Twenty-First Century Fox 2004 Annual Report Download

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ANNUAL REPORT 2004
The Simpsons TM and © 2004
Twentieth Century Fox Film Corporation.
All Rights Reserved.

Table of contents

  • Page 1
    ANNUAL REPORT 2004 The Simpsons TM and © 2004 Twentieth Century Fox Film Corporation. All Rights Reserved.

  • Page 2

  • Page 3
    ... R T 2 0 0 4 A constellation of media businesses News Corporation's global operations encompass the fields of filmed entertainment, newspapers, pay and free-to-air television, cable network programming, book publishing, magazines and consumer marketing. Just as our assets span the world, our vision...

  • Page 4
    ... WNYW New York, NY WWOR New York, NY KTTV Los Angeles, CA KCOP Los Angeles, CA WFLD Chicago, IL WPWR Chicago, IL WTXF Philadelphia, PA STAR STAR STAR STAR STAR STAR STAR STAR Plus Movies News Mandarin Movies World Gold Chinese Channel FOX News Channel (a) Fox Cable Networks Group (a) FX Fox Movie...

  • Page 5
    ... AND CANADA New York Post UNITED KINGDOM SKY Italia 80% Sky Sport Calcio Sky Sky Cinema Sky TG 24 British Sky Broadcasting 35% Sky News Sky Sports Sky Travel Sky One Sky Movies UNITED STATES The Times The Sunday Times The Sun News of the World TSL Education AUSTRALIA News America Marketing In...

  • Page 6
    ... spirit. Australia is our spiritual home, and will always remain so. But over the past two decades, as more of the Company's revenues and profits have come from our US-based businesses, it has become increasingly clear to us that without a primary listing on the New York Stock Exchange and...

  • Page 7
    ...the Fox Entertainment Group, News Corporation can boast nearly 30 million subscribers around the world, stretching from Rome (SKY Italia) to Rio (Sky Brasil), from Sydney (Foxtel) to Seattle (DIRECTV), from London (BSkyB) to Los Cabos (Sky Mexico). By combining our industryleading content businesses...

  • Page 8
    ..., a focus on profitability over market share and an exploding home entertainment market that generated our success. In fiscal 2004 and early in fiscal 2005, Twentieth Century Fox films had an industry record six films in a row open to US$20 million-plus box offices. Meanwhile, Day After Tomorrow has...

  • Page 9
    ...store marketing business, generated a 6 percent improvement over last year. HarperCollins, led by the astonishing performance of The Purpose Driven Life , had another year of record profits and had 97 titles on the New York Times bestseller list. And our Washington-based magazine The Weekly Standard...

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    GLOBAL EDITION N E W S C O R P O R AT I O N A N N U A L R E P O R T 2 0 0 4 Garfield A solid performance Cheaper by the Dozen Family Hit of the Holiday Season FOX MAKES WAVES 9

  • Page 12
    ... Century Fox A string of hit movies and record home entertainment sales gave 20th Century Fox Film, News Corporation's 82 percent-owned Fox Entertainment Group's film studio, record operating profits for the third straight year in fiscal 2004. Fox's most successful film of the year at the box office...

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    12

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    TELEVISION N E W S C O R P O R AT I O N A N N U A L R E P O R T 2 0 0 4 EXCLUSIVE WORLD IDOLIZED FOX the Idol of Young Adults and Teens Most competitive season in FOX's 18-year history. See next page for details 13

  • Page 16
    ... and those aged 18 to 34 - demographics highly coveted by advertisers - FOX was a clear number one. In fact, among teens, FOX's ratings were 71 percent higher than its nearest competitor, the widest margin in the history of electronic ratings measurement. In its third hit season, American Idol ended...

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    15

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    ... News Corporation has duopoly stations in nine of the top 20 markets in the U.S., including the top three markets of New York, Los Angeles and Chicago. By the end of fiscal 2004, the integration of the duopoly stations was virtually complete. The New York duopoly of WNYW and WWOR made market share...

