News Corporation Reports Second Quarter Operating Income of $760 Million; Eighth Consecutive Quarter of Year-on-Year Growth.Business Editors NEW YORK--(BUSINESS WIRE)--Feb. 11, 2004 The News Corporation Limited (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 ): -- Revenues Increase 19% to $5.6 Billion -- Net Profit before Other Items Increases 28% to $410 Million; Net Profit Increases 51% to $361 Million -- QUARTER HIGHLIGHTS -- Strong revenue growth across all major cable channels substantially drives up Cable Network Programming 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. . -- Television segment operating income up slightly as strong advertising demand for the broadcast network's sports schedule and STAR's growing profitability offset tough political advertising comparisons at the station group; Market share at stations group up nearly a full percentage point. -- Filmed Entertainment operating income in line with a year ago as robust home entertainment sales of film and television titles match prior-year success of Ice Age. -- All print businesses report higher earnings led by advertising and circulation revenue gains in U.K. and Australian Australian pertaining to or originating in Australia. Australian bat lyssavirus disease see Australian bat lyssavirus disease. Australian cattle dog a medium-sized, compact working dog used for control of cattle. newspapers, increased page volume at free-standing free-standing Managed care adjective Referring to a physically and, often, financially discrete entity–eg, a surgical center, that is separate from, but may be affiliated with, a hospital; FS facilities may provide ambulatory surgery, emergency or inserts and several leading titles at HarperCollins HarperCollins is a publishing company owned by News Corporation. It is the combination of the publishers William Collins, Sons and Co Ltd, a British company, and Harper & Row, an American company. The worldwide CEO of HarperCollins is Jane Friedman. . -- BSkyB's 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. more than doubles on revenue growth of 17%, primarily from a 10% increase in the DTH (Direct-To-Home) Typically refers to satellite TV broadcasting directly to a dish antenna on the roof of a house. See DBS. subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. base, now exceeding 7.2 million. -- Completed acquisition of 34% interest in Hughes Electronics, including leading DTH provider DIRECTV DirecTV (trademarked as "DIRECTV") is a direct broadcast satellite (DBS) service based in El Segundo, California, USA, that transmits digital satellite television and audio to households in the United States, the Caribbean and Latin America except for Mexico. . The News Corporation Limited (NYSE: NWS, NWSA) today reported second quarter consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenues of $5.6 billion, a 19% increase over the $4.7 billion in the prior year, and consolidated operating income of $760 million, up 4% over the $729 million a year ago, despite the inclusion of $106 million in losses from 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. in the quarter. The year-on-year growth was driven by double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. increases at the Cable Network Programming, Newspaper and 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. segments. Net profit for the fiscal second quarter was $361 million, an increase of $122 million over the $239 million reported in the second quarter a year ago. Net profit before other items was $410 million, an increase of $90 million over the $320 million reported in the prior year. Commenting on the results, Chairman and Chief Executive Rupert Rupert, 1352–1410, German king (1400–1410), elector palatine of the Rhine. He was elected German king after the deposition of Wenceslaus. Seeking the imperial crown, Rupert went to Italy. Murdoch said: "This past quarter saw the Company achieve significant operational and strategic gains. Operationally, we recorded our eighth consecutive quarter of operating income growth, led by double-digit gains at our cable networks, newspapers and book publishing segments, and strong performances from our filmed entertainment and television segments despite difficult comparisons to prior year results. All of our key assets are performing well, including the television network, which after a difficult start to the broadcast season has once again reclaimed re·claim tr.v. re·claimed, re·claim·ing, re·claims 1. To bring into or return to a suitable condition for use, as cultivation or habitation: reclaim marshlands; reclaim strip-mined land. ratings momentum and is now strongly competitive in the key 18-49 demographic See demographics. . "Strategically, we have continued to expand our global distribution capabilities with the acquisition of our interest in DirecTV and the rapid growth at SKY Italia. We are looking forward to the unique opportunities these businesses provide us as we position ourselves for continued strong growth in the years to come." MANAGEMENT REVIEW OF PERFORMANCE The Statement of Financial Performance, Statement of Financial Position, Statement of Cash Flows and Supplemental Financial Data for the three and six months ended December December: see month. 31st are attached. The following commentary is made in respect of those statements, including an analysis of certain information contained therein.
