Twenty-First Century Fox 2008 Annual Report Download - page 67

NEWSCORP
Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
SKY Italia’s ARPU for the fiscal year ended June 30, 2007 was approximately €44 and was consistent with that of fiscal 2006.
SAC of approximately €260 in fiscal 2007 was consistent with that of fiscal 2006, primarily due to an increase in commissions being offset by
lower average installation costs.
For the fiscal year ended June 30, 2007, Operating income at SKY Italia improved by $182 million as compared to fiscal 2006. The
improvement in fiscal 2007 was primarily due to the revenue increases noted above, partially offset by higher programming costs due to the
increased subscriber base, as well as higher sports rights amortization. During the fiscal year ended June 30, 2007, the weakening of the U.S. dollar
in relation to the Euro represented 7% of the total improvement in operating results.
Magazines and Inserts (4% of the Company’s consolidated revenues in fiscal 2007 and 2006)
For the fiscal year ended June 30, 2007, revenues at the Magazines and Inserts segment increased $29 million, or 3%, as compared to fiscal
2006. The increase in revenues primarily resulted from an increase in volume of in-store marketing and free-standing insert products, partially
offset by lower rates for these products.
Operating income for the fiscal year ended June 30, 2007 increased $28 million, or 9%, as compared to fiscal 2006. The increase was primarily
due to the revenue increases noted above, as well as lower printing costs.
Newspapers and Information Services (16% of the Company’s consolidated revenues in fiscal 2007 and 2006)
For the fiscal year ended June 30, 2007, revenues at the Newspapers and Information Services segment increased $391 million, or 10%, as
compared to fiscal 2006. Operating income increased $136 million, or 26%, for the fiscal year ended June 30, 2007 as compared to fiscal 2006. The
weakening of the U.S. dollar resulted in approximately 7% of the increases in both revenues and Operating income for the fiscal year ended
June 30, 2007 as compared to fiscal 2006.
For the fiscal year ended June 30, 2007, U.K. newspapers’ revenues increased 9% as compared to fiscal 2006, primarily due to favorable
foreign exchange movements and higher Internet revenues which were partially offset by lower circulation and advertising revenues. Operating
income increased for the fiscal year ended June 30, 2007, as compared to fiscal 2006, primarily due to a higher redundancy provision in fiscal
2006. During the fiscal year ended June 30, 2006, the Company recorded a redundancy provision of approximately $109 million as compared with a
$24 million provision recorded during fiscal 2007. The increase in Operating income was also a result of lower production costs due to decreased
circulation and lower promotional costs, partially offset by higher operating costs associated with the launch of a free London newspaper,
increased investment in Internet businesses and higher newsprint costs.
For the fiscal year ended June 30, 2007, Australian newspapers’ revenues increased 10% as compared to fiscal 2006, primarily due to favorable
foreign exchange movements, an increase in advertising revenues and incremental revenue from the acquisition of the Federal Publishing
Company’s group of companies in April 2007. Operating income increased 3% as compared to fiscal 2006, primarily due to the impact of favorable
exchange rate movements, partially offset by higher employee and newsprint costs.
Book Publishing (5% of the Company’s consolidated revenues in fiscal 2007 and 2006)
For the fiscal year ended June 30, 2007, revenues at the Book Publishing segment increased by $35 million, or 3%, from fiscal 2006, primarily
due to strong sales on key titles, including The Dangerous Book For Boys by Conn and Hal Iggulden, The Reagan Diaries by Ronald Reagan, The
Children of Hurin by J.R.R. Tolkien and The Measure of a Man by Sidney Poitier, partially offset by lower revenues from the successful children’s
title The Chronicles of Narnia by C.S. Lewis in the corresponding period of fiscal 2006. During the fiscal year ended June 30, 2007, HarperCollins had
128 titles on The New York Times Bestseller lists with 16 titles reaching the number one position.
Operating income for the fiscal year ended June 30, 2007 decreased $8 million, or 5%, as compared to fiscal 2006. The decrease was primarily
due to lower sales of the highly profitable The Chronicles of Narnia which were included in fiscal 2006.
Other (8% and 6% of the Company’s consolidated revenues in fiscal 2007 and 2006, respectively)
For the fiscal year ended June 30, 2007, revenues at the Other operating segment increased $889 million, or 64%, as compared to fiscal
2006. The increase was primarily driven by an increase in the number of active users and higher advertising revenues from FIM’s Internet sites. The
revenue increase was also driven by incremental revenues from acquisitions by FIM in October 2005 and from the Jamba joint venture which was
formed in January 2007. Also contributing to the revenue increase was Global Cricket Corporation’s sale of the broadcast and sponsorship rights of
the ICC Cricket World Cup with no comparable event in fiscal 2006.
Operating results for the fiscal year ended June 30, 2007, decreased $43 million as compared to fiscal 2006, primarily due to a loss on the ICC
Cricket World Cup which can be attributable to a shortfall in advertising and sponsorship revenue. This underperformance was due to the early
elimination of two of the more popular teams from the competition, which resulted in matches among less well-known teams, significantly
reducing the Company’s advertising and sponsorship revenues. Also contributing to the decrease was higher employee costs and higher costs
related to Internet initiatives. The decrease in operating results was partially offset by Operating income improvements of $83 million at FIM,
primarily due to the revenue increases noted above.
66 NEWSCORP 2008 Annual Report