Twenty-First Century Fox 2008 Annual Report Download - page 62

NEWSCORP
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Average revenue per subscriber (“ARPU”) for the fiscal year ended June 30, 2008 was approximately €44, which was consistent with the ARPU
for fiscal 2007. SKY Italia calculates ARPU by dividing total subscriber-related revenues for the period by the average subscribers for the period and
dividing that amount by the number of months in the period. Subscriber-related revenues are comprised of total subscription revenue,
pay-per-view revenue and equipment rental revenue for the period. Average subscribers are calculated for the respective periods by adding the
beginning and ending subscribers for the period and dividing by two.
Subscriber acquisition costs per subscriber (“SAC”) of approximately €260 in fiscal 2008 were consistent with that of fiscal 2007, as an
increase in upfront activation fees paid by subscribers was substantially offset by an increase in sales commissions during fiscal 2008. SAC is
calculated by dividing total subscriber acquisition costs for a period by the number of gross SKY Italia subscribers added during the
period. Subscriber acquisition costs include the cost of the commissions paid to retailers and other distributors, the cost of equipment sold directly
by SKY Italia to subscribers and the costs related to installation and acquisition advertising, net of any upfront activation fee. SKY Italia excludes
the value of equipment capitalized under SKY Italia’s equipment lease program, as well as payments and the value of returned equipment related
to disconnected lease program subscribers from subscriber acquisition costs.
For the fiscal year ended June 30, 2008, SKY Italia’s operating results improved by $198 million as compared to fiscal 2007. The increases were
primarily due to the revenue increases noted above, partially offset by an increase in operating expenses. The increase in operating expenses was
primarily due to higher fees paid for programming costs as a result of an increase in the number of subscribers, the addition of new channels, as
well as an increased number of movie titles. For the fiscal year ended June 30, 2008, the weakening of the U.S. dollar represented 13% of the total
improvement in operating results.
Magazines and Inserts (4% of the Company’s consolidated revenues in fiscal 2008 and 2007)
For the fiscal year ended June 30, 2008, revenues at the Magazines and Inserts segment increased $5 million as compared to fiscal 2007. The
increase in revenues primarily resulted from an increase in rates and volume of in-store marketing products, partially offset by reduced rates and
volume of free-standing insert products.
For the fiscal year ended June 30, 2008, Operating income increased $17 million, or 5%, as compared to fiscal 2007. The increase was primarily
due to the revenue increases noted above, as well as lower store commissions for in-store marketing products and lower production costs for free-
standing insert products.
Newspapers and Information Services (19% and 16% of the Company’s consolidated revenues in fiscal 2008 and 2007, respectively)
For the fiscal year ended June 30, 2008, revenues at the Newspapers and Information Services segment increased $1.8 billion, or 39%, as
compared to fiscal 2007, primarily due to the inclusion of Dow Jones beginning December 13, 2007 and revenue growth in Australia and the United
Kingdom. During fiscal 2008, the weakening of the U.S. dollar resulted in increases of approximately 7% in revenues as compared to fiscal 2007.
Operating income for the fiscal year ended June 30, 2008 increased $114 million, or 17%, as compared to fiscal 2007, primarily due to the revenue
growth noted above, partially offset by increased costs related to the printing presses upgrade in the United Kingdom, which was completed in
fiscal 2008. Dow Jones contributed $1.1 billion of revenue and $45 million of Operating income, including $47 million of Dow Jones related purchase
price adjustments, for the fiscal year ended June 30, 2008. During fiscal 2008, the weakening of the U.S. dollar resulted in increases of
approximately 12% in Operating income as compared to fiscal 2007.
For the fiscal year ended June 30, 2008, the Australian newspapers’ revenues increased 27% as compared to fiscal 2007, primarily due to
higher advertising revenues, incremental revenues from the acquisition of the Federal Publishing Company’s group of companies in April 2007 and
favorable foreign exchange movements. Operating income for the fiscal year ended June 30, 2008 increased 28% as compared to fiscal 2007,
primarily due to the revenue increases noted above which were partially offset by an increase in employee related costs.
For the fiscal year ended June 30, 2008, the UK newspapers’ revenues increased 5% as compared to fiscal 2007, primarily due to favorable
foreign exchange movements, as well as higher Internet revenues. Internet revenues increased primarily due to incremental revenues from
acquisitions made in fiscal 2007 and higher Internet advertising revenues. Operating income decreased for the fiscal year ended June 30, 2008 as
compared to fiscal 2007, primarily due to incremental accelerated depreciation of $45 million recorded for the printing presses and printing
facilities that were replaced earlier than originally anticipated.
Book Publishing (4% and 5% of the Company’s consolidated revenues in fiscal 2008 and 2007, respectively)
For the fiscal year ended June 30, 2008, revenues at Book Publishing segment increased $41 million, or 3%, from fiscal 2007, primarily due to
distribution revenues earned on the final release of the Harry Potter series book published by Scholastic and the addition of a new distribution
client during the fiscal year ended June 30, 2008. This increase was partially offset by lower revenue on Lemony Snicket’s Series of Unfortunate
Events titles. During the fiscal year ended June 30, 2008, HarperCollins had 165 titles on The New York Times Bestseller List with 14 titles reaching
the number one position.
Operating income for the fiscal year ended June 30, 2008 was relatively consistent with Operating income for the fiscal year ended June 30,
2007 as the revenue increases noted above were offset by increased distribution, royalty and printing costs.
Other (9% and 8% of the Company’s consolidated revenues in fiscal 2008 and 2007, respectively)
For the fiscal year ended June 30, 2008, revenues at the Other operating segment increased $702 million, or 31%, as compared to fiscal 2007,
primarily due to incremental revenues received from the search technology and services agreement with Google and increased advertising revenues
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