News Corporation NCRA SEC Form 10Q

  News Corporation (NCRA) - SEC Form 10Q

RNS Number : 8055Q
News Corporation
09 November 2012




Table of Contents





                                UNITED STATES

                      SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, DC 20549



                                      

                                  FORM 10-Q



                                      

(Mark One)

x Quarterly report pursuant to Section13 or 15(d) of the Securities Exchange
  Act of 1934 for the quarterly period ended September30, 2012

                                      or



¨ Transition report pursuant to Section13 or 15(d) of the Securities Exchange
  Act of 1934 for the transition period from to

                       Commission file number 001-32352



                                      

                               NEWS CORPORATION

            (Exact Name of Registrant as Specified in its Charter)



                   Delaware                          26-0075658

         (State or Other Jurisdiction             (I.R.S. Employer

       of Incorporation or Organization)         Identification No.)
1211 Avenue of the Americas, New York, New York         10036

   (Address of Principal Executive Offices)          (Zip Code)

      Registrant's telephone number, including area code (212)852-7000



                                      

Indicate by check mark whether the registrant: (1)has filed all reports
required to be filed by Section13 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 xNo ¨

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule405 of RegulationS-T during the
preceding 12months (or for such shorter period that the registrant was
required to submit and post such files).Yes xNo ¨

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule12b-2 of the Exchange Act.



   Large accelerated filer x Accelerated filer ¨Non-accelerated
                  filer ¨Smaller reporting company ¨

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

As of October26, 2012, 1,546,011,394 shares of ClassA Common Stock, par
value $0.01 per share, and 798,520,953 shares of Class B Common Stock, par
value $0.01 per share, were outstanding.









                                      

Table of Contents

                              NEWS CORPORATION

                                  FORM 10-Q

                              TABLE OF CONTENTS



                                                                 Page
Part I. Financial Information                                       
  Item1.   Financial Statements                                
                Unaudited Consolidated Statements of Operations for
            the three months ended September 30, 2012 and 2011      3 
                Unaudited Consolidated Statements of Comprehensive
                Income (Loss) for the three months ended
            September30, 2012 and 2011                             4 
                Consolidated Balance Sheets at September 30, 2012
            (unaudited) and June 30, 2012 (audited)                 5 
                Unaudited Consolidated Statements of Cash Flows for
            the three months ended September 30, 2012 and 2011      6 
                Notes to the Unaudited Consolidated Financial
            Statements                                              7 
                Management's Discussion and Analysis of Financial
  Item2.   Condition and Results of Operations                    39 
                Quantitative and Qualitative Disclosures About
  Item3.   Market Risk                                            54 
  Item4.   Controls and Procedures                                55 
Part II. Other Information                                          
  Item1.   Legal Proceedings                                      56 
  Item1A.  Risk Factors                                           60 
                Unregistered Sales of Equity Securities and Use of
  Item2.   Proceeds                                               65 
  Item3.   Defaults Upon Senior Securities                        65 
  Item4.   Mine Safety Disclosures                                65 
  Item5.   Other Information                                      65 
  Item6.   Exhibits                                               66 
  Signature                                                          67 



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                              NEWS CORPORATION

               UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

                   (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)



                                                      Forthethreemonths
                                                     ended September30,
                                                      2012         2011
Revenues                                            $  8,136     $  7,959
Operating expenses                                    (4,848 )    (4,753 )
Selling, general and administrative                   (1,610 )    (1,527 )
Depreciation and amortization                           (300 )      (294 )
Impairment and restructuring charges                    (152 )       (91 )
Equity earnings of affiliates                            190          121
Interest expense, net                                   (267 )      (258 )
Interest income                                           31           36
Other, net                                             1,375         (130 )
                                                                
Income before income tax expense                       2,555        1,063
Income tax expense                                      (259 )      (277 )
                                                                
Net income                                             2,296          786
Less: Net income attributable to noncontrolling
interests                                                (63 )       (48 )
                                                                
