Twenty-First Century Fox 2005 Annual Report Download

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Annual Report 2005

Table of contents

  • Page 1
    Annual Report 2005

  • Page 2
    The eyes of the world are on us CHIEF EXECUTIVE OFFICER'S REVIEW

  • Page 3
    ..., 2005 Television United States FOX Broadcasting Company Fox Television Stations 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 KDFW Dallas, TX KDFI Dallas, TX WFXT Boston, MA Washington DC Washington DC Atlanta...

  • Page 4
    ... 30% Brazil - Sky Brasil 50% (b) Asia Space TV (India DBS) 20% Phoenix Satellite Television 38% Hathway Cable and Datacom 26% China Network Systems (17 affiliated cable systems) various Newspapers United States New York Post United Kingdom The Times The Sunday Times The Sun News of the World TSL...

  • Page 5
    ... position us for sustained growth for years to come. Indeed, fiscal 2005 was our third consecutive year of double-digit revenue and operating income growth. Our Filmed Entertainment, Cable Network Programming, Newspapers, Book Publishing, Magazines and Inserts segments all posted record profits. At...

  • Page 6
    ... Group as a separate corporate entity. Consequently, earlier this year we completed a successful exchange offer for all outstanding shares of Fox stock. In so doing, we simplified our corporate reporting, eliminated a duplicative U.S. listing and achieved some minimal cost savings from redundant...

  • Page 7
    ... the home entertainment business is success at the box office - in fiscal 2005, several Fox films debuted at number one, including I, Robot, Alien Vs. Predator, Hide and Seek, Kingdom of Heaven and Robots. We also distributed Mr. and Mrs. Smith and, of course, the record-breaking Star Wars: Episode...

  • Page 8
    ... joint venture in India, whose footprint would cover India's 80 million television households. STAR was hardly our only television success story in fiscal 2005. For the first time in its history, the FOX network won the ratings race among 18-49 year olds. Clearly, American Idol was a big part of our...

  • Page 9
    ... its DTH subscriber base by 6 percent to 7.8 million this past year while revamping its pricing and package structure to offer consumers increased choice and flexibility. As the number of subscribers increased - a number expected to exceed 8 million by the end of calendar 2005 - the number of multi...

  • Page 10
    ... a tragedy of unimaginable breadth. While News Corp.'s news outlets swung into action to bring news of the disaster to readers and viewers around the world, Company executives in New York, Hong Kong, Sydney and London met to devise ways in which the Company and our employees could help relief and...

  • Page 11
    ... many of the year's top box office hits. In fiscal 2005, the Company's home entertainment division achieved record worldwide revenues. In television production, Twentieth Century Fox Television together with the Company's other TV studios produce and distribute some of the world's most popular...

  • Page 12
    > Fiscal 2005 started successfully for Fox Filmed Entertainment with the number one box office opening of I, Robot, starring Will Smith. The film went on to gross nearly $350 million worldwide. F I L M E D E N T E R TA I N M E N T

  • Page 13
    ...fiction action movie Alien Vs. Predator gave Fox an industry record sixth movie in a row with a $20 million-plus opening weekend in the U.S. market. Alien Vs. Predator went on to gross $170 million worldwide. > In the biggest-ever worldwide opening in film history, Fox distributed Star Wars Episode...

  • Page 14
    ... by Twentieth Century Fox Film, opened at number one at the domestic box office, earning $50 million in its first weekend. Today, it has earned more than $370 million box office worldwide. > Fox Searchlight's Sideways drew appreciative audiences across America and around the world, earning...

  • Page 15
    ..., with record DVD sales in the U.S. and around the world. In the U.S., six Fox-distributed titles debuted at number one on the DVD sales charts: The Passion of the Christ, Girl Next Door, The Day After Tomorrow, Man On Fire, I, Robot and Star Wars Trilogy. > Fox's Domestic Home Entertainment group...

  • Page 16
    > Twentieth Century Fox Television (TCFTV), News Corporation's main TV production studio, received orders for 28 pilots for the 2005-2006 television season. Each of the four major networks - FOX, ABC, CBS and NBC - ordered pilots, as did the WB network and News Corporation's cable entertainment ...

  • Page 17
    ... of the FOX Broadcasting Company's FOX network and STAR, which develops, produces and broadcasts television programming across Asia. The Simpsons TM and © 2004 Twentieth Century Fox Film Corporation. All Rights Reserved. > FOX launched a new hit medical drama, House, during fiscal 2005 and re...

