Twenty-First Century Fox 2007 Annual Report Download - page 52

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Income tax expense–The effective tax rate for the fiscal year ended June 30, 2006 was 35%. The effective tax rate for fiscal 2006
reflects the positive impact of the Company’s application of the American Jobs Creation Act of 2004 (“AJCA”). The Company
reflected a tax benefit of approximately $126 million in the fiscal year ended June 30, 2006, primarily resulting from the reduction
of prior deferred tax accruals relating to the repatriation of foreign earnings at the lower rate of 5.25% under the AJCA.
The effective tax rate for fiscal 2006 was slightly higher than the effective tax rate for fiscal 2005 of 34%, primarily due to the
impact of the resolution of foreign income tax audits in fiscal 2005, offset by the impact of the AJCA noted above.
Minority interest in subsidiaries, net of tax–Minority interest expense improved by $146 million for the fiscal year ended June 30,
2006 as compared to the fiscal year ended June 30, 2005. The improvement was primarily due to the acquisition of minority shares
of FEG in fiscal 2005.
Gain on disposition of discontinued operations, net of tax–In October 2005, the Company sold TSL for cash consideration of approx-
imately $395 million and recorded a gain on disposition of discontinued operations of approximately $381 million. In April 2006,
the Company sold Sky Radio for cash consideration of approximately $215 million and recorded a gain on disposition of dis-
continued operations of approximately $134 million. (See Results of Operations—Fiscal 2007 versus Fiscal 2006 for further
information on Gain on disposition of discontinued operations, net of tax)
Cumulative effect of accounting change, net of tax–Effective July 1, 2005, the Company adopted EITF D-108. As a result of this
adoption, the Company recorded a charge of $1.6 billion ($1 billion net of tax) to reduce the intangible balances attributable to its
television stations’ FCC licenses. (See Results of Operations—Fiscal 2007 versus Fiscal 2006 for further information on Cumulative
effect of accounting change, net of tax)
Net income–Net income increased $186 million for the fiscal year ended June 30, 2006 as compared to fiscal 2005. The increase was
primarily due to increases in Operating income, Equity earnings from affiliates, Other income, the Gain on the disposition of dis-
continued operations, as well as lower minority interest expense, partially offset by the Cumulative effect of accounting change.
Segment Analysis:
The following table sets forth the Company’s revenues and operating income by segment, for fiscal 2006 as compared to fiscal
2005.
2006 2005 Change % Change
For the years ended June 30, ($ millions)
Revenues:
Filmed Entertainment $ 6,199 $ 5,919 $ 280 5%
Television 5,334 5,338 (4) —
Cable Network Programming 3,358 2,688 670 25%
Direct Broadcast Satellite Television 2,542 2,313 229 10%
Magazines and Inserts 1,090 1,068 22 2%
Newspapers 4,095 4,083 12 —
Book Publishing 1,312 1,327 (15) (1)%
Other 1,397 1,123 274 24%
Total revenues $25,327 $23,859 $1,468 6%
Operating income (loss):
Filmed Entertainment $ 1,092 $ 1,058 $ 34 3%
Television 1,032 952 80 8%
Cable Network Programming 864 702 162 23%
Direct Broadcast Satellite Television 39 (173) 212 **
Magazines and Inserts 307 298 9 3%
Newspapers 517 740 (223) (30)%
Book Publishing 167 164 3 2%
Other (150) (177) 27 (15)%
Total operating income $ 3,868 $ 3,564 $ 304 9%
** not meaningful
NEWS CORPORATION 2007 Annual Report 51