Two establishes a global minimum effective tax rate of 15% for multinational groups with annual global revenue exceeding 750 million Euros. On December 15, 2022, European Union Member States unanimously adopted a directive implementing the global minimum tax rules of Pillar Two requiring members to enact the directive into their national laws which are expected to begin going into effect for tax years beginning on or after January 1, 2024. The majority of the EU countries and the U.K. enacted the Pillar Two legislation in 2023. The Company is currently evaluating the potential impact of the Pillar Two global minimum tax proposals on its consolidated financial statements and related disclosures.

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The Company paid gross income taxes of $74 million and $81 million during the six months ended December 31, 2023 and 2022, respectively, and received tax refunds of $9 million and $1 million, respectively.

NOTE 11. SEGMENT INFORMATION

The Company manages and reports its businesses in the following six segments:

Digital Real Estate Services—The Digital Real Estate Services segment consists of the Company’s 61.4% interest in REA Group and 80% interest in Move. The remaining 20% interest in Move is held by REA Group. REA Group is a market-leading digital media business specializing in property and is listed on the Australian Securities Exchange (“ASX”) (ASX: REA). REA Group advertises property and property-related services on its websites and mobile apps, including Australia’s leading residential, commercial and share property websites, realestate.com.au, realcommercial.com.au and Flatmates.com.au, property.com.au and property portals in India. In addition, REA Group provides property-related data to the financial sector and financial services through a digital property search and financing experience and a mortgage broking offering.

Move is a leading provider of digital real estate services in the U.S. and primarily operates Realtor.com®, a premier real estate information, advertising and services platform. Move offers real estate advertising solutions to agents and brokers, including its ConnectionsSM Plus, Market VIPSM and AdvantageSM Pro products as well as its referral-based services, ReadyConnect ConciergeSM and UpNest. Move also offers online tools and services to do-it-yourself landlords and tenants.

Subscription Video Services—The Company’s Subscription Video Services segment provides sports, entertainment and news services to pay-TV and streaming subscribers and other commercial licensees via satellite and internet distribution and consists of (i) the Company’s 65% interest in the Foxtel Group (with the remaining 35% interest held by Telstra, an ASX-listed telecommunications company) and (ii) Australian News Channel (“ANC”). The Foxtel Group is the largest Australian-based subscription television provider. Its Foxtel pay-TV service provides approximately 200 live channels and video on demand covering sports, general entertainment, movies, documentaries, music, children’s programming and news. Foxtel and the Group’s Kayo Sports streaming service offer the leading sports programming content in Australia, with broadcast rights to live sporting events including: National Rugby League, Australian Football League, Cricket Australia and various motorsports programming. The Foxtel Group’s other streaming services include BINGE, its entertainment streaming service, and Foxtel Now, a streaming service that provides access across Foxtel’s live and on-demand content.

ANC operates the SKY NEWS network, Australia’s 24-hour multi-channel, multi-platform news service. ANC channels are distributed throughout Australia and New Zealand and available on Foxtel and Sky Network Television NZ. ANC also owns and operates the international Australia Channel IPTV service and offers content across a variety of digital media platforms, including web, mobile and third party providers.

Dow Jones**—The Dow Jones segment consists of Dow Jones, a global provider of news and business information whose products target individual consumers and enterprise customers and are distributed through a variety of media channels including newspapers, newswires, websites, mobile apps, newsletters, magazines, proprietary databases, live journalism, video and podcasts. Dow Jones’s consumer products include premier brands such as The Wall Street Journal, Barron’s, MarketWatch and Investor’s Business Daily. Dow Jones’s professional information products, which target enterprise customers, include Dow Jones Risk & Compliance, a leading provider of data solutions to help customers identify and manage regulatory, corporate and reputational risk with tools focused on financial crime, sanctions, trade and other compliance requirements, Dow Jones Energy (which includes OPIS), a leading provider of pricing data, news, insights, analysis and other information for energy commodities and key base chemicals, Factiva, a leading provider of global business content, and Dow Jones Newswires, which distributes real-time business news, information and analysis to financial professionals and investors.
Book Publishing—The Book Publishing segment consists of HarperCollins, the second largest consumer book publisher in the world, with operations in 15 countries and particular strengths in general fiction, nonfiction, children’s and religious publishing. HarperCollins owns more than 120 branded publishing imprints, including Harper, William Morrow, Mariner, HarperCollins Children’s Books, Avon, Harlequin and Christian publishers Zondervan and Thomas Nelson, and publishes works by well-known authors such as Harper Lee, George Orwell,

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Agatha Christie and Zora Neale Hurston, as well as global author brands including J.R.R. Tolkien, C.S. Lewis, Daniel Silva, Karin Slaughter and Dr. Martin Luther King, Jr. It is also home to many beloved children’s books and authors and a significant Christian publishing business.

News Media**—The News Media segment consists primarily of News Corp Australia, News UK and the New York Post and includes The Australian, The Daily Telegraph, Herald Sun, The Courier Mail, The Advertiser and the news.com.au website in Australia, The Times, The Sunday Times, The Sun, The Sun on Sunday and thesun.co.uk in the U.K. and the-sun.com in the U.S. This segment also includes Wireless Group, operator of talkSPORT, the leading sports radio network in the U.K., TalkTV in the U.K. and Storyful, a social media content agency.
Other—The Other segment consists primarily of general corporate overhead expenses, strategy costs and costs related to the U.K. Newspaper Matters.