  • Page 18
    ... in fiscal 2005 as the number one network among Teens and Adults 18-34 and, for the first time in its history, won the season in the advertiser-important demographic of Adults 18-49. > FOX's American Idol, in its fourth phenomenal year, was the number one show of the 2004-2005 U.S. television season...

  • Page 19
    ... Emmy Award. > Fiscal 2005 was the biggest year in the history of FOX Sports, with marquee events including the NFL's Super Bowl XXXIX, MLB's All-Star Game and World Series and NASCAR's Daytona 500. > FOX's broadcast of Super Bowl XXXIX had the largest total audience in FOX's history and the fifth...

  • Page 20
    > Amid a weak overall advertising market, Fox Television Stations (FTS) continued to focus on the local communities its 35 stations serve by expanding local newscasts. In fiscal 2005, the station group added 45 hours of news per week across its markets in the U.S. This increase brought the total ...

  • Page 21
    > In Asia, STAR recorded another year of strong growth, bolstered by continued ratings success - notably in India - and new distribution deals across the region. > In India, STAR remains the undisputed cable television leader, offering viewers 18 channels in every genre. > Occupying the top position...

  • Page 22
    ... satellite television to India in fiscal 2006. > In Mainland China, STAR broadcasts nine channels. Xing Kong, the flagship Mandarin entertainment channel, continued to attract good ratings in Guangdong province, where it has cable landing rights. In the first three months of calendar 2005, the...

  • Page 23
    ..., the Cable Network Programming segment has become one of News Corporation's key growth areas. The segment's operations produce and license programming distributed through cable television systems and direct broadcast satellite platforms in the U.S. Those operations include FOX News Channel, general...

  • Page 24
    ... audience ever. > By the end of fiscal 2005, FOX News had maintained its position as the number one cable news network for 42 consecutive months, often beating the combined ratings of its cable news competitors. > FOX News secured new international distribution deals in fiscal 2005 with cable...

  • Page 25
    ... years earlier. > Fox Sports Networks' regional sports services continued to lead in the local delivery of live MLB and NBA games in fiscal 2005. In April 2005, Fox completed a transaction to take full ownership of FSN Florida and FSN Ohio, as well as the FSN national programming service. Fox Cable...

  • Page 26
    ...-growing sports networks in cable and satellite television in fiscal 2005, reaching almost 64 million homes in the U.S.. > SPEED used NASCAR and other key racing programming to establish several new audience highs including the highest-rated month in network history in February 2005. The channel...

  • Page 27
    ... of the operations of SKY Italia in Italy. However, News Corporation also owns significant holdings in the U.K.'s leading pay-TV company, BSkyB, and the largest satellite broadcaster in the U.S., The DIRECTV Group. > News Corporation took full ownership of SKY Italia in fiscal 2005, acquiring the 20...

  • Page 28
    ... and Ireland, the company continues to meet the needs of its customers. > BSkyB expanded its digital direct-to-home subscriber base by 6 percent to 7.8 million during fiscal 2005. > BSkyB's new pricing and packaging structure, introduced to customers September 1, 2005, offers Sky users more choice...

  • Page 29
    ...'s titles continued to lead the market. > The Times ended its 219-year history as a broadsheet, fully converting to a compact format in November 2004. The change was a great success and by the end of fiscal 2005 the paper had enjoyed 16 consecutive months of year-on-year growth. > Timesonline.co.uk...

  • Page 30
    ... for the first time. > News of the World, the U.K.'s biggest-selling Sunday paper, made history when it became the first News International title to be crowned Newspaper of the Year at the British national newspaper press awards. With 37 percent market share of Sunday tabloid sales, it has the most...

  • Page 31
    ... continued to lead Australia's media industry with growing market share. A multi-million dollar investment in printing plants and buildings will help News Limited produce even better products. > The group's newspapers outstripped their rivals' growth in attracting affluent readers and advertisers...

  • Page 32
    ... daily newspaper. Soon after the end of the fiscal year, the Herald Sun won the Pacific Area Newspaper Publishers' Association 2005 Newspaper of the Year award. > The New York Post is the seventh largest paper in the U.S. Its exceptional coverage of news, business, sports and gossip contributed to...