  • Page 20
    ... in fiscal 2004 as its growth continued. The breadth and depth of STAR's businesses expanded during the year, with new distribution deals in a number of key markets - including Hong Kong and Singapore - and with the addition of several new channels. The total number of channels broadcast on...

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    20

  • Page 23
    ...'s audience grow in the U.S., but also overseas. FOX News secured new international distribution deals in fiscal 2004 with several cable systems overseas, including in New Zealand, Taiwan, Brazil and Italy. The deals mean FOX News' programming is now seen in 52 countries. 21 Cable News Market Share...

  • Page 24
    ... with a March 2004 launch on News Corporation's 25 percent-owned FOXTEL in Australia, and planned launch in the UK and Europe. National Geographic Channel Since January 2004, primetime audiences at Fox Entertainment Group's 67 percent-owned National Geographic Channel have climbed every...

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    ... . SKY Italia was formed from the April 2003 merger of Stream and Telepiu, the former competitors in the Italian pay-TV market, and, after a massive restructuring, its new programming slate and marketing campaign were launched just three months later. Already the significant losses News Corporation...

  • Page 28
    ...0 0 4 Viewers Tune In To DIRECTV In December 2003, News Corporation completed its acquisition of a 34 percent stake in Hughes Electronics, since renamed The DIRECTV Group. The acquisition was completed in December 2003 and DIRECTV started calendar 2004 with a new management team and a renewed focus...

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    ... news coverage. News Limited staff won all seven print media awards at the 2003 Walkley Awards and also won the prestigious Graham Perkin Award. The long list of awards was reflected in the performances of the national, capital city and regional newspapers. In Sydney, The Sunday Telegraph, Australia...

  • Page 32
    ...the past eight audit periods. Also in Melbourne, MX, a free commuter newspaper at the forefront of a worldwide trend, continued to show impressive growth. News Corporation's 42 percent-owned Queensland Newspapers showed ongoing growth in the fastest-growing newspaper markets in Australia. The Sunday...

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    ... The Sun made 2004 one of the most successful years in the paper's history . The Sun achieved record weeks across all display and classified advertising categories. The best selling Sunday newspaper in the U.K., News of the World, slightly increased its already-impressive market share to record its...

  • Page 36
    ... New York Yankees 2004 Medallion Collection, featuring high-quality collectable coins with color photos of the team's top players. Class Act at TSL Education TSL Education, the education publishing division of News International, achieved record operating profits in fiscal 2004. The company's main...

  • Page 37

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  • Page 39
    ... network to more than 8,000 retailers and became a key promotional pricing tool for consumer packaged goods clients. News America Marketing International also provides consumer-marketing services in Canada, Australia and New Zealand, in addition to a network of advertising and promotional partners...

  • Page 40
    ... was released in August. HarperCollins has also signed renowned former General Electric Chairman and CEO Jack Welch and his wife, former Harvard Business Review editor Suzy Welch, to write a business how-to book. In September 2003, HarperCollins published My Side by soccer superstar David Beckham...

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    ... an iconic 1960s radio brand. Two months later, Sky Radio Denmark was launched as that country's first and only national commercial FM radio station and had an audience share of 6.2 percent by the end of fiscal 2004. During the year, the Sky Radio operation in Hessen, Germany, acquired a further...

  • Page 44
    42

  • Page 45
    ... of Corporate Governance 44 Directors' Report 52 Concise Financial Report Discussion and Analysis 60 Statement of Financial Performance 62 Statement of Financial Position 63 Statement of Cash Flows 64 Notes to the Concise Financial Report 65 Directors' Declaration 80 Independent Audit Report 81...

  • Page 46
    ... New York Stock Exchange (the "NYSE") Listing Standards. Various information reports are sent to the Board in order to keep them informed of the Group's businesses. Directors also receive operating and financial reports and access to senior management at Board and Committee meetings. The Board holds...