Net income attributable to News Corporation
stockholders                                        $  2,233     $    738
                                                                
Weighted average shares:                           
Basic                                                  2,366        2,607
Diluted                                                2,370        2,612
Net income attributable to News Corporation
stockholders per share:                            
Basic                                               $   0.94     $   0.28
Diluted                                             $   0.94     $   0.28

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



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                              NEWS CORPORATION

       UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

                                (IN MILLIONS)



                                                       Forthethreemonths
                                                     endedSeptember30,
                                                      2012         2011
Net income                                           $ 2,296     $    786
Other comprehensive income (loss):                  
Foreign currency translation adjustments                 279       (1,216 )
Unrealized holding losses on securities                   (1 )      (122 )
Benefit plan adjustments                                  14           14
                                                                
Other comprehensive income (loss)                        292       (1,324 )
                                                                
Comprehensive income (loss)                            2,588         (538 )
                                                                
Less: Net income attributable to noncontrolling
interests (a)                                            (63 )       (48 )
Less: Other comprehensive income attributable to
noncontrolling interests                                  (1 )         9
                                                                
Comprehensive income (loss) attributable to News
Corporation stockholders                             $ 2,524     $   (577 )
                                                                





(a)  Net income attributable to noncontrolling interests includes $22 million
      and $7 million relating to redeemable noncontrolling interests for the
      three months ended September30, 2012 and 2011, respectively.

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



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                              NEWS CORPORATION

                         CONSOLIDATED BALANCE SHEETS

              (IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)



                                       AsofSeptember30,     AsofJune30,
                                            2012                2012
                                         (unaudited)         (audited)
Assets:                                                   
Current assets:                                           
Cash and cash equivalents            $            12,007   $        9,626
Receivables, net                                   6,634            6,608
Inventories, net                                   2,856            2,595
Other                                                770              619
                                                             
Total current assets                              22,267           19,448
                                                             
Non-current assets:                                       
Receivables                                          464              387
Investments                                        4,725            4,968
Inventories, net                                   4,835            4,596
Property, plant and equipment, net                 5,830            5,814
Intangible assets, net                             7,128            7,133
Goodwill                                          13,190           13,174
Other non-current assets                           1,237            1,143
                                                             
Total assets                         $            59,676   $       56,663
                                                             
Liabilities and Equity:                                   
Current liabilities:                                      
Borrowings                           $               273   $          273
Accounts payable, accrued expenses
and other current liabilities                      5,615            5,405
Participations, residuals and
royalties payable                                  1,862            1,691
Program rights payable                             1,292            1,368
Deferred revenue                                   1,003              880
                                                             
Total current liabilities                         10,045            9,617
                                                             
Non-current liabilities:                                  
Borrowings                                        16,184           15,182
Other liabilities                                  3,693            3,650
Deferred income taxes                              2,329            2,388
Redeemable noncontrolling interests                  648              641
Commitments and contingencies                             
Equity:                                                   
ClassA common stock (a)                              15               15
Class B common stock (b)                               8                8
Additional paid-in capital                        16,016           16,140
Retained earnings and accumulated
other comprehensive income                        10,225            8,521
                                                             
Total News Corporation
stockholders' equity                              26,264           24,684
Noncontrolling interests                             513              501
                                                             
Total equity                                      26,777           25,185
                                                             
Total liabilities and equity         $            59,676   $       56,663
                                                             





(a)  ClassA common stock , $0.01 par value per share, 6,000,000,000 shares
      authorized, 1,555,194,481 shares and 1,584,519,372 shares issued and
      outstanding, net of 1,775,950,044 and 1,775,983,637 treasury shares at
      par at September30, 2012 and June30, 2012, respectively.
(b)  Class B common stock , $0.01 par value per share, 3,000,000,000 shares
      authorized, 798,520,953 shares issued and outstanding, net of
      313,721,702 treasury shares at par at September30, 2012 and June30,
      2012.

