News Corporation Reports Second Quarter Operating Income of $1.1 Billion, a 24% Increase on Revenue Growth of 18%.Income from Continuing Operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the Increases 18% to $822 Million QUARTER HIGHLIGHTS * Filmed Entertainment delivers 57% operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. growth on strong theatrical release slate and success of film and television home entertainment titles. * Higher affiliate revenues at Cable Network Programming drive segment revenues up 14%, resulting in operating income growth of 5%. * Television operating income decreases as strength of political advertising at the station group is offset by losses from launching MyNetworkTV as well as ratings declines and higher sports programming costs at the FOX broadcast network. * SKY Italia SKY Italia is an Italian digital satellite television platform owned by News Corporation. It is similar in many ways to BSkyB's Sky Digital in the United Kingdom and Ireland, and like that network it is a major sports broadcaster. operating results improve $41 million, reflecting net subscriber additions of 432,000 over the past 12 months expanding the subscriber base to over four million. * Publishing businesses aggregate operating income increases 34% on Newspaper advertising and circulation growth as well as a $99 million redundancy provision included in prior year's results. Newspapers growth partially offset by lower contributions from Book Publishing book publishing. The term publishing means, in the broadest sense, making something publicly known. Usually it refers to the issuing of printed materials, such as books, magazines, periodicals, and the like. . * Announced share exchange agreement with Liberty Media Corporation which will result in News Corporation acquiring Liberty's 16.3% economic interest in the Company. NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- News Corporation (NYSE NYSE See: New York Stock Exchange : NWS NWS National Weather Service NWS Naval Weapons Station NWS New World Symphony NWS Nuclear Weapon State NWS Not Work Safe NWS National Watercolor Society NWS North Warning System NWS Nose Wheel Steering NWS National Waste Strategy (UK) , NWSA NWSA National Women's Studies Association NWSA National Woman Suffrage Association (1869-1890) NWSA New World School of the Arts (Miami, Florida, USA) NWSA National Welding Supply Association ; ASX ASX See: Australian Stock Exchange : NWS, NWSLV) today reported second quarter income from continuing operations of $822 million ($0.26 per share on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. combined basis1), as compared with $694 million ($0.21 per share on a diluted combined basis1) reported in the second quarter a year ago. These results primarily reflect an increase in consolidated operating income and higher equity earnings of affiliates partially offset by an increased tax provision, the result of a prior year tax benefit from the application of the American Jobs Creation Act. Additionally, the current quarter included a decrease in Other income, primarily from the unrealized change in fair value of certain outstanding exchangeable debt Exchangeable Debt Similar to convertibles, except this type of debt can be converted into the shares of a company other than the issuing company (usually a subsidiary). Notes: Often used by corporations to sell a large position in the shares of another company. securities. Consolidated operating income for the second quarter of $1.1 billion was up 24% versus the $920 million reported a year ago, primarily driven by the record performance at Filmed Entertainment as well as improved results at the Cable Network Programming, Newspapers and Direct Broadcast Satellite segments. The prior year results included a $99 million redundancy provision recorded in connection with the U.K. newspaper printing project. Commenting on the results, Chairman and Chief Executive Officer Rupert Murdoch said: "Our second fiscal quarter was a success both financially and strategically. Financially, we enjoyed double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" revenue and operating income growth, with a better than expected performance at our film studio and strong growth at SKY Italia, where subscriber additions reached the four million mark. The quarter was not without its challenges, however. In particular, we were disappointed with the results at MyNetworkTV, whose ratings have been far below expectations. We are focused on reversing this performance, and since quarter's end, have brought in new management and will introduce new programming to jump-start its recovery. "Strategically, the quarter's highlight was our announced transaction with Liberty - a transaction we believe unlocks tremendous value for our shareholders. It will be immediately accretive on both a free cash flow and earnings per share basis, and it allows us to monetize Monetize 1. To convert into money. 