  • Page 33
    ...000 stores. > In-store advertising and promotions increased sales at News America Marketing to record levels, fueled by continued growth of its shelf-based and Floortalk programs. SM > News America Marketing introduced a number of cutting-edge technology products in fiscal 2005, including Audio-Ink...

  • Page 34
    ...Savings Network, an affiliation of over 100 major retailer and lifestyle websites. M AG A Z I N E S A N D I N S E R T S > SmartSource Magazine®, the most widely circulated newspaper insert in the U.S., grew volume by 7 percent and maintained its market share of more than 60 percent in fiscal 2005...

  • Page 35
    ..., HarperCollins had 103 books on The New York Times bestseller list, including 15 titles that reached number one. HarperCollins U.K. had 41 titles on The Sunday Times bestseller list, with seven books at number one. > HarperCollins achieved strong sales around the world in fiscal 2005, led by Lemony...

  • Page 36
    BOOK PU B LI S H I NG

  • Page 37
    ... for the secure delivery of entertainment to television set-top boxes and personal computers, and a variety of assets in Eastern Europe and Australia. > NDS is a publicly traded company on the New York Stock Exchange that is 76 percent-owned by News Corporation. By the end of fiscal 2005, NDS had...

  • Page 38
    ... Control Over Financial Reporting Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting 67 Report of Independent Registered Public Accounting Firm on Financial Statements 68 Consolidated Statements of Operations for the years ended June 30, 2005, 2004...

  • Page 39
    ... (loss) and Earnings (loss) per share are not affected by this classification. This classification affects the Company's and the Cable Network Programming segment's revenues. The effect of the classification on the Company's revenues is as follows: 2005 For the years ended June 30, 2004 2003 (in...

  • Page 40
    ...(a) In March 2005, the Company's acquisition of the interest of Fox Entertainment Group, Inc. ("FEG") that it did not already own was completed and a total of 357 million shares of Class A Common Stock were issued as consideration. (7) Each fiscal year presented prior to June 30, 2005 includes $345...

  • Page 41
    ... in the change in fair value of certain outstanding exchangeable debt securities. Financial Highlights â...¢ Operating income grew at the Cable Network Programming, Filmed Entertainment, Television, Newspapers, Magazines and Inserts and Book Publishing segments. â...¢ Cable Network Programming operating...

  • Page 42
    ... entertainment company, which manages and reports its businesses in eight segments: â...¢ Filmed Entertainment, which principally consists of the production and acquisition of live-action and animated motion pictures for distribution and licensing in all formats in all entertainment media worldwide...

  • Page 43
    ... FOX Broadcast Network ("FOX") and the 35 television stations owned by the Company. The Company's International television operations consist primarily of STAR Group Limited ("STAR"). The Television segment derives revenues principally from the sale of advertising time. The Cable Network Programming...

  • Page 44
    ... order to sell advertising at profitable rates. FOX competes for audience, advertising revenues and programming with other broadcast networks such as CBS, ABC, NBC, UPN and the WB, independent television stations, cable program services as well as other media, including DBS television services, DVDs...

  • Page 45
    ... the loss of station licenses. Direct Broadcast Satellite Television SKY Italia derives revenues principally from subscriber fees. The Company believes that the quality and variety of video, audio and interactive programming, quality of picture, access to service, customer service and price are the...

  • Page 46
    ..., employee benefits, rent and other routine overhead. The book publishing business operates in a highly competitive market and has been affected by consolidation trends. This market continues to change in response to technological innovations and other factors. Recent years have brought a number of...

  • Page 47
    ..., Television and Cable Network Programming segments. Operating expenses increased approximately 14% for the fiscal year ended June 30, 2005 from fiscal 2004, primarily due to increased theatrical releasing costs, home entertainment marketing and manufacturing costs and amortization of production and...

  • Page 48
    ...2001 loss of its broadcast tower at the World Trade Center in New York, and the unrealized gain in fair value on the Company's exchangeable securities in the amount of $18 million. Income tax expense - The effective tax rate for the fiscal year ended June 30, 2005 is 34% as compared to the effective...

  • Page 49
    ... the fiscal year ended June 30, 2005 at the Company's U.S. television operations increased approximately 6% from fiscal 2004. The Company experienced increased advertising revenues from the telecast of the Super Bowl and Daytona 500, which were not telecast on FOX in fiscal 2004 and higher pricing...

