FOX · Read the filing

ITEM 7. 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 consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. The consolidated financial statements are referred to as the "Financial Statements" herein.

INTRODUCTION

The Distribution

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

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

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

In connection with the Separation, the Company entered into several agreements that govern certain aspects of the Company's relationship with 21CF and Disney following the Separation, including the Separation Agreement and a tax matters agreement. The core transition services agreements entered into in connection with the Separation terminated in accordance with their terms in fiscal 2022.

Basis of Presentation

The Company's financial statements are presented on a consolidated basis.

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 either during the fiscal year ended June 30, ("fiscal") 2022 or early fiscal 2023 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 fiscal 2022, 2021 and 2020. 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 Resources—This section provides an analysis of the Company's cash flows for fiscal 2022, 2021 and 2020, as well as a discussion of the Company's outstanding debt and commitments, both firm and contingent, that existed as of June 30, 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.

•Critical Accounting Policies—This section discusses accounting policies considered important to the Company's financial condition and results of operations, and which require significant judgment and estimates on the part of management in application. In addition, Note 2—Summary of Significant Accounting Policies to the accompanying Financial Statements summarizes the Company's significant accounting policies, including the critical accounting policy discussion found in this section.

•Caution Concerning Forward-Looking Statements—This section provides a description of the use of forward-looking information appearing in this Annual Report on Form 10-K, 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 Item 1A. "Risk Factors" in this Annual Report 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 produces and licenses news and sports content distributed through traditional cable television systems, direct broadcast satellite operators and telecommunication companies ("traditional MVPDs"), virtual multi-channel video programming distributors ("virtual MVPDs") and other digital platforms, primarily in the U.S.

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

•Other, Corporate and Eliminations, which principally consists of the FOX Studio Lot, Credible 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.

The Company's Cable Network Programming and Television segments derive the majority of their revenues from affiliate fees for the transmission of content and advertising sales. For fiscal 2022, the Company generated revenues of $14.0 billion, of which approximately 49% was generated from affiliate fees, approximately 42% was generated from advertising, and approximately 9% was generated from other operating activities.

Affiliate fees primarily include (i) monthly subscriber-based license and retransmission consent fees paid by programming distributors that carry our cable networks and our owned and operated television stations and (ii) fees received from non-owned and operated television stations that are affiliated with the FOX Network. U.S. law governing retransmission consent provides a mechanism for the television stations owned by the Company to seek and obtain payment from traditional MVPDs that carry the Company's broadcast signals.

The Company's revenues are impacted by rate changes, changes in the number of subscribers to the Company's content and changes in the expenditures by advertisers. In addition, advertising revenues are subject to seasonality and cyclicality as a result of the impact of state, congressional and presidential election cycles and special events that air on the Company's networks, including the National Football League's ("NFL") Super Bowl, which is broadcast on the FOX Network on a rotating basis with other networks, and the Fédération Internationale de Football Association ("FIFA") World Cup, which occurs every four years (for each of women and men), and other regular and post-season sports events, including one NFL Divisional playoff game that is aired on a rotating annual basis with another network.

The cable network programming and television industries continue to evolve rapidly, with changes in technology leading to alternative methods for the delivery and storage of digital content. These technological advancements have driven changes in consumer behavior as consumers seek more control over when, where and how they consume content. Consumer preferences have evolved toward alternatives, including direct-to-consumer offerings. These changes in technologies and consumer behavior have contributed to declines in the number of subscribers to MVPD services, and these declines are expected to continue and possibly accelerate in the future.

At the same time, technological changes have affected advertisers' options for reaching their target audiences. There has been a substantial increase in the availability of content with reduced advertising or without advertising at all. As consumers switch to digital consumption of video content, there is still to be developed a consistent, broadly accepted measure of multiplatform audiences across the industry. Furthermore, the pricing and volume of advertising may be affected by shifts in spending from more traditional media and toward digital and mobile offerings, which can deliver targeted advertising more promptly, or toward newer ways of purchasing advertising. In addition, the market for AVOD advertising campaigns is relatively new and evolving.

The Company operates in a highly competitive industry and its performance is dependent, to a large extent, on the impact of changes in consumer behavior as a result of new technologies, the sale of advertising, the maintenance, renewal and terms of its carriage, affiliation and content agreements and programming rights, the popularity of its content, general economic conditions (including financial market conditions), the Company's ability to manage its businesses effectively, and its relative strength and leverage in the industry. For more information, see Item 1. "Business" and Item 1A. "Risk Factors."

RESULTS OF OPERATIONS

Results of Operations—Fiscal 2022 versus Fiscal 2021

The following table sets forth the Company’s operating results for fiscal 2022, as compared to fiscal 2021:

For the years ended June 30,

(in millions, except %) Better/(Worse)

Revenues

Selling, general and administrative (1,920) (1,807) (113) (6) %

Depreciation and amortization (363) (300) (63) (21) %

Impairment and restructuring charges — (35) 35 100 %

Less: Net income attributable to noncontrolling interests (28) (51) 23 45 %

** not meaningful

Overview—The Company's revenues increased 8% for fiscal 2022, as compared to 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 coronavirus disease 2019 ("COVID-19") related under-delivery of college football games. The increase in advertising revenue was primarily due to higher pricing at FOX Sports and FOX News Media, growth at TUBI, and a higher number of live events at FOX Sports due to the impact of COVID-19 in fiscal 2021. Partially offsetting this increase was lower political advertising revenue due to the absence of the 2020 presidential and congressional elections. The increase in other revenues was primarily due to higher sports sublicensing revenues which were impacted by COVID-19 in fiscal 2021, the impact of acquisitions of entertainment production companies in fiscal 2022 (See Note 3—Acquisitions, Disposals and Other Transactions to the accompanying Financial Statements) and higher FOX Nation subscription revenues, partially offset by the impact of the divestiture of the Company's sports marketing businesses in fiscal 2021.

