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2003
Annual Report

Table of contents

  • Page 1
    Annual Report 2003

  • Page 2

  • Page 3
    ... our work as the supplier of films and television shows; the publisher of newspapers, books and magazines; and a global pioneer... dynamic channels, News Corporation has consistently provided viewers and readers with more and better options when it comes to the news, sports, information and ...

  • Page 4
    ... New York, NY WWOR New York, NY KTTV Los Angeles, CA KCOP Los Angeles, CA WFLD Chicago, IL WPWR Chicago, IL WTXF Philadelphia, PA KDFW Dallas, TX KDFI Dallas, TX Europe Balkan News Corporation Asia STAR STAR STAR STAR STAR STAR STAR STAR Plus News Movies Mandarin Movies World Gold Chinese Channel...

  • Page 5
    ... Channel International (b) 50% Los Angeles Dodgers STAPLES Center (b) 40% Australia Fox Sports Australia 50% BOOK PUBLISHING United States, Canada, Europe and Australasia HarperCollins Publishers OTHER Europe NDS 78% Broadsystem Ventures The Wireless Group 19% Convoys Group Sky Radio 93% News...

  • Page 6
    ...84,961 $18,805 Operating Income by Geographic Segment 2003 Revenues by Geographic Segment 2003 United States 81% United States 76% Europe 16% Europe 12% Australasia 7% Australasia 8% Note: These financial highlights are taken from the Concise Financial Report. 4 The News Corporation Limited

  • Page 7
    ... 256 235 Magazines/Inserts 923 864 Newspapers 400 430 Newspapers 2,718 2,411 Book Publishing 133 118 Book Publishing 1,162 1,078 Other (111) (58) Other 932 659 â- 2002 â- 2003 Note: These financial highlights are taken from the Concise Financial Report. The News Corporation Limited 5

  • Page 8
    ... was the single most successful in News Corporation's history. Our full-year revenues rose 15 percent to US$17.5 billion and our operating income increased 36 percent to a record US$2.5 billion. We posted record profits at our film, cable television and book publishing businesses as well as at our...

  • Page 9
    ... confront problems as well. In addition to repeatedly leading at the box office during the year - with five of our movies opening the box office at number one - News Corporation was a leader in both Hollywood and Washington in our efforts to devise solutions to and educate the public about the...

  • Page 10
    ... and across the globe. Just as Fox News Channel in the U.S. and Sky News in London cooperated to produce the most brilliant war coverage on television - and were rewarded for their combined efforts with record viewership numbers - so did our newspapers share their strengths in order to cover the...

  • Page 11
    ... again posted record profits and more than 150 best-selling titles worldwide. From the increasing prominence of our Washington, D.C.-based political magazine, The Weekly Standard, to the steady market share gains at News America Marketing; from the Australian television leadership of FOXTEL to the...

  • Page 12
    FILMED ENTERTAINMENT box office hits Following its record-breaking debut in May as the widest global release in history, X2: X-Men United grossed more than US$400 million in worldwide box office by the end of fiscal 2003 10 The News Corporation Limited

  • Page 13
    ... films opened at number one at the box office: Swimfan, Just Married, Daredevil, Phone Booth and X2: X-Men United 5 From unconventional art films to international blockbusters, from groundbreaking American television series to a vast library of home entertainment titles, News Corporation's filmed...

  • Page 14
    News Corporation's video and DVD business achieved a sixth consecutive year of record profits More than 23 million videos and DVDs of Ice Age were sold worldwide by the end of the fiscal year 6 12 The News Corporation Limited

  • Page 15
    The News Corporation Limited 13

  • Page 16
    ... of Fox Television Studios and Regency, continued to achieve number-one ratings in its time slot For the 2003-2004 broadcast season, Twentieth Century Fox Television is scheduled to supply 24 series for the major American networks, including 12 new shows ➤ 14 The News Corporation Limited

  • Page 17
    The News Corporation Limited 15

  • Page 18
    ... - and the highest-rating entertainment program on any American broadcast network in more than two years FOX's thriller 24 achieved the greatest ratings growth of any drama on any network, while The Simpsons delivered its highest ratings in more than seven years 16 The News Corporation Limited

  • Page 19
    ... digital cable TV. Whether delivering classic Bollywood films to viewers in India or providing local news, sports and weather to towns and cities across the U.S., News Corporation is an unparalleled supplier of top-quality television to one community at a time. The News Corporation Limited 17

  • Page 20
    ... WRBW WOFL KTVI WDAF WITI KSTU WBRC WHBQ WGHP KTBC WUTB WOGX New York, NY New York, NY Los Angeles, CA Los Angeles, CA Chicago, IL Chicago, IL Philadelphia, PA Dallas, TX Dallas, TX Boston, MA Washington DC Washington DC Atlanta, GA Detroit, MI Houston, TX Houston, TX Minneapolis, MN Minneapolis, MN...