NET PROFIT ATTRIBUTABLE TO MEMBERS OF THE PARENT ENTITY
The reported net profit attributable to members of the parent entity
consisted of the following items:
3 Months Ended 6 Months Ended
December 31, December 31,
2003 2002 2003 2002
------- ------- -------- -------
US $ Millions (except per ADR
amounts)
Revenue $5,588 $4,681 $10,237 $8,494
------- ------- -------- -------
Operating income 760 729 1,479 1,277
Associated entities before other items 49 (39) 106 (135)
Interest expense, net (110) (115) (224) (239)
Exchangeable securities expense (19) (12) (37) (25)
------- ------- -------- -------
Profit before income tax expense,
outside equity interest and other
items 680 563 1,324 878
Income tax expense (217) (178) (416) (276)
Outside equity interest (53) (65) (112) (120)
------- ------- -------- -------
Net profit before other items 410 320 796 482
------- ------- -------- -------
Other items, net of tax and outside
equity interest:
Group (32) (14) 4 (14)
Associated entities (17) (67) (17) (67)
------- ------- -------- -------
Total other items (49) (81) (13) (81)
------- ------- -------- -------
Net profit attributable to members of
the parent entity $ 361 $ 239 $ 783 $ 401
======= ======= ======== =======
Earnings per ADR (diluted) on net
profit before other items, net $ 0.30 $ 0.24 $ 0.60 $ 0.36
======= ======= ======== =======
Weighted average number of ADRs
outstanding in millions (diluted) 1,339 1,286 1,325 1,284
======= ======= ======== =======
The following commentary discusses the major components of these results.
Consolidated Operating Income
3 Months 6 Months
Ended Ended
December 31, December 31,
2003 2002 2003 2002
------ ----- ------- -------
US $ Millions US $ Millions
Filmed Entertainment $ 253 $255 $ 581 $ 355
Television 168 165 347 353
Cable Network Programming 187 121 320 239
Direct Broadcast Satellite Television* (106) - (223) -
Magazines & Inserts 63 59 121 110
Newspapers 170 102 272 159
Book Publishing 57 48 116 106
Other (32) (21) (55) (45)
------ ----- ------- -------
Consolidated Operating Income $ 760 $729 $1,479 $1,277
====== ===== ======= =======
* New segment reflecting the results of SKY Italia, consolidated as
of May 1, 2003
Second quarter net earnings from associated entities before other items were $49 million versus losses of $39 million in the same period a year ago, primarily due to the absence of Stream's losses in the current year. In addition, contributions from BSkyB BSkyB British Sky Broadcasting increased partly due to improved earnings resulting from a 10% increase in the DTH subscriber base, as well as earnings that were not reflected for a portion of the prior year's quarter. These favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. variances were partially offset by lower foreign currency gains at Sky Brasil. A detailed discussion of the components of associated entities earnings is provided later in the release. Second quarter net profit before other items increased to $410 million ($0.30 per ADR ADR - Astra Digital Radio ) versus $320 million ($0.24 per ADR) in the prior year primarily due to higher consolidated operating income and the significant improvement in net earnings from associated entities. REVIEW OF OPERATING RESULTS FILMED ENTERTAINMENT The Filmed Entertainment segment reported second quarter operating income of $253 million, in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with the $255 million reported in the same period a year ago, which included the blockbuster block·bust·er n. 1. Something, such as a film or book, that sustains widespread popularity and achieves enormous sales. 2. A high-explosive bomb used for demolition purposes. 3. worldwide home entertainment performances of Ice Age and Star Wars Episode II: Attack of the Clones. Current-year results primarily reflected strong contributions from several film and television home entertainment releases as well as pay-TV pay-TV n. A system for receiving television broadcasts by making subscription payments, as by renting a device that unscrambles the broadcaster's scrambled signal. Also called pay television. and free-TV contributions from catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. titles. Very strong current-quarter film results were largely driven by the worldwide home entertainment performances of X-2: X-Men United and 28 Days Later as well as various catalog titles. Additionally, the domestic home entertainment performances of Bend Bend, city (1990 pop. 20,469), seat of Deschutes co., W central Oregon, on the Deschutes River, at the eastern foot of the Cascade Range; inc. 1904. Lumbering is the primary industry, and tourism is also important. it Like Beckham and League of Extraordinary Gentlemen also contributed to the strong quarterly results. These contributions were partially offset by marketing costs for several new releases including Master and Commander: The Far Side of The World which garnered ten Academy Award nominations, including Best Picture, the Farrelly Brothers comedy Stuck on You and Cheaper by the Dozen, which has brought in more than $130 million domestically since its Christmas Christmas [Christ's Mass], in the Christian calendar, feast of the nativity of Jesus, celebrated in Roman Catholic and Protestant Churches on Dec. 25. In liturgical importance it ranks after Easter, Pentecost, and Epiphany (Jan. 6). release. Twentieth Century Fox Television (TCFTV) contributions primarily reflected continued momentum in home entertainment sales, most notably from The Simpsons, Buffy buffy (buf´e) of the color buff; light yellowish pink to yellow, including orange-yellow to yellow-brown. the Vampire vampire, in folklore, animated corpse that sucks the blood of humans. Belief in vampires has existed from the earliest times and has given rise to an amalgam of legends and superstitions. Slayer, Family Guy and 24, offset by lower network revenue from The Practice. Several TCFTV shows garnered Golden Globe nominations during the quarter including Bernie Mac <noinclude> Bernard Jeffrey McCullough (born October 5, 1957[1]), better known as Bernie Mac, is a two time Emmy Award-nominated American actor and comedian. , Arrested Development, Reba Reba (rē`bə), in the Bible, king of Midian killed by the Jews. and Best Drama winner 24. TELEVISION The Television segment reported second quarter operating income of $168 million, an increase of $3 million versus the same period a year ago, primarily reflecting improvement at 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" and higher contributions from STAR, partially offset by a decline at 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. . At the FOX Broadcasting Company, second quarter operating income improved by $21 million compared to a year ago due principally to improved sports advertising, particularly from Major League Baseball "MLB" and "Major Leagues" redirect here. For other uses, see MLB (disambiguation) and Major Leagues (disambiguation). Major League Baseball (MLB) is the highest level of play in North American professional baseball. with ratings up nearly 30% for the post-season. Additionally, higher pricing for the primetime entertainment schedule more than offset a 10% decline in ratings and increased promotional costs. Following the end of the quarter, the network premiered several shows that are winning their time slots Continuously repeating interval of time or a time period in which two devices are able to interconnect. among all key demographics The attributes of people in a particular geographic area. Used for marketing purposes, population, ethnic origins, religion, spoken language, income and age range are examples of demographic data. , including 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 My Big Fat Obnoxious Fiance My Big Fat Obnoxious Fiance is a one-shot television reality show on the Fox Network during the 2003-2004 season. The show consisted of six hour-long episodes. Plot Summary . Fox Television Stations (FTS FTS facteur thymique sérique. ) second quarter operating income declined 9% from the prior year as market share growth of nearly a full percentage point was more than offset by an overall market-wide decline, primarily from non-recurring political advertising. FTS, excluding primetime, achieved ratings growth in the quarter across all key day-parts, particularly during the morning and early evening news programming periods. STAR, bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. by a 20% increase in revenues, substantially increased its second quarter operating income versus prior year. Revenue gains were driven by both advertising and subscription growth primarily at STAR Plus which, on average, continues to deliver all of the top 10 cable programs in India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. . CABLE NETWORK PROGRAMMING Cable Network Programming reported second quarter operating income of $187 million, an increase of $66 million or 55% over last year's results reflecting strong growth across all of the Company's primary cable television channels as well as the recovery of $15 million of Adelphia A`del´phi`a n. 1. (Bot.) A "brotherhood," or collection of stamens in a bundle; - used in composition, as in the class names, Monadelphia, Diadelphia, etc. s> receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed which had been previously written off. The Fox News Channel (FNC FNC - Federal Networking Council ) reported operating income growth of 23% compared to the second quarter a year ago fueled by double-digit revenue growth, primarily from increased ad sales, partially offset by higher costs associated with covering the war. During the quarter, FNC once again achieved the highest viewership view·er·ship n. The people who watch a television program or motion picture: a largely male viewership. among all cable news channels, expanding its lead to 42% in primetime and 57% on a 24-hour basis. Fox Cable Networks' (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 (RSNs), the FX Channel (FX) and SPEED Channel) operating profit improved 52% during the quarter driven by double-digit revenue growth at both the RSNs and FX. The revenue increase at the RSNs was largely due to higher affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. rates, additional DTH subscribers and increased advertising sales versus a year ago. FX achieved revenue gains from increases in both advertising and affiliate revenues fueled by ratings gains, higher advertising pricing and a 4% expansion in the subscriber base over the past year. DIRECT BROADCAST SATELLITE TELEVISION On April 30th, 2003 the Company completed the acquisition of the Italian pay-TV business Telepiu and combined it with Stream. News Corporation owns 80.1% of the combined entity, SKY Italia, whose results comprise To embrace, cover, or include; to confine within; to consist of. In the law governing patents—grants of an exclusive right or privilege to make, use, or sell an invention or product for a term of years—the term comprise this segment. During the second quarter, SKY Italia reported an 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 $106 million on revenues of $421 million while increasing the subscriber base to more than 2.4 million. Over 90% of the new subscribers during the quarter opted for a premium-programming tier including movies and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. sports programming. MAGAZINES AND INSERTS The Magazines and Inserts segment reported second quarter operating income of $63 million, an increase of $4 million versus a year ago. The improvement was primarily driven by higher contributions from the Free Standing Inserts division, principally as a result of increased demand for packaged goods Noun 1. packaged goods - groceries that are packaged for sale foodstuff, grocery - (usually plural) consumer goods sold by a grocer plural, plural form - the form of a word that is used to denote more than one pages, partially offset by lower contributions from the InStore In`store´ v. t. 1. To store up; to inclose; to contain. division. NEWSPAPERS The Newspaper segment reported second quarter operating income of $170 million, a 67% increase versus the same period a year ago reflecting circulation revenue increases in the U.K. combined with advertising strength in both the U.K. and Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. . The U.K. newspaper group reported operating income growth of 61% in local currency terms for the second quarter compared to the prior year, driven by both circulation and advertising revenue gains partially offset by costs associated with the launch of the tabloid tab·loid n. A newspaper of small format giving the news in condensed form, usually with illustrated, often sensational material. adj. 1. In summary form; condensed. 