  • Page 47
    ...and a business risk management process; and established Standards of Business Conduct for Directors, officers and employees and a Code of Ethics for the Chief Executive and senior financial officers. These matters are discussed in further detail below. Board Committees To assist in the execution of...

  • Page 48
    ... during the course of the audit, and management's response thereto; • To recommend to the Board of Directors whether the Group's consolidated financial statements be accepted for inclusion in the Group's annual reports filed with the ASX, Australian Securities and Investment Commission (ASIC...

  • Page 49
    ... with all Non-executive Directors, the frequency of executive sessions in which only Non-executive Directors will participate and over which the Chairman of the Nominating and Corporate Governance Committee will preside; • • To recommend to the Board, Directors to serve as members of each...

  • Page 50
    ... Standards of Business Conduct; • To review and assist with the development of executive succession plans, to review and approve the executive compensation information to be included in the Group's annual report, and to consult with the Chief Executive regarding the selection of senior executives...

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    ... 0 0 4 Statement of Corporate Governance (continued) for the year ended 30 June, 2004 • • • Guidelines and limits for approval of capital expenditures and investments; Policies and procedures for the management of financial risk and treasury operations; and Standards of Business Conduct, as...

  • Page 52
    ... to the Chairman of the Nominating and Corporate Governance Committee, The News Corporation Limited, 1211 Avenue of the Americas, New York, N.Y. 10036. Corporate Reporting In connection with the Company's periodic reports filed with the SEC, the Chief Executive and Chief Financial Officer have made...

  • Page 53
    ..., Chairman, Fox Filmed Entertainment A M Siskind, Senior Executive Vice President and Group General Counsel, The News Corporation Limited Important Information about this Concise Report IMPORTANT INFORMATION FOR MEMBERS The Directors' Report, Concise Financial Report and Independent Audit Report...

  • Page 54
    ... Chairman of R.M. Williams Holdings Limited since 1994. Director of The News Corporation Limited from 1979, Non-executive Director since 1997 and member of Nominating and Corporate Governance Committee. D F DeVoe (Age 57). Executive Director, Chief Financial Officer and Finance Director of The News...

  • Page 55
    ... Director of National Australia Bank Limited since 1997 and Chairman since January 2004. Non-executive Director of The News Corporation Limited from 2001 and resigned in April 2004, Chairman of the Audit Committee from 2002 until April 2004. J R Murdoch (Age 31) Chief Executive Officer and Director...

  • Page 56
    ...Executive Director of The News Corporation Limited since June 2004 and member of the Compensation Committee. Directors' Meetings The following Directors were in office during the financial year, and attended the following number of Board meetings: Directors' Meetings Number of meetings held: Number...

  • Page 57
    ...attached financial statements in accordance with the Group's accounting policy , as the dividend was not declared and announced by the Directors prior to 30 June, 2004. A discount of 10% will apply to the weighted average market price of the ordinary and preferred limited voting ordinary shares used...

  • Page 58
    ... members an additional $8,425 (US$6,000) per year with the Audit Committee Chairman receiving an additional $14,041 (US$10,000) per year and Compensation and Nominating and Corporate Governance Committee Chairmen to receive an additional $7,020 (US$5,000) annually . Because the focus of the Board...

  • Page 59
    ... 28 of the Full Financial Report. (2) Messrs P Barnes and V Dinh joined the Board in April 2004. (3) Mr. Erkko KBE retired from the Board in October 2003. (4) Mr. Thornton joined the Board in June 2004. (5) For Non-executive Directors, includes the value of deferred stock units credited in fiscal...

  • Page 60
    ...(11)Each Officer is a "Specified Executive" under AASB 1046, "Director and Executive Disclosures by Disclosing Entities". Directors' Interests and Benefits Information on Directors' Shareholdings as at the date of this report is contained in the Full Financial Report Note 28. Share Options Details...