  • Page 21
    In August 2002, the Group completed its acquisition of WPWR-TV in the Chicago market, giving the Fox Television Stations group duopolies in the top three American television markets The News Corporation Limited 19

  • Page 22
    The FOX Broadcasting Company television network among Adults 18-34 and Teens reigned as the number-one American one The Simpsons TM and © 2003 Twentieth Century Fox Film Corporation. AllRights Reserved. 20 The News Corporation Limited

  • Page 23
    ...2003, STAR Plus supplied a record 50 of the 50 most popular programs on Indian cable television STAR's promising Mandarin entertainment channel in China, Xing Kong Wei Shi, expanded its landing rights to become available in high-quality hotels and Chinese compounds ➤ The News Corporation Limited...

  • Page 24
    ...year, Fox News secured new distribution deals in India, Italy, Scandinavia, Poland, Israel and Turkey, expanding an international base of subscribers that includes Japan, Britain, Australia, Asia, Europe and Latin America In the past few years, News Corporation has created and launched channels that...

  • Page 25
    Fox News' The O'Reilly Factor remained the most-watched show in all of American cable news - a position it assumed in November 2001 news The News Corporation Limited 23

  • Page 26
    In June 2003, FX's original movie 44 Minutes: The North Hollywood Shootout - produced by Fox Television Studios - drew 6.1 million viewers, making it the best-rating program in FX's history best 24 The News Corporation Limited

  • Page 27
    ... the U.S. At SPEED Channel, primetime ratings increased 31 percent over the prior year as the channel expanded to more than 57 million homes Shortly after the fiscal year, the Group launched FUEL, its extreme sports channel, into nearly five million homes ➤ ➤ The News Corporation Limited 25

  • Page 28
    ... them access to its premium movies, sports, general entertainment, music and documentary channels During the year, FOXTEL launched new dedicated services for football fans in New South Wales, Queensland, South Australia, Victoria and West Australia ➤ ➤ ➤ 26 The News Corporation Limited

  • Page 29
    ...T E T E L E V I S I O N The Sky Italia platform, 80 percent-owned by News Corporation, was launched shortly after the close of the fiscal year to more than two million subscribers BSkyB expanded its digital DTH subscriber base by 12 percent during the fiscal year + The News Corporation Limited 27

  • Page 30
    NEWSPAPERS record sales The Daily Telegraph, Sydney's most popular daily paper, significantly increased its circulation while the Sunday Telegraph achieved record sales, underlining its leadership as Australia's best-selling Sunday newspaper 28 The News Corporation Limited

  • Page 31
    ... newspapers than any other provider. From the Group's publishing roots in Australia to its readership in Papua New Guinea, from the clarion voice of the New York Post to the award-winning journalism of The Times in London, News Corporation's newspaper operations are at the heart of its connection...

  • Page 32
    The Sunday Times in the U.K. solidified recording 12 consecutive months of year-over-year readership growth its lead in the Sunday broadsheet market, 12 30 The News Corporation Limited

  • Page 33
    ..., News of the World maintained its market share and continued to reign as the U.K.'s best-selling Sunday paper In the U.S., the phenomenal circulation gains at the New York Post continued with its fifth consecutive six-month period of growth exceeding 10 percent The News Corporation Limited 31...

  • Page 34
    ...continued to grow. News America Marketing, the Group's consumer promotion division, expanded its services and substantially improved its market share on the success of its unique SmartSource marketing products. News Corporation's political magazine in Washington DC, The Weekly Standard, continued to...

  • Page 35
    ... million, reaching an estimated 28 million readers every week The TV Guide Channel, television's premier entertainment guidance network, now reaches 55 million households The Weekly Standard, News Corporation's Washington-based political magazine, increased its circulation by nearly 23 percent donna...

  • Page 36
    ...number-one position For a single week in February, HarperCollins had a record 27 titles on the New York Times bestseller lists The award-winning and best-selling titles of HarperCollins Publishers make News Corporation a leading provider of quality books worldwide. Despite a slowdown across the book...