2. Lurid or sensational. version of The Times. Circulation revenue growth was achieved across all titles, with the largest increase at The Sun, where reduced cover price initiatives during the second quarter a year ago adversely affected results. The improvement in advertising was primarily driven by growth at The Sun on the strength of higher classified and display advertisements. The Australian newspaper group reported a 16% increase in operating income in local currency terms, primarily driven by an 11% increase in advertising revenue compared to a year ago. Both display and classified advertising showed increases across all categories, with the strongest growth in the national, retail and real estate sectors. BOOK PUBLISHING HarperCollins reported operating income of $57 million during the quarter, an increase of $9 million compared to the same period a year ago. The 19% growth was led by the phenomenal success of Zondervan's The Purpose Driven Life, the best-selling best·sell·er also best seller n. A product, such as a book, that is among those sold in the largest numbers. best non-fiction non-fiction n → littérature f non romanesque non-fiction n → Sachbücher pl adj (book) → Sach-; ( book of calendar 2003 with more than 11 million English language English language, member of the West Germanic group of the Germanic subfamily of the Indo-European family of languages (see Germanic languages). Spoken by about 470 million people throughout the world, English is the official language of about 45 nations. copies sold in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . During the quarter, HarperCollins had 30 titles on The 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 Times bestseller lists including three titles that reached the #1 spot. OTHER At the end of the quarter, the Company completed the acquisition of 34% of the outstanding common stock of Hughes Electronics for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3.1 billion in cash and 130.7 million preferred limited voting Limited voting is a voting system in which electors have fewer votes than there are positions available. The positions are awarded to the candidates who receive the most votes absolutely. ordinary ADRs. At closing, News Corporation's ownership interest was transferred to Fox Entertainment Group, Inc. (FEG feg aftermath. ) in exchange for $4.5 billion in promissory notes promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. and approximately 74.5 million shares in FEG, increasing News Corporation's ownership interest in FEG from 80.6% to approximately 82%. Also during the quarter, the Company announced it had reached an agreement in principle for the sale of the Los Angeles Dodgers "Dodgers" and "Brooklyn Dodgers" redirect here. For the American football team, see Brooklyn Dodgers (football). For the Eastern Basketball Association team, see Brooklyn Dodgers (basketball). . The sale has been approved by Major League Baseball and is expected to close shortly, subject to customary closing conditions. An interim unfranked dividend of A$0.06 per Ordinary ADR and an unfranked dividend of A$0.15 per Preferred Limited Voting Ordinary ADR has been declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. and is payable on May 7, 2004. The Company's Dividend Reinvestment Plan Dividend Reinvestment Plan (DRP) Plan which provides for automatic reinvestment of shareholder dividends in more shares of a company's stock, often without commissions. Some plans provide for the purchase of additional shares at a discount to market price. ("Plan") remains in operation and a discount of 10% will apply in determining the allotment A portion, share, or division. The proportionate distribution of shares of stock in a corporation. The partition and distribution of land. ALLOTMENT. Distribution by lot; partition. Merl. Rep. h.t. price calculated 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 the Plan rules. The record date for determining dividend entitlements and Plan participation is March 25, 2004. The ex-dividend date Ex-dividend date The first day of trading when the buyer of a stock is no longer entitled to the most recently announced dividend payment ( i.e. the trade will settle the day after the record date, too late for the buyer to appear on the shareholder record and receive the dividend. will be March 23, 2004. REVIEW OF ASSOCIATED ENTITIES RESULTS Second quarter net earnings from associated entities before other items were $49 million versus losses of $39 million in the same period a year ago, primarily due to the absence of Stream's losses in the current year. In addition, contributions from BSkyB increased partly due to improved earnings resulting from a 10% increase in the DTH subscriber base, as well as earnings that were not reflected for a portion of the prior year's quarter. These favorable variances were partially offset by lower foreign currency gains at Sky Brasil. The Company's share of associated entities' earnings (losses) is as follows:
3 Months 6 Months
Ended Ended
December 31, December 31,
% Owned 2003 2002 2003 2002
------- ----- ------ ----- ------
US $ Millions US $ Millions
BSkyB 35.4%(a) $ 42 $ 19 $ 95 $ 19
Sky Brasil 49.7%(b) (6) 10 (14) (57)
Innova - Mexico 30.0% - (9) (10) (17)
FOXTEL - Australia 25.0% (4) (2) (7) (4)
Stream 50.0%(c) - (61) - (100)
Fox Sports Cable Networks Various - (3) 9 9
ESPN STAR Sports 50.0% 1 - 2 1
Other Associates Various(d) 16 7 31 14
----- ----- ----- -----
Total associated entities' earnings
(losses) before other items $ 49 $ (39) $106 $(135)
Other items (17) (67) (17) (67)
----- ------ ----- ------
Total associated entities' earnings
(losses) $ 32 $(106) $ 89 $(202)
===== ====== ===== ======
Further details on the associated entities follow.
