Impairment and Restructuring Charges

9 Months Ended

Mar. 31, 2020

Restructuring and Related Activities [Abstract]

Impairment and Restructuring Charges

NOTE 4. IMPAIRMENT AND RESTRUCTURING CHARGES

Fiscal 2020 Impairment

During the three and nine months ended March 31, 2020, the Company recognized non-cash impairment charges of $1,106 million and $1,398 million, respectively, primarily related to a write-down of goodwill and indefinite-lived intangible assets at its Foxtel and News America Marketing reporting units.

Foxtel: During the three and nine months ended March 31, 2020, the Company recognized non-cash impairment charges totaling $931 million related to the goodwill and indefinite-lived intangible assets at its Foxtel reporting unit. Due to the impact of adverse trends resulting from lower expected broadcast subscribers and the impact that COVID-19 is expected to have on advertising, over-the-top, or OTT, and commercial subscriber revenues in the near term, the Company revised its future outlook which resulted in a reduction in expected future cash flows of the business. As a result, the Company determined that the fair value of the reporting unit was less than its carrying value and recorded non-cash impairment charges of $882 million to goodwill and $49 million to indefinite-lived intangible assets. The assumptions utilized in the income approach valuation method for Foxtel were discount rates ranging from 10.5% to 11.5%, long-term growth rates of 2.0% and a royalty rate of 1.5%. The assumptions utilized in the market approach valuation methods were EBITDA multiples from guideline public companies operating in similar industries and a control premium of 10%.

News America Marketing: During the three and nine months ended March 31, 2020, the Company recognized a non-cash impairment charge of $175 million on the disposal group as a result of the reclassification of its News America Marketing reporting unit to assets held for sale. See Note 3—Acquisitions, Disposals and Other Transactions. During the nine months ended March 31, 2020, in addition to the write-down to fair value less costs to sell, the Company recognized non-cash impairment charges of $235 million related to goodwill and indefinite-lived intangible assets at the News America Marketing reporting unit. In the first quarter of fiscal 2020, as a result of the Company’s review of strategic options for the News America Marketing business, and other market indicators, the Company determined that the fair value of the reporting unit was less than its carrying value. As a result, the Company recorded non-cash impairment charges of $122 million to goodwill and $113 million to indefinite-lived intangible assets. The assumptions utilized in the income approach valuation method for News America Marketing were discount rates ranging from 17.0% to 18.5% and long-term growth rates ranging from 0.6% to 1.5%.

Fiscal 2020 Restructuring

During the three and nine months ended March 31, 2020, the Company recorded restructuring charges of $19 million and $53 million, respectively, of which $15 million and $41 million, respectively, related to the News and Information Services segment. The restructuring charges recorded in fiscal 2020 were for employee termination benefits.

Fiscal 2019 Restructuring

During the three and nine months ended March 31, 2019, the Company recorded restructuring charges of $25 million and $62 million, respectively, of which $23 million and $55 million, respectively, related to the News and Information Services segment. The restructuring charges recorded in fiscal 2019 were for employee termination benefits.

Changes in restructuring program liabilities were as follows:

	For the three months ended March 31,
	2020										2019
	One time										One time
	employee			Facility							employee			Facility
	termination			related							termination			related
	benefits			costs		Other costs		Total			benefits			costs		Other costs			Total
	(in millions)
Balance, beginning of period	$	16		$	—	$	9	$	25		$	20		$	2	$	11		$	33
Additions		19			—		—		19			25			—		—			25
Payments		(17	)		—		—		(17	)		(17	)		—		(1	)		(18	)
Balance, end of period	$	18		$	—	$	9	$	27		$	28		$	2	$	10		$	40

	For the nine months ended March 31,
	2020												2019
	One time												One time
	employee			Facility									employee			Facility
	termination			related									termination			related
	benefits			costs			Other costs			Total			benefits			costs		Other costs			Total
	(in millions)
Balance, beginning of period	$	28		$	2		$	10		$	40		$	29		$	2	$	11		$	42
Additions		53			—			—			53			62			—		—			62
Payments		(63	)		—			(1	)		(64	)		(61	)		—		(2	)		(63	)
Other		—			(2	)		—			(2	)		(2	)		—		1			(1	)
Balance, end of period	$	18		$	—		$	9		$	27		$	28		$	2	$	10		$	40

As of March 31, 2020, restructuring liabilities of approximately $18 million were included in the Balance Sheet in Other current liabilities and $9 million were included in Other non-current liabilities.