Twenty-First Century Fox 2007 Annual Report Download

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Annual Report 2007

Table of contents

  • Page 1
    Annual Report 2007

  • Page 2
    Creating and distributing top-quality news, sports and entertainment around the world.

  • Page 3
    ...% National Geographic Channel - Latin America 67% National Geographic Channel - Europe 25% STATS, LLC 50% Australia Premier Media Group 50% Television United States FOX Broadcasting Company MyNetworkTV Fox Television Stations WNYW New York, NY WWOR New York, NY KTTV Los Angeles, CA KCOP Los Angeles...

  • Page 4
    ... Book Publishing United States, Canada, Europe, New Zealand and Australia HarperCollins Publishers News Corp Europe News Outdoor Group NCE Television Group Multimedia Holdings 50% milkround.com Propertyfinder.com 58% Australia and New Zealand FOXTEL 25% Sky Network Television Limited 44% National...

  • Page 5
    ... clear strategy. We provide a compelling combination of information and entertainment for the largest audience around the globe. Few media companies can claim to match our breadth of offerings, or our global reach. And when we add Dow Jones to our stable of other news and information businesses, our...

  • Page 6
    ...this formula at work was our Cable Network Programming, a segment containing established, developing and new channels. Nearly every asset in this segment contributed more than its fair share to the bottom line. Among our established channels, the FOX News Channel showed strong growth during the year...

  • Page 7
    ... of record revenues and profits. What clearly distinguishes our film studio from the rest of Hollywood is the stability of our senior management team, their consistent good judgment in choosing films to make, and the business model they have faithfully followed that keeps costs relatively low while...

  • Page 8
    ... quality of the product and offering new options for advertisers. As the digital revolution accelerates, newspapers should be seen as simply one delivery method for news organizations. Properly executed, great news brands will expand, not contract. N E W S C O R P O R AT I O N 2007 Annual Report 7

  • Page 9
    ... successful year as North America's largest in-store consumer advertising and promotion network. News America Marketing delivered brand messages to more than 200 million shoppers each week last year. Meanwhile, in Book Publishing, HarperCollins published many fine books but had a relatively flat...

  • Page 10
    ... to the communities we serve. In May, News Corporation announced one of of future performance our boldest moves ever when we launched our industry-leading Global Energy Initiative. Our aim is to engage our audiences on the issue of climate change, and to transform the way our Company uses energy. We...

  • Page 11
    ... end of fiscal 2007, Twentieth Century Fox Film released two blockbusters, Fantastic 4: Rise of the Silver Surfer and Live Free or Die Hard. Both movies quickly became two of the top-grossing summer movies. s Night at the Museum opened in the number one slot over the competitive Christmas weekend...

  • Page 12
    Filmed Entertainment News Corporation's Filmed Entertainment segment encompasses both motion picture and television series production. It includes the legendary Twentieth Century Fox Film studio, the industry-leading Twentieth Century Fox Television, and our successful home entertainment division ...

  • Page 13
    s Another critical favorite, the low-budget ensemble comedy Little Miss Sunshine, achieved $100 million in worldwide box office and won two Oscars, including Best Actor in a Supporting Role for Alan Arkin. s Forest Whitaker's portrayal of Ugandan dictator Idi Amin in Last King of ...

  • Page 14
    Twentieth Century Fox Television s Twentieth Century Fox Television... FOX network; My Name Is Earl for NBC; Boston Legal for ABC; and Shark, How I Met Your Mother and The Unit ... amount of energy used in the production, manufacture and distribution of DVDs. s Twentieth Century Fox Home Entertainment had...

  • Page 15
    ... in North America and Asia, delivering news, sports and entertainment to hundreds of millions of viewers. Operations in the United States include FOX Broadcasting Company and the 35 stations in our Fox Television Stations group. Throughout Asia, STAR network broadcasts more than 60 channels in 10...

  • Page 16
    ... its total number of viewers in the 2006-2007 season. The network was first among Teenagers for the seventh season in a row and first among Adults 18-34 for the fifth straight season. s American Idol ranked first among the 2006-2007 season regular prime time programs across key demographics...

  • Page 17
    s The 13th season of the NFL on FOX attracted an average audience of 16.6 million viewers, FOX Sports' largest draw since 1995 and the network's biggest one-year gain ever. 16

  • Page 18
    ...week in fiscal 2007, with morning news showing particular strength. In May 2007, the 5-9am news block beat all affiliate competitors in all key adult demographics. s The stations launched popular first-run programming, including The Morning Show with Mike & Juliet, produced by Twentieth Television...

