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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2018

or

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-35769

NEWS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	46-2950970
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
1211 Avenue of the Americas, New York, New York	10036
(Address of principal executive offices)	(Zip Code)

[phone]

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Non-accelerated filer ☐

Accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of February 1, 2019, 385,325,489 shares of Class A Common Stock and 199,630,240 shares of Class B Common Stock were outstanding.

Table of Contents
Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations for the three and six months ended December 31, 2018 and 2017 (unaudited)	2
Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended December 31, 2018 and 2017
(unaudited)	3
Consolidated Balance Sheets as of December 31, 2018 (unaudited) and June 30, 2018 (audited)	4
Consolidated Statements of Cash Flows for the six months ended December 31, 2018 and 2017 (unaudited)	5
Notes to the Unaudited Consolidated Financial Statements	6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3. Quantitative and Qualitative Disclosures About Market Risk	61
Item 4. Controls and Procedures	61
Part II. Other Information
Item 1. Legal Proceedings	62
Item 1A. Risk Factors	62
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 3. Defaults Upon Senior Securities	62
Item 4. Mine Safety Disclosures	62
Item 5. Other Information	62
Item 6. Exhibits	63
Signature	64

NEWS CORPORATION

FORM 10-Q TABLE OF CONTENTS

ITEM 1. FINANCIAL STATEMENTSPART INEWS CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; millions, except per share amounts)

For the three months	For the six months
ended	ended
December 31,	December 31,

Notes

2018	2017
$ 2,063	$ 1,288
878	839
353	287
(2,824)	(2,288)
(326)	(197)
(9)	(28)
27	(21)
(105)	(289)
(51)	(36)
$ 0.16 $ (0.14)	$ 0.33	$ (0.03)

2018

2017

Revenues:

Circulation and subscription

$ 1,029

$ 637

Advertising

718 717 1,382 1,399

Consumer

478 453

Real estate

248 222 475 425

Other

154 151

Total Revenues 2

2,627 2,180 5,151 4,238

Operating expenses (1,484) (1,139)

Selling, general and administrative

(773) (713) (1,599) (1,374)

Depreciation and amortization (163) (100)

Impairment and restructuring charges 4

(19) (12) (37) (27)

Equity losses of affiliates

Income before income tax expense

174 169 352 310

5 14 12

Interest (expense) income, net

(15) 1 (31) 7

Other, net

Income tax expense

(6) (18)

7 (30)

(55)

(235)

Net income (loss)

119 (66) 247 21

Less: Net income attributable to noncontrolling interests

(24)

(17)

Net income (loss) attributable to News Corporation stockholders

$ 95 $ (83) $ 196 $ (15)

10

Net income (loss) available to News Corporation stockholders per share:

Basic

$ 0.16 $ (0.14) $ 0.34 $ (0.03)

Diluted

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

2

NEWS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
For the six months
ended	ended
December 31,	December 31,

For the three months

(Unaudited; millions)

2018

2017

2018

2017

Net income (loss)

119

(66)$

247$

Other comprehensive (loss) income:

Foreign currency translation adjustments

(147)-(257)134

Net change in the fair value of cash flow hedges(a) Unrealized holding gains on securities, net(b) Benefit plan adjustments, net(c)

5

-

7

-

8

• -18

  -5

  1 13 (5)

  Share of other comprehensive income from equity affiliates, net(d)

  Other comprehensive (loss) income

  (134)

• --

-1

19

(237)

135

Comprehensive (loss) income

Less: Net income attributable to noncontrolling interests

(15)(24)

• (47)10156

• (17) (51) (36)

  Less: Other comprehensive loss (income) attributable to noncontrolling interests Comprehensive (loss) income attributable to News Corporation stockholders

  28

• 156(3)

$

(11)

$

(63)

$

15

$ 117

• (a) Net of income tax expense of nil and $1 million for the three and six months ended December 31, 2018, respectively.

• (b) Net of income tax expense of $8 million and $2 million for the three and six months ended December 31, 2017, respectively.

• (c) Net of income tax expense of $2 million and nil for the three months ended December 31, 2018 and 2017, respectively, and income tax expense (benefit) of $3 million and ($2) million for the six months ended December 31, 2018 and 2017, respectively.

• (d) Net of income tax expense of nil for the three and six months ended December 31, 2018 and 2017, respectively.

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

3

NEWS CORPORATION

CONSOLIDATED BALANCE SHEETS (Millions, except share and per share amounts)

Notes

Assets:

Current assets:

Cash and cash equivalents

$ 1,618 $ 2,034

Receivables, net

14

Inventory, net

400 376

Other current assets

Total current assets

4,429 4,394

Non-current assets:

Investments 5

345 393

Property, plant and equipment, net

Intangible assets, net

2,571 2,671

Goodwill

Deferred income tax assets 12

228 279

14

Other non-current assets

As of	As of
December 31, 2018	June 30, 2018
(unaudited)	(audited)
1,853	1,612
558	372
2,517	2,560
5,225	5,218
912	831

Total assets

$ 16,227 $ 16,346

Liabilities and Equity:

Current liabilities:

$

Accounts payable

625 $ 605

Accrued expenses

1,243 1,340

Deferred revenue

Current borrowings 6

744 462

670 372

Other current liabilities

2 14

430 516

Total current liabilities

3,712 3,295

Non-current liabilities:

Borrowings 6

936 1,490

237 245

Retirement benefit obligations

Deferred income tax liabilities 12

384 389

Other non-current liabilities

524 430

Commitments and contingencies 11

7

Redeemable preferred stock

- 20

Class A common stock(a)

4 4

2 2

Class B common stock(b)

Additional paid-in capital

12,271 12,322

(1,937)

Accumulated deficit

(2,163)

Accumulated other comprehensive loss

(1,076) (874)

9,264

Total News Corporation stockholders' equity

9,291

Noncontrolling interests

1,170 1,186

Total equity

8

10,434

10,477

Total liabilities and equity

$ 16,227 $ 16,346

• (a) Class A common stock, $0.01 par value per share ("Class A Common Stock"), 1,500,000,000 shares authorized, 385,259,814 and 383,385,353 shares issued and outstanding, net of 27,368,413 treasury shares at par at December 31, 2018 and June 30, 2018, respectively.

• (b) Class B common stock, $0.01 par value per share ("Class B Common Stock"), 750,000,000 shares authorized, 199,630,240 shares issued and outstanding, net of 78,430,424 treasury shares at par at December 31, 2018 and June 30, 2018, respectively.

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

4