Twenty-First Century Fox 2006 Annual Report Download - page 45

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Results of Operations (CONTINUED)
During the fiscal year ended June 30, 2006, Operating income increased 9% from fiscal 2005, primarily due to the
revenue increases noted above. The Operating income increase was offset by a$109 million redundancy provision recorded
as an other operating chargeduring fiscal 2006. The redundancy provision, recorded at the Newspapers segment, was
related to certain U.K. employees as aresult of the Company committing to areduction in workforce, associated with the
development of new printing plants in the UnitedKingdom.
Interest expense, net—Interest expense, net increased $9 million for the fiscal year ended June 30, 2006 as compared to
fiscal 2005. This increaseis primarily due to interest on the Company’s issuance of $1.0 billion in 6.2% Senior Notes due
2034 and $750 million in 5.3% Senior Notes due 2014 in December 2004 and $1.15 billion in 6.4% Senior Notes due 2035
in December 2005. The increase in interest expense was partially offset by higher interest income.
Equity earnings of affiliates—Net earnings from affiliates for the fiscal year ended June 30, 2006 increased $533 million
as compared to fiscal 2005. The improvement for fiscal 2006 was due to an increased contribution from The DIRECTV
Group, Inc. (“DIRECTV”) on subscriber growth and increased pricing. DIRECTV’s results alsoreflect lower expenses asso-
ciated with anewset-top receiver lease program, as well as the absence of charges recognized in fiscal 2005 related to the
SPACEWAY program and PanAmSat.
2006 2005 Change % Change
For the years ended June 30, ($ millions)
The Company’s share of equity earnings (losses) of affiliates principally
consists of:
British Sky Broadcasting Group plc $369 $374$(5) (1)%
The DIRECTV Group, Inc. 246 (186)432**
Sky Brasil 23 49 (26) (53)%
Innova 61 27 34 **
Other DBS equity affiliates 24 519 **
Cable channelequity affiliates 68 46 22 48%
Other equity affiliates 97 40 57 **
Total Equity earnings (losses) of affiliates $888 $355$533 **
** not meaningful
Other, net—
Footnote
reference 2006 2005
For the years ended June 30, (in millions)
Loss on sale of Regional Programming Partners 3$— $ (85)
Gain on sale of Innova 6206—
Gain on sale of China Netcom 652 —
Loss on sale of Sky Multi-Country Partners 6— (55)
Gain on sale of Rogers Sportsnet 6 —39
Change in fair value of exchangeable securities(a) 10 (76) 246
Other 12 33
Total Other, net $194 $178
(a) The Company has certain outstanding exchangeable debt securities which contain embedded derivatives. Pursuant to
SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”), these embedded
derivatives are not designated as hedges and, as such, changes in their fair value are recognized in Other, net. A
significant variance in the price of the underlying stock could have amaterial impact on the operating results of the
Company.
ANNUAL REPORT 45