  • Page 19
    ... night, making it one of the most popular television shows in India Who: STAR s STAR PLUS remained the number one cable channel in India, attracting nearly 65 million viewers every week. s In April 2007, STAR announced a joint venture with Balaji Telefilms to launch several South Indian regional...

  • Page 20
    ... the National Geographic Channel, Fox Reality Channel, Fox Movie Channel, FUEL TV, Fox Soccer Channel, Fox Sports en Español, Fox College Sports, SPEED and the newly launched Big Ten Network. cable news based on Total Viewers. In October 2007, the Company will launch the FOX Business Network, a 24...

  • Page 21
    What: Nip/Tuck Where: Tuesdays at 10pm When: On FX in the U.S., and in 18 other countries How: You want cutting edge drama? It doesn't get any more provocative than Nip/Tuck, with drama aimed squarely at adults 4.8 million viewers saw the Season 4 premiere Who: 20

  • Page 22
    ...channels continued to grow strongly, with 80 TV channels reaching more than 170 million subscribers around the world. Through a combination of stronger ad sales in most regions and eight additional channels, Fox International Channels is now the largest multichannel group in Latin America and Italy...

  • Page 23
    ... in ratings, viewership and ad sales. More than 100 new advertisers chose to promote their products on the Channel in fiscal 2007. s National Geographic HD surpassed 6 million HD homes, making it one of the fastest growing HD networks ever. FUEL TV s FUEL TV added Comcast, the largest cable...

  • Page 24
    ... fans of the Gators and other local sports teams 6.3 million homes hungry for coverage as the Gators made history by winning both the NCAA football and basketball titles in the same year FSN s FSN remained the leading local sports programming network in the U.S., reaching more than 85 million...

  • Page 25
    ... Satellite Television News Corporation's satellite television platforms are among the most popular in the pay-TV industry. The Company continued to attract new subscribers in Italy, the U.K., Australia and the U.S. with exceptional technology, service and programming. What: SKY TG24 news channel...

  • Page 26
    ... three of News Corporation's regional sports networks and $588 million in cash (subject to adjustment) for all the shares in News Corporation held by Liberty. The swap is expected to be completed by the end of calendar 2007. FOXTEL s FOXTEL is Australia's leading subscription television provider and...

  • Page 27
    ... quality market in full-rate sales and The Sunday Times had a 49 percent share of the quality Sunday market. What: www.timesonline.co.uk Where: U.K. and worldwide When: 24/7 How: Breaking news and analysis from the 219 year-old world-famous The Times delivered 21st Century-style online and by...

  • Page 28
    ..., each week producing four national mastheads in the U.K.; approximately 145 national, metropolitan and suburban newspapers in Australia, Fiji, and Papua New Guinea; the New York Post in the U.S.; as well as continuously updated online versions of all our major papers. News International s The...

  • Page 29
    ...its chief rival. s Sydney's The Daily Telegraph sold nearly 179,000 more copies each weekday than its top competitor, with The Sunday Telegraph, Australia's biggest selling newspaper, leading the competition by 167,000 copies each week. s News Limited added 19 new community and commuter newspapers...

  • Page 30
    ... in the U.S. s The Post revamped its website, nypost.com, increasing average unique visitors by 33 percent to 3.1 million and page views by 75 percent to 65 million. s News Corporation acquired three groups of local community newspapers in the New York metropolitan area, increasing our reach in...

  • Page 31
    ... Corporation's business. Our portfolio of consumer promotion media and trusted magazines gives us incomparable access to shoppers around the world. s News America Marketing (NAM) delivers brand messages to more than 200 million shoppers through an extensive portfolio of products, including special...

  • Page 32
    ... growth in ad pages last year. s The Weekly Standard continued its central role in the national public affairs conversation with increased circulation and website traffic. s News Limited became one of Australia's largest magazine publishers in fiscal 2007, acquiring 25 key titles, including Vogue...

  • Page 33
    What: The Dangerous Book for Boys When: Published June 5, 2006 in the U.K. and May 1, 2007 in the U.S., hitting both The Sunday Times and The New York Times bestsellers lists immediately after publication Where: Online and in bookstores in 20 countries How: Entertaining boys - and boys at heart - ...

  • Page 34
    Book Publishing HarperCollins, News Corporation's global book publishing division, achieved impressive results across its imprints in the U.S., the U.K., Canada and Australasia. With several new titles each selling more than one million copies in fiscal 2007 and a rich library of treasured classics,...

  • Page 35
    ... countries When: Launched in January 2004, acquired by News Corporation in September 2005. How: Who: By making social networking a social phenomenon in the U.S. and worldwide If...on the site, making new friends and keeping old ones s In fiscal 2007, nearly one in four Americans visited www.myspace.com each ...