  • Page 61
    ..., amounts in this report and the accompanying Concise Financial Report have been rounded off to the nearest million dollars unless specifically stated to be otherwise. This report is signed in accordance with a resolution of Directors. K R Murdoch AC Director D F DeVoe Director 12 August, 2004 59

  • Page 62
    ... from Other items before tax of $26 million in 2004. This amount principally reflects the loss on the sale of the Los Angeles Dodgers offset by the gain on the sale of the shares in SKY PerfecTV!. The net profit attributable to members of the parent entity was $2.3 billion (2003 $1.8 billion). 60

  • Page 63
    ... shares in SKY PerfecTV! during the year and the return of capital invested in the form of a special dividend from Monarchy Enterprises Holdings B.V . • The reduction in publishing rights, titles and television licences primarily reflect the decline of the US dollar and the sale of the Los Angeles...

  • Page 64
    ... net profit (loss) attributable to members of the parent entity Ordinary shares Preferred limited voting ordinary shares Ordinary and preferred limited voting ordinary shares $0.364 $0.437 $0.411 $0.305 $0.366 $0.342 $(2.170) $(2.604) $(2.431) The Statement of Financial Performance is to be read in...

  • Page 65
    ...N C I S E R E P O R T 2 0 0 4 Statement of Financial Position as at 30 June, 2004 Consolidated 2004 A$ million 2003 Assets Current Assets Cash Cash on deposit Receivables Inventories Other Total Current... profits Shareholders' equity attributable to members of the parent entity Outside equity...

  • Page 66
    ... 0 4 Statement of Cash Flows for the year ended 30 June, 2004 Consolidated 2004 2003 A$ million 2002 Operating activity Net profit (loss) attributable to members of the parent... Proceeds from sale of non-current assets and business disposals Cash ...from trading operations Receipts Payments Dividend ...

  • Page 67
    ...2001, Accounting Standard AASB 1039 "Concise Financial Reports" and other mandatory professional reporting requirements. The financial statements and specific disclosures have been derived from The News Corporation Limited's Full Financial Report for the financial year. Other information included in...

  • Page 68
    ... Financial Report (continued) for the year ended 30 June, 2004 Note 2 Business segment data Consolidated 2004 A$ million Direct Cable Filmed Note Entertainment Television Network Programming Broadcast Satellite Television Magazines & Inserts Newspapers Book Publishing Other Unallocated Total Sales...

  • Page 69
    ... the Concise Financial Report (continued) for the year ended 30 June, 2004 Note 2 Business segment data (continued) Consolidated 2003 A$ million Direct Cable Filmed Note Entertainment Television Network Programming Broadcast Satellite Television Magazines & Inserts Newspapers Book Publishing Other...

  • Page 70
    ... the Concise Financial Report (continued) for the year ended 30 June, 2004 Note 2 Business segment data (continued) Consolidated 2002 A$ million Direct Cable Filmed Note Entertainment Television Network Programming Broadcast Satellite Television Magazines & Inserts Newspapers Book Publishing Other...

  • Page 71
    ... of the Concise Financial Report (continued) for the year ended 30 June, 2004 Note 2 Business segment data (continued) Consolidated 2004 A$ million Direct Cable Filmed Entertainment Television Network Programming Broadcast Satellite Television Magazines & Inserts Newspapers Book Publishing Other...

  • Page 72
    ... of the Concise Financial Report (continued) for the year ended 30 June, 2004 Note 2 Business segment data (continued) Consolidated 2003 A$ million Direct Cable Filmed Entertainment Television Network Programming Broadcast Satellite Television Magazines & Inserts Newspapers Book Publishing Other...

  • Page 73
    ...Full Financial Report. On 15 October, 2003, a final unfranked dividend of 1.5 cents per ordinary share and 3.75 cents per preferred limited voting ordinary share totalling $153 million was paid or distributed according to the operation of the Group's Dividend Reinvestment Plan. On 30 April, 2004, an...