  • Page 50
    ... and operating income, noted above, as compared to the fiscal year ended June 30, 2004. Book Publishing (6% of the Company's consolidated revenues in fiscal years 2005 and 2004) HarperCollins recorded revenues of $1,327 million in fiscal 2005, a $51 million or 4% increase from revenues of $1,276...

  • Page 51
    ... costs at the Direct Broadcast Satellite Television segment. For the year ended June 30, 2004, Operating income increased $551 million to $2,931 million from fiscal 2003. These increases were primarily due to improved results at the Filmed Entertainment, Television, Cable Network Programming...

  • Page 52
    ...ownership interest in FEG increased since the time of FEG's initial public offering in fiscal year 1999. Also in fiscal 2003, BSkyB, an affiliate of the Company issued 43.2 million new shares as consideration related to its purchase of an interest in British Interactive Broadcasting Holdings Limited...

  • Page 53
    ... by segment, for fiscal 2004 as compared to fiscal 2003. 2004 For the year ended June 30, 2003 ($ millions) Change % Change Revenues: Filmed Entertainment Television Cable Network Programming Direct Broadcast Satellite Television Magazines & Inserts Newspapers Book Publishing Other Total revenues...

  • Page 54
    ...$2,409 million for the year ended June 30, 2004. This increase reflected improved results across all of the Cable Network Programming channels. Fox News', the FX's and the RSN's revenues increased 24%, 10%, and 14%, respectively, over fiscal 2003. At Fox News, advertising revenues increased 34% from...

  • Page 55
    ... market and public acceptance of film and television products. Any significant decline in the advertising market or the performance of its films could adversely impact its cash flows from operations which could require the Company to seek other sources of funds including proceeds from the sale...

  • Page 56
    ...Class A shares (in millions) Number of Class B shares Fiscal 2005 Fox Entertainment Group(a) Queensland Press(a) Fiscal 2004 DIRECTV(b) Liberty Media(c) FOOTNOTES: $14,293 $ 6,359 $ 3,728 $ 500 1,988 61 261 47 - 308 - - (a) See Note 3 to the Consolidated Financial Statements of News Corporation...

  • Page 57
    ..., JP Morgan Chase Bank, as syndication agent, and the lenders named therein. News Corporation, FEG Holdings, Inc., Fox Entertainment Group, Inc., News America Marketing FSI, Inc., News Publishing Australia Limited and News Australia Holdings Pty Limited are guarantors (the "Guarantors") under the...

  • Page 58
    ...through fiscal 2095. (b) News America Marketing ("NAMG"), a leading provider of in-store marketing products and services primarily to consumer packaged goods manufacturers, enters into agreements with retailers to rent space for the display of point of service advertising. (c) The Company's contract...

  • Page 59
    ... and Australia to take advantage of technological and market changes. The Company intends to expend a total of $1 billion in the United Kingdom for new printing plants and related costs for its U.K. newspapers and $500 million for the Australian printing plants. As of June 30, 2005 the Company was...

  • Page 60
    .... QPL owns a publishing business which includes two metropolitan and eight regional newspapers in Queensland, Australia, as well as shares in News Corporation. Following this transaction, Mr. K.R. Murdoch and the Murdoch Trusts own approximately 29.5% of the Company's Class B Common Stock. Critical...

  • Page 61
    ... basis, which may result in a change in the rate of amortization and/or a write down of the asset to fair value. The costs of national sports contracts at the FOX and Cable Network Programming segment and for international sports rights agreements are charged to expense based on the ratio of each...

  • Page 62
    .... Employee Costs The Company maintains defined benefit pension plans covering a majority of its employees and retirees. For financial reporting purposes, net periodic pension expense (income) is calculated based upon a number of actuarial assumptions including a discount rate for plan obligations...

  • Page 63
    ... - - SFAS No. 87 requires recognition of an additional minimum pension liability if the fair value of plan assets is less than the accumulated benefit obligation at the end of the plan year. In fiscal 2005, the Company recorded a non-cash adjustment to equity through accumulated other comprehensive...

  • Page 64
    ... Company for nonmonetary asset exchanges occurring after the first quarter of fiscal 2006. The Company does not expect the adoption of SFAS No. 153 to have a material effect on its financial position, results of operation or cash flows. In May 2005, the FASB issued SFAS No. 154, "Accounting Changes...

  • Page 65
    NEWS CORPORATION Quantitative and Qualitative Disclosures About Market Risk The Company has exposure to several types of market risk: changes in foreign currency exchange rates, interest rates and stock prices. The Company neither holds nor issues financial instruments for trading purposes. The ...