  • Page 36
    ...FIM sites. s FIM aquired Strategic Data Corporation to enhance advertising delivery to viewers and Flektor to offer consumer media tools to all FIM sites. s IGN.com was the leading games information portal on the Internet with Males 18-34 in fiscal 2007. s FOXSports.com continued to be a leader in...

  • Page 37
    ... digital publisher. Online readers increased by 57 percent to more than 6.8 million unique visitors. s FOXSPORTS.com.au, CareerOne.com.au, local search directory truelocal.com.au, and CARSguide.com.au all experienced substantial gains in audience share. NDS s NDS, a leading supplier of pay-TV...

  • Page 38
    ... of News Corporation for information with respect to significant acquisitions, disposals, changes in accounting and other transactions during fiscal 2007, 2006 and 2005. (2) Fiscal 2004 results include the sale of the Los Angeles Dodgers, Dodger Stadium and the team's training facilities in...

  • Page 39
    ... Financial Data (continued) (5) Class A common stock, par value $0.01 per share ("Class A Common Stock") carry rights to a greater dividend than the Company's Class B common stock, par value $0.01 per share ("Class B Common Stock") through fiscal 2007. As such, net income available to the Company...

  • Page 40
    ...in Italy. • Magazines and Inserts, which principally consists of the publication of free-standing inserts, which are promotional booklets containing consumer offers distributed through insertion in local Sunday newspapers in the United States, and the provision NEWS CORPORATION 2007 Annual Report...

  • Page 41
    ..., Warner Bros. and Paramount Television, to sell programming both domestically and internationally. The Company also competes to obtain creative talent and story properties which are essential to the success of the Company's filmed entertainment businesses. Television and Cable Network Programming...

  • Page 42
    ... decoders. SKY Italia's most significant operating expenses are those related to the acquisition of entertainment, movie and sports programming and subscribers and the production and technical expenses related to operating the technical facilities. Operating NEWS CORPORATION 2007 Annual Report 41

  • Page 43
    ... expenses include promotional expenses, salaries, employee benefits, rent and other routine overhead. The book publishing business operates in a highly competitive market and has been affected by consolidation trends. This market continues to change in response to technological innovations...

  • Page 44
    ...FOX-affiliated television stations. No agreement has yet been entered into with respect to the sale of any of these stations. In June 2007, the Company announced that it intends to explore strategic options for News Outdoor in connection with News Outdoor's continued development plans. The strategic...

  • Page 45
    ... the final fiscal 2007 dividend payment, shares of Class A Common Stock will cease to carry any rights to a greater dividend than shares of Class B Common Stock. See Note 20 to the Consolidated Financial Statements of News Corporation. Overview-The Company's revenues in fiscal 2007 increased 13% as...

  • Page 46
    ...Gain on sale of Sky Brasil(a) Gain on sale of Phoenix Satellite Television Holdings Termination of participation rights agreement(b) Gain on sale of Innova(a) Gain on sale of China Netcom Group Corporation(a) Change in fair value of exchangeable Other Total Other, net securities(c) Limited(a) $ 261...

  • Page 47
    ...by segment, for fiscal 2007 as compared to fiscal 2006. 2007 For the years ended June 30, 2006 ($ millions) Change % Change Revenues: Filmed Entertainment Television Cable Network Programming Direct Broadcast Satellite Television Magazines and Inserts Newspapers Book Publishing Other Total revenues...

  • Page 48
    ... rights amortization mainly due to additional games, higher entertainment programming for new shows and incremental expenses from the consolidation of NGC International and NGC Latin America. Direct Broadcast Satellite Television (11% and 10% of the Company's consolidated revenues in fiscal 2007...

  • Page 49
    ... by FIM in October 2005 and from the Jamba joint venture which was formed in January 2007. Also contributing to the revenue increase was Global Cricket Corporation's sale of the broadcast and sponsorship rights of the International Cricket Council ("ICC") Cricket World Cup with no comparable event...

  • Page 50
    ...to reduced amortization of production and participation costs. The decrease in operating expenses at the Television segment was mainly due to the absence of programming costs for the NFL's Super Bowl and NASCAR's Daytona 500 that were broadcast in fiscal 2005. NEWS CORPORATION 2007 Annual Report 49

  • Page 51
    ...) Loss on sale of Regional Programming Partners(a) Gain on sale of Innova(b) Gain on sale of China Netcom Group Corporation(b) Loss on sale of Sky Multi-Country Partners(b) Gain on sale of Rogers Sportsnet(b) Change in fair value of exchangeable Other Total Other, net securities(c) $- 206 52...