-------------------------------------------
(a) The Company's investment basis in BSkyB was negative from December
31, 2001 through November 11, 2002. Accordingly, the Company's share
of BSkyB's results was not recognized during that period.
(b) Represents the Company's economic interest, which was 46.7% as of
December 31, 2002. The Company continues to hold a 36% equity interest
in Sky Brasil.
(c) The Company's share of Stream's losses was included as part of
associated entities from April 1, 2002 through April 30, 2003, when it
merged with Telepiu to form the consolidated entity SKY Italia.
(d) Primarily comprising Gemstar-TV Guide International, Independent
Newspapers Limited, and Queensland Press.
BSkyB (in STG) - Europe 3 Months Ended 6 Months Ended
December 31, December 31,
2003 2002* 2003 2002*
--------- ------- ----------- ---------
Millions Millions
(except subscribers) (except subscribers)
Revenues GBP 916 GBP 785 GBP 1,766 GBP 1,511
Operating profit before
exceptional items 103 48 225 94
Net income before
exceptional items GBP 40 GBP 36 GBP 104 GBP 36
======== ======== ========== ==========
AGAAP adjustment (in US$) (1) 18 13 34 29
------- -------- --------- ----------
News' 35.4% share (in US$) $ 42 $ 34 $ 95 $ 50
======= ======= ========= ==========
Investment basis
adjustment (a) - (15) - (31)
------- -------- --------- -----------
News' reportable
share (in US$) $ 42 $ 19 $ 95 $ 19
======= ======= ========= ===========
Net debt (excluding capitalized
leases) GBP 751 GBP 1,378
Ending Subscribers 11,070,000 10,513,000
DTH Subscribers 7,208,000 6,562,000
* Does not reflect BSkyB's adoption of accounting abstract
UITF 38.
BSkyB's quarterly revenues increased 17% in local currency terms largely due to DTH subscriber growth, an increase in average revenue per subscriber and improved interactive revenues. Operating profit before exceptional items increased 115% due to increased revenues, partially offset by higher programming expenses from increased sports rights (mainly soccer and cricket cricket, sport cricket, ball-and-bat game played chiefly in Great Britain and the Commonwealth countries. Basic Rules Cricket is played by two teams of eleven on a level, closely cut oval "pitch" preferably measuring about 525 ft (160 m) ) as well as higher betting and subscriber management costs. The increase in net income before exceptional items reflects the improvement in operating income largely offset by an increase in the tax provision resulting from higher earnings in the current year as well as the absence of a tax benefit that was recorded in the prior year's quarter.
3 Months 6 Months
Sky Brasil (in US$) Ended Ended
December 31, December 31,
2003 2002 2003 2002
---------- -------- --------- ---------
Millions Millions
(except subscribers) (except subscribers)
Revenues (in local currency) R$ 158 R$ 138 R$ 320 R$ 268
Revenues 55 37 110 79
Operating loss (3) (8) - (12)
Net income (loss) $(11) $ 21 $ (28) $ (136)
====== ====== ======== ========
News' reportable 49.7%/46.7%
share (in US$) $ (6) $ 10 $ (14) $ (57)
====== ====== ======== =======
Net debt (excluding capitalized
leases) $ 216 $ 213
Ending Subscribers 784,000 732,000
Sky Brasil's revenues grew 14% in local currency terms in the quarter compared to prior year primarily driven by a higher subscriber base and increased average revenue per subscriber. The revenue growth for the quarter was partly offset by increased marketing costs due to new campaigns to grow the subscriber base. The increase in net loss in the current quarter principally reflects lower foreign currency gains versus a year ago.
Innova (in US$) - Mexico 3 Months Ended 6 Months Ended
December 31, December 31,
2003 2002 2003 2002
---------- -------- --------- ---------
Millions Millions
(except subscribers) (except subscribers)
Revenues (in local currency) Ps 1,013 Ps 805 Ps 1,922 Ps 1,639
Revenues 90 80 175 164
Operating income 16 6 28 13
Net loss $ (1) $(30) $ (33) $ (58)
======== ====== ======== ========
News' reportable 30%
share (in US$) $ - $ (9) $ (10) $ (17)
======== ====== ======== ========
Net Debt (excluding capitalized
leases) $ 344 $ 350
Ending Subscribers 857,000 742,000
Innova's revenues grew 26% in local currency terms compared to prior year primarily driven by a 15% increase in the subscriber base. The decrease in net loss during the quarter principally reflects lower interest expense resulting from the refinancing Refinancing An extension and/or increase in amount of existing debt. of debt and lower foreign currency losses versus a year ago.
