Twenty-First Century Fox 2004 Annual Report Download - page 7
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Year ended June 30, 2004 2003 2002
Revenues $ 20,959 $ 17,474 $ 15,195
Operating Income $ 3,064 $ 2,532 $ 1,855
Associated entities, before Other items $ 261 $ (93) $ (165)
Income before Other items $ 1,685 $ 1,100 $ 636
Other items, net $ (38) $ (54) $ (6,901)
Net Profit $ 1,647 $ 1,046 $ (6,265)
Earnings per ADR
Income before Other items $ 1.20 $ 0.83 $ 0.49
Net Profit $ 1.17 $ 0.79 $ (5.09)
Financial Position
Assets $ 51,455 $ 44,963 $ 40,293
Debt $ 8,702 $ 8,249 $ 8,709
Financial Highlights
(U.S. Dollars, in Millions except for Earnings Per ADR)
move will have no discernible
impact on our operations, in
Australia or elsewhere. We
will remain a proud and
vital part of the Australian
media landscape with a
listing on the Australian
Stock Exchange – now and
for generations to come.
What will be affected,
however, is our financial
flexibility. By becoming a
US-domiciled company, we
believe News Corporation
would have improved access
to a larger pool of invest-
ment capital – specifically,
the US$12 trillion US capital
market. In addition, the
Company would become eligi-
ble for inclusion in US
indices, including the S&P
500 index, which we believe
would generate billions of
dollars of increased demand
from funds that previously
have been precluded from
owning our Company’s
shares. This in turn is expect-
ed to narrow the historic
discount that has existed
between News Corp’s voting
and non-voting shares, an
anomaly that has bedeviled
us for many years.
There is, in short, a com-
pelling logic to this proposal,
and I urge you to give it the
strongest possible considera-
tion when you study the
detailed proposal materials.
Another transformative
event occurred during the
year with the completion
of our acquisition of a 34
percent interest in Hughes
Electronics, now re-named
The DIRECTV Group. In
December 2003, after nearly
four years of exhaustive,
often arduous negotiations,
we finally realized our dream
of adding a US distribution
system to our global satellite
pay-TV platform. With our
investment in DIRECTV and
its 13 million subscribers
now housed within the
Fox Entertainment Group,
News Corporation can boast
nearly 30 million sub-
scribers 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 industry-
leading content businesses
with the world’s single
largest and most global dis-
tribution platform, we have
compiled what I believe is
the industry’s most formida-
ble grouping of assets, and
with it, the ability to better
control our own destiny in an
uncertain and increasingly
consolidated global market-
place. The ability to create
our own content and distrib-
ute it through our own and
other platforms should ensure
that we are beholden to no
one but the discriminating
consumer. When we create
compelling content, it will be
seen; when we distribute qual-
ity content, we can ensure
fair compensation. And when
we want to launch new chan-
nels or services, we know we
have a national – indeed an
international – footprint, to
get us off the ground.
In more practical, everyday
terms, it means sharing
our most talented employees
across platforms and exploit-
ing the knowledge they have
gained at one system for the
benefit of others. And it
means leveraging our scale
and breadth to ensure that we
are paying less – and getting
more – for the products and
services we are using.
But we didn’t just acquire
our interest in DIRECTV
for its strategic benefits.
We also believe it will be
a great business with even
greater potential. Shortly
after assuming operational
control, we put to work many
of the best practices we
had learned from our other
pay-TV businesses and the
results were immediate.
DIRECTV’s first full quarter
of operation saw it achieve the
highest number of net new
subscribers in the company’s
history. By the end of our
first half year of operation,
the company had very nearly
equaled our full-year forecast
for net new subscribers.
The new management
team at DIRECTV has
brought a new energy, a
new focus and a culture of
excellence to a company that
had endured years of paraly-
sis as it awaited its sale. This
team has divested non-core
assets such as PanAmSat, a
transaction that when com-
pleted will reap The DIRECTV
Group more than US$2.6 bil-
lion net of taxes. It has
streamlined the operations of
Hughes Network Systems and
announced the sale of its set
top box manufacturing assets.
It has launched a new satellite
and expanded local-into-local
service and high definition
television. But most impor-
tantly, it has infused this
great company with a sense
of urgency.
Another new business that
demonstrated great potential
was our pay-TV service in
Italy: SKY Italia. Officially
launched in August, 2003,
SKY Italia has quickly
expanded to nearly 2.7 mil-
lion subscribers, well on
its way to the three million
subscribers we forecast for
the end of this calendar year.
Monthly average revenue per
user (ARPU) – a key indica-
tor of a platform’s success –
is more than €40, reflecting
that nearly 90 percent of
subscribers have opted for
a premium service, while
piracy – the theft of our
satellite signal – has been
tamed. Indeed, if our current
momentum continues, we
think we are well on our way
to creating another BSkyB
in Europe’s third most pros-
perous market. The year
ended with start-up losses of
US$267 million, better than
NEWS CORPORATION ANNUAL REPORT 2004
When we create compelling
content, it will be seen;
when we distribute quality
content, we can ensure
fair compensation.