  • Page 52
    ...2005 ($ millions) Change % Change Revenues: Filmed Entertainment Television Cable Network Programming Direct Broadcast Satellite Television Magazines and Inserts Newspapers Book Publishing Other Total revenues Operating income (loss): Filmed Entertainment Television Cable Network Programming Direct...

  • Page 53
    ...and continued growth in local news programming versus fiscal 2005. Operating income at the Company's U.S. television operations for the fiscal year ended June 30, 2006 increased approximately 11% from fiscal 2005. The increase was mainly due to the absence of programming costs for the Super Bowl and...

  • Page 54
    ... as fiscal 2005 included the effect of significant sales of The Purpose Driven Life by Rick Warren. During the fiscal year ended June 30, 2006, HarperCollins had 109 titles on The New York Times Bestseller List with 14 titles reaching the number one position. NEWS CORPORATION 2007 Annual Report 53

  • Page 55
    ...rights for entertainment and sports programming; paper purchases; operational expenditures including employee costs; capital expenditures; interest expense; income tax payments; investments in associated entities; dividends; acquisitions and stock repurchases. Sources and Uses of Cash-Fiscal 2007 vs...

  • Page 56
    ... Class A shares (in millions) Number of Class B shares Fiscal 2006 Queensland Press(a) Fiscal 2005 Fox Entertainment Group(a) Queensland Press(a) $14,293 $ 6,359 1,988 61 - 308 $ 33 2 - (a) See Note 3 to the Consolidated Financial Statements of News Corporation. NEWS CORPORATION 2007 Annual Report...

  • Page 57
    ... Financial Statements of News Corporation for information with respect to borrowings. (2) The Company had historically funded its film production by borrowing under a commercial paper facility ("New Millennium") but in May 2004, the Company ceased utilizing this facility. In fiscal 2005, the Company...

  • Page 58
    ... of Financial Condition and Results of Operations (continued) Revolving Credit Agreement On May 23, 2007, News America Incorporated ("NAI"), a subsidiary of the Company, terminated its existing $1.75 billion Revolving Credit Agreement (the "Prior Credit Agreement") and entered into a new Credit...

  • Page 59
    ... Consolidated Financial Statements of News Corporation for further discussion of the Company's pension and OPEB plans. Contingencies The Company's wholly-owned subsidiary, News Outdoor owns and operates outdoor advertising companies and also owns approximately 73% of Media Support Services Limited...

  • Page 60
    ... the television programming in the initial markets, the existence of future firm commitments to sell additional episodes of the program and the past performance of similar television programs. Management regularly reviews, and revises when necessary, its total NEWS CORPORATION 2007 Annual Report 59

  • Page 61
    ... of Financial Condition and Results of Operations (continued) revenue estimates on a title-by-title basis, which may result in a change in the rate of amortization and/or a write down of the asset to fair value. The costs of national sports contracts at FOX and for international sports rights...

  • Page 62
    ...the United States, the United Kingdom and Australia as of the measurement date. The Company will utilize a weighted average discount rate of 6.0% in calculating the fiscal 2008 net periodic pension expense for its plans. The Company will continue to use a weighted NEWS CORPORATION 2007 Annual Report...

  • Page 63
    Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) average long-term rate of return of 7% for fiscal 2008 based principally on a combination of asset mix and historical experience of actual plan returns. The net losses on the Company's pension plans ...

  • Page 64
    ...of the underlying stock could have a material impact on the operating results of the Company. A 10% increase in the price of the underlying shares, holding other factors constant, would increase the fair value of the call option by approximately $115 million. NEWS CORPORATION 2007 Annual Report 63

  • Page 65
    ... Data News Corporation Index to Consolidated Financial Statements Page Management's Report on Internal Control Over Financial Reporting Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting Report of Independent Registered Public Accounting...

  • Page 66
    ... registered public accounting firm who audited and reported on the consolidated financial statements of News Corporation included in this report, has issued an attestation report on management's assessment of internal control over financial reporting. NEWS CORPORATION 2007 Annual Report 65

  • Page 67
    ..., effective internal control over financial reporting as of June 30, 2007, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of News Corporation as of June 30, 2007 and...

  • Page 68
    ... 1, 2005, and pension and other post-retirement obligations, effective June 30, 2007. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of News Corporation's internal control over financial reporting as of June...

  • Page 69
    ... subsidiaries, net of tax Income from continuing operations Gain on disposition of discontinued operations, net of tax Income before cumulative effect of accounting change Cumulative effect of accounting change, net of tax Net income Basic earnings per share: Income from continuing operations Class...