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



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                              NEWS CORPORATION

               UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                (IN MILLIONS)



                                                 Forthethreemonthsended
                                                     September30,
                                                  2012            2011
Operating activities:                         
Net income                                     $    2,296       $     786
Adjustments to reconcile net income to cash
provided by operating activities:             
Depreciation and amortization                         300             294
Amortization of cable distribution
investments                                            21              24
Equity earnings of affiliates                        (190 )         (121 )
Cash distributions received from affiliates            18              64
Impairment charges                                     35             - 
Other, net                                         (1,375 )          130
Change in operating assets and liabilities,
net of acquisitions:                          
Receivables and other assets                         (164 )         (275 )
Inventories, net                                     (465 )         (537 )
Accounts payable and other liabilities                234              59
                                                                
Net cash provided by operating activities             710             424
                                                                
Investing activities:                         
Property, plant and equipment, net of
acquisitions                                         (176 )         (248 )
Acquisitions, net of cash acquired                   (227 )          (67 )
Investments in equity affiliates                       69             (34 )
Other investments                                     (30 )          (78 )
Proceeds from dispositions                          1,825             334
                                                                
Net cash provided by (used in) investing
activities                                          1,461             (93 )
                                                                
Financing activities:                         
Borrowings                                            988             - 
Repayment of borrowings                               -           (32 )
Issuance of shares                                    111              12
Repurchase of shares                                 (877 )       (1,272 )
Dividends paid                                        (52 )          (23 )
Other, net                                              9             - 
                                                                
Net cash provided by (used in) financing
activities                                            179          (1,315 )
                                                                
Net increase (decrease) in cash and cash
equivalents                                         2,350            (984 )
Cash and cash equivalents, beginning of year        9,626          12,680
Exchange movement on opening cash balance              31            (267 )
                                                                
Cash and cash equivalents, end of year         $   12,007       $  11,429
                                                                

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



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                              NEWS CORPORATION

           NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

News Corporation, a Delaware corporation, with its subsidiaries (together,
"News Corporation" or the "Company"), is a diversified global media company,
which manages and reports its businesses in six segments:Cable Network
Programming, Filmed Entertainment, Television, Direct Broadcast Satellite
Television, Publishing and Other.

The accompanying unaudited consolidated financial statements of the Company
have been prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of
management, all adjustments consisting only of normal recurring adjustments
necessary for a fair presentation have been reflected in these unaudited
consolidated financial statements. Operating results for the interim periods
presented are not necessarily indicative of the results that may be expected
for the fiscal year ending June30, 2013.

These interim unaudited consolidated financial statements and notes thereto
should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended June30, 2012 as filed with the Securities and
Exchange Commission ("SEC") on August14, 2012 and as amended on October1,
2012 (the "2012 Form 10-K").

The consolidated financial statements include the accounts of News Corporation
and its subsidiaries. Intercompany transactions and balances have been
eliminated. Equity investments in which the Company exercises significant
influence but does not exercise control and is not the primary beneficiary are
accounted for using the equity method. Investments in which the Company is not
able to exercise significant influence over the investee are designated as
available-for-sale if readily determinable fair values are available.If an
investment's fair value is not readily determinable, the Company accounts for
its investment under the cost method.

The Company has an investment in Sky Deutschland AG ("Sky Deutschland") which
it considers a variable interest entity ("VIE"). The Company's aggregate risk
of loss related to this investment was approximately $510 million and $515
million as of September30, 2012 and June30, 2012, respectively, which
consisted of debt and equity securities and a loan. (See Note 6-Investments)

The Company also has a consolidated investment in a VIE; however, the assets,
liabilities, net income and cash flows attributable to this entity were not
material to the Company in any of the periods presented.

The preparation of consolidated financial statements in conformity with GAAP
requires that management make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Because of the use of estimates inherent in the
financial reporting process, actual results could differ from those estimates.