Operating expenses increased 13% for fiscal 2022, as compared to 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 fiscal 2021. Also impacting the increase was increased digital investment at TUBI and FOX News Media, costs associated with the launch of the United States Football League ("USFL") and higher entertainment programming rights amortization due to more hours of original scripted programming as compared to fiscal 2021 which was impacted by COVID-19. This increase was partially offset by the absence of events that were shifted into fiscal 2021 from fiscal 2020 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 in fiscal 2021.

Selling, general and administrative expenses increased 6% for fiscal 2022, as compared to 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 in fiscal 2021.

Depreciation and amortization—Depreciation and amortization expense increased 21% for fiscal 2022, as compared to fiscal 2021, primarily due to assets placed into service during the fourth quarter of fiscal 2021 for the Company's standalone broadcast technical facilities and the impact of acquisitions of entertainment production companies in fiscal 2022.

Impairment and restructuring charges—See Note 4—Restructuring Programs to the accompanying Financial Statements.

Interest expense, net—Interest expense, net decreased 5% for fiscal 2022, as compared to fiscal 2021, primarily due to the repayment of $750 million of senior notes in January 2022 (See Note 9— Borrowings to the accompanying Financial Statements).

Other, net—See Note 20—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 27% for fiscal 2022 was higher than the statutory rate of 21% primarily due to state taxes and a remeasurement of the Company's net deferred tax assets associated with changes in the mix of jurisdictional earnings. The Company's tax provision and related effective tax rate of 25% for fiscal 2021 was higher than the statutory rate of 21% primarily due to state taxes, partially offset by a benefit from the reduction of uncertain tax positions for state tax audits.

Net income—Net income decreased 44% for fiscal 2022, as compared to fiscal 2021, primarily due the change in fair value of the Company's investment in Flutter Entertainment plc and the absence of the reimbursement from Disney of $462 million related to the substantial settlement of the Company's prepayment of its share of the Divestiture Tax, which occurred during fiscal 2021 (See Note 20—Additional Financial Information to the accompanying Financial Statements under the heading "Other, net").

Results of Operations—Fiscal 2021 versus Fiscal 2020

The following table sets forth the Company's operating results for fiscal 2021, as compared to fiscal 2020:

For the years ended June 30,

(in millions, except %) Better/(Worse)

Revenues

Selling, general and administrative (1,807) (1,741) (66) (4) %

Depreciation and amortization (300) (258) (42) (16) %

Impairment and restructuring charges (35) (451) 416 92 %

Less: Net income attributable to noncontrolling interests (51) (63) 12 19 %

Net income attributable to Fox Corporation stockholders $ 2,150 $ 999 $ 1,151 **

** not meaningful

Overview—The Company's revenues increased 5% for fiscal 2021, as compared to fiscal 2020, as higher affiliate fee and advertising revenues were partially offset by lower other revenue. The increase in affiliate fee revenue was primarily attributable to higher average rates due to rate increases from affiliate agreement renewals and contractual rate increases on existing affiliate agreements, partially offset by the impact of a lower average number of subscribers and estimated affiliate fee credits provided as a result of cancelled live college football games due to COVID-19. The increase in advertising revenue was primarily due to the impact of the consolidation of TUBI, which experienced record viewership and record advertising revenue, higher political advertising revenue at the FOX Television Stations related to the 2020 presidential and congressional elections, higher linear and digital advertising revenue from the 2020 presidential election coverage at FOX News Media, and the rotating broadcast of one additional NFL Divisional playoff game, partially offset by the comparative effect of the broadcast of the NFL's Super Bowl LIV in February 2020 (the "Super Bowl") and lower ratings at the FOX Network due in part to COVID-19-impacted schedules in fiscal 2021.

Operating expenses increased 3% for fiscal 2021, as compared to fiscal 2020, primarily due to the impact of the consolidation of TUBI, partially offset by lower sports programming rights amortization and production costs, including the absence of the broadcast of the Super Bowl in fiscal 2021 and the cancellation of live college football games, and lower entertainment programming rights amortization due to fewer hours of original scripted programming as a result of COVID-19. Partially offsetting lower sports programming rights amortization and production costs were contractual rate increases for NFL, MLB and college football content, the rotating broadcast of one additional NFL Divisional playoff game and a higher volume of NASCAR races due to fewer races following the COVID-19-impacted schedule in fiscal 2020.

Selling, general and administrative expenses increased 4% for fiscal 2021, as compared to fiscal 2020, primarily due to higher legal and marketing expenses and the impact of acquisitions that occurred in fiscal 2020 (the "Fiscal 2020 Acquisitions") (See Note 3—Acquisitions, Disposals and Other Transactions to the

accompanying Financial Statements), partially offset by lower professional fees, lower bad debt expense and lower marketing costs associated with the absence of the Super Bowl in the current year.

Depreciation and amortization—Depreciation and amortization expense increased 16% for fiscal 2021, as compared to fiscal 2020, primarily due to assets placed into service as the Company transitioned from service agreements in connection with the Separation and the Fiscal 2020 Acquisitions.