  • Page 70
    ...shares authorized, 986,520,953 shares and 986,530,368 shares issued and outstanding, net of 313,721,702 treasury shares at par at June 30, 2007 and 2006, respectively. The accompanying notes are an integral part of these audited consolidated financial statements. NEWS CORPORATION 2007 Annual Report...

  • Page 71
    ... Repayment of borrowings Cash on deposit Issuance of shares Repurchase of shares Dividends paid Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Exchange movement of opening cash balance Cash and cash equivalents...

  • Page 72
    NEWS CORPORATION Consolidated Statements of Stockholders' Equity and Other Comprehensive Income (Loss) (in millions) 2007 For the years ended June 30, Shares Amount Shares 2006 Amount Shares 2005 Amount Class A common stock: Balance, beginning of year Acquisitions Shares issued Treasury shares ...

  • Page 73
    ... Financial Statements Note 1 Description of Business On November 12, 2004, a new Delaware corporation named News Corporation (for periods after November 12, 2004, the "Company") became, through a wholly-owned subsidiary named News Australia Holdings Pty Ltd ("News Australia Holdings"), the parent...

  • Page 74
    ...film or television production's fair value. Programming Costs: In accordance with Statement of Financial Accounting Standards ("SFAS") No. 63, "Financial Reporting by Broadcasters," costs incurred in acquiring program rights or producing programs for the Television, DBS and Cable Network Programming...

  • Page 75
    ... intangible assets The Company has a significant amount of intangible assets, including goodwill, film and television libraries, Federal Communications Commission ("FCC") licenses, newspaper mastheads, distribution networks, publishing rights and other copyright products and trademarks. Goodwill is...

  • Page 76
    ... trends and changes in customer demand and acceptance of the Company's product. Based on this information, management reserves a percentage of each dollar of product sales that provide the customer with the right of return. Subscriber acquisition costs Subscriber acquisition costs in the DBS segment...

  • Page 77
    ... per share for Class A and Class B Common Stock is calculated by dividing net income or loss, less dividends on perpetual preference shares, by the weighted average number of shares of Class A and Class B Common Stock outstanding. Diluted earnings per share for Class A and Class B Common Stock is...

  • Page 78
    ... an amendment of FASB Statement No. 115" ("SFAS No. 159"). SFAS No. 159 allows companies to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 will become effective for the Company beginning in fiscal 2009. NEWS CORPORATION 2007 Annual Report 77

  • Page 79
    ... fiscal 2010 and fiscal 2012, respectively. In March 2007, the Company acquired Strategic Data Corporation ("SDC"), a developer of technology that allows websites to target advertisements to specific audiences. The Company acquired SDC for a total purchase price of $50 million, of which $40 million...

  • Page 80
    ... and preferred limited voting ordinary shares, including those ordinary shares and preferred limited voting ordinary shares represented by American Depositary Receipts ("ADRs"), had their shares cancelled and received in exchange shares of voting and non-voting common stock of News Corporation at...

  • Page 81
    ..., News Corporation became the new parent company of TNCL. News Corporation has a primary listing on the New York Stock Exchange and secondary listings on the Australian Stock Exchange and the London Stock Exchange. In exchange for approximately 78 million shares of Class A Common Stock and...

  • Page 82
    ... that will be required as new printing presses and the new printing facilities eventually come on line. As a result of this Program, the Company expects to reduce its production workforce by approximately 65%, and as of June 30, 2007, over 700 employees in the United Kingdom had already voluntarily...

  • Page 83
    ...in cash to employees in fiscal 2008. Note 5 Inventories As of June 30, 2007, the Company's inventories were comprised of the following: 2007 As of June 30, (in millions) 2006 Programming rights Books, DVDs, paper and other merchandise Filmed entertainment costs: Films: Released (including acquired...

  • Page 84
    ... Group China Network Systems Sky Network Television Ltd. National Geographic Channel (US)(2) National Geographic Other investments International(5) Other equity method investments plc(1) DBS operator principally in the U.S. U.S. print and electronic guidance company U.K. DBS operator Taiwan cable TV...

  • Page 85
    ...interest in NGC International to 75% with National Geographic Television holding the remaining interest. In January 2007, National Geographic Television agreed to certain governance changes related to the operations of NGC International and NGC Latin America which gave the Company operating decision...

  • Page 86
    ...613 5,268 8,770 Equity affiliates of the Company have balance sheet dates consistent with the Company with the following exceptions: Investment Year End Gemstar-TV Guide International, Inc. NGC UK The DIRECTV Group, Inc. December 31 December 31 December 31 NEWS CORPORATION 2007 Annual Report 85

  • Page 87
    ... inputs, the use of published industry data that are based on subjective judgments about future advertising revenues in the markets where the Company owns television stations. This method also involves the use of management's judgment in estimating an appropriate discount rate reflecting the risk of...