  • Page 66
    .... Based on this assessment, management determined that, as of June 30, 2005, News Corporation maintained effective internal control over financial reporting. Ernst & Young LLP, the independent registered public accounting firm who audited and reported on the consolidated financial statements of News...

  • Page 67
    ..., cash flows, and shareholders' equity and other comprehensive income (loss) for each of the three years in the period ended June 30, 2005 of News Corporation, and our report dated August 31, 2005 expressed an unqualified opinion thereon. ERNST & YOUNG LLP New York, New York August 31, 2005 > 66

  • Page 68
    ... have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of News Corporation's internal control over financial reporting as of June 30, 2005, based on criteria established in Internal Control-Integrated Framework issued by...

  • Page 69
    NEWS CORPORATION Consolidated Statements of Operations 2005 For the years ended June 30, 2004 2003 (in millions, except per share amounts) Revenues Expenses: Operating Selling, general and administrative Depreciation and amortization Other operating charge Operating income Other (Expense) Income: ...

  • Page 70
    ... Program rights payable Deferred revenue Total Current Liabilities Non-current Liabilities: Borrowings Other liabilities Deferred income taxes Minority interest in subsidiaries Commitments and contingencies Shareholders' Equity: Class A Common Stock, $0.01 par value per share, 6,000,000,000 shares...

  • Page 71
    NEWS CORPORATION Consolidated Statements of Cash Flows 2005 For the years ended June 30, 2004 (in millions) 2003 Operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Amortization of cable distribution ...

  • Page 72
    NEWS CORPORATION Consolidated Statements of Shareholders' Equity and Other Comprehensive Income (Loss) 2005 Shares For the years ended June 30, Amount Shares 2004 Amount Shares 2003 Amount (in millions) Class A common stock: Balance, beginning of year Acquisitions Shares issued Treasury shares ...

  • Page 73
    NEWS CORPORATION Notes to the Consolidated Financial Statements > Note 1 Description of Business On November 12, 2004, a new Delaware corporation named News Corporation became, through a wholly-owned subsidiary named News Australia Holdings Pty Ltd ("News Australia Holdings"), the parent of News ...

  • Page 74
    ...In accordance with Statement of Financial Accounting Standards ("SFAS") No. 63, "Financial Reporting by Broadcasters," costs incurred in acquiring program rights or producing programs for the Television, Direct Broadcast Satellite Television and Cable Network Programming segments are capitalized and...

  • Page 75
    ... assets The Company has a significant amount of intangible assets, including goodwill, film and television libraries, Federal Communications Commission ("FCC") licenses, newspaper mastheads, distribution networks, publishing rights and other copyright products and trademarks. Goodwill is recorded as...

  • Page 76
    ... of the related licensing agreement. Television, Cable Network Programming and Direct Broadcast Satellite Television: Advertising revenue is recognized as the commercials are aired. Subscriber fees received from cable systems and DBS operators for cable network programming are recognized as revenue...

  • Page 77
    ..., which are expensed as incurred. Advertising expenses The Company expenses advertising costs as incurred, including advertising expenses for theatrical and television product in accordance with SOP 00-2. Advertising expenses recognized for the years ended June 30, 2005, 2004, and 2003 totaled...

  • Page 78
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) Sale of stock by a subsidiary or equity method investee When one of the Company's subsidiaries or equity investees issues additional shares to third parties, the Company's percentage ownership interest in the investee ...

  • Page 79
    ... share, which was the closing price of the Company's Class A Common Stock (as traded on the Australian Stock Exchange in the form of CHESS Depositary Interests) on May 2, 2005. Prior to the Company's reorganization in the United States, stock options were granted to employees with Australian dollar...

  • Page 80
    ... for the Company in the first quarter of fiscal 2006 and will be reflected as a cumulative effect of an accounting change. In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123(R), "Share-Based Payment." This standard will require the cost of employee compensation...

  • Page 81
    ..., News Corporation became the new parent company of TNCL. News Corporation has a primary listing on the New York Stock Exchange and secondary listings on the Australian Stock Exchange and the London Stock Exchange. In exchange for approximately 78 million shares of Class A Common Stock and...

  • Page 82
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) Fox Entertainment Group Acquisition In March 2005, Fox Acquisition Corp., a direct wholly-owned subsidiary of the Company, completed its offer to the holders of Class A common stock of Fox Entertainment Group, Inc. ("FEG") ...