  • Page 37
    The News Corporation Limited 35

  • Page 38
    ... leading providers of marketing solutions and database management, oversaw the U.K. Health Department's telephone contact center, enabled popular voting at the National Television Awards and helped Sky News deliver electronic alerts on the war in Iraq ➤ ➤ ➤ 36 The News Corporation Limited

  • Page 39
    ...60 61 62 63 75 76 77 Discussion and Analysis Statement of Financial Performance Statement of Financial Position Statement of Cash Flows Notes to the Concise Financial Report Directors' Declaration Independent Audit Report Shareholder Information A.C.N. 007 910 330 The News Corporation Limited 37

  • Page 40
    ... the year ended 30 June, 2003 is set out on pages 55 to 56 of the Directors' Report. The Company's Constitution authorises the Board to appoint Managing Directors (including the Chief Executive) with specific authorised duties and to elect a Chairman to preside at meetings. If a vote, which requires...

  • Page 41
    ...and a business risk management process; and established Standards of Business Conduct for Directors, officers and employees and a Code of Ethics for the chief executive and senior financial officers. These matters are discussed in further detail below. Board Committees To assist in the execution of...

  • Page 42
    ...A majority of the members of the Committee shall constitute a quorum. As part of its job to foster open communication, the Committee should meet at least annually with management, the director of the Corporate Audit Department and the independent accountants in separate executive sessions to discuss...

  • Page 43
    ... corporate audit reports to management prepared by the corporate audit department and management's response. Financial Statements; Disclosure and Other Risk Management and Compliance Matters 1. Review and discuss with the independent accountants and with management the results of the annual audit...

  • Page 44
    ... and rating agencies (paying particular attention to use of "pro forma" or "adjusted" non-GAAP information). 8. Review, with the Group's counsel and management, any legal or regulatory matter that could have a significant impact on the Group's financial statements. 9. Review the Group's policies and...

  • Page 45
    ... the corporate audit department. 12. Review with the independent accountants, the corporate audit department and management the extent to which changes or improvements in financial or accounting practices, as approved by the Audit Committee, have been implemented. Reporting to the Board of Directors...

  • Page 46
    Statement of Corporate Governance FOR THE YEAR ENDED 30 JUNE, 2003 (continued) Composition and Meetings The Committee shall consist entirely of Directors who the Board determines are "independent" in accordance with the New York Stock Exchange listing standards. The members of the Committee shall ...

  • Page 47
    ...'s Standards of Business Conduct; To review and assist with the development of executive succession plans, to review and approve the executive compensation information to be included in the Group's annual report, and to consult with the Chief Executive regarding the selection of senior executives...

  • Page 48
    ... text of the Charter of the Corporate Audit Department is available on the Group's website. Ethical Standards At a Board meeting on 27 February, 1996, the Board adopted "Standards of Business Conduct". The Standards confirm the Group's policy to conduct its affairs in compliance with all applicable...

  • Page 49
    ... and Corporate Governance Committee by writing to Geoffrey Bible, Board of Directors of The News Corporation Limited, 1211 Avenue of the Americas, New York, N.Y. 10036. Corporate Reporting In connection with the Company's periodic reports filed with the SEC, the Chief Executive and Chief Financial...

  • Page 50
    ... Executive Vice President and Chief Financial Officer, The News Corporation Limited Executive Vice President for Content, The News Corporation Limited President and Chief Executive Officer, HarperCollins Publishers, Inc. Chairman, Fox Filmed Entertainment Executive Vice President, Investor Relations...

  • Page 51
    ... Directors' Report, Concise Financial Report and Independent Audit Report contained within this document represent a Concise Report. The financial statements and disclosures in the Concise Financial Report on pages 60 to 74 have been derived from The News Corporation Limited's Full Financial Report...

  • Page 52
    ..., Chairman since 1992 and Chief Executive Officer since 1995. Chairman of STAR Group from 1993 to 1998, Director since 1993. Director of British Sky Broadcasting Group plc since 1990 and Chairman since 1999. Director of China Netcom Corporation (Hong Kong) Limited since 2001. Director of Gemstar-TV...

  • Page 53
    ... Director of The News Corporation Limited since 1996 and Senior Executive Vice President from 1999 to 2000. Deputy Chief Operating Officer since 2000. Executive Director of News Limited since 1995, Chairman since 1997. Director of Fox Entertainment Group, Inc. since 2002. Deputy Chairman of STAR...

  • Page 54
    ..., Senior Executive Vice President and General Counsel of Fox Entertainment Group, Inc. since 1998. Directors' Meetings The following Directors were in office during the financial year, and attended the following number of Board meetings: Meetings of Committees Nominating and Corporate Governance...