  • Page 74
    ... to equity account its share of Stream's results. (c) Associated entities' Other items for the year ended 30 June, 2004 primarily relate to the Group's share of the write down of certain tax assets and legal settlement costs which were partially offset by the gain on the sale of certain investments...

  • Page 75
    ... resulting gain was recorded as Other revenue. (b) Fiscal 2004 amount primarily relates to Group's August 2003 sale of its entire 8.14% cost investment in SKY Perfect Communications Inc. ("SKY PerfecTV!"). The Group's 182,000 shares of SKY PerfecTV! were sold for total consideration of $249 million...

  • Page 76
    ... million related to the Group's carrying value of its investment in Knowledge Enterprises, Inc. ("Knowledge Enterprises"). The charge was based on Knowledge Enterprises' recent equity rights offering and reflects the estimated recoverable value of this investment. (h) On 17 May , 2004, News America...

  • Page 77
    ... policies, the Directors re-evaluated the recoverability of the costs of certain sports contracts, principally in the United States. Accordingly , the Group recorded a one-time Other expense of $1,861 million relating to National Football League ("NFL") ($753 million), National Association of Stock...

  • Page 78
    ... of the financial year 1,137 2,312 (367) (400) 2,682 1 1,808 (351) (321) 1,137 Dividends on ordinary and preferred limited voting ordinary shares are paid out of the retained profits of the parent entity , The News Corporation Limited. The parent entity has retained profits as at 30 June, 2004 of...

  • Page 79
    ... which is the market value of QPL's non-publishing assets. The Murdoch Interests will receive voting common stock in News Corp U.S. in exchange for the value of their 58% pro rata ownership of the QPL publishing business, net of debt, based on the average closing price of the shares of the Group...

  • Page 80
    ... forming part of the Concise Financial Report (continued) for the year ended 30 June, 2004 Note 11 Subsequent events In May 2004, the Group ended the transfer term under the New Millennium II film funding agreement and will no longer draw any borrowings under the Facility . In accordance with the...

  • Page 81
    ...June, 2004 Note 12 International Financial Reporting Standards For reporting periods beginning on or after 1 January , 2005, all entities preparing general purpose financial reports under the Corporations Act 2001 will be required to adopt Australian equivalents to International Financial Reporting...

  • Page 82
    ...' Declaration for the year ended 30 June, 2004 The Directors of The News Corporation Limited declare that: a) the Concise Financial Report set out on pages 60 to 79 complies with Accounting Standard AASB 1039 "Concise Financial Reports"; and b) has been derived from and is consistent with the...

  • Page 83
    ... Electronic Presentation of the Audited Concise Financial Report This audit report relates to the concise financial report of The News Corporation Limited ("the parent entity") for the year ended 30 June 2004 included on the parent entity's web site. The parent entity's directors are responsible for...

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    ...R P O R AT I O N C O N C I S E R E P O R T 2 0 0 4 Shareholder Information for the year ended 30 June, 2004 Corporate Ownership - Ordinary Shares Number of Ordinary Shareholders Voting rights On show of hands - one vote for each member On poll - one vote for each share held 64,681 Distribution of...

  • Page 85
    ..., 2004 Corporate Ownership - Preferred Limited Voting Ordinary Shares Number of Preferred Limited Voting Ordinary Shareholders 18,907 A holder of a preferred limited voting ordinary share ("preferred share") shall be entitled to vote at any general meeting of the members of The News Corporation...

  • Page 86
    ...Chief Executive Officer HarperCollins David F. DeVoe Chief Financial Officer News Corporation James Gianopulos Chairman Fox Filmed Entertainment Viet Dinh Professor of Law Georgetown University Gary Ginsberg Executive Vice President, Investor Relations & Corporate Communications News Corporation...

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    N E W S C O R P O R AT I O N ANNUAL REPORT 2004 FILMED ENTERTAINMENT TELEVISION Cable Network Programming Direct Broadcast Satellite Television Newspapers MAGAZINES & INSERTS BOOK PUBLISHING