2. To convert from securities into currency that can be used to purchase goods and services. Notes: For example, you'll often hear Internet marketers talk about "monetizing website visitors. our stake in DIRECTV at an attractive valuation, tax-free. It also represents a significant share buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may without paying a customary premium, while leaving us with a very strong balance sheet from which we can deliver additional value to our shareholders." [TABLE OMITTED] REVIEW OF OPERATING RESULTS FILMED ENTERTAINMENT The Filmed Entertainment segment reported record second quarter operating income of $470 million, an increase of $171 million versus the $299 million reported in the same period a year ago. The 57% growth primarily reflects increased contributions from several strong theatrical releases as well as higher contributions from film and television home entertainment releases. Higher second quarter film results were driven by strong theatrical contributions from the launch of Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan and the continued international success of The Devil Wears Prada. Additionally, the home entertainment performances of theatrical hits Ice Age: The Meltdown meltdown Occurrence in which a huge amount of thermal energy and radiation is released as a result of an uncontrolled chain reaction in a nuclear power reactor. The chain reaction that occurs in the reactor's core must be carefully regulated by control rods, which absorb , X-Men: The Last Stand, Little Miss Sunshine and The Devil Wears Prada contributed to the strong quarterly results The second quarter also included launch costs for several additional successful theatrical releases including Eragon, which has grossed over $240 million in worldwide box office, and Night at the Museum, which held the top spot in the domestic box office for three weeks and has grossed over $438 million in worldwide box office to date. Twentieth Century Fox Television (TCFTV) increased contributions versus the second quarter a year ago, primarily reflecting continued momentum in home entertainment sales, most notably from 24 and Prison Break. Several TCFTV shows garnered Golden Globe nominations, including 24 for Best Television Series - Drama and Best Actor in a Television Series - Drama, as well as My Name is Earl My Name Is Earl is an Emmy Award-winning American sitcom created by Greg Garcia. It is produced by 20th Century Fox Television. It is currently in its third season and is broadcast on the NBC television network Thursdays at 8:00 PM Eastern time. for Best Actor in a Television Series - Musical or Comedy. TELEVISION The Television segment reported second quarter operating income of $112 million, a decline of $71 million versus the same period a year ago as increased contributions from the Fox Television Stations The Fox Television Stations (FTS) are a group of television stations located throughout the United States which are owned-and-operated by the Fox Broadcasting Company. FTS also produces the Fox program COPS. were more than offset by lower contributions from the FOX Broadcasting Company Noun 1. broadcasting company - a company that manages tv or radio stations company - an institution created to conduct business; "he only invests in large well-established companies"; "he started the company in his garage" , STAR and by losses from the launch of MyNetworkTV. Fox Television Stations' second quarter operating income increased 8% from the same period a year ago as advertising revenues expanded primarily on the strength of political spending. The increased political revenues were partially offset by lower revenues at the MyNetworkTV stations as well as by costs associated with the further expansion of local newscasts and spending on local station websites. At the FOX Broadcasting Company, second quarter operating results declined by 36% compared to a year ago, primarily due to weak ratings for Major League Baseball's post-season and increased National Football League programming costs. In prime-time, a decline in ratings and cancellation costs for several new series was offset by lower programming costs. Following the end of the quarter, the network further strengthened its schedule with the return of American Idol American Idol is an annual American televised singing competition, which began its first season on June 11, 2002. Part of the Idol franchise, it originated from the British reality program Pop Idol. and 24, both of which are delivering bigger audiences than a year ago. STAR's second quarter operating income decreased 36% from the same period a year ago as subscription revenue growth was more than offset by a decline in advertising revenue at STAR PLUS in India. The decrease in advertising revenue reflects last year's contributions from the highly successful broadcast of Kaun Banega Crorepati Kaun Banega Crorepati (Hindustani: कौन बनेगा करोड़पति 2, India's version of Who Wants to Be a Millionaire, which did not begin broadcasting in the current year until January. CABLE NETWORK PROGRAMMING Cable Network Programming reported second quarter operating income of $275 million, a $13 million increase over the second quarter a year ago, primarily reflecting increased contributions from the Fox News Channel. Fox News Channel (FNC FNC - Federal Networking Council ) reported operating income growth of 25% compared to the second quarter a year ago, primarily from higher affiliate revenues on increased rates and additional subscribers. During the quarter, viewership view·er·ship n. The people who watch a television program or motion picture: a largely male viewership. at FNC was more than 60% higher than its nearest competitor in primetime and was nearly 50% greater on a 24-hour basis, reflecting FNC broadcasting the top five shows in cable news. Operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. at our other cable channels (including the Regional Sports Networks In the United States of America, a Regional Sports Network, or RSN, is a cable television station that presents sports programming to a local market. The most important programming on an RSN consists of live broadcasts of professional and college sporting events, as those games , FX and SPEED) was in-line with the second quarter a year ago. At our sports networks, higher advertising and affiliate revenues were more than offset by increased programming and rights costs for additional professional and collegiate col·le·giate adj. 1. Of, relating to, or held to resemble a college. 