  • Page 83
    ... Stream S.p.A. ("Stream"), and the combined platform was renamed SKY Italia, which was owned 80% by the Company and 20% by Telecom Italia S.p.A. The excess purchase price over the fair value of the net assets acquired of $638 million is reported within publishing rights, titles, television licenses...

  • Page 84
    ... amortization Programming rights Total non-current inventories Total inventories, net 1,910 456 2,366 $3,882 As of June 30, 2005, the Company estimated that approximately 62% of unamortized filmed entertainment costs from the completed films are expected to be amortized during fiscal year 2006...

  • Page 85
    ... China Network Systems Sky Network Television Ltd. FOXTEL National Geographic Channel (US)(4) National Geographic International Other equity method investments Cost method investments DBS operator principally in the U.S. U.S. print and electronic guidance company U.S. partnership holding interests...

  • Page 86
    ... the sale, which is reflected in Other, net in the accompanying consolidated statements of operations for the fiscal year ended June 30, 2005. In fiscal 2005, INL merged with Sky Network Television and formed a new company which has been named Sky Network Television Limited ("Sky Network Television...

  • Page 87
    ... in exchange for approximately 204.2 million shares of News Corporation Class A shares, valued at $2.9 billion. Subsequent to the above transaction, Hughes changed its corporate name to The DIRECTV Group, Inc ("DIRECTV"). In December 2003, the Company exercised its right to require Discovery...

  • Page 88
    ... In accordance with SFAS No. 142, the Company's intangible assets and related accumulated amortization are as follows: Weighted average useful lives As of June 30, 2005 (in millions) 2004 FCC Distribution networks Publishing rights & imprints Newspaper mastheads Other(b) Intangible assets not...

  • Page 89
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) The changes in the carrying value of goodwill, by segment, are as follows: Balance as of June 30, 2004 Acquisitions Adjustments(a) (in millions) Balance as of June 30, 2005 Filmed Entertainment Television Cable Network ...

  • Page 90
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) > Note 8 As of June 30, Borrowings 2005 Note (in millions) 2004 Bank Loans (a) Current Long-term $ $ 32 128 160 $ $ 44 60 104 Public Debt Description...Exchangeable securities Total public debt New... 200 150 500 105 - 200...

  • Page 91
    ... financial covenants. The loans are secured by certain bank accounts and share pledges of the Company's Russian operating subsidiaries. The cash flows from these facilities have been and are to be used to expand the Company's businesses in Russia and Eastern Europe. In fiscal 2005, the Company...

  • Page 92
    ..., JP Morgan Chase Bank, as syndication agent, and the lenders named therein. News Corporation, FEG Holdings, Inc., Fox Entertainment Group, Inc., News America Marketing FSI, Inc., News Publishing Australia Limited and News Australia Holdings Pty Limited are guarantors (the "Guarantors") under the...

  • Page 93
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) > Note 9 TOPrS In November 1996, the Company, through a trust (the "Exchange Trust") wholly-owned by NAI issued 10 million 5% TOPrS for aggregate gross proceeds of $1 billion. Such proceeds were invested in (i) preferred ...

  • Page 94
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) > Note 10 Film Production Financing Considering the competitive environment and costs associated with film production, all film studios, including the Company, constantly evaluate the risks and rewards of film production. ...

  • Page 95
    ... 2005. For the years ended June 30, 2005 2004 2003 Cash dividends paid per share Class A Class B $0.10 $0.04 $0.10 $0.04 $0.09 $0.04 > Note 12 Stock Option Plan News Corporation 2005 Long-Term Incentive Plan The Company has adopted the News Corporation 2005 Long-Term Incentive Plan (the "2005...

  • Page 96
    ... CORPORATION Notes to the Consolidated Financial Statements (continued) outstanding as June 30, 2005 are subject to the provisions of the 2004 Plan. No future grants will be issued under the 2004 Plan and the plan automatically terminates in ten years. Other The Company operates an employee share...

  • Page 97
    ... paid to Allen & Company LLC in fiscal 2005 and 2003. In fiscal 2004, total fees paid to Allen & Company LLC were $3.9 million. During fiscal 2004, Mr. K. R. Murdoch purchased real estate from the Company for its fair market value of $13 million in cash. The Company recorded a gain on the sale of...