  • Page 55
    ...policy, as the dividend was not declared and announced by the Directors prior to 30 June, 2003. A discount of 10% will apply to the weighted average market price of the ordinary and preferred limited voting ordinary shares used to determine the respective entitlements under the Dividend Reinvestment...

  • Page 56
    ... of major multinational corporations, in the appropriate markets. Directors' fees are not paid to Executive Directors since the responsibilities of Board membership are considered in determining remuneration provided as part of the normal employment conditions. 54 The News Corporation Limited

  • Page 57
    ...568 662 474 14 150 663 95 38 30 42 34 40 Executive Directors K R Murdoch AC C Carey P Chernin D F DeVoe J R Murdoch L K Murdoch A M Siskind Officers R Ailes J Gianopulos S Grushow D Hill T Rothman M Stern 4,508 1,600 8,104 2,104 900 ... 464,400 348,400 389,200 354,000 The News Corporation Limited 55

  • Page 58
    .... Share Options Details of the share options are disclosed in the Full Financial Report Note 25. The options carry no right to participate in any other share issue and no options have been exercised by a Director, except as noted in the Full Financial Report Note 30. 56 The News Corporation Limited

  • Page 59
    ...the accompanying Concise Financial Report have been rounded off to the nearest million dollars unless specifically stated to be otherwise. This report is signed in accordance with a resolution of Directors. K R Murdoch AC Director D F DeVoe Director 13 August, 2003 The News Corporation Limited 57

  • Page 60
    ...the year ended 30 June, 2003 primarily relate to the Group's share of asset sale gains recognised by Independent Newspapers Limited, offset by a write down in the value of certain assets of Sky Multi-Country Partners, a Latin American pay television platform. The Group recorded a net loss from Other...

  • Page 61
    ... to repay $3.7 billion in long term debt and Exchangeable securities and to provide $0.7 billion as cash collateral for SKY Italia long term debt. Dividends paid amounted to $0.3 billion; The weakening of the US dollar reduced reported cash by $0.7 billion. • • The News Corporation Limited 59

  • Page 62
    ... and preferred limited voting ordinary shares $0.342 The Statement of Financial Performance is to be read in conjunction with the accompanying notes. $(2.170) $(2.604) $(2.431) $(0.174) $(0.209) $(0.192) $(2.170) $(2.604) $(2.431) $(0.174) $(0.209) $(0.192) 60 The News Corporation Limited

  • Page 63
    ...' equity attributable to members of the parent entity Outside equity interests in controlled entities Total Shareholders' Equity Total Liabilities and Shareholders' Equity The Statement of Financial Position is... 1,690 31,973 28,239 6,351 1 34,591 4,877 39,468 71,441 The News Corporation Limited 61

  • Page 64
    ...) (94) 2,483 28,970 (24,423) 4,547 38 247 (1,324) (337) (93) 3,078 25,176 (23,120) 2,056 86 302 (1,225) (209) (90) 920 The Statement of Cash Flows is to be read in conjunction with the accompanying notes. 62 The News Corporation Limited

  • Page 65
    ...2001, Accounting Standard AASB 1039 "Concise Financial Reports" and other mandatory professional reporting requirements. The financial statements and specific disclosures have been derived from The News Corporation Limited's Full Financial Report for the financial year. Other information included in...

  • Page 66
    ...Report FOR THE YEAR ENDED 30 JUNE, 2003 (continued) ➤ NOTE 2 Business segment data Consolidated 2003 A$ million Cable Network Programming Direct Broadcast Satellite Magazines & Television Inserts Newspapers Filmed Note Entertainment Television Book Publishing... members ...News Corporation Limited

  • Page 67
    ... Financial Report FOR THE YEAR ENDED 30 JUNE, 2003 (continued) ➤ NOTE 2 Business segment data (continued) Consolidated 2002 A$ million Cable Network Programming Direct Broadcast Satellite Magazines & Television Inserts Newspapers Filmed Note Entertainment Television Book Publishing Other...

  • Page 68
    ... Financial Report FOR THE YEAR ENDED 30 JUNE, 2003 (continued) ➤ NOTE 2 Business segment data (continued) Consolidated 2001 A$ million Cable Network Programming Direct Broadcast Satellite Magazines & Television Inserts Newspapers Filmed Note Entertainment Television Book Publishing Other...