  • Page 88
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) The changes in the carrying value of goodwill, by segment, are as follows: Balance as of June 30, 2006 Balance as of June 30, 2007 Additions Adjustments (in millions) Filmed Entertainment Television Cable Network ...

  • Page 89
    ... of the Company's Russian operating subsidiaries. b) These notes are issued under the Amended and Restated Indenture dated as of January 28, 1993, as supplemented, among News America Incorporated ("NAI"), the Company (the "Parent Guarantor") named therein and U.S. Bank National Association, as...

  • Page 90
    ... as Borrower, the Company as Parent Guarantor, the lenders named therein (the "Lenders"), Citibank, N.A. as Administrative Agent and JPMorgan Chase Bank, N.A. as Syndication Agent. The New Credit Agreement consists of a $2.25 billion five-year unsecured revolving credit facility with a sublimit of...

  • Page 91
    ... balance sheet. BUCS During fiscal 2003, News Corporation Finance Trust II (the "Trust") issued an aggregate of $1.655 billion 0.75% BUCS representing interests in debentures issued by NAI and guaranteed on a senior basis by the Company and certain of its subsidiaries. The net proceeds from the BUCS...

  • Page 92
    ...or action by the stockholders, to issue preferred stock in one or more series and to fix the number of shares, designations, relative rights (including voting rights), preferences, qualifications and limitations of such series to the full extent permitted by Delaware law. The Company has two classes...

  • Page 93
    ... as an average of a ten year history of the Company's yearly dividend divided by the fiscal year's closing stock price. RSU awards are grants that entitle the holder to shares of Class A Common Stock or the value of shares of Class A Common Stock as the award vests, subject to the 2005 Plan and such...

  • Page 94
    ... all preferred limited voting ordinary shares which the Company issued stock options over were cancelled and holders received in exchange stock options for shares of Class A Common Stock on a one-for-two basis with no change in the original terms under the News Corporation 2004 Stock Option Plan and...

  • Page 95
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) The following table summarizes information about the Company's stock option transactions for all the Company's stock option plans (options in thousands): Fiscal 2007 Options Weighted average exercise price (in US$) (in ...

  • Page 96
    ... in the NDS Plans, however (with the exception of the employee share ownership schemes which are open to all), management determines to whom and how many stock options are granted. A summary of the NDS stock options (options in thousands): Fiscal 2007 Weighted average exercise price (in US$) Fiscal...

  • Page 97
    ... of unvested out-of-the-money stock options granted under the 2004 Plan. The affected stock options were those with exercise prices greater than A$19.74 per share, which was the closing price of the Class A Common Stock (as traded on the Australian Stock Exchange in the form of CHESS Depositary...

  • Page 98
    ... Officer, to provide strategic advice for the development of the MySpace business in China. The fees paid to Mrs. Murdoch pursuant to this arrangement are $100,000 per annum and Mrs. Murdoch received $83,333 in the fiscal year ended June 30, 2007. Mrs. Murdoch is a Director of MySpace China Holdings...

  • Page 99
    ... with the National Association of Stock Car Auto Racing ("NASCAR") give the Company rights to broadcast certain races and ancillary content through calendar year 2014. Under the Company's contract with the Bowl Championship Series ("BCS"), remaining future minimum payments for program rights to...

  • Page 100
    ... Research ("Nielsen") under which Nielsen provides audience measurement services for 49 of the Company's subsidiaries and affiliates. (e) A joint-venture in which the Company owns a 50% equity interest, entered into an agreement for global programming rights. Under the terms of the agreement, the...

  • Page 101
    ... 2005 and August 30, 2005, two purported class action lawsuits captioned, respectively, Ron Sheppard v. Richard Rosenblatt et. al., and John Friedmann v. Intermix Media, Inc. et al., were filed in the California Superior Court, County of Los Angeles. Both lawsuits named as defendants all of the then...

  • Page 102
    ... Greenspan filed a notice of appeal of the court's October 6, 2006 ruling. Mr. Greenspan's opening brief in the Court of Appeal is currently due August 24, 2007. The matter will likely not be fully briefed and ready for oral argument until the first half of 2008. NEWS CORPORATION 2007 Annual Report...

  • Page 103
    ... its FSI products to its in-store products, has violated California's Unfair Practices Act by predatorily pricing its FSI products, and has unfairly competed with Valassis. Valassis' California complaint seeks injunctive relief, damages, fees and costs. On May 4, 2007, News America filed a motion to...

