Twenty-First Century Fox 2006 Annual Report Download - page 7

ANNUAL REPORT 7
approaching $450 million in worldwide gross. The
Devil Wears Prada – a great example of counter-pro-
gramming – has so far returned $100 million on a
relatively small investment. Last summer’sFantastic
Four – our newest franchise – did another $330
million at the worldwide box office. And Walk the
Line was a critical and commercial success, winning
three Golden Globes and an Oscar and earning
nearly $200 million on a low production cost.
Second, home entertainment performance of
recent films remained robust. Robots,Hide and Seek,
Mr. and Mrs. Smith,Star Wars Episode III: Revenge
of the Sith, and also some of the films mentioned
above sold well in both the DVD and pay-televi-
sion markets. In addition, some of our most
successful titles from prior years continue to sell
strongly, notably Sideways,Napoleon Dynamite,
Alien v. Predator and I, Robot.
Third, Twentieth Century Fox Television remains
one of the largest and most successful producers of
primetime TV in the business. We launched three
new hit shows: NBC’sMy Name is Earl, the number
one new comedy of the season, and FOX’sPrison
Break and CBS’sThe Unit, this season’s top two new
dramas. And lastly, home entertainment sales for
our TV content continued to grow, led by strong
sales of The Simpsons,Family Guy and 24.
Broadcast television needed a big year to top
last year’s record shattering ratings performance –
and it delivered. For the second year in a row, the
FOX network won the ratings race among 18-49
year olds. Once again, American Idol led the way, but
once again, FOX showed real depth across a range
of programming. Idol shattered precedent and
expectation, growing its audience by 10 percent in
its fifth year on the air. This cultural phenomenon
has the legs to last many more years, and the
brand strength to launch many more shows on its
popularity. And it has already helped launch two
big hits. 24, now in its fifth year, posted its best
ever performance. And House, last year’s welcome
surprise, became this year’s genuine hit, winning
its time slot for the season.
In the coming seasons, FOX will remain the
premier sports network on U.S. television. We
renewed our contracts with Major League Baseball,
NFL football and NASCAR all at attractive rates –
and, in the case of baseball, at a lower annual cost
than the previous deal. We also inked a new deal to
broadcast the college football Bowl Championship
Series. Sporting events are – along with live news
– as close to DVR-proof as programming gets.
And the enormous ratings of the World Series
and the BCS offer unmatched promotional
opportunities for our network lineup.
Our owned-and-operated stations group – com-
prising 35 stations in the U.S. – logged record
market share in the 4th quarter on the strength of
network ratings and the popularity of local news.
Yet we also moved aggressively to keep ahead of the
demands of the market and improve their per-
formance in future years. We worked with station
managers to launch new websites and are leveraging
those sites to promote films and network shows
by making clips available for download by their
viewers. We’re improving local news coverage by
helping local newsgathering teams introduce
proven techniques pioneered by FOX News. And
we’ve worked to build up a stronger lineup of
syndicated programming.
In Asia, STAR saw operating income and rev-
enues rise on the strength of advertising sales and
subscriber growth. In India, enhanced weekend
programming at STAR PLUS and new programming
launched at STAR ONE boosted ratings. And shortly
after the end of the fiscal year, we invested in the
launch of a new direct-to-home satellite service
called Tata Sky that will capitalize on the rapidly
rising middle class in that country.
One of the most interesting developments for
our broadcast television business this year was the
announcement that our 10 non-FOX affiliated
stations will get a new face this fall as we launch
MyNetworkTV.Formed quickly in the wake of the
WB/UPN merger, MyNetworkTV will bring the
“telenovela,” the most popular television format in
the world, to the U.S. for the first time. Produced
by Twentieth Television, MyNetworkTV‘s original
new shows will run six nights per week in 13-week
seasons without repeats. Our owned-and-operated
stations formerly part of the UPN network reach
nearly a quarter of the U.S. market. To reach
the other 75 percent, we have affiliated with an
additional 157 stations.
Our Cable Network Programming segment
continued to grow at a torrid pace, solidifying its
position as one of the principal growth drivers of
our company. The success of these businesses is
emblematic of our broader strategy. The elements
are simple to understand, if not always easy to
implement. First, be willing to ignore or even take
on conventional wisdom. Second, invest wisely
and early in a new business. Third, be patient as
the new effort finds its footing. Fourth, enjoy the
growth and profitability as the business matures,
but always be thinking about and building the
next generation of new channel offerings.
Our cable businesses are today where we hope
and expect our Internet businesses to be in the near
future. The FOX News Channel set another record
for operating income and revenue growth, and has
now held the number one position in cable news
for 18 straight quarters. High ratings have driven up
Our Cable Network Programming
segment continued to grow at a torrid
pace, solidifying its position as one
of the principal growth drivers of our
company.