Impairment and restructuring charges—See Note 4—Restructuring Programs to the accompanying Financial Statements.

Interest expense, net—Interest expense, net increased 17% million for fiscal 2021, as compared to fiscal 2020, due to lower interest income primarily due to lower interest rates and higher interest expense primarily due to the issuance of $1.2 billion of senior notes in April 2020 (See Note 9—Borrowings to the accompanying Financial Statements under the heading "Public Debt – Senior Notes Issued" for additional information).

Other, net—See Note 20—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 25% for fiscal 2021 was higher than the statutory rate of 21% primarily due to state taxes, partially offset by a benefit from the reduction of uncertain tax positions for state tax audits. The Company's tax provision and related effective tax rate of 27% for fiscal 2020 was higher than the statutory rate of 21% primarily due to state taxes and other permanent items. See Note 16—Income Taxes to the accompanying Financial Statements.

Net income—Net income increased $1.1 billion for fiscal 2021 as compared to fiscal 2020, primarily due the receipt of the $462 million reimbursement from Disney related to the Divestiture Tax (See Note 1—Description of Business and Basis of Presentation to the accompanying Financial Statements), higher Segment EBITDA (as defined below) at the Cable Network Programming and Television segments and higher net gains on investments in equity securities (See Note 20—Additional Financial Information to the accompanying Financial Statements under the heading "Other, net"), partially offset by lower restructuring charges due to the contract termination costs related to a programming rights agreement with the United States Golf Association ("USGA") in fiscal 2020 (See Note 4—Restructuring Programs to the accompanying Financial Statements under the heading "Fiscal 2020") and higher income tax expense.

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) benefit. 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.

Fiscal 2022 versus Fiscal 2021

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

For the years ended June 30,

(in millions, except %) Better/(Worse)

Revenues

Other, Corporate and Eliminations 192 178 14 8 %

For the years ended June 30,

(in millions, except %) Better/(Worse)

Segment EBITDA

Other, Corporate and Eliminations (326) (344) 18 5 %

Cable Network Programming (44% of the Company's revenues in fiscal 2022 and 2021)

For the years ended June 30,

(in millions, except %) Better/(Worse)

Revenues

Selling, general and administrative (586) (540) (46) (9) %

Amortization of cable distribution investments 18 22 (4) (18) %

Revenues at the Cable Network Programming segment increased for fiscal 2022, as compared to 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 fiscal 2021 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 virtual MVPD subscribers. The increase in advertising revenue was primarily due to higher pricing at FOX News Media and higher pricing and an increase in the 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 fiscal 2021. This increase was partially offset by lower political advertising revenue due to the absence of the 2020 presidential elections. The increase in other revenues was primarily due to higher sports sublicensing revenues, which were impacted by COVID-19

in fiscal 2021, and higher FOX Nation subscription revenues, partially offset by the impact of the divestiture of the Company's sports marketing businesses in fiscal 2021.

Cable Network Programming Segment EBITDA increased for fiscal 2022, as compared to 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 fiscal 2021, increased investment in digital growth initiatives at FOX News Media and costs associated with the launch of USFL. This increase was partially offset by the absence of events that were shifted into fiscal 2021 from fiscal 2020 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 in fiscal 2021. 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 in fiscal 2021.

Television (55% of the Company's revenues in fiscal 2022 and 2021)

For the years ended June 30,

(in millions, except %) Better/(Worse)

Revenues

Selling, general and administrative (907) (831) (76) (9) %

Revenues at the Television segment increased for fiscal 2022, as compared to fiscal 2021, due to higher advertising, affiliate fee and other revenues. The increase in advertising revenue was primarily attributable to higher pricing as well as the return of a full schedule of college football in fiscal 2022 at FOX Sports and continued growth at TUBI, partially offset by lower political advertising revenue at the FOX Television Stations due to the absence of the 2020 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 impact of acquisitions of entertainment production companies.

Television Segment EBITDA decreased for fiscal 2022, as compared to fiscal 2021, as the revenue increases noted above were more than offset by higher expenses. Operating expenses increased primarily due to higher sports programming rights amortization and production costs related to NFL, MLB and college football content, including a higher number of college football games as compared to the COVID-19 impacted fiscal 2021, increased digital investment at TUBI and higher entertainment programming rights amortization due to more hours of original scripted programming as compared to fiscal 2021, 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 fiscal 2022 and 2021)

For the years ended June 30,

(in millions, except %) Better/(Worse)

Operating expenses (91) (86) (5) (6) %

Selling, general and administrative (427) (436) 9 2 %

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

Fiscal 2021 versus Fiscal 2020

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

For the years ended June 30,

(in millions, except %) Better/(Worse)

Revenues

For the years ended June 30,

(in millions, except %) Better/(Worse)

Segment EBITDA

Other, Corporate and Eliminations (344) (357) 13 4 %

Cable Network Programming (44% and 45% of the Company's revenues in fiscal 2021 and 2020, respectively)

For the years ended June 30,

(in millions, except %) Better/(Worse)

Revenues

Selling, general and administrative (540) (494) (46) (9) %

Amortization of cable distribution investments 22 24 (2) (8) %

Revenues at the Cable Network Programming segment increased for fiscal 2021 as compared to fiscal 2020 as the increases in advertising and affiliate fee revenues were partially offset by lower other revenue. The increase in advertising revenue was primarily due to higher linear and digital advertising revenue from the 2020 presidential election coverage at FOX News Media. The increase in affiliate fee revenue was primarily due to rate increases from affiliate agreement renewals and contractual rate increases on existing affiliate agreements, partially offset by a lower average number of subscribers and estimated affiliate fee credits provided as a result of the cancellation of live college football games due to COVID-19. The decrease in the average number of subscribers was due to a reduction in traditional MVPD subscribers, partially offset by an increase in virtual MVPD subscribers. The decrease in other revenues was primarily attributable to lower sports sublicensing revenues and lower revenues generated from Premier Boxing Champions ("PBC") pay-per-view events due in part to COVID-19.