  • Page 98
    ... CORPORATION Notes to the Consolidated Financial Statements (continued) shared the same call center to sell advertising on a group basis. The net value of these transactions was $16 million for the period of July 1, 2004 through November 11, 2004, and $55 million and $56 million for the years ended...

  • Page 99
    ...through fiscal 2095. (b) News America Marketing ("NAMG"), a leading provider of in-store marketing products and services primarily to consumer packaged goods manufacturers, enters into agreements with retailers to rent space for the display of point of service advertising. (c) The Company's contract...

  • Page 100
    ... and Australia to take advantage of technological and market changes. The Company intends to expend a total of $1 billion in the United Kingdom for new printing plants and related costs for its U.K. newspapers and $500 million for the Australian printing plants. As of June 30, 2005 the Company was...

  • Page 101
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) Competition statute and the federal RICO statute. The complaint also purported to allege claims for civil conspiracy, misappropriation of trade secrets and interference with prospective business advantage. The complaint ...

  • Page 102
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) Approximately 17 purported class action complaints were filed in January 2005 at the Court of Chancery of the State of Delaware challenging the FEG Offer. The Delaware complaints are captioned: Allen v. News Corp., et al., ...

  • Page 103
    ... Company's benefit plans: Pension benefits 2005 As of June 30, 2004 (in millions) Postretirement benefits 2005 2004 Projected benefit obligation, beginning of the year Service cost Interest cost Benefits paid Actuarial loss (gain)(a) Settlements Foreign exchange rate changes Amendments, transfers...

  • Page 104
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) The accrued pension and postretirement costs recognized in the Company's consolidated balance sheets were computed as follows: Pension benefits 2005 As of June 30, 2004 Postretirement benefits 2005 (in millions) 2004 ...

  • Page 105
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) Pension benefits 2005 For the years ended June 30, 2004 2003 (in millions) Postretirement benefits 2005 2004 2003 Additional information: Decrease (increase) in minimum liability reflected in other comprehensive income ...

  • Page 106
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) The Company's investment strategy for its pension plans is to maximize the long-term rate of return on plan assets within an acceptable level of risk in order to minimize the cost of providing pension benefits while ...

  • Page 107
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) > Note 16 Other, Net The following table sets forth the components of Other, net included in the accompanying consolidated statements of operations: Footnote reference For the years ended June 30, 2005 2004 (in millions) ...

  • Page 108
    ...because the Company's ownership interest in FEG increased since the time of FEG's initial public offering in fiscal year 1999. BSkyB In November 2002, BSkyB issued 43.2 million new shares as consideration related to its purchase of an interest in British Interactive Broadcasting Holdings Limited. In...

  • Page 109
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) The following is a summary of the components of the deferred tax accounts: 2005 As of June 30, (in millions) 2004 Deferred tax assets: Net operating loss carryforwards Capital loss carryforwards Total deferred tax assets ...

  • Page 110
    ... entertainment company, which manages and reports its businesses in eight segments: â...¢ Filmed Entertainment, which principally consists of the production and acquisition of live-action and animated motion pictures for distribution and licensing in all formats in all entertainment media worldwide...

  • Page 111
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) 2005 For the years ended June 30, 2004 (in millions) 2003 Revenues: Filmed Entertainment Television Cable Network Programming Direct Broadcast Satellite Television Magazines & Inserts Newspapers Book Publishing Other Total...

  • Page 112
    ... the year ended June 30, 2005 Depreciation and amortization Amortization of cable distribution investments Operating income (loss) (in millions) Filmed Entertainment Television Cable Network Programming Direct Broadcast Satellite Television Magazines & Inserts Newspapers Book Publishing Other...

  • Page 113
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) 2005 For the years ended June 30, 2004 (in millions) 2003 Depreciation and amortization Filmed Entertainment Television Cable Network Programming Direct Broadcast Satellite Television Magazines & Inserts Newspapers Book ...

  • Page 114
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) Geographic Segments 2005 For the years ended June 30, 2004 (in millions) 2003 Revenues: United States and Canada(1) Europe(2) Australasia and Other(3) Total revenues $12,884 7,511 3,464 $23,859 $12,022 6,015 2,765 $20,...

  • Page 115
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) 2005 Class A Class B Total Class A 2004 Class B Total Class A 2003 Class B Total (in millions, except % and per share data) Allocation percent - basic Allocation of income - basic: Net income available to shareholders ...