The Company's fiscal year ends on the Sunday closest to June30. Fiscal 2013
and fiscal 2012 include 52 weeks. All references to September30, 2012 and
September30, 2011 relate to the three months ended September30, 2012 and
October2, 2011, respectively.For convenience purposes, the Company continues
to date its financial statements as of September30.

Certain fiscal 2012 amounts have been reclassified to conform to the fiscal
2013 presentation.

Recently Adopted and Recently Issued Accounting Guidance

Adopted

In the first quarter of fiscal 2013, the Company adopted Accounting Standards
Update ("ASU") 2011-05, "Comprehensive Income (Topic 220): Presentation of
Comprehensive Income," ("ASU 2011-05") which requires an entity to present
total comprehensive income, the components of net income and the components of
other comprehensive income in either a single continuous statement of
comprehensive income or in two separate but consecutive statements. The
adoption of ASU 2011-05 resulted in two separate but consecutive statements.

In the first quarter of fiscal 2013, the Company adopted ASU 2011-08,
"Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment"
("ASU 2011-08"). Under ASU 2011-08 the Company has the option to make a
qualitative assessment of whether it is more likely than not that a reporting
unit's fair value is less than its carrying value before applying the two-step
goodwill impairment model that is currently in place. If it is determined
through the qualitative assessment that a reporting unit's fair value is more
likely than not greater than its carrying value, the remaining impairment
steps would be unnecessary.



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                               NEWS CORPORATION

           NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



Issued

In July 2012, the Financial Accounting Standards Board ("FASB") issued ASU
2012-02, "Intangibles-Goodwill and Other (Topic 350):Testing Indefinite-Lived
Intangible Assets for Impairment" ("ASU 2012-02"), which permits an entity to
make a qualitative assessment of whether it is more likely than not that the
fair value of a reporting unit's indefinite-lived intangible asset is less
than the asset's carrying value before applying the two-step goodwill
impairment model that is currently in place.If it is determined through the
qualitative assessment that the fair value of a reporting unit's
indefinite-lived intangible asset is more likely than not greater than the
asset's carrying value, the remaining impairment steps would be
unnecessary.The qualitative assessment is optional, allowing companies to go
directly to the quantitative assessment.ASU 2012-02 is effective for the
Company for annual and interim indefinite-lived intangible asset impairment
tests performed beginning July1, 2013, however, early adoption is
permitted.The Company is currently evaluating the impact ASU 2012-02 will
have on its consolidated financial statements.

In October 2012, the FASB issued ASU 2012-07, "Accounting for Fair Value
Information That Arises after the Measurement Date and Its Inclusion in the
Impairment Analysis of Unamortized Film Costs" ("ASU 2012-07"), which would
have the effect of incorporating into the fair value measurement used for the
impairment analysis of unamortized film costs only information that is known
or knowable as of the measurement date, consistent with how information is
incorporated into other fair value measurements. ASU 2012-07 is effective for
the Company for impairment assessments performed on or after December15,
2012. The Company is currently evaluating the impact ASU 2012-07 will have on
its consolidated financial statements.

NOTE 2. ACQUISITIONS, DISPOSALS AND OTHER TRANSACTIONS

Fiscal 2013

Acquisitions

In July 2012, the Company acquired Thomas Nelson, Inc. ("Thomas Nelson"), one
of the leading Christian book publishers in the United States, for
approximately $200 million in cash. In accordance with Accounting Standards
Codification ("ASC") 350, "Intangibles-Goodwill and Other," the purchase price
has been preliminarily allocated to intangibles. The amount allocated to
intangibles is subject to change pending the completion of final valuations of
certain assets and liabilities. A change in the purchase price allocation 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.