Cable Network Programming Segment EBITDA increased for fiscal 2021 as compared to fiscal 2020 primarily due to the revenue increases noted above, partially offset by higher expenses. Selling, general and administrative expenses increased primarily due to higher legal and marketing expenses, including promotional expenses associated with FOX Nation. Operating expenses decreased primarily due to lower sports programming rights amortization and production costs driven by cancelled live games in the first half of fiscal 2021, partially offset by the shift of NASCAR races and MLB regular season games into fiscal 2021 as a result of COVID-19 and contractual rate increases for MLB and college football content.

Television (55% and 54% of the Company's revenues in fiscal 2021 and 2020, respectively)

For the years ended June 30,

(in millions, except %) Better/(Worse)

Revenues

Selling, general and administrative (831) (794) (37) (5) %

Revenues at the Television segment increased for fiscal 2021, as compared to fiscal 2020, due to higher affiliate fee and other revenues partially offset by lower advertising revenue. 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 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 higher revenues at the Company's entertainment production companies. The decrease in advertising revenue was primarily due to the comparative effect of the broadcast of the Super Bowl in fiscal 2020 and lower ratings at the FOX Network due in part to COVID-19-impacted schedules partially offset by the impact of the consolidation of TUBI, higher political advertising revenue at the FOX Television Stations related to the 2020 presidential and congressional elections and the rotating broadcast of one additional NFL Divisional playoff game.

Television Segment EBITDA increased for fiscal 2021, as compared to fiscal 2020, due to the revenue increases noted above partially offset by higher expenses. Operating expenses increased primarily due to the impact of the consolidation of TUBI partially offset by lower sports programming rights amortization and production costs, including the absence of the broadcast of the Super Bowl in fiscal 2021, and lower entertainment programming rights amortization due to fewer hours of original scripted programming as a result of COVID-19. Partially offsetting the decrease in sports programming rights amortization and production costs were contractual rate increases for NFL, MLB and college football content and the rotating broadcast of one additional NFL Divisional playoff game. Selling, general and administrative expenses increased primarily due to the Fiscal 2020 Acquisitions (See Note 3— Acquisitions, Disposals and Other Transactions to the accompanying Financial Statements) partially offset by lower bad debt expense and lower marketing costs associated with the absence of the Super Bowl in fiscal 2021.

Other, Corporate and Eliminations (1% of the Company's revenues for fiscal 2021 and 2020)

For the years ended June 30,

(in millions, except %) Better/(Worse)

Selling, general and administrative (436) (453) 17 4 %

Revenues at the Other, Corporate and Eliminations segment increased for fiscal 2021, as compared to fiscal 2020, primarily due to the impact of the consolidation of Credible in the second quarter of fiscal 2020 and growth at Credible. Operating expenses increased primarily due to the impact of the consolidation of Credible and growth at Credible. Selling, general and administrative expenses decreased primarily due to lower professional fees.

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.

Fiscal 2022 versus Fiscal 2021

The following table reconciles Net income to Adjusted EBITDA for fiscal 2022, as compared to fiscal 2021:

For the years ended June 30,

(in millions)

Add

Amortization of cable distribution investments 18 22

Depreciation and amortization 363 300

Impairment and restructuring charges — 35

The following table sets forth the computation of Adjusted EBITDA for fiscal 2022, as compared to fiscal 2021:

For the years ended June 30,

(in millions)

Selling, general and administrative (1,920) (1,807)

Amortization of cable distribution investments 18 22

Fiscal 2021 versus Fiscal 2020

The following table reconciles Net income to Adjusted EBITDA for fiscal 2021, as compared to fiscal 2020:

For the years ended June 30,

(in millions)

Add

Amortization of cable distribution investments 22 24

Depreciation and amortization 300 258

Impairment and restructuring charges 35 451

The following table sets forth the computation of Adjusted EBITDA for fiscal 2021, as compared to fiscal 2020:

For the years ended June 30,

(in millions)

Selling, general and administrative (1,807) (1,741)

Amortization of cable distribution investments 22 24

LIQUIDITY AND CAPITAL RESOURCES

Current Financial Condition

The Company has approximately $5.2 billion of cash and cash equivalents as of June 30, 2022 and an unused five-year $1.0 billion unsecured revolving credit facility (See Note 9—Borrowings to the accompanying Financial Statements). The Company also has access to the worldwide capital markets, subject to market conditions. As of June 30, 2022, the Company was in compliance with all of the covenants under its 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 and dispositions disclosed within Note 3—Acquisitions, Disposals, and Other Transactions to the accompanying Financial Statements, 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—Fiscal 2022 vs. Fiscal 2021

Net cash provided by operating activities for fiscal 2022 and 2021 was as follows (in millions):

Net cash provided by operating activities $ 1,884 $ 2,639

The decrease in net cash provided by operating activities during fiscal 2022, as compared to fiscal 2021, was primarily due to higher sports payments and entertainment production spending as well as lower Adjusted EBITDA.

