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November 5, 2018
John Nallen
President
New Fox, Inc.
1211 Avenue of the Americas
New York, NY
Re: New Fox, Inc.
Draft Registration Statement on Form 10-12B
Submitted October 9, 2018
CIK No. 0001754301
Dear Mr. Nallen:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form 10-12B
Information Statement Summary, page 1
1. We note your statement that "live, as opposed to delayed viewing,
provides several
strategic and financial advantages in the context of overall media
industry trends." Please
provide more detail regarding the strategic and financial advantages of
live viewing and
information regarding the media trends referenced.
2. We note your statement that "live news and sports programming continue
to increase their
aggregate share of live same day linear television programming
viewership." Please
consider discussing the position of live news and sports programming in
wider contexts
John Nallen
FirstNameInc.
New Fox, LastNameJohn Nallen
Comapany 5, 2018
November NameNew Fox, Inc.
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such as same day linear television viewing overall and television
programming at-large.
The Transactions, page 40
3. We note your statement here and throughout the filing that "if the
final estimate of the
transaction tax is lower than $8.5 billion, Disney will make a cash
payment...up to a
maximum cash payment of $2 billion." It appears that the cash payment
will only be
made if the transaction tax is less than $8.5 billion but other
disclosures state that the
indebtedness related to the transaction tax dividend "will be reduced"
after the merger.
Please clarify.
Unaudited Pro Forma Combined Financial Information, page 54
4. We note your statement on page 74 that, "The FOX Network obtains
programming from
major television studios, including Twentieth Century Fox Television
(which, after the
closing of the transactions, will be owned by New Disney) and
independent television
production companies pursuant to license agreements. The terms of
those agreements
generally provide the FOX Network with the right to broadcast a
television series for a
minimum of four seasons." In this regard, please tell us if these
agreements predate the
separation and are reflected in the historical financial statements.
If there are new or
revised agreements effective after the separation, please disclose how
the agreements will
effect your future results of operations. Tell us if you considered
disclosing the effect of
the agreements in your pro forma combined financial information.
Notes to the Unaudited FOX Pro Forma Financial Statements
1. Historical FOX and Pro Forma Adjustments, page 58
5. Your pro forma adjustment (j) states that "Certain U.S. employees
participate in defined
benefit pension and postretirement plans sponsored by 21CF. Generally,
the combination
merger agreement and the separation principles provide that when FOX
becomes a
standalone, publicly traded company, FOX will assume those obligations
related to
employees of FOX and certain former employees related to FOX's
business and will
directly provide the benefits to those Company employees and former
employees. FOX
currently estimates plan liabilities of.." Please tell us why you
believe this adjustment is
considered "factually supportable." We refer you to Rule 11- 02(b)(6)
of Regulation S-X.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 84
6. We note your statement on page 88 that the increase in affiliate fee
revenue was
"primarily attributable to higher average rates per subscriber across
all networks partially
offset by the impact of lower average number of subscribers at certain
networks." In this
regard, please explain the underlying reason for the increase in rates
and the decrease in
subscribers. Also, disclose average rates per subscriber and the
average number of
subscribers by network. Disclose all your key performance indicators.
John Nallen
FirstNameInc.
New Fox, LastNameJohn Nallen
Comapany 5, 2018
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November 5, 2018 Page 3
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FirstName LastName
Furthermore, disclose any known trends and uncertainties that have had
or that you
reasonably expects will have a material favorable or unfavorable
impact on revenues or
income from continuing operations. We refer to guidance in Item
303(a)(3) of Regulation
S-K.
Liquidity and Capital Resources
Sources and Uses of Cash, page 92
7. You state that "The change in net cash provided by (used in) financing
activities during
fiscal 2018, as compared to fiscal 2017, was primarily due to net
transfers from 21CF of
$1,113 million in fiscal 2018 as compared to net transfers to 21CF of
$1,395 million in
fiscal 2017." Please disclose underlying reason for the transfers in
2018, 2017, and 2016.
Description of Our Capital Stock, page 111
8. We note your disclosures regarding the voting rights of Class A
shareholders. Please
clarify whether these shareholders will have the right to vote upon
matters at shareholder
meetings such as, for example, the election of directors to the board.
Please also update
your risk factor on pages 36-37.
Combined Financial Statements
Note 2. Summary of Significant Accounting Policies
Revenue recognition, page F-13
9. We note your disclosure that advertising revenue is recognized net of
agency
commissions. Please revise to clarify, if true, that agents are your
customers and the
amount recognized as revenue is your transaction price. Reference ASC
606-10-50-17.
10. Please identify the specific products and/or services transferred to
your customers within
your affiliate agreements. Tell us which products and/or services you
have combined with
others for the purposes of determining your performance obligations
and which you have
treated as a separate performance obligation. Specifically address if
these arrangements
contain a video-on-demand library. Tell us, and revise to clarify,
whether you believe
these arrangements contain a functional license of intellectual
property and if this is the
predominant item to which royalties relate. Please also describe the
judgements used in
determining both the timing of satisfaction and amounts allocated to
each performance
obligation. Refer to ASC 606-10-50-12 and 606-10-50-17.
U.S. Tax Reform, page F-17
11. We note your statement that you recorded a provisional income tax
benefit of $607
million to adjust "net deferred tax liability position in accordance
with the Tax Act...
Among the Company's more significant net deferred tax liabilities are
basis differences
and amortization, and sports rights contracts." Please disclose in
more detail how you
John Nallen
New Fox, Inc.
November 5, 2018
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determined the provisional income tax benefit of $607 million.
Specifically, clearly
explain how the Tax Act affected the basis difference and amortization,
and sports rights
contracts.
Note 10. Related Party Transactions and 21CF Investment
Related Party Transactions, page F-25
12. We note you show related party revenue, net of expenses. To help
investors understand
the extent of your relationship with your related parties, please revise
your disclosure to
show related party revenue separate from related party expenses. We refer
to guidance in
ASC 850-10-50 and Item 5-03(b)1 and 2 of Regulation S-X. In addition,
tell us how you
considered the guidance in ASC 850-10-50-6.
You may contact Inessa Kessman, Staff Accountant, at (202) 551-3371 or
Terry French,
Accounting Branch Chief, at (202) 551-3828 if you have questions regarding
comments on the
financial statements and related matters. Please contact William Mastrianna,
Attorney-Adviser,
at (202) 551-3778 or Celeste M. Murphy, Legal Branch Chief, at (202) 551-3257
with any other
questions.
Sincerely,
FirstName LastNameJohn Nallen
Division of
Corporation Finance
Comapany NameNew Fox, Inc.
Office of
Telecommunications
November 5, 2018 Page 4
cc: Andrew L. Fabens
FirstName LastName