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Management’s Discussion and Analysis of Financial Condition
and Results of Operations
This document contains statements that constitute “forward-looking statements” within the meaning of Section 21E of the Secu-
rities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended. The
words “expect,” “estimate,” “anticipate,” “predict,” “believe” and similar expressions and variations thereof are intended to identify
forward-looking statements. These statements appear in a number of places in this document and include statements regarding the
intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things, trends affect-
ing the Company’s financial condition or results of operations. The readers of this document are cautioned that any forward-looking
statements are not guarantees of future performance and involve risks and uncertainties. More information regarding these risks,
uncertainties and other factors is set forth under the heading “Risk Factors” in Item 1A of the Annual Report on Form 10-K. The
Company does not ordinarily make projections of its future operating results and undertakes no obligation (and expressly disclaims
any obligation) to publicly update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise, except as required by law. Readers should carefully review this document and the other documents filed by the Company
with the Securities and Exchange Commission (the “SEC”). This section should be read together with the audited consolidated
financial statements of the Company and related notes set forth elsewhere in this Annual Report.
Reorganization
Effective November 12, 2004, the Company changed its corporate domicile from Australia to the United States and its reporting
currency from the Australian dollar to the U.S. dollar (“the Reorganization”). As a result, the Company’s accompanying consolidated
financial statements are stated in U.S. dollars as opposed to Australian dollars, which was the currency the Company previously used
to present its financial statements, and have been prepared in accordance with U.S. generally accepted accounting principles, or
GAAP.
In the Reorganization, all outstanding The News Corporation Limited (“TNCL”) ordinary shares and preferred limited voting
ordinary shares were cancelled and shares of Class A common stock, par value $0.01 per share (“Class A Common Stock”) and Class
B common stock, par value $0.01 per share (“Class B Common Stock”) were issued in exchange, respectively, on a one-for-two
share basis. The financial statements have been presented as if the one-for-two share exchange took place on July 1, 2004.
Introduction
Management’s discussion and analysis of financial condition and results of operations is intended to help provide an understanding
of the Company’s financial condition, changes in financial condition and results of operations. This discussion is organized as fol-
lows:
•Overview of the Company’s Business–This section provides a general description of the Company’s businesses, as well as
developments that have occurred either during fiscal 2007 or early fiscal 2008 that the Company believes are important in
understanding its results of operations and financial condition or to disclose known trends.
•Results of Operations–This section provides an analysis of the Company’s results of operations for the three fiscal years ended
June 30, 2007. This analysis is presented on both a consolidated and a segment basis. In addition, a brief description is pro-
vided of significant transactions and events that have an impact on the comparability of the results being analyzed.
•Liquidity and Capital Resources–This section provides an analysis of the Company’s cash flows for the three fiscal years ended
June 30, 2007, as well as a discussion of the Company’s outstanding debt and commitments, both firm and contingent, that
existed as of June 30, 2007. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity
available to fund the Company’s future commitments and obligations, as well as a discussion of other financing arrange-
ments.
•Critical Accounting Policies–This section discusses accounting policies considered important to the Company’s financial con-
dition and results of operations, and which require significant judgment and estimates on the part of management in applica-
tion. In addition, Note 2 to the accompanying consolidated financial statements summarizes the Company’s significant
accounting policies, including the critical accounting policy discussion found in this section.
Overview of the Company’s Business
The Company is a diversified entertainment company, which manages and reports its businesses in eight segments:
•Filmed Entertainment, which principally consists of the production and acquisition of live-action and animated motion pic-
tures for distribution and licensing in all formats in all entertainment media worldwide, and the production and licensing of
television programming worldwide.
•Television, which principally consists of the operation of 35 full power broadcast television stations, including nine duopolies,
in the United States (of these stations, 25 are affiliated with the FOX network and ten are affiliated with the MyNetworkTV
network), the broadcasting 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 licensing and production of programming distributed through
cable television systems and direct broadcast satellite (“DBS”) operators primarily in the United States.
•Direct Broadcast Satellite Television, which principally consists of the distribution of premium programming services via satel-
lite and broadband directly to subscribers 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 39