Net cash used in investing activities for fiscal 2022 and 2021 was as follows (in millions):

Net cash used in investing activities $ (513) $ (528)

The decrease in net cash used in investing activities during fiscal 2022, as compared to fiscal 2021, was primarily due to lower capital expenditures in connection with establishing the Company's standalone broadcast technical facilities placed into service in fiscal 2021, partially offset by higher fiscal 2022 acquisitions (See Note 3—Acquisitions, Disposals, and Other Transactions to the accompanying Financial Statements).

Net cash used in financing activities for fiscal 2022 and 2021 was as follows (in millions):

Net cash used in financing activities $ (2,057) $ (870)

The increase in net cash used in financing activities during fiscal 2022, as compared to fiscal 2021, was primarily due to the $750 million repayment of senior notes that matured in January 2022 (See Note 9—Borrowings to the accompanying Financial Statements) and the absence of cash received from Disney in fiscal 2021, including the $462 million reimbursement related to the Divestiture Tax.

Stock Repurchase Program

See Note 11—Stockholders' Equity to the accompanying Financial Statements under the heading "Stock Repurchase Program."

Dividends

Dividends paid in fiscal 2022 totaled $0.48 per share of Class A Common Stock and Class B Common Stock. Subsequent to June 30, 2022, the Company increased its semi-annual dividend and declared a semi-annual dividend of $0.25 per share on both the Class A Common Stock and the Class B Common Stock. The dividend declared is payable on September 28, 2022 with a record date for determining dividend entitlements of August 31, 2022.

Based on the number of shares outstanding as of June 30, 2022, and the new annual dividend rate stated above, the total aggregate cash dividends expected to be paid to stockholders in fiscal 2023 is approximately $275 million, which is consistent with fiscal 2022.

Sources and Uses of Cash—Fiscal 2021 vs. Fiscal 2020

Net cash provided by operating activities for fiscal 2021 and 2020 was as follows (in millions):

Net cash provided by operating activities $ 2,639 $ 2,365

The increase in net cash provided by operating activities during fiscal 2021, as compared to fiscal 2020, was comprised of higher Segment EBITDA and higher programming amortization over cash payments at the Television segment partially offset by higher advertising and affiliate billings along with higher tax payments.

Net cash used in investing activities for fiscal 2021 and 2020 was as follows (in millions):

Net cash used in investing activities $ (528) $ (1,100)

Net cash used in investing activities during fiscal 2021 was primarily comprised of payments related to investments made in connection with establishing the Company's standalone broadcast technical facilities as compared to the acquisitions of TUBI, three television stations and Credible during fiscal 2020.

Net cash (used in) provided by financing activities for fiscal 2021 and 2020 was as follows (in millions):

Net cash (used in) provided by financing activities $ (870) $ 146

Net cash used in financing activities during fiscal 2021 was primarily comprised of repurchases of shares of the Company's Common Stock and dividends paid to stockholders of $1.3 billion partially offset by the $462 million reimbursement from Disney related to the Divestiture Tax. The net cash provided by financing activities during fiscal 2020 was primarily due to the April 2020 issuance of $1.2 billion of senior notes, partially offset by repurchases of shares of the Company's Common Stock and dividends paid of $935 million to stockholders during fiscal 2020.

Debt Instruments

The following table summarizes cash from borrowings and cash (used in) repayment of borrowings for fiscal 2022, 2021 and 2020:

For the years ended June 30,

(in millions)

Borrowings

Total borrowings $ (750) $ — $ 1,191

Ratings of the Senior Notes

The following table summarizes the Company's credit ratings as of June 30, 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 9—Borrowings to the accompanying Financial Statements).

Commitments and Contingencies

The Company has commitments under certain firm contractual arrangements ("firm commitments") to make future payments. These firm commitments secure the future rights to various assets and services to be used in the normal course of operations. For additional details on commitments and contingencies see Note 14—Commitments and Contingencies to the accompanying Financial Statements under the headings "Operating leases," "Licensed Programming," "Other commitments and contractual obligations" and "Contingencies."

Pension and other postretirement benefits and uncertain tax benefits

The table in Note 14—Commitments and Contingencies to the accompanying Financial Statements excludes the Company's pension and other postretirement benefits ("OPEB") obligations and the gross unrecognized tax benefits for uncertain tax positions as the Company is unable to reasonably predict the ultimate amount and timing. The Company made contributions of $59 million and $63 million to its pension plans in fiscal 2022 and 2021, respectively. The majority of these contributions were voluntarily made to improve the funded status of the plans. Future plan contributions are dependent upon actual plan asset returns, interest rates and statutory requirements. Assuming that actual plan asset returns are consistent with the Company's expected plan returns in fiscal 2023 and beyond and that interest rates remain constant, the Company would not be required to make any material contributions to its pension plans for the immediate future. Required pension plan contributions for the next fiscal year are not expected to be material but the Company may make voluntary contributions in future periods. Payments due to participants under the Company's pension plans are primarily paid out of underlying trusts. Payments due under the Company's OPEB plans are not required to be funded in advance, but are paid as medical costs are incurred by covered retiree populations, and are principally dependent upon the future cost of retiree medical benefits under the Company's OPEB plans. The Company does not expect its net OPEB payments to be material in fiscal 2023 (See Note 15—Pension and Other Postretirement Benefits to the accompanying Financial Statements for further discussion of the Company's pension and OPEB plans).