FOXTEL (in A$)
3 Months 6 Months
Ended Ended
December 31, December 31,
2003 2002 2003 2002
---------- -------- --------- ---------
Millions Millions
(except subscribers) (except subscribers)
Revenues A$ 186 A $150 A$ 368 A$ 288
Operating loss (31) (20) (58) (44)
Net loss A$ (22) A$ (13) A$ (40) A$ (30)
======= ======= ======= =======
News' reportable 25%
share (in US$) $ (4) $ (2) $ (7) $ (4)
====== ===== ======= =======
Ending Subscribers
(including Optus) 1,073,000 1,050,000
FOXTEL's revenues for the quarter increased 24% principally due to an increase of 18% in satellite subscribers compared to a year ago, higher average revenue per subscriber, and the inclusion of Optus wholesale subscribers as of December 1, 2002. Net loss for the quarter increased A$9 million against the prior year as the increased subscriber revenues were more than offset by subscriber acquisition expenses, the development of a future digital service, higher depreciation expense and the inclusion of Optus license fee costs. Total subscribers (including Optus wholesale) have increased by 2.2% over prior year while FOXTEL managed subscribers have increased by 6.6%.
Fox Sports Cable
Networks* (in US$)
3 Months 6 Months
Ended Ended
December 31, December 31,
2003 2002 2003 2002
---------- -------- --------- ---------
Millions Millions
(except subscribers) (except subscribers)
News' reportable share* $- $(3) $9 $9
======= ===== ====== =====
Ending Subscribers 44,068,000 44,072,000
The improved results for the quarter primarily reflect the effect of
cost savings at the Metro Channels and reduced programming costs at
National Sports Partners.
* Various associated interests ranging from approximately 20 percent
to 60 percent, primarily comprising Regional Programming Partners
(including Madison Square Garden), National Sports Partners and
National Advertising Partners.
ESPN STAR Sports (in US$) - Asia
3 Months 6 Months
Ended Ended
December 31, December 31,
2003 2002 2003 2002
----- ----- ----- -----
Millions Millions
Revenues $42 $39 $76 $76
Operating income (loss) 4 (1) 6 4
Net income (loss) $ 3 $(1) $ 4 $ 2
===== ===== ===== =====
News' reportable 50% share $ 1 $ - $ 2 $ 1
===== ===== ===== =====
Operating income improved $5 million due to higher subscription revenues from India, stronger syndication See syndication format. revenues from Bangladesh Bangladesh (bäng-lädĕsh`, băng–) [Bengali,=Bengal nation], officially People's Republic of Bangladesh, republic (2005 est. pop. 144,320,000), 55,126 sq mi (142,776 sq km), S Asia. Cricket and lower costs associated with various cricket events. (1) Principally reflects adjustments for reporting under Australian Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("AGAAP") relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc identifiable intangible amortization. Foreign Exchange Rates Average foreign exchange rates used in the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. profit results are as follows:
6 Months Ended
December 31,
2003 2002
---------- ------------
Australian Dollar/U.S Dollar 0.68 0.55
U.K. Pounds Sterling/U.S. Dollar 1.66 1.56
Euro/U.S. Dollar 1.16 0.99
To receive a copy of this press release through the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , 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 10:00 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. 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.
STATEMENT OF FINANCIAL PERFORMANCE(a) 3 Months Ended 6 Months Ended
December 31, December 31,
2003 2002 2003 2002
------- ------- -------- -------
Note US $ Millions (except per
ADR amounts)
Sales revenue 1 $5,588 $4,681 $10,237 $8,494
Operating expenses 4,828 3,952 8,758 7,217
------- ------- -------- -------
Operating income 1 760 729 1,479 1,277
Net profit (loss) from associated
entities 32 (106) 89 (202)
Borrowing costs (145) (139) (293) (291)
Interest income 35 24 69 52
------- ------- -------- -------
Net borrowing costs (110) (115) (224) (239)
Exchangeable securities expense (19) (12) (37) (25)
Other items before income tax, net (65) (26) (4) (26)
------- ------- -------- -------
Profit from ordinary activities
before income tax 598 470 1,303 785
------- ------- -------- -------
Income tax expense on:
Ordinary activities before
other items (217) (178) (416) (276)
Other items 23 12 1 12
------- ------- -------- -------
Net income tax expense (194) (166) (415) (264)
------- ------- -------- -------
Net profit from ordinary
activities after tax 404 304 888 521
Net profit attributable to outside
equity interests (43) (65) (105) (120)
----------------------------------------------------------------------
Net Profit Attributable to Members
of the Parent Entity $ 361 $ 239 $ 783 $ 401
----------------------------------------------------------------------
Net exchange gains recognized
directly in equity 585 186 627 178
Other items recognized directly in
equity - 86 - 86
------- ------- -------- -------
Total change in equity other than
those resulting from transactions
with owners as owners $ 946 $ 511 $ 1,410 $ 665
======= ======= ======== =======
Diluted earnings per ADR on net
profit attributable to members of
the parent entity
Ordinary ADRs $ 0.24 $ 0.16 $ 0.52 $ 0.27
Preferred limited voting ordinary
ADRs $ 0.29 $ 0.19 $ 0.63 $ 0.32
Ordinary and preferred limited
voting ordinary ADRs $ 0.27 $ 0.18 $ 0.59 $ 0.30
(a) Following the issuance in June 2002 of the revised Australian
Accounting Standard AASB 1018 "Statement of Financial Performance"
this statement has been reformatted from previous presentations to be
consistent with the format prescribed in the revised Australian
Accounting Standard.