2. Of, for, or typical of college students. 3. Of or relating to a collegiate church. games as compared to the prior year. At FX, increased affiliate revenues in the quarter were driven by higher rates and additional subscribers, while increased advertising revenues were the result of higher volume on ratings strength, most notably from Nip/Tuck which delivered ratings growth in its third season. These revenue gains were mostly offset by increased marketing spending primarily for new original series Dirt, which premiered to strong ratings after the quarter. DIRECT BROADCAST SATELLITE TELEVISION SKY Italia reported a second quarter operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $12 million, an improvement of $41 million versus a loss of $53 million a year ago on local currency revenue growth of 14%. This improvement primarily reflects subscriber additions, with more than 432,000 net subscribers added over the past 12 months, bringing SKY Italia's subscriber base to 4.03 million at quarter end. The revenue growth was partially offset by increased programming spending associated with the larger subscriber base as well as costs associated with broadcasting additional Series A and Series B soccer matches. MAGAZINES AND INSERTS The Magazines and Inserts segment reported second quarter operating income of $74 million, slightly below the $76 million reported in the same quarter a year ago, primarily due to lower revenue rates for free-standing inserts partially offset by increased page volume and lower printing costs. NEWSPAPERS The Newspapers segment reported second quarter operating income of $170 million, an increase of $101 million versus the same period a year ago which included a $99 million redundancy provision associated with the development of new printing operations in the U.K. The U.K. newspaper group, in addition to benefiting from the redundancy provision in the prior year, generated operating income growth in local currency terms primarily driven by increased advertising revenues on higher color volume at The Sun and The Sunday Times. The quarter also included slightly increased circulation revenues from higher cover prices at several titles as well as additional costs associated with the consumer magazine division and the launch of a free London newspaper. The Australian newspaper group reported a slight second quarter operating income decline in local currency terms versus a year ago as circulation revenue growth on higher cover prices was more than offset by increased newsprint newsprint low grade paper used for newspapers. Old newspapers are fed to cattle as an alternative roughage and may occasionally be ingested by dogs. Significant amounts of lead are accumulated in tissues; no cases of poisoning have been recorded in cattle, though it has been and production costs. Additionally, advertising revenues increased slightly with classified advertising experiencing strength in the employment sector and display advertising benefiting from a stronger retail market. BOOK PUBLISHING HarperCollins reported second quarter operating income of $54 million, a decrease of $23 million versus the same period a year ago which included strong sales from The Chronicles of Narnia series by C.S. Lewis. The year on year decline also reflects charges in the current year due to the bankruptcy filing of a major distributor. Current quarter results were led by strong sales of new titles including Michael Crichton's Next, The Dangerous Book for Boys by Conn Iggulden and Lemony Snicket's The End, as well as continuing sales of Marley & Me by John Grogan For the journalist of the same name, see . John Timothy Grogan (born 24 February, 1961) is a British politician. He is the first Labour Member of Parliament to represent Selby. John Grogan was born in Halifax, West Yorkshire, the son of a teacher, he was educated at St. and YOU: The Owners Manual by Michael F. Roizen and Mehmet Oz Dr. Mehmet Oz (born June 11, 1960) is an American cardiothoracic surgeon and author. Mehmet Oz or Mohammad Oz was born in Cleveland, Ohio, to Turkish, Muslim parents, and was educated at Tower Hill School in Wilmington, Delaware, received his undergraduate degree from . During the quarter, HarperCollins had 39 books on The New York Times bestseller list, including four books Four Books Chinese Sishu Ancient Confucian texts used as the basis of study for civil service examinations (see Chinese examination system) in China (1313–1905). that reached the number one spot. OTHER ITEMS In December 2006, the Company announced that it had signed a share exchange agreement with Liberty Media Corporation under which Liberty will exchange its entire 16.3 percent economic position in News Corporation for the Company's entire interest in The DIRECTV Group, three Regional Sports Networks and $550 million of cash, subject to adjustment. The transaction will be immediately accretive to News Corporation's earnings per share and is subject to various regulatory approvals and an affirmative AFFIRMATIVE. Averring a fact to be true; that which is opposed to negative. (q.v.) 2. It is a general rule of evidence that the affirmative of the issue must be proved. Bull. N. P. 298 ; Peake, Ev. 2. 