CRITICAL ACCOUNTING POLICIES

An accounting policy is considered to be critical if it is important to the Company's financial condition and results of operations and if it requires significant judgment and estimates on the part of management in its application. The development and selection of these critical accounting policies have been determined by management of the Company and the related disclosures have been reviewed with the Audit Committee of the Company's Board of Directors. For the Company's summary of significant accounting policies, see Note 2—Summary of Significant Accounting Policies to the accompanying Financial Statements.

Use of Estimates

See Note 2—Summary of Significant Accounting Policies to the accompanying Financial Statements under the heading "Use of Estimates."

Revenue Recognition

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

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

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

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

Inventories

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

Owned programming includes content internally developed and produced as well as co-produced content. Capitalized costs for owned programming are predominately amortized using the individual-film-forecast-computation method, which is based on the ratio of current period revenue to estimated total future remaining revenue, and related costs to be incurred throughout the life of the respective program. When production

partners distribute owned programming on the Company's behalf, the net participation in profits is recorded as content license revenue.

Inventories are evaluated for recoverability when an event or circumstance occurs that indicates that fair value may be less than unamortized costs. The Company will determine if there is an impairment by evaluating the fair value of the inventories, which are primarily supported by internal forecasts as compared to unamortized costs. Where an evaluation indicates unamortized costs, including advances on multi-year sports rights contracts, are not recoverable, amortization of rights is accelerated in an amount equal to the amount by which the unamortized costs exceed fair value. Owned programming is monetized and tested for impairment on an individual basis. Licensed programming is predominately monetized as a group and tested for impairment on a channel, network, or daypart basis. The recoverability of certain sports rights is assessed on an aggregate basis. The Company recognized impairments of approximately $50 million, nil, and $95 million in fiscal 2022, 2021 and 2020, respectively, related to licensed and owned programming at the Cable Network Programming and Television segments, which were recorded in Operating expenses in the Consolidated Statements of Operations.

Goodwill and Other Intangible Assets

The Company accounts for its business combinations under the acquisition method of accounting. The total cost of acquisitions is allocated to the underlying net assets acquired, based on their respective estimated fair values at the date of acquisition. Goodwill is recorded as the difference between the consideration transferred to acquire entities and the estimated fair values assigned to their tangible and identifiable intangible net assets and is assigned to one or more reporting units for purposes of testing for impairment. Determining the fair value of assets acquired and liabilities assumed requires management's judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. Identifying reporting units and assigning goodwill to them requires judgment involving the aggregation of business units with similar economic characteristics and the identification of existing business units that benefit from the acquired goodwill. The judgments made in determining the estimated fair value assigned to each class of intangible assets acquired, their reporting unit, as well as their useful lives can significantly impact net income. The Company allocates goodwill to disposed businesses using the relative fair value method.

Carrying values of goodwill and intangible assets with indefinite lives are reviewed at least annually for possible impairment. The Company's impairment review is based on a discounted cash flow analysis and market-based valuation approach that requires significant management judgment. The Company uses its judgment in assessing whether assets may have become impaired between annual valuations. Indicators such as unexpected adverse economic factors, unanticipated technological changes or competitive activities, loss of key personnel and acts by governments and courts, may signal that an asset has become impaired and require the Company to perform an interim impairment test.

The Company uses direct valuation methods to value identifiable intangibles for acquisition accounting and impairment testing. The direct valuation method used for FCC licenses requires, among other inputs, the use of published industry data that are based on subjective judgments about future advertising revenues in the markets where the Company owns television stations. This method also involves the use of management's judgment in estimating an appropriate discount rate reflecting the risk of a market participant in the U.S. broadcast industry. The resulting fair values for FCC licenses are sensitive to these long-term assumptions and any variations to such assumptions could result in an impairment to existing carrying values in future periods and such impairment could be material.

During fiscal 2022, the Company determined that the goodwill and indefinite-lived intangible assets included in the accompanying Consolidated Balance Sheet as of June 30, 2022, were not impaired based on the Company's annual assessment. While the Company believes its judgments represent reasonably possible outcomes based on available facts and circumstances, adverse changes to the assumptions, including those related to macroeconomic factors, comparable public company trading values and prevailing conditions in the capital markets, could lead to future declines in the fair value of a reporting unit in the Other, Corporate and Eliminations segment and a potential non-cash goodwill impairment charge. The estimated fair value of this

reporting unit was determined using a combination of the income approach, which incorporates the use of a discounted cash flow analysis, and the market approach, which incorporates the use of revenue multiples based on market data. Fair value exceeded the carrying value of this reporting unit by less than 20% as of June 30, 2022. Further adverse changes in market conditions may result in a partial or full impairment of the approximately $250 million of goodwill in this reporting unit as of June 30, 2022. The Company determined that there are no other reporting units at risk of impairment as of June 30, 2022, and will continue to monitor its goodwill and indefinite-lived intangible assets for any possible future non-cash impairment charges.

See Note 2—Summary of Significant Accounting Policies to the accompanying Financial Statements under the heading "Annual Impairment Review" for further discussion.

Income Taxes

The Company is subject to income tax primarily in various domestic jurisdictions. The Company computes its annual tax rate based on the statutory tax rates and tax planning opportunities available to it in the various jurisdictions in which it earns income. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining the Company's tax expense and in evaluating its tax positions, including evaluating uncertainties under ASC 740, "Income Taxes."

The Company records valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In making this assessment, management analyzes future taxable income, reversing temporary differences and ongoing tax planning strategies. Should a change in circumstances lead to a change in judgment about the realizability of deferred tax assets in future years, the Company would adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.