Segment EBITDA is the primary measure used by the Company’s chief operating decision maker to evaluate the performance of, and allocate resources within, the Company’s businesses. Segment EBITDA is defined as revenues less operating expenses and selling, general and administrative expenses. Segment EBITDA does not include: depreciation and amortization, impairment and restructuring charges, equity losses of affiliates, interest (expense) income, net, other, net and income tax (expense) benefit. Segment EBITDA may not be comparable to similarly titled measures reported by other companies, since companies and investors may differ as to what items should be included in the calculation of Segment EBITDA. Segment EBITDA provides management, investors and equity analysts with a measure to analyze the operating performance of each of the Company’s business segments and its enterprise value against historical data and competitors’ data, although historical results may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences).

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Segment information is summarized as follows:


	For the three months ended December 31,				For the six months ended December 31,
	2023		2022		2023		2022
	(in millions)
Revenues:
Digital Real Estate Services	$	419	$	386	$	822	$	807
Subscription Video Services	470		462		956		964
Dow Jones	584		563		1,121		1,078
Book Publishing	550		531		1,075		1,018
News Media	563		579		1,111		1,132
Other	—		—		—		—
Total revenues	$	2,586	$	2,521	$	5,085	$	4,999
Segment EBITDA:
Digital Real Estate Services	$	147	$	128	$	269	$	247
Subscription Video Services	77		90		170		201
Dow Jones	163		139		287		252
Book Publishing	85		51		150		90
News Media	52		59		66		77
Other	(51)		(58)		(105)		(108)
Depreciation and amortization	(179)		(174)		(350)		(353)
Impairment and restructuring charges	(13)		(19)		(51)		(40)
Equity losses of affiliates	(1)		(29)		(3)		(33)
Interest expense, net	(25)		(26)		(48)		(53)
Other, net	22		(6)		(13)		(24)
Income before income tax expense	277		155		372		256
Income tax expense	(94)		(61)		(131)		(96)
Net income	$	183	$	94	$	241	$	160


	As of December 31, 2023		As of June 30, 2023
	(in millions)
Total assets:
Digital Real Estate Services	$	3,073	$	2,942
Subscription Video Services	2,633		2,812
Dow Jones	4,178		4,305
Book Publishing	2,731		2,629
News Media	1,966		2,023
Other(a)	1,676		1,783
Investments	424		427
Total assets	$	16,681	$	16,921

(a)The Other segment primarily includes Cash and cash equivalents.

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	As of December 31, 2023		As of June 30, 2023
	(in millions)
Goodwill and intangible assets, net:
Digital Real Estate Services	$	1,826	$	1,779
Subscription Video Services	1,288		1,288
Dow Jones	3,273		3,298
Book Publishing	942		958
News Media	308		306
Total Goodwill and intangible assets, net	$	7,637	$	7,629

NOTE 12. ADDITIONAL FINANCIAL INFORMATION

Receivables, net

Receivables are presented net of allowances, which reflect the Company’s expected credit losses based on historical experience as well as current and expected economic conditions.

Receivables, net consist of:


	As of December 31, 2023		As of June 30, 2023
	(in millions)
Receivables	$	1,579	$	1,482
Less: allowances	(63)		(57)
Receivables, net	$	1,516	$	1,425

Other Non-Current Assets

The following table sets forth the components of Other non-current assets:


	As of December 31, 2023		As of June 30, 2023
	(in millions)
Royalty advances to authors	$	384	$	376
Retirement benefit assets	141		134
Inventory(a)	236		267
News America Marketing deferred consideration	164		157
Other	395		407
Total Other non-current assets	$	1,320	$	1,341

(a)Primarily consists of the non-current portion of programming rights.

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Other Current Liabilities

The following table sets forth the components of Other current liabilities:


	As of December 31, 2023		As of June 30, 2023
	(in millions)
Royalties and commissions payable	$	242	$	206
Current operating lease liabilities	111		112
Allowance for sales returns	155		154
Current tax payable	11		16

Other	359		465
Total Other current liabilities	$	878	$	953

Other, net

The following table sets forth the components of Other, net:


	For the three months ended December 31,				For the six months ended December 31,
	2023		2022		2023		2022
	(in millions)
Remeasurement of equity securities	$	13	$	(11)	$	(10)	$	(14)
Dividends received from equity security investments	1		2		3		4

Gain on remeasurement of previously-held interest	—		—		4		—
Other	8		3		(10)		(14)
Total Other, net	$	22	$	(6)	$	(13)	$	(24)

Supplemental Cash Flow Information

The following table sets forth the Company’s cash paid for taxes and interest:


	For the six months ended December 31,
	2023		2022
	(in millions)
Cash paid for interest	$	51	$	54
Cash paid for taxes	$	74	$	81

NOTE 13. SUBSEQUENT EVENTS

Dividend declaration

In February 2024, the Company’s Board of Directors declared a semi-annual cash dividend of $0.10 per share for Class A Common Stock and Class B Common Stock. The dividend is payable on April 10, 2024 to stockholders of record as of March 13, 2024.

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