3. vote by a majority of holders of News Corporation's Class B common stock, other than the Murdoch family and Liberty. If approved, the transaction is expected to be completed in the second half of calendar 2007. A dividend of $0.06 per Class A share and a dividend of $0.05 per Class B share has been declared and is payable on April 18, 2007. The record date for determining dividend entitlements is March 14, 2007. REVIEW OF EQUITY EARNINGS OF AFFILIATES' RESULTS Second quarter net earnings from affiliates were $249 million versus $160 million in the same period a year ago. The $89 million increase was primarily due to improved earnings from The DIRECTV Group resulting from subscriber growth and increased pricing, as well as lower expenses resulting from the set-top receiver lease program. The Company's share of equity earnings (losses) of affiliates is as follows: [TABLE OMITTED] Foreign Exchange Rates Average foreign exchange rates used in the year-to-date results are as follows: [TABLE OMITTED] To receive a copy of this press release through the Internet, access News Corp's corporate Web site located at http://www.newscorp.com. Audio from News Corp's conference call with analysts on the second quarter results can be heard live on the Internet at 8:30 A.M. Eastern Standard Time today. To listen to the call, visit http://www.newscorp.com. Cautionary Statement Concerning Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This document contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based on management's views and assumptions regarding future events and business performance as of the time the statements are made. Actual results may differ materially from these expectations due to changes in global economic, business, competitive market and regulatory factors. More detailed information about these and other factors that could affect future results is contained in our filings with the Securities and Exchange Commission. The "forward-looking statements" included in this document are made only as of the date of this document and we do not have any obligation to publicly update any "forward-looking statements" to reflect subsequent events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , except as required by law. (1) See supplemental financial data on page 12 for detail on earnings per share [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] NOTE 1 - SUPPLEMENTAL EARNINGS PER SHARE DATA Earnings per share is presented on a combined basis as the Company will not be required to present the two class method beginning in Fiscal 2008. Currently under US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , earnings per share is computed individually for the Class A and Class B shares. Class A non-voting shares carry rights to a greater dividend than Class B voting shares Voting Shares Shares that give the stockholder the right to vote on matters of corporate policy making as well as who will compose the members of the board of directors. Notes: Different classes of shares, such as preferred stock, sometimes don't allow for voting rights. through fiscal 2007. As such, net income available to the Company's common stockholders is allocated between our two classes of common stock. The allocation between classes was based upon the two-class method. Earnings per share by class and by total weighted average shares outstanding (Class A and Class B combined) is as follows: [TABLE OMITTED] NOTE 2 - OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION Operating income before depreciation and amortization, defined as operating income plus depreciation and amortization and the amortization of cable distribution investments, eliminates the variable effect across all business segments of non-cash depreciation and amortization. Since operating income before depreciation and amortization is a non-GAAP measure it should be considered in addition to, not as a substitute for, operating income, net income, cash flow and other measures of financial performance reported in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP. Operating income before depreciation and amortization does not reflect cash available to fund requirements, and the items excluded from operating income before depreciation and amortization, such as depreciation and amortization, are significant components in assessing the Company's financial performance. Management believes that operating income before depreciation and amortization is an appropriate measure for evaluating the operating performance of the Company's business segments. Operating income before depreciation and amortization, which is the information reported to and used by the Company's chief decision maker for the purpose of making decisions about the allocation of resources allocation of resources Apportionment of productive assets among different uses. The issue of resource allocation arises as societies seek to balance limited resources (capital, labour, land) against the various and often unlimited wants of their members. to segments and assessing their performance, provides management, investors and equity analysts a measure to analyze operating performance of each business segment and enterprise value against historical and competitors' data. The following table reconciles operating income before depreciation and amortization to the presentation of operating income. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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