Employee Costs

The Company participates in and/or sponsors various pension, savings and postretirement benefit plans. Pension plans and postretirement benefit plans are closed to new participants with the exception of a small group covered by collective bargaining agreements. The measurement and recognition of costs of the Company's pension and OPEB plans require the use of significant management judgments, including discount rates, expected return on plan assets and other actuarial assumptions.

For financial reporting purposes, net periodic pension expense is calculated based upon a number of actuarial assumptions, including a discount rate, an expected rate of return on plan assets and mortality. The Company considers current market conditions, including changes in investment returns and interest rates, in making these assumptions. The expected long-term rate of return is determined using the current target asset allocation of 35% equity securities, 55% fixed income securities and 10% in other investments, and applying expected future returns for the various asset classes and correlations amongst the asset classes. A portion of the fixed income investments is allocated to cash to pay near-term benefits.

The discount rate reflects the market rate for high-quality fixed income investments on the Company's annual measurement date of June 30 and is subject to change each fiscal year. The discount rate assumptions used to account for pension and other postretirement benefit plans reflect the rates at which the benefit obligations could be effectively settled. The rate was determined by matching the Company's expected benefit payments for the plans to a hypothetical yield curve developed using a portfolio of several hundred high-quality non-callable corporate bonds.

The key assumptions used in developing the Company's fiscal 2022, 2021 and 2020 net periodic pension expense for its plans consist of the following:

(in millions, except %)

Discount rate for service cost 2.8 % 2.9 % 3.7 %

Discount rate for interest cost 2.1 % 2.2 % 3.2 %

Assets

Expected rate of return 5.1 % 6.5 % 7.0 %

Actuarial (loss) gain $ (202) $ 145 $ (31)

One year actual return (15.8) % 26.1 % 3.4 %

Discount rates are volatile from year to year because they are determined based upon the prevailing rates as of the measurement date. The Company will utilize discount rates of 4.8% and 4.5% in calculating the fiscal 2023 service cost and interest cost, respectively, for its plans. The Company will use an expected long-term rate of return of 5.0% for fiscal 2023 based principally on the future return expectation of the plans' asset mix. The accumulated pre-tax net losses on the Company's pension and postretirement benefit plans as of June 30, 2022 were $292 million which decreased from $424 million as of June 30, 2021. This decrease of $132 million was primarily due to the change in the discount rate assumption utilized in measuring plan obligations, updates to other valuation assumptions and the recognition of deferred losses related to amortization partially offset by asset losses. The overall accumulated pre-tax net losses as of June 30, 2022 were primarily the result of changes in discount rates. Higher discount rates decrease the present value of benefit obligations and reduce the Company's accumulated net loss, which decreases the amortization component of subsequent-year pension expense. Lower discount rates increase the present value of benefit obligations and increase the Company's accumulated net loss, which increases the amortization component of subsequent-year pension expense. These deferred losses are being systematically recognized in future net periodic pension expense in accordance with ASC 715, "Compensation—Retirement Benefits." Unrecognized losses in excess of 10% of the greater of the market-related value of plan assets or the plans' projected benefit obligation ("PBO") are recognized over the average future service of the plan participants or average future life of the plan participants.

The Company made contributions of $59 million, $63 million and $30 million to its pension plans in fiscal 2022, 2021 and 2020, respectively. The majority of these contributions were voluntarily made to improve the funding status of the plans which were impacted by the economic conditions noted above. Future plan contributions are dependent upon actual plan asset returns, statutory requirements and interest rate movements. Assuming that actual plan returns are consistent with the Company's expected plan returns in fiscal 2023 and beyond and that interest rates remain constant, the Company would not be required to make any material statutory contributions to its pension plans for the immediate future. The Company will continue to make voluntary contributions as necessary to improve funded status.

Changes in net periodic pension expense may occur in the future due to changes in the Company's expected rate of return on plan assets and discount rate resulting from economic events. The following table highlights the sensitivity of the Company's pension obligations and expense to changes in these assumptions, assuming all other assumptions remain constant:

Changes in Assumption Impact on AnnualPension Expense Impact on PBO

Fiscal 2023 net periodic pension expense for the Company's pension plans is expected to increase to approximately $65 million primarily due to asset losses during fiscal 2022 and an increase in interest costs due to higher discount rates.

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:

•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 MVPDs;

•declines in advertising expenditures due to various factors such as the economic prospects of advertisers or the economy, major sports events and election 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 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 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 and other widespread health emergencies or pandemics 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;

•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 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 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 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 and the indemnification arrangements entered into in connection with the Transaction; and

•the other risks and uncertainties detailed in Item 1A. "Risk Factors" in this Annual Report.

Forward-looking statements in this Annual Report 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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

Interest Rates

The Company's current financing arrangements and facilities include $7.25 billion of outstanding fixed-rate debt, before adjustments for unamortized discount and debt issuance costs (See Note 9—Borrowings to the accompanying Financial Statements).