STATEMENT OF FINANCIAL POSITION December June
31, 30,
2003 2003
-------- --------
ASSETS US $ Millions
Current Assets
Cash $ 2,498 $ 4,477
Cash on deposit 293 -
Receivables 4,578 3,784
Inventories 1,732 1,282
Other 488 321
-------- --------
Total Current Assets 9,589 9,864
-------- --------
Non-Current Assets
Cash on deposit - 463
Receivables 832 809
Investments in associated entities 10,592 3,667
Other investments 643 793
Inventories 2,791 2,723
Property, plant and equipment 4,192 4,180
Publishing rights, titles and television licenses 22,189 21,719
Goodwill 243 250
Other 545 495
-------- --------
Total Non-Current Assets 42,027 35,099
-------- --------
Total Assets $51,616 $44,963
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Interest bearing liabilities $ 306 $ 22
Payables 5,997 5,507
Tax liabilities 564 474
Provisions 186 171
-------- --------
Total Current Liabilities 7,053 6,174
-------- --------
Non-Current Liabilities
Interest bearing liabilities 8,657 8,227
Payables 2,288 2,353
Tax liabilities 526 442
Provisions 795 685
-------- --------
Total Non-Current Liabilities Excluding Exchangeable
Preferred Securities 12,266 11,707
-------- --------
Exchangeable preferred securities 1,408 1,383
-------- --------
Total Liabilities 20,727 19,264
Shareholders' Equity
Contributed equity 21,608 17,262
Reserves 2,530 1,685
Retained profits 2,937 2,506
-------- --------
Shareholders' equity attributable to members of the
parent entity 27,075 21,453
Outside equity interests in controlled entities 3,814 4,246
-------- --------
Total Shareholders' Equity 30,889 25,699
-------- --------
Total Liabilities and Shareholders' Equity $51,616 $44,963
======== ========
STATEMENT OF CASH FLOWS 6 Months Ended
December 31,
2003 2002
-------- --------
Operating Activity US $ Millions
Net profit attributable to members of the parent
entity $ 783 $ 401
Adjustment for non-cash and non-operating
activities:
Equity earnings, net (96) 145
Outside equity interest 112 120
Depreciation and amortization 299 204
Other items, net 13 81
Change in assets and liabilities:
Receivables (1,107) (1,236)
Inventories (422) (344)
Payables 711 748
Other liabilities 332 178
-------- --------
Cash provided by operating activity 625 297
Investing and other activity
Property, plant and equipment (136) (184)
Acquisitions, net of cash acquired (147) (432)
Investments and acquisitions of interests in
associated entities (3,179) (357)
Other investments (49) (48)
Repayment of loans by associate - 96
Proceeds from sale of non-current assets 387 54
-------- --------
Cash used in investing activity (3,124) (871)
Financing activity
Issuance of debt 359 -
Repayment of debt and exchangeable securities (479) (1,100)
Decrease in cash on deposit 157 -
Issuance of shares 529 1,220
Dividends paid (97) (75)
Leasing and other finance costs - (1)
-------- --------
Cash provided by financing activity 469 44
-------- --------
Net decrease in cash (2,030) (530)
Opening cash balance 4,477 3,574
Exchange movement on opening balance 51 32
-------- --------
Closing cash balance $ 2,498 $ 3,076
======== ========
Note 1 - SEGMENT DATA 3 Months Ended 6 Months Ended
December 31, December 31,
BY GEOGRAPHIC AREAS 2003 2002 2003 2002
------- ------- -------- -------
US $ Millions US $ Millions
Revenues
United States $3,937 $3,670 $ 7,248 $6,559
Europe 1,155 641 2,083 1,231
Australasia 496 370 906 704
------- ------- -------- -------
$5,588 $4,681 $10,237 $8,494
======= ======= ======== =======
Operating Income
United States $ 635 $ 584 $ 1,325 $1,052
Europe 18 83 (7) 139
Australasia 107 62 161 86
------- ------- -------- -------
$ 760 $ 729 $ 1,479 $1,277
======= ======= ======== =======
BY INDUSTRY SEGMENT
Revenues
Filmed Entertainment $1,377 $1,335 $ 2,625 $2,217
Television 1,555 1,443 2,566 2,467
Cable Network Programming 597 502 1,224 1,056
Direct Broadcast Satellite
Television* 421 - 685 -
Magazines and Inserts 229 215 451 409
Newspapers 858 672 1,597 1,279
Book Publishing 341 326 688 673
Other 210 188 401 393
------- ------- -------- -------
$5,588 $4,681 $10,237 $8,494
======= ======= ======== =======
Operating Income
Filmed Entertainment $ 253 $ 255 $ 581 $ 355
Television 168 165 347 353
Cable Network Programming 187 121 320 239
Direct Broadcast Satellite
Television* (106) - (223) -
Magazines and Inserts 63 59 121 110
Newspapers 170 102 272 159
Book Publishing 57 48 116 106
Other (32) (21) (55) (45)
------- ------- -------- -------
$ 760 $ 729 $ 1,479 $1,277
======= ======= ======== =======
* New segment reflecting the results of SKY Italia, consolidated as
of May 1, 2003.
