Twenty-First Century Fox 2005 Annual Report Download - page 7

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SPEED Channel, which reached almost 64 million homes this past year, and our 67
percent-owned National Geographic, which expanded its subscriber base to almost 55 million,
are both enjoying their highest ratings ever. Additionally, this past year we launched our newest
cable channel, Fox Reality, which is now in nearly 19 million homes. With commitments to grow
to approximately 25 million homes, the channel is poised to become one of the few networks
to pass 20 million homes in its first year.
This is not to say we expect the growth at our established channels to slow. FOX News,
FX and the Fox Sports Net have built affluent and loyal audiences. FOX News Channel continues
to dominate the cable news landscape, finishing the year with primetime ratings more than double
those of its nearest competitor. And with ratings up 30 percent in primetime we continue to ramp
up our advertising revenue. To give one example of how we stay ahead of the competition:
during 2005, FOX News became the first news channel available to cell phone users, appearing
live on Sprint phones 24 hours a day, seven days a week. FOX News’ affiliate contracts begin
expiring next September. As we renegotiate those agreements, I expect quite sizeable rate increases
that reflect the Channel’s must-see status.
At FX, we have developed one of the best brands in cable today. This past year was our
best rated in history as ratings rose 16 percent among Adults 18-49 on the strength of original
programs such as returning hits The Shield and Nip/Tuck and promising newcomers Rescue Me
and 30 Days. And much like at FOX News, this ratings momentum is translating into more
advertising dollars. FX also renewed several of its original carriage agreements with pay-television
operators this past year at significant increases, fostering double-digit revenue growth. As at
FOX News, we expect affiliate revenues to continue to rise as additional agreements come up
for renewal in the year ahead.
We are also enjoying double-digit affiliate revenue growth at our Regional Sports Networks
while solidifying our position as the local sports leader with the re-signing of nearly 20 teams
to long-term rights deals. And this past year we restructured our partnership with Cablevision,
in the process taking full ownership of two RSNs.
Another established business posting impressive growth was our Filmed Entertainment
segment. After attaining record profits in fiscal 2004, skeptics questioned whether we
could sustain such growth. Few thought we could. Well, I am pleased to report that in fiscal
2005 we again delivered record results, despite an overall slowdown in box office sales
and a patchy home entertainment
market. While others may have suffered
disappointing home entertainment
sales, we experienced further growth
in fiscal 2005.
The engine for this success has
been – and will continue to be – the
production of theatrical hits at appropri-
ate budgets. Home entertainment has
become our largest film profit window. But what drives success in 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 III,
Revenge of the Sith.
Meanwhile, Fox Searchlight, our low-budget studio, produced an array of profitable films
including Sideways, which earned more than $100 million in worldwide box office and won an
Academy Award.
NEWS CORPORATION Chief Executive Officer’s Review
> Cable Network Programming was
our biggest growth driver during fiscal
2005, recording yet another year
of double-digit revenue and operating
income growth.