  • Page 69
    ... ("Stream"), and the combined platform has been renamed SKY Italia, which is owned 80.1% by the Group and 19.9% by Telecom Italia. The results of SKY Italia have been included in the Group's Statement of Financial Performance from 30 April, 2003, the date of acquisition, and are presented in a new...

  • Page 70
    ...payment details of the above mentioned dividends refer to Directors' Report on page 53 of the Concise Report. On 13 August, 2003, the Directors of The News Corporation Limited recommended the payment on 15 October, 2003 of a final unfranked dividend of 1.5 cents per ordinary share and 3.75 cents per...

  • Page 71
    ... share of the profit (loss) after income tax of its associated entities consist principally of British Sky Broadcasting Group plc Stream, S.p.A (a) Sky Latin America Sky Brasil (formerly Net Sat Servicos Ltda) Innova, S.de R.L de C.V. (Mexico) Other Fox Sports Cable Networks FOXTEL ESPN Star Sports...

  • Page 72
    ...) (576) (426) (923) (1,274) 19 (1,255) 3,335 (4,609) 19 (1,255) (a) Primarily relates to the sale by Fox Entertainment Group ("FEG"), a subsidiary of the Group, of 50 million shares of its Class A Common Stock for net proceeds of approximately US$1.2 billion ($1.8 billion). Upon consummation of the...

  • Page 73
    ...million shares in Gemstar-TV Guide and recorded a charge to reflect the permanent impairment in carrying value of $11.1 billion. The charge was determined by reference to Gemstar-TV Guide's share price at 28 June, 2002 of US$5.39 ($9.56) per share. During fiscal 2003, Gemstar-TV Guide's market value...

  • Page 74
    ... in accordance with the Group's accounting policies, the Directors re-evaluated the recoverability of the costs of certain sports contracts, principally in the United States. Accordingly, the Group recorded a one-time Other expense of $1,861 million relating to National Football League ($753 million...

  • Page 75
    ...financial year, the Group changed its accounting policy with regards to, amongst other things, the treatment of marketing and development costs incurred in the production and distribution of films whereby marketing and certain development costs, previously capitalised and expensed over time, are now...

  • Page 76
    ... amount transferred (to) from reserves Retained profits at the end of the financial year Dividends on ordinary and preferred limited voting ordinary shares are paid out of the retained profits of the parent entity, The News Corporation Limited. The parent entity has retained profits as at 30 June...

  • Page 77
    ... "Concise Financial Reports"; and b) has been derived from and is consistent with the Full Financial Report for the financial year. This declaration is made in accordance with a resolution of Directors. K R Murdoch AC Director D F DeVoe Director 13 August, 2003 The News Corporation Limited 75

  • Page 78
    ... FOR THE YEAR ENDED 30 JUNE, 2003 To the members of The News Corporation Limited Matters relating to the Electronic Presentation of the Audited Concise Financial Report This audit report relates to the concise financial report of The News Corporation Limited ("the parent entity") for the year ended...

  • Page 79
    Shareholder Information AT 13 AUGUST, 2003 Corporate Ownership - Ordinary Shares Number of Ordinary Shareholders Voting rights On show of hands - one vote for each member On poll - one vote for each share held Distribution of shareholding 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001 and ...

  • Page 80
    ... Corporate Ownership - Preferred Limited Voting Ordinary Shares Number of Preferred Limited Voting Ordinary Shareholders 19,307 A holder of a preferred limited voting ordinary share ("preferred share") shall be entitled to vote at any general meeting of the members of The News Corporation Limited...

  • Page 81
    ...455,259 6,205,738 5,522,431 4,945,012 3,101,656,369 Percentage of Preferred Limited Voting Ordinary Shares held by twenty largest holders 96.01% Head Office 2 Holt Street Sydney NSW 2010 Australia Registered Office 121 King William Street Adelaide SA 5000 Australia The News Corporation Limited 79

  • Page 82
    ... Chairman Fox Filmed Entertainment Gary Ginsberg Executive Vice President, Investor Relations and Corporate Communications News Corporation Sandy Grushow Chairman Fox Television Entertainment Group John Hartigan Chief Executive News Limited David Hill Chairman and Chief Executive Officer Fox...

  • Page 83
    ... Limited The London Stock Exchange New York Stock Exchange The New Zealand Exchange Limited Share Registers Computershare Investor Services Pty Ltd Level 5, 115 Grenfell Street Adelaide, S.A. Australia 5000 Telephone 61 (8) 8236 2300 Requests for Annual Reports Australasia: 2 Holt Street Sydney...

  • Page 84
    News Corporation Annual Report 2003