In August 2012, the Company entered into an agreement to acquire a 51% equity
interest in Eredivisie Media& Marketing CV ("EMM"). EMM is a media company
based in the Netherlands which holds the Dutch Premier League soccer rights
and operates several channels in the Netherlands.EMM is owned by the 18 Dutch
Premier League soccer clubs and the global TV production company Endemol. The
acquisition is subject to regulatory clearances and other customary closing
conditions.

In November 2012, the Company acquired the remaining 50% interest in ESPN STAR
Sports ("ESS") it did not already own for approximately $335 million in
cash.ESS is the leading sports broadcaster in Asia and the Company now,
through its wholly owned subsidiaries, owns 100% of ESS. Accordingly, the
results of ESS will be included in the Company's consolidated results of
operations in November 2012.

Other

In July 2011, the Company announced that it would close its publication, The
News of the World , after allegations of phone hacking and payments to public
officials. As a result of management's approval of the shutdown of The News of
the World , the Company has reorganized portions of the U.K. newspaper
business and has recorded restructuring charges in fiscal 2013 and 2012
primarily for termination benefits and certain organizational restructuring at
the U.K. newspapers. (See Note 4-Restructuring Programs) The Company is
subject to several ongoing investigations by U.K. and U.S. regulators and
governmental authorities, including investigations into whether similar
conduct may have occurred at the Company's subsidiaries outside of the U.K.
The Company is cooperating with these investigations. In addition, the Company
has admitted liability in a number of civil cases related to the phone hacking
allegations and has settled a number of cases. The Company created an
independently-chaired Management& Standards Committee (the "MSC"), which
operates independently from NI Group Limited ("News International") and has
full authority to ensure cooperation with all relevant investigations and
inquiries into The News of the World matters and all other related



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                               NEWS CORPORATION

           NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



issues across News International. The MSC conducts its own internal
investigation where appropriate. The MSC has an independent Chairman, Lord
Grabiner QC, and reports directly to Gerson Zweifach, Senior Executive Vice
President and Group General Counsel of the Company. Mr.Zweifach reports to
the independent members of the Board of Directors (the "Board") through their
representative Viet Dinh, an independent director and Chairman of the
Company's Nominating and Corporate Governance Committee. The independent
directors of the Board have retained independent outside counsel and are
actively engaged in these matters. The MSC conducted an internal investigation
of the three other titles at News International and engaged independent
outside counsel to advise it on these investigations and all other matters it
handles. News International has instituted governance reforms and issued
certain enhanced policies to its employees. The Company has also engaged
independent outside counsel to assist it in responding to U.S. governmental
inquiries. (See Note 13-Commitments and Contingencies for a summary of the
costs of The News of the World Investigations and Litigation.)

In May 2012, the Company renewed its existing FOX affiliation agreement with a
major FOX affiliate group ("Network Affiliate").As part of the transaction,
the Company received a one-time payment of $25 million and an option to buy
Network Affiliate's stations in any three of four markets or, if such option
is not exercised, receive an additional $25 million cash payment.Further,
Network Affiliate has an option to buy the Company's Baltimore station. Both
options may be exercised at any time through March30, 2013.Network Affiliate
has exercised its option to purchase the Baltimore station.

In June 2012, the Company announced that it intends to pursue the separation
of its publishing and its media and entertainment businesses into two distinct
publicly traded companies. The global publishing company that would be created
through the proposed transaction would consist of the Company's publishing
businesses, its education division and other Australian assets. The global
media and entertainment company would consist of the Company's cable and
television assets, filmed entertainment, and direct satellite broadcasting
businesses. Following the separation, each company would maintain two classes
of common stock: ClassA Common and Class B Common Voting Shares. The
separation is expected to be completed in approximately one year from the date
of announcement. In addition to final approval from the Board and stockholder
approval, the completion of the separation will be subject to receipt of
regulatory approvals, opinions from tax counsel and favorable rulings from
certain tax jurisdictions regarding the tax-free nature of the transaction to
the Company and to its stockholders, further due diligence as appropriate, and
the filing and effectiveness of appropriate filings with the SEC.

