Twenty-First Century Fox 2011 Annual Report Download - page 26

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
The Company’s international cable operations’ revenues increased 18% as compared to fiscal 2009, primarily due to higher advertising
revenues at STAR, as well as higher net affiliate and advertising revenues at FIC. The higher advertising revenues at STAR were primarily due to
the strengthening of the advertising market in India and improved performance at the regional channels, while the strengthening of the worldwide
advertising markets led to improvements at FIC. The higher net affiliate revenues at FIC resulted from increases in subscribers at existing channels
in Europe and Latin America.
FX’s revenues increased 11% for the fiscal year ended June 30, 2010 as compared to fiscal 2009, primarily due to higher net affiliate and
advertising revenues. Net affiliate revenues increased 16% for the fiscal year ended June 30, 2010, primarily due to higher average rates per
subscriber. Advertising revenues for the fiscal year ended June 30, 2010 increased 3% as compared to fiscal 2009, primarily due to additional
commercial spots sold.
For the fiscal year ended June 30, 2010, operating income at the Cable Network Programming segment increased $615 million, or 37%, as
compared to fiscal 2009, primarily due to the revenue increases noted above. Also contributing to this increase was the absence of a $30 million
settlement relating to the termination of a distribution agreement at the Company’s international cable operations in fiscal 2009. These increases
were partially offset by a $292 million increase in expenses, primarily due to higher movie acquisition costs, sports rights amortization and original
programming costs.
Filmed Entertainment (23% and 20% of the Company’s consolidated revenues in fiscal 2010 and 2009, respectively)
For the fiscal year ended June 30, 2010, revenues at the Filmed Entertainment segment increased $1,695 million, or 29%, as compared to
fiscal 2009, primarily due to increased worldwide theatrical and home entertainment revenues. The revenue increase was primarily driven by the
successful worldwide theatrical and home entertainment releases of Avatar,Alvin and the Chipmunks: The Squeakquel and Ice Age: Dawn of the
Dinosaurs, as well as the worldwide theatrical release of Date Night. Also contributing to the increase in revenues were the home entertainment
releases of X-Men Origins: Wolverine and Night at the Museum: Battle of the Smithsonian.
For the fiscal year ended June 30, 2010, the Filmed Entertainment segment operating income increased $501 million, or 59%, as compared to
fiscal 2009, primarily due to the revenue increases noted above, partially offset by increased amortization of production costs, higher participation
and releasing costs and higher home entertainment manufacturing and marketing costs.
Television (13% of the Company’s consolidated revenues in fiscal 2010 and 2009)
For the fiscal year ended June 30, 2010, Television segment revenues increased $177 million, or 4%, as compared to fiscal 2009. The increase
was primarily due to higher advertising revenues at the television stations owned by the Company as a result of higher pricing due to continued
improvements in the advertising market, partially offset by lower political advertising revenues due to the absence of advertising revenues related
to the 2008 presidential election. In addition, higher NFL and MLB revenues due to increased post-season ratings were more than offset by the
absence of revenue from the Bowl Championship Series National Championship, which was broadcast on FOX in fiscal 2009, and lower ratings
for NASCAR.
The Television segment reported an increase in operating income for the fiscal year ended June 30, 2010 of $29 million, or 15%, as compared
to fiscal 2009. The increase in operating income was primarily the result of the revenue increases noted above and the effects of cost containment
initiatives, as well as improved operating results at MyNetworkTV, partially offset by higher prime-time entertainment programming and sports
costs at FOX.
Direct Broadcast Satellite Television (12% of the Company’s consolidated revenues in fiscal 2010 and 2009)
For the fiscal year ended June 30, 2010, SKY Italia’s revenues increased $42 million, or 1%, as compared to fiscal 2009, as increases from
higher advertising revenues primarily due to the FIFA World Cup and favorable foreign exchange fluctuations, were partially offset by lower
pay-per-view and other revenues. The number of SKY Italia subscribers decreased by approximately 56,000 during fiscal 2010, bringing the total
subscriber base to 4.7 million at June 30, 2010. The total churn for fiscal 2010 was approximately 630,000 subscribers on an average subscriber
base of 4.8 million, as compared to churn of approximately 635,000 subscribers on an average subscriber base of 4.7 million in fiscal 2009.
Subscriber churn for the period represents the number of SKY Italia subscribers whose service was disconnected during the period. During the
fiscal year ended June 30, 2010, the weakening of the U.S. dollar against the Euro resulted in an increase in revenue of approximately 1% as
compared to fiscal 2009.
ARPU of approximately €43 in the fiscal year ended June 30, 2010 decreased from approximately €44 in fiscal 2009. The decrease in ARPU
for the fiscal year ended June 30, 2010, was primarily due to lower average tier mix and reduced pay-per-view revenue.
SAC of approximately €310 in the fiscal year ended June 30, 2010 increased from fiscal 2009, primarily due to higher marketing costs on a
per subscriber basis.
For the fiscal year ended June 30, 2010, SKY Italia’s operating income decreased $163 million, or 41%, as compared to fiscal 2009, resulting
from higher sports rights amortization, primarily due to the 2010 FIFA World Cup and Winter Olympics, and increased set-top box depreciation.
During the fiscal year ended June 30, 2010, the weakening of the U.S. dollar against the Euro resulted in a decrease in operating income of
approximately 4% as compared to fiscal 2009.
Publishing (26% and 27% of the Company’s consolidated revenues in fiscal 2010 and 2009, respectively)
For the fiscal year ended June 30, 2010, revenues at the Publishing segment increased $381 million, or 5%, as compared to fiscal 2009. The
increase in revenue was primarily due to favorable foreign exchange fluctuations at the Australian newspapers, increased book sales and higher
integrated marketing services revenues.
For the fiscal year ended June 30, 2010, revenues at the Company’s newspapers and information services businesses increased $229 million, or
4%, as compared to fiscal 2009 primarily due to favorable foreign exchange fluctuations at the Australian newspapers and higher circulation
revenues at The Wall Street Journal due to higher pricing. The increase in revenues was partially offset by lower circulation revenues at the
Company’s U.K newspapers and a decrease in revenue from the disposition of the financial indexes businesses at Dow Jones. The weakening of the
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