Twenty-First Century Fox 2014 Annual Report Download - page 48

Download and view the complete annual report

Please find page 48 of the 2014 Twenty-First Century Fox annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 168

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168

42
production, overhead and interest costs; and participations and talent residuals. Selling, general and administrative
expenses include salaries, employee benefits, rent and other routine overhead.
Direct Broadcast Satellite Television
The Direct Broadcast Satellite Television (“DBS”) segment derives revenues principally from subscriber fees.
The Company believes that the quality and variety of programming, audio and interactive programming including
personal video recorders, quality of picture including high definition channels, access to services, customer service
and price are the key elements for gaining and maintaining market share.
The DBS segment’s most significant operating expenses are those related to the acquisition of entertainment,
movie and sports programming and subscribers and the expenses related to operating the technical facilities.
Operating expenses related to sports programming are generally recognized over the course of the related sport
season, which may cause fluctuations in the operating results of this segment.
The continued challenging economic environment in Europe has contributed to a reduction in consumer
spending and has posed challenges for subscriber retention and growth. If this trend continues, it could have a
material effect on the operating results of the DBS segment.
Other, Corporate and Eliminations
The Other, Corporate and Eliminations segment consists primarily of corporate overhead and eliminations and
other businesses.
Other Business Developments
Cable Network Programming
In September 2013, the Company acquired the 22% interest it did not already own in Latin America Pay
Television (“LAPTV”), an entity that distributes premium and basic television channels in Latin America, for
approximately $75 million in cash. As a result of this transaction, the Company now owns 100% of LAPTV.
On February 28, 2014, the Company acquired an additional 31% interest in the Yankees Entertainment and
Sports Network (“YES Network”), a Regional Sports Network (“RSN”) primarily broadcasting pre-season and
regular season games for the New York Yankees and the Brooklyn Nets, for approximately $680 million, net of cash
acquired. As a result of this transaction, beginning March 2014, the Company consolidated the balance sheet and
operating results of the YES Network, including $1.7 billion in debt, as it owns an 80% controlling interest.
In the fourth quarter of fiscal 2014, the Company acquired the 13% interest it did not already own in Asianet
Communications Limited (“Asianet Communications”), an entity in India that broadcasts and operates the Malayalam
language channels Asianet and Asianet Plus and the Kannada language channel Suvarna television, for approximately
$50 million in cash. As a result of this transaction, the Company now owns 100% of Asianet Communications.
Television
In June 2014, the Company entered into an agreement to acquire two San Francisco-Bay area television
stations from Cox Media Group in exchange for the Company’s FOX affiliated stations WHBQ-TV FOX 13 and
WFXT-TV FOX 24, located in the Memphis and Boston markets, respectively. The transaction is subject to
regulatory approvals and other closing conditions.
Filmed Entertainment
In May 2014, the Company and certain funds managed by Apollo Global Management (“Apollo”) entered into a
preliminary agreement, subject to a number of conditions, to form a joint venture to which the Company will contribute
its interests in the Shine Group. The joint venture is expected to be comprised of the Shine Group, Endemol, and the
CORE Media Group and will be jointly owned and managed by the Company and the funds managed by Apollo. If the