Note 2 - SUPPLEMENTAL FINANCIAL DATA The Company considers net profit before other items to be an important indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of the Company's operating performance on a consolidated basis. Net profit before other items, defined as net profit attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to members of the parent entity before other items related to the Company and associated entities, net of applicable income tax expenses and outside equity interests, eliminates the effect of transactions that are considered significant by reason of their size, nature or effect on the Company's financial performance for the year. Net profit before other items should be considered in addition to, not as a substitute for the Company's operating income, net profit attributable to members of the parent entity, cash flows and other measures of financial performance prepared in accordance with generally accepted accounting principles in Australia. Net profit before other items does not reflect cash available to fund requirements, and the items excluded from net profit before other items, such as other revenues and expenses, are significant components in assessing the Company's financial performance. The following table reconciles certain components of net profit attributable to members of the parent entity as presented earlier in this release to the presentation required under Australian GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). as required by Australian Accounting Standard AASB AASB Australian Accounting Standards Board AASB Alabama Association of School Boards AASB Association of Alaska School Boards AASB American Association of Small Businesses AASB Association of American Schools in Brazil AASB Advanced Audio Server Base 1018 "Statement of Financial Performance."
3 Months 6 Months
Ended Ended
December 31, December 31,
2003 2002 2003 2002
------ ------ ------ ------
US $ Millions US $ Millions
Total other items $ (49) $ (81) $ (13) $ (81)
Reclassification of other items -
associated
entities 17 67 17 67
Reclassification of income tax and net
profit
attributable to outside equity interest (33) (12) (8) (12)
------ ------ ------ ------
Other items before income tax, net $ (65) $ (26) $ (4) $ (26)
====== ====== ====== ======
Associated entities before other items
$ 49 $ (39) $ 106 $(135)
Reclassification of other items -
associated entities (17) (67) (17) (67)
------ ------ ------ ------
Net profit (loss) from associated entities
$ 32 $(106) $ 89 $(202)
====== ====== ====== ======
Income tax expense $(217) $(178) $(416) $(276)
Reclassification of income tax expense on
other items 23 12 1 12
------ ------ ------ ------
Net income tax expense $(194) $(166) $(415) $(264)
====== ====== ====== ======
Outside equity interest $ (53) $ (65) $(112) $(120)
Reclassification of outside equity
interest on
other items, net 10 - 7 -
------ ------ ------ ------
Net profit attributable to outside equity
interest $ (43) $ (65) $(105) $(120)
====== ====== ====== ======
SUPPLEMENTAL FINANCIAL DATA (continued)
3 Months Ended 6 Months Ended
December 31, December 31,
2003 2002 2003 2002
------- ------- ------- -------
US $ Millions US $ Millions
Net profit before other items $ 410 $ 320 $ 796 $ 482
Other items before income tax, net (65) (26) (4) (26)
Reclassification of income tax and net
profit
attributable to outside equity
interest 33 12 8 12
Reclassification of other items -
associated entities (17) (67) (17) (67)
------- ------- ------- -------
Net profit attributable to members of
the parent entity $ 361 $ 239 $ 783 $ 401
======= ======= ======= =======
Earnings per ADR on net profit before
other items, net $ 0.30 $ 0.24 $ 0.60 $ 0.36
Earnings per ADR on other items before
income tax, net (0.05) (0.02) - (0.02)
Earnings per ADR on reclassification
of income tax and net profit
attributable to outside equity
interest 0.03 0.01 - 0.01
Earnings per ADR on reclassification
of other items - associated entities (0.01) (0.05) (0.01) (0.05)
------- ------- ------- -------
Diluted earnings per ADR on net profit
attributable to members of the parent
entity $ 0.27 $ 0.18 $ 0.59 $ 0.30
======= ======= ======= =======
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