At the end of fiscal 2012, the Company identified certain businesses as held
for sale and reclassified the net assets to other current assets.In the three
months ended September30, 2012, as a result of revised projections, the
Company recorded a $35 million non-cash impairment charge related to its
assets held for sale to reduce the carrying value of these assets to fair
value less cost to sell.The assets, liabilities and cash flows attributable
to these businesses were not material to the Company in any of the periods
presented and, accordingly, have not been presented separately.

Fiscal 2012

Acquisitions

In December 2011, the Company acquired the 67% equity interest it did not
already own in Fox Pan American Sports LLC ("FPAS") for approximately $400
million. FPAS, an international sports programming and production entity,
which owns and operates Fox Sports Latin America network, a Spanish and
Portuguese-language sports network distributed to subscribers in certain
Caribbean and Central and South American nations, and partially through its
ownership in FPAS, a 53% interest in Fox Deportes, a Spanish-language sports
programming service distributed in the United States. As a result of this
transaction, the Company now owns 100% of FPAS and Fox Deportes. Accordingly,
the results of FPAS are included in the Company's consolidated results of
operations beginning in December 2011.

The FPAS acquisition was accounted for in accordance with ASC 805, "Business
Combinations," which requires an acquirer to remeasure its previously held
equity interest in an acquiree at its acquisition date fair value and
recognize the resulting gain or loss in earnings. The carrying amount of the
Company's previously held equity interest in FPAS was revalued to fair value
at the acquisition date, resulting in a non-taxable gain of approximately $158
million which was included in Other, net in the consolidated statements of
operations for the fiscal year ended June30, 2012. In accordance with ASC 350
the excess purchase price preliminarily allocated to goodwill will not be
amortized for the FPAS acquisition. The amount allocated to goodwill is
subject to change pending the completion of final valuations of certain assets
and liabilities. A future reduction in goodwill for additional value to be
assigned to identifiable finite-lived intangible assets or tangible assets
could reduce future earnings as a result of additional amortization.



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                               NEWS CORPORATION

           NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



In May 2012, the Company acquired an approximate 23% interest in Latin America
Pay Television ("LAPTV"), a partnership that distributes premium and basic
television channels in Latin America, for approximately $64 million in cash.
As a result of this transaction, the Company increased its interest in LAPTV
to approximately 78% from the 55% it owned at June30, 2011.

Disposals

In July 2011, the Company sold its majority interest in its outdoor
advertising businesses in Russia and Romania ("News Outdoor Russia") for cash
consideration of approximately $360 million. In connection with the sale, the
Company repaid $32 million of News Outdoor Russia debt. (See Note
9-Borrowings) The Company recorded a gain related to the sale of this
business, which was included in Other, net in the unaudited consolidated
statements of operations for the three months ended September30, 2011. The
gain on the sale and the net income, assets, liabilities and cash flow
attributable to the News Outdoor Russia operations were not material to the
Company in any of the periods presented and, accordingly, have not been
presented separately.

In May 2012, the Company sold its former U.K. newspaper division headquarters
located in East London,which it relocated from in August 2010, for
consideration of approximately £150million, of which £25million was received
on closing of the sale. The remaining £125million is in the form of a secured
note and the Company will receive £25million on May31, 2013, and annually
thereafter until May31, 2017. The Company recorded a loss of approximately
$22 million on this transaction, which was included in Other, net in the
consolidated statements of operations for the fiscal year ended June30, 2012.

Other

In fiscal 2012, the Company entered into an asset acquisition agreement with a
third party in exchange for a noncontrolling ownership interest in one of the
Company's majority-owned Regional Sports Networks ("RSN"). The noncontrolling
shareholder has a put option related to its ownership interest that is
exercisable beginning in fiscal 2015. Since redemption of the noncontrolling
interest is outside of the control of the Company, the Company has accounted
for this put option in accordance with ASC 480-10-S99-3A, "Distinguishing
Liabilities from Equity" ("ASC 480-10-S99-3A"), and has recorded the put
option at its fair value as a redeemable noncontrolling interest in the
consolidated balance sheets.

