Twenty-First Century Fox 2005 Annual Report Download - page 8

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The results achieved at our Television segment provide another example of our success
developing new growth drivers while maintaining solid performances at our established businesses.
STAR, our pan-Asian channels group, is now one of News Corp.’s most exciting growth
drivers. Its operating income more than doubled in fiscal 2005 and I expect it to become a major
profit contributor in the years ahead.
Unlike many of our competitors who
talk of the possibilities in Asia, we
have built a real presence with powerful
brands. We broadcast more than 50
channels in all genres across Asia.
We control more than 20,000 hours of Indian and Chinese programming. And, recently,
we were granted approval for a DTH 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 success. But it was far from the sole contributor. Several other returning
shows rated well, including 24, whose ratings were up 16 percent, and The OC, which established
a foothold on Thursday nights – the most lucrative night of the week. We also found big audiences
for several new series, including medical drama House, the number one new comedy, Stacked,
and the cult hit Family Guy, which we revived to its best ratings ever.
The biggest profit generator within our Television segment remains our station group.
Fiscal 2005 operating income was up only slightly, with results affected by a soft local advertising
market and the impact of local people meters being adopted in several large markets. Changes
to the way local television ratings are measured has had a disproportionate impact on minority
viewing, with fault rates among African-American, Hispanic and large households unacceptably
high. To combat the unfair and disruptive effects of this flawed system, News Corp. has been
at the forefront of a broad industry effort to bring greater accountability and accuracy to
local ratings.
Just as the Television segment showed great resilience and, in some instances, achieved
historic firsts, the results of our newest segment – Direct Broadcast Satellite Television – vindicated
our faith in this exciting industry.
SKY Italia was arguably the year’s biggest single success story. Launched just two years
ago, SKY Italia – as promised – became profitable in our fourth quarter. Indeed, the platform
improved its operating results by more than $100 million in fiscal 2005. For the year, we added
more than 650,000 subscribers to bring our subscriber base to more than 3.3 million.
But subscriber additions are only part of the story. Average rate per subscriber continued
to exceed our early expectations, with customers overwhelmingly purchasing all our top-tier
packages. We successfully quashed piracy problems by swapping out old technology and
replacing it with a much more secure conditional access system purchased from our majority-owned
subsidiary, NDS. And our churn rate remained at astonishingly low levels – less than 10 percent
annually – reflecting a loyal and satisfied subscriber base.
Our two other major satellite investments also made considerable progress in 2005.
DIRECTV, grew its subscriber base by 1.7 million and aggressively expanded its product offerings
with more local channels and high definition and digital video recorder capabilities. News
Corporation also agreed to sell its satellite platforms in Latin America to The DIRECTV Group,
allowing DIRECTV to form a single platform in each major territory. In our first full year owning
a 34 percent stake in DIRECTV, the platform fulfilled its promise as a powerful partner to our Fox
assets. We negotiated contracts with DIRECTV management to carry several new Fox-produced
> For the first time in its history, the FOX
network won the ratings race among
18-49 year olds.