Twenty-First Century Fox 2006 Annual Report Download - page 51

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Results of Operations (CONTINUED)
Interest expense, net—Interest expense increased $4 million from fiscal 2004 due primarily to interest on the Company’s
issuance of $1.75 billion in Senior Notes in December 2004 partially offset by increased interest income on higher cash
balances.
Equity earnings of affiliates—Equity earnings of affiliates of $355 million for the fiscal year ended June 30, 2005
increased $185 million from $170 million for the fiscal year ended June 30, 2004, primarily due to increased contributions
from British Sky Broadcasting Group plc (“BSkyB”) and the comparatively favorable impact from foreign currency fluctua-
tions reported by the Latin American DBS platforms, partially offset by increased losses at DIRECTV.
2005 2004 Change % Change
For the years ended June 30, ($ millions)
The Company’s share of equity earnings (losses) of affiliates principally consists of:
British Sky Broadcasting Group plc $374 $265 $10941%
The DIRECTV Group, Inc. (186) (57) (129) **
Sky Brasil 49 (37) 86 **
Innova 27 (10) 37 **
Other DBS equity affiliates 5(33) 38 **
Cable channelequity affiliates 46 67(21) (31)%
Other equity affiliates 40 (25) 65 **
Total Equity earnings (losses) of affiliates $ 355 $170 $185 **
** not meaningful
The Company’s share of DIRECTV’s losses for the fiscal year ended June 30, 2005 was $186 million and includes the
Company’s share of DIRECTV’s increased loss from its sale of PanAmSat resulting from areduction in the salesproceeds
and the Company’s portion of the SPACEWAY program impairment.
The Company’s DIRECTV purchase price allocation reflected the fair value of the PanAmSat, SPACEWAY and Hughes
Network Systems, Inc. assets at the date of acquisition, which approximate DIRECTV’s revised carrying amounts. As such,
portions of the impacts of the preceding items were recognized by the Company through its purchaseprice allocation, and
were appropriately excluded from its share of DIRECTV losses for fiscal 2005. The resulting excess has been allocated to
finite-lived intangibles, which are being amortized over lives ranging from six to 20 years, and to certain indefinite-lived
intangibles and goodwill, which are not subject toamortization in accordance with Statement of Financial Accounting
Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.”
Other, net—
For the years ended June 30,
Footnote
reference 2005 2004
(in millions)
Loss on sale of Regional Programming Partners 3$(85) $ —
Loss on sale of Sky Multi-Country Partners 6(55) —
Gain on sale of Rogers Sportsnet 6 39
Gain on sale of Sky PerfecTV! 6—105
Monarchy dividend (a) —52
World TradeCenter insurance settlement —26
Change in fair value of Exchangeable securities (b) 10 246 18
Other 33 (15)
Total Other, net $178 $186
(a) During fiscal 2004, the Company received a special dividend from Monarchy Enterprises Holdings B.V., acost based
investment. The portion of the dividend representing adistribution of the Company’s share of cumulative earnings of
the investee of $52 million is reflected as Other, net while the balance was areturn of capital.
(b) The Company has certain outstanding exchangeable debt securities which contain embedded derivatives. Pursuant to
SFAS No. 133,these embedded derivatives are not designated as hedges and, as such, changes in their fair value are
recognized in Other, net.
ANNUAL REPORT 51