NOTE 3. RECEIVABLES, NET

Receivables are presented net of an allowance for returns and doubtful
accounts, which is an estimate of amounts that may not be collectible. In
determining the allowance for returns, management analyzes historical returns,
current economic trends and changes in customer demand and acceptance of the
Company's products. Based on this information, management reserves a
percentage of each dollar of product sales that provide the customer with the
right of return. The allowance for doubtful accounts is estimated based on
historical experience, receivable aging, current economic trends and specific
identification of certain receivables that are at risk of not being paid.

The Company has receivables with original maturities greater than one year in
duration principally related to the Company's sale of program rights in the
television syndication markets within the Filmed Entertainment segment.
Allowances for credit losses are established against these non-current
receivables as necessary. As of September30, 2012 and June30, 2012, these
allowances were not material.

Receivables, net consisted of:



                                                     At              At
                                                September30,     June30,
                                                  2012            2012
                                                    (in millions)
Total receivables                             $       8,072     $  7,981
Allowances for returns and doubtful accounts           (974 )      (986 )
                                                               
Total receivables, net                                7,098        6,995
Less: current receivables, net                       (6,634 )    (6,608 )
                                                               
Non-current receivables, net                  $         464     $    387
                                                               



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                               NEWS CORPORATION

           NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 4. RESTRUCTURING PROGRAMS

Fiscal 2013

During the three months ended September30, 2012, the Company recorded
restructuring charges of $117 million, of which $112 million related to the
newspaper businesses. The restructuring charges primarily relate to the
reorganization of the Australian newspaper businesses which was announced at
the end of fiscal 2012 and the continued reorganization of the U.K. newspaper
business. The restructuring charges recorded in the first quarter of fiscal
2013 are primarily for termination benefits in Australia and contract
termination payments in the U.K.

Fiscal 2012

During the three months ended September30, 2011, the Company recorded
restructuring charges of $91 million, of which $88 million related to the
newspaper businesses. The Company reorganized portions of the U.K. newspaper
business and recorded restructuring charges in the first quarter of fiscal
2012 primarily for termination benefits as a result of the shutdown of The
News of the World and certain organizational restructurings at other
newspapers.

Changes in the program liabilities were as follows:



                                                               For the three months ended September30,
                                            2012                                                                       2011
                 One time           Facility                                                One time           Facility
               termination           related            Other                             termination           related            Other
           benefits     costs     costs     Total     benefits     costs     costs     Total
                                                                             (in millions)
Balance,
beginning
of period  $             64     $         185     $         -   $         249     $             27     $         207     $         -   $         234
Additions                64                 2                51               117                   74                 3                14                91
Payments                (77 )             (8 )            (49 )           (134 )               (22 )            (10 )            (10 )            (42 )
Other                   -             -              (1 )             (1 )                (5 )              1                (3 )             (7 )
                                                                                                                                      
Balance,
end of
period     $             51     $         179     $           1     $         231     $             74     $         201     $           1     $         276
                                                                                                                                      

The Company expects to record an additional $65 million of restructuring
charges, principally related to accretion on facility termination obligations
through fiscal 2021 and additional termination benefits related to the
newspaper businesses. At September30, 2012, restructuring liabilities of
approximately $82 million and $149 million were included in the consolidated
balance sheets in other current liabilities and other liabilities,
respectively. Amounts included in other liabilities primarily relate to
facility termination obligations, which are expected to be paid through fiscal
2021.