  • Page 116
    ... The stock prices reflect the reported high and low closing sales prices for the Company's Class A Common Stock and Class B Common Stock, as reported on the New York Stock Exchange ("NYSE"). High and low closing sales prices for the Company's Class A Common Stock and Class B Common Stock for periods...

  • Page 117
    ... this sale in the first quarter of fiscal year 2006. In July 2005, the Company announced that it signed a definitive agreement to acquire Intermix Media, Inc. ("Intermix") for approximately $580 million in cash, or the equivalent of $12 per common share. In a separate transaction, the Company agreed...

  • Page 118
    ..., JP Morgan Chase Bank, as syndication agent, and the lenders named therein. News Corporation, News Australia Holdings Pty Limited, FEG Holdings, Inc., Fox Entertainment Group, Inc., News America Marketing FSI, L.L.C., and News Publishing Australia Limited are guarantors (the "Guarantors") under the...

  • Page 119
    ... Financial Statements (continued) Supplemental Condensed Consolidating Statement of Operations News America Incorporated For the year ended June 30, 2005 News Corporation Guarantor Non-Guarantor (US$ in millions) Reclassifications and Eliminations News Corporation and Subsidiaries Revenues...

  • Page 120
    ... Financial Statements (continued) Supplemental Condensed Consolidating Statement of Operations News America Incorporated For the year ended June 30, 2003 News Corporation Guarantor Non-Guarantor (US$ in millions) Reclassifications and Eliminations News Corporation and Subsidiaries Revenues...

  • Page 121
    ...Financial Statements (continued) Supplemental Condensed Consolidating Balance Sheet News Corporation and Subsidiaries News America Incorporated As of June 30, 2005 News Corporation... Goodwill Other Investments Investments in associated companies and Other investments Intragroup investments Total ...

  • Page 122
    ...Financial Statements (continued) Supplemental Condensed Consolidating Balance Sheet News Corporation and Subsidiaries News America Incorporated As of June 30, 2004 News Corporation... Goodwill Other Investments Investments in associated companies and Other investments Intragroup investments Total ...

  • Page 123
    ...Financial Statements (continued) Supplemental Condensed Consolidating Statement of Cash Flows News Corporation and Subsidiaries News America Incorporated For the year ended June 30, 2005 News Corporation... Proceeds from sale of investments, non-current assets and business disposals Net cash...

  • Page 124
    ...Financial Statements (continued) Supplemental Condensed Consolidating Statement of Cash Flows News Corporation and Subsidiaries News America Incorporated For the year ended June 30, 2004 News Corporation...Investments Proceeds from sale of investments, non-current assets and business disposals Net ...

  • Page 125
    ...Financial Statements (continued) Supplemental Condensed Consolidating Statement of Cash Flows News Corporation and Subsidiaries News America Incorporated For the year ended June 30, 2003 News Corporation...associate Proceeds from sale of investments, non-current assets and business disposals Net cash...

  • Page 126
    ...subsidiary of News Corporation, principally engaged in the development, production and worldwide distribution of feature films and television programs, television broadcasting, and cable network programming. News Publishing Australia Limited FEG Holdings, Inc. News America Marketing FSI, L.L.C. Fox...

  • Page 127
    ... Annual Meeting of Stockholders under the heading "Security Ownership of News Corporation". As of August 23, 2005, there were approximately 1,942 holders of record of News Corporation's Class B common stock and 54,805 holders of record of News Corporation's Class A common stock. Each share of News...

  • Page 128
    ... regarding the top twenty stockholders of record is based on information provided by News Corporation's transfer agent as of August 29, 2005. Class B common stock Cede & Co Nominee Account (c/o Computershare Investor Services) Chess Depositary Nominees Pty Limited Liberty NC Inc. Liberty NC VIII...

  • Page 129
    ... Officer News Corporation Peter Barnes Chairman Ansell Limited Chase Carey President and Chief Executive Officer The DIRECTV Group, Inc. Peter Chernin President and Chief Operating Officer News Corporation Kenneth E. Cowley Chairman RM Williams Holdings Pty Ltd David F. DeVoe Chief Financial Officer...

  • Page 130
    ...to its Annual Report on Form 10-K for fiscal year ended June 30, 2005 filed with the Securities and Exchange Commission certificates of News Corporation's Chief Executive Officer and Chief Financial Officer certifying the quality of the Company's public disclosure. News Corporation's Chief Executive...

  • Page 131