  • Page 104
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) The Company uses a June 30 measurement date for all pension and postretirement benefit plans. The following table sets forth the change in the benefit obligation for the Company's benefit plans: Postretirement benefits ...

  • Page 105
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) Amounts recognized in the consolidated balance sheets consist of: Pension benefits 2007 As of June 30, 2006 Postretirement benefits 2007 2006 (in millions) Non-current pension assets Accrued pension/postretirement ...

  • Page 106
    ... decrease in the assumed health care cost trend rate would have the following effects on the results for fiscal 2007: Service and interest costs (in millions) Benefit Obligation One percentage point increase One percentage point decrease $1 (1) $8 (7) NEWS CORPORATION 2007 Annual Report 105

  • Page 107
    ... to estimated future employee service: Expected benefit payments Pension benefits Postretirement benefits Fiscal year: 2008 2009 2010 2011 2012 2013-2017 $116 109 112 116 125 701 $ 7 8 9 9 10 59 The Company's investment strategy for its pension plans is to maximize the long-term rate of return on...

  • Page 108
    ... Television Holdings Limited(a) Termination of Participation rights agreement(b) Gain on sale of Innova(a) Gain on sale of China Netcom Group Corporation(a) Loss on sale of RPP(b) Loss on sale of Sky Multi-Country Partners(a) Gain on sale of Rogers Sportsnet(a) Change in fair value of Exchangeable...

  • Page 109
    ...in a tax benefit to the Company of approximately $125 million. The amounts repatriated were used to compensate non-executive U.S. employees for services performed within the United States. The reconciliation of income tax attributable to continuing operations computed at the statutory rate to income...

  • Page 110
    ... related to these earnings is not practicable. Undistributed earnings of foreign subsidiaries considered to be indefinitely reinvested amounted to approximately $5.0 billion at June 30, 2007. (See Note 2, Summary of Significant Accounting Policies) NEWS CORPORATION 2007 Annual Report 109

  • Page 111
    ... of network programming in the United States and the development, production and broadcasting of television programming in Asia. • Cable Network Programming, which principally consists of the production and licensing of programming distributed through cable television systems and DBS operators...

  • Page 112
    ... on many factors including customer tastes and preferences). 2007 For the years ended June 30, 2006 (in millions) 2005 Revenues: Filmed Entertainment Television Cable Network Programming Direct Broadcast Satellite Television Magazines and Inserts Newspapers Book Publishing Other Total revenues...

  • Page 113
    ... the year ended June 30, 2007 Depreciation and amortization Amortization of cable distribution investments (in millions) Filmed Entertainment Television Cable Network Programming Direct Broadcast Satellite Television Magazines and Inserts Newspapers Book Publishing Other Total $1,225 962 1,090...

  • Page 114
    ... Newspapers Book Publishing Other Total capital expenditures $ 85 125 92 199 10 544 23 230 $1,308 $ 66 136 40 223 9 359 7 136 $976 $ 53 119 32 324 4 293 10 66 $901 $ 85 93 56 191 8 284 8 154 $ 879 $ 85 88 51 172 7 263 7 102 $775 $ 51 92 39 156 6 222 6 76 $648 NEWS CORPORATION 2007 Annual Report...

  • Page 115
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) 2007 As of June 30, (in millions) 2006 Total assets: Filmed Entertainment Television Cable Network Programming Direct Broadcast Satellite Television Magazines and Inserts Newspapers Book Publishing Other Investments ...

  • Page 116
    ... attributed to countries based on location of customers. Australasia comprises Australia, Asia, Fiji, Papua New Guinea and New Zealand. Note 20 Earnings Per Share Earnings per share ("EPS") is computed individually for the Class A Common Stock and Class B Common Stock. Net income is apportioned to...

  • Page 117
    NEWS CORPORATION Notes to the Consolidated Financial Statements 2007 Class A For the years ended June 30, Class B (continued) 2006 Total Class A Class B Total (in millions, except per share data) Class A 2005 Class B Total Allocation of income-basic: Income from continuing operations Gain on ...

  • Page 118
    ...24 $ 0.30 $ 0.25 $5,914 851 843 $7,844 1,144 822 $7,530 1,239 871 $7,367 1,218 890 (a) The stock prices reflect the reported high and low closing sales prices for the Class A Common Stock and Class B Common Stock, as reported on the New York Stock Exchange. NEWS CORPORATION 2007 Annual Report 117

  • Page 119
    ... of record and not more than 10% of the shares of Dow Jones may elect to have their shares of Dow Jones converted into a number of units of a newly formed subsidiary of the Company (each unit of which will be exchangeable for one share of the Company's Class A Common Stock in accordance with 118

  • Page 120
    ..., financial position and cash flows of NAI, News Corporation, the wholly-owned and non-wholly-owned non-guarantor subsidiaries of News Corporation and the eliminations and reclassifications necessary to arrive at the information for the Company on a consolidated basis. NEWS CORPORATION 2007 Annual...