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                               NEWS CORPORATION

           NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 5. INVENTORIES

The Company's inventories were comprised of the following:



                                                      At              At
                                                 September30,     June30,
                                                   2012            2012
                                                     (in millions)
Programming rights                             $       4,527     $  4,285
Books, DVDs, Blu-rays, paper and other
merchandise                                              404          348
Filmed entertainment costs:                   
Films:                                        
Released (including acquired film libraries)             755          846
Completed, not released                                   14          135
In production                                            756          502
In development or preproduction                          141          140
                                                                
                                                       1,666        1,623
                                                                
Television productions:                       
Released (including acquired libraries)                  582          561
In production                                            506          370
In development or preproduction                            6            4
                                                                
                                                       1,094          935
                                                                
Total filmed entertainment costs, less
accumulated amortization (a)                           2,760        2,558
                                                                
Total inventories, net                                 7,691        7,191
Less: current portion of inventory, net (b)           (2,856 )    (2,595 )
                                                                
Total noncurrent inventories, net              $       4,835     $  4,596
                                                                





(a)  Does not include $389 million and $397 million of net intangible film
      library costs as of September30, 2012 and June30, 2012, respectively,
      which are included in intangible assets subject to amortization in the
      consolidated balance sheets.
(b)  Current inventory as of September30, 2012 and June30, 2012 is
      comprised of programming rights ($2,484 million and $2,279 million,
      respectively), books, DVDs, Blu-rays, paper and other merchandise.

NOTE 6. INVESTMENTS

The Company's investments were comprised of the following:



                                                                       At                At
                                                   Ownership      September30,       June30,
                                               Percentage         2012            2012
                                                                     (in millions)
Equity method
investments:                                                                   
British Sky
Broadcasting Group
plc (a)             U.K. DBS operator                  39 %  $       1,896     $  1,710
Sky Network
Television Ltd.
(a)                 NewZealandmediacompany          44 %            399          390
Sky Deutschland
(a)                 German pay-TV operator           49.9 %            223          231
NDS Group Limited     Digital technology
(b)                 company                           - %            -        492
Other equity
method investments                                various             954          904
Fair value of
available-for-sale
investments (c)                                   various             572          561
Other investments                                 various             681          680
                                                                                
Total Investments                                             $       4,725     $  4,968
                                                                                





(a)  The market value of the Company's investment in British Sky Broadcasting
      Group plc ("BSkyB"), Sky Deutschland and Sky Network Television Ltd., of
      $7,783 million, $1,559 million and $719 million at September30, 2012,
      respectively, were valued using quoted market prices.



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                               NEWS CORPORATION

           NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS



(b)  In July 2012, the Company sold its 49% investment in NDS Group Limited
      ("NDS") and the investment basis in NDS did not change significantly
      from June 30, 2012. See Other section below for more information on this
      transaction.
(c)  Includes investments in publicly traded common stock, which were valued
      using quoted market prices, and the convertible bond issued by Sky
      Deutschland, which consists of the host and derivative financial
      instrument components. The convertible bond components were measured
      using the discounted cash flows and Black-Scholes valuation methods.
      Inputs to these valuation measures include observable market data such
      as stock prices and interest rates.

The cost basis, unrealized gains, unrealized losses and fair market value of
available-for-sale investments are set forth below:



                                                     At              At
                                                September30,     June30,
                                                  2012            2012
                                                    (in millions)
Cost basis of available-for-sale investments  $         278     $    278
Accumulated gross unrealized gain                       304          305
Accumulated gross unrealized loss                       (10 )       (22 )
                                                                 
Fair value of available-for-sale investments  $         572     $    561
                                                                 
Net deferred tax liability (a)                $         111     $    108
                                                                 





(a)  The net deferred tax liability includes $107 million related to
      unrealized gains recorded in comprehensive income as of September30,
      2012 and June30, 2012.

BSkyB

During fiscal 2010, the Company announced that it had proposed to the board of
directors of BSkyB, in which the Company currently has an approximate 39%
interest, to make a cash offer for the BSkyB shares that the Company does not
already own. On July13, 2011, the Company announced that it no longer
intended to make an offer for the BSkyB shares that the Company does not alrea

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