Fixed and variable-rate debts are impacted differently by changes in interest rates. A change in the interest rate or yield of fixed-rate debt will only impact the fair market value of such debt, while a change in the interest rate of variable-rate debt will impact interest expense, as well as the amount of cash required to service

such debt. As of June 30, 2022, all the Company's financial instruments with exposure to interest rate risk were denominated in U.S. dollars and no variable-rate debt was outstanding. Information on financial instruments with exposure to interest rate risk is presented below:

As of June 30,

(in millions)

Fair Value

Sensitivity Analysis

Stock Prices

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

As of June 30,

(in millions)

Fair Value

Total fair value of common stock investments $ 435 $ 788

Sensitivity Analysis

Concentrations of Credit Risk

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

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FOX CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Management's Report on Internal Control Over Financial Reporting 59

Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42) 60

Notes to the Consolidated Financial Statements 68

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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

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

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

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

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

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

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

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

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Fox Corporation:

Opinion on Internal Control Over Financial Reporting

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

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

Basis for Opinion

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

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

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

Definition and Limitations of Internal Control Over Financial Reporting

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

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

/s/ Ernst & Young LLP

New York, New York

August 12, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Fox Corporation:

Opinion on the Financial Statements

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

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

Basis for Opinion

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

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

Critical Audit Matters

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

Assessment of realizability of deferred tax assets

Program rights amortization – National sports programming

/s/ Ernst & Young LLP

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

New York, New York

August 12, 2022

FOX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

For the years ended June 30,

Depreciation and amortization (363) (300) (258)

Impairment and restructuring charges — (35) (451)

Less: Net income attributable to noncontrolling interests (28) (51) (63)

Net income attributable to Fox Corporation stockholders $ 1,205 $ 2,150 $ 999

EARNINGS PER SHARE DATA

Net income attributable to Fox Corporation stockholders per share:

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

FOX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN MILLIONS)

For the years ended June 30,

Other comprehensive income (loss), net of tax:

Benefit plan adjustments and other 92 99 (109)

Other comprehensive income (loss), net of tax 92 99 (109)

Less: Net income attributable to noncontrolling interests(a) (28) (51) (63)

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

FOX CORPORATION

CONSOLIDATED BALANCE SHEETS

(IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)

As of June 30,

ASSETS

Current assets

Cash and cash equivalents $ 5,200 $ 5,886

Non-current assets

Property, plant and equipment, net 1,682 1,708

LIABILITIES AND EQUITY

Current liabilities

Borrowings $ — $ 749

Accounts payable, accrued expenses and other current liabilities 2,296 2,253

Non-current liabilities

Redeemable noncontrolling interests 188 261

Commitments and contingencies

Equity

Class A Common Stock(a) 3 3

Class B Common Stock(b) 3 3

Accumulated other comprehensive loss (226) (318)

Total Fox Corporation stockholders' equity 11,339 11,123

Noncontrolling interests 36 2

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

FOX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN MILLIONS)

For the years ended June 30,

OPERATING ACTIVITIES

Adjustments to reconcile net income to cash provided by operating activities

Amortization of cable distribution investments 18 22 24

Impairment and restructuring charges — 35 133

Change in operating assets and liabilities, net of acquisitions and dispositions

Receivables and other assets (79) (269) 224

Inventories net of programming payable (301) 190 181

Accounts payable and accrued expenses (54) 282 (87)

INVESTING ACTIVITIES

Property, plant and equipment (307) (484) (359)

Acquisitions, net of cash acquired (243) (51) (1,061)

Proceeds from dispositions, net 83 93 60

Sale of investments — — 349

Purchase of investments (28) (86) (103)

Other investing activities, net (18) — 14

Net cash used in investing activities (513) (528) (1,100)

FINANCING ACTIVITIES

Repayment of borrowings (750) — —

Non-operating cash flows from (to) The Walt Disney Company — 112 (95)

Settlement of Divestiture Tax Prepayment — 462 —

Dividends paid and distributions (307) (330) (335)

Purchase of subsidiary noncontrolling interest — (67) —

Sale of subsidiary noncontrolling interest 25 — —

Other financing activities, net (25) (46) (15)

Net cash (used in) provided by financing activities (2,057) (870) 146

Net (decrease) increase in cash and cash equivalents (686) 1,241 1,411

Cash and cash equivalents, beginning of year 5,886 4,645 3,234

Cash and cash equivalents, end of year $ 5,200 $ 5,886 $ 4,645

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

FOX CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(IN MILLIONS)

Common Stock Common Stock

Shares Amount Shares Amount

Other comprehensive loss — — — — — — (109) (109) — (109)

Other comprehensive income — — — — — — 99 99 — 99

Other comprehensive income — — — — — — 92 92 — 92

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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

The Distribution

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

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

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

Basis of Presentation

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

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

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

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

Reclassifications and adjustments

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

Use of estimates

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

Cash and cash equivalents

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

Receivables

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

Receivables, net consist of:

As of June 30,

(in millions)

Allowances for doubtful accounts (54) (77)

Inventories

Licensed and Owned Programming

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

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Investments

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

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

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

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

Property, plant and equipment

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

Goodwill and other intangible assets

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

Annual Impairment Review

Goodwill

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

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

FCC licenses

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

Leases

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

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

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

Long-lived asset impairments

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

Revenue recognition

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

Advertising expenses

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

Income taxes

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

Earnings per share

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

Equity-based compensation

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

Financial instruments

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

Redeemable noncontrolling interests

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

Concentrations of credit risk

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

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

NOTE 3. ACQUISITIONS, DISPOSALS AND OTHER TRANSACTIONS

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

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

Fiscal 2022 and 2021

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

Fiscal 2020

Acquisitions and Disposals

Credible Acquisition

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Television Stations Acquisition and Divestiture

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

TUBI Acquisition

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

Other Transactions

Flutter

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

Roku

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

FOX CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4. RESTRUCTURING PROGRAMS

Fiscal 2021

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

FOX US Equity

FOX · 10-K · period ended 2022-06-30

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FOX US Equity☆

FOX · 10-K · period ended 2022-06-30

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FOX US Equity