  • Page 121
    ... Notes to the Consolidated Financial Statements (continued) Supplemental Condensed Consolidating Statement of Operations For the year ended June 30, 2007 (US$ in millions) News Corporation and Subsidiaries News America Incorporated News Corporation Non-Guarantor Reclassifications and...

  • Page 122
    ...Financial Statements (continued) Supplemental Condensed Consolidating Statement of Operations For the year ended June 30, 2006 (US$ in millions) News Corporation and Subsidiaries News America Incorporated News Corporation...) 2,812 515 3,327 (1,013) $ 2,314 NEWS CORPORATION 2007 Annual Report 121

  • Page 123
    ...Financial Statements (continued) Supplemental Condensed Consolidating Statement of Operations For the year ended June 30, 2005 (US$ in millions) News Corporation and Subsidiaries News America Incorporated News Corporation...subsidiaries Income tax (expense) benefit Minority interest in subsidiaries...

  • Page 124
    ...Financial Statements (continued) Supplemental Condensed Consolidating Balance Sheet At June 30, 2007 (US$ in millions) News Corporation and Subsidiaries News America Incorporated News Corporation...2,204 5,818 2,039 362 10,423 7,654 5,842 2,039 371 15,906 NEWS CORPORATION 2007 Annual Report 123

  • Page 125
    ...Financial Statements (continued) Supplemental Condensed Consolidating Balance Sheet At June 30, 2006 (US$ in millions) News Corporation and Subsidiaries News America Incorporated News Corporation... Other Investments Investments in associated companies and Other investments Intragroup investments ...

  • Page 126
    ... Notes to the Consolidated Financial Statements (continued) Supplemental Condensed Consolidating Statement of Cash Flows For the year ended June 30, 2007 (US$ in millions) News Corporation and Subsidiaries News America Incorporated News Corporation Non-Guarantor Reclassifications and...

  • Page 127
    ... Notes to the Consolidated Financial Statements (continued) Supplemental Condensed Consolidating Statement of Cash Flows For the year ended June 30, 2006 (US$ in millions) News Corporation and Subsidiaries News America Incorporated News Corporation Non-Guarantor Reclassifications and...

  • Page 128
    ...Financial Statements (continued) Supplemental Condensed Consolidating Statement of Cash Flows For the year ended June 30, 2005 (US$ in millions) News Corporation and Subsidiaries News America Incorporated News Corporation...) $ 519 $ 673 $ 2,179 $- $ 3,371 NEWS CORPORATION 2007 Annual Report 127

  • Page 129
    NEWS CORPORATION Notes to the Consolidated Financial Statements (continued) Notes to Supplemental Guarantor Information (1) Investments in the Company's subsidiaries, for purposes of the supplemental consolidating presentation, are accounted for by their parent companies under the equity method ...

  • Page 130
    ...Meeting of Stockholders under the heading "Security Ownership of News Corporation." As of August 17, 2007, there were approximately 1,600 holders of record of Class B Common Stock and 54,000 holders of record of Class A Common Stock. Each share of Class B Common Stock entitles the holder to one vote...

  • Page 131
    ... information regarding the top twenty stockholders of record is based on information provided by News Corporation's transfer agent as of August 17, 2007. Class B Common Stock Cede & Co Chess Depositary Nominees Pty Limited Liberty NC Inc. Liberty NC VIII Inc. Liberty NC VII Inc. Fayez Sarofim LMC...

  • Page 132
    ... and Chief Operating Officer DAVID F. DEVOE Chief Financial Officer ROGER AILES Chairman and Chief Executive Officer FOX News Channel and FOX Business Network Chairman Fox Television Stations and Twentieth Television LAWRENCE A. JACOBS Group General Counsel NEWS CORPORATION 2007 Annual Report 131

  • Page 133
    ... of shares in News Corporation is subject to Delaware law and applicable United States securities laws. Auditors Ernst & Young LLP Share Listings Class A Common Stock and Class B Common Stock New York Stock Exchange Australian Stock Exchange Limited The London Stock Exchange Share Registers...

  • Page 134
    ... the Company's competitors in the industry, includes The Walt Disney Company, Time Warner Inc., CBS Corporation Class B common stock and Viacom Inc. Class B Common Stock (created on December 31, 2005 by the separation of the company formerly known as Viacom Inc. into two publicly held companies, CBS...

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