Twenty-First Century Fox 2004 Annual Report Download - page 62

Statement of Financial Performance
Operating income for the year ended 30 June, 2004 was $4.3 billion, which was consistent with the previous year. The Group’s
results have been impacted by the decline of the US dollar which materially impacted the Group’s conversion of the results
of its US operations into Australian dollars. In US dollars, operating income increased 21% over the prior year from
US$2,532 million to US$3,064 million. This result was driven by improved performances across most of the Group’s
segments.
The strong performance of the Filmed Entertainment segment was primarily driven by the worldwide home entertainment
and pay-TV performances of X-2: X-Men United, 28 Days Later, Daredevil, Drumline, Just Married, Phone Booth and various
catalogue titles combined with several successful theatrical releases during the year including The League of Extraordinary
Gentlemen and Cheaper By the Dozen.
The Television segment saw operating income decline to $1,344 million from $1,459 million but in US dollars the Television
segment operating income increased 12% primarily reflecting earnings improvement at the FOX Broadcasting Company
and Fox Television Stations, and higher contributions from STAR.
The success of the Cable Network Programming segment reflects continued revenue growth across all of the Group’s
primary cable television channels, and the absence of losses from the Los Angeles Dodgers, which was sold during the third
quarter.
The Direct Broadcast Satellite Television segment reflects the SKY Italia results since its consolidation on 30 April, 2003.
For the full year, SKY Italia reported an operating loss of $376 million as compared to a loss of $104 million for the two
months in the prior year, while increasing its subscriber base to nearly 2.7 million. Over 90% of the new subscribers during
the year opted for a premium-programming tier including movies and/or sports programming.
The Magazine and Inserts segment operating income decreased to $381 million from $438 million but in US dollars the
Magazine and Inserts segment operating income increased 6% reflecting higher contributions from the free-standing
inserts division resulting principally from higher demand for packaged goods and custom publishing pages.
During fiscal 2004, the Group’s Newspapers segment operating income increased to $831 million from $686 million in the
prior year. In the U.K., the increase in operating income was primarily from circulation revenue growth which was achieved
across all titles, with the largest increase at The Sun where reduced cover price initiatives a year ago adversely affected
results. The U.K newspaper group experienced a 7% advertising growth for the fiscal year, primarily from The Sun with
higher volumes on display and classified advertising. In Australia, display and classified advertising achieved strong
growth throughout the year with ongoing strength in national display together with real estate, retail and employment
advertising.
The Book Publishing segment reported operating income of $221 million which was consistent with the prior year. In US
dollars the Book Publishing segment operating income increased by 19% from fiscal 2003 and was driven by solid
performances around the world, highlighted by blockbuster sales of Zondervan’s The Purpose Driven Life by Rick Warren.
In the year ended 30 June, 2004, associated entities generated income of $322 million compared to a loss of $89 million in the
previous year. The improved net profit in 2004 primarily reflects increased contributions from British Sky Broadcasting
Group plc (“BSkyB”) due to continued subscriber growth, the absence of Stream’s losses in the current year following its
consolidation on 30 April, 2003 and favourable results from Regional Programming Partners primarily due to the income
recognised from the termination of a sports broadcast rights agreement. These favourable results were partially offset by
the inclusion of losses relating to the Group’s investment in The DIRECTV Group, which was acquired at the end of
December 2003.
The Group recorded a net loss 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).
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NEWS CORPORATION CONCISE REPORT 2004
Discussion and Analysis of the Financial Statements
for the year ended 30 June, 2004