Twenty-First Century Fox 2014 Annual Report Download - page 50

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RESULTS OF OPERATIONS
Results of Operations—Fiscal 2014 versus Fiscal 2013
The following table sets forth the Company’s operating results for fiscal 2014, as compared to fiscal 2013.
For the years ended June 30,
2014 2013 Change % Change
(in millions, except %)
Revenues:
Affiliate fees .......................................................................... $ 8,984 $ 7,678 $ 1,306 17 %
Subscription ........................................................................... 5,467 4,074 1,393 34 %
Advertising ............................................................................ 8,218 7,634 584 8 %
Content .................................................................................. 8,596 7,871 725 9 %
Other ...................................................................................... 602 418 184 44 %
Total revenues ............................................................................. 31,867 27,675 4,192 15 %
Operating expenses ..................................................................... (21,108) (17,496) (3,612 ) 21 %
Selling, general and administrative ............................................. (4,129) (4,007) (122 ) 3 %
Depreciation and amortization .................................................... (1,142) (797) (345 ) 43 %
Impairment charges .................................................................... - (35) 35 **
Equity earnings of affiliates ........................................................ 622 655 (33 ) (5)%
Interest expense, net .................................................................... (1,121) (1,063) (58 ) 5 %
Interest income ............................................................................ 26 57 (31 ) (54)%
Other, net .................................................................................... 174 3,747 (3,573 ) (95)%
Income from continuing operations before income
tax expense .............................................................................. 5,189 8,736 (3,547 ) (41)%
Income tax expense ..................................................................... (1,272) (1,690) 418 (25)%
Income from continuing operations ........................................ 3,917 7,046 (3,129 )
(44)%
Income from discontinued operations, net of tax ........................ 729 277 452 **
N
et income .................................................................................. 4,646 7,323 (2,677 ) (37)%
Less: Net income attributable to noncontrolling interests ..... (132) (226) 94 (42)%
Net income attributable to Twenty-First Century
Fox stockholders .................................................................... $4,514
$7,097
$ (2,583 ) (36)%
** not meaningful
Overview – The Company’s revenues increased 15% for fiscal 2014, as compared to fiscal 2013, primarily
due to increases in subscription, affiliate fees, content and advertising revenues. The increase in subscription
revenues was primarily due to the effect of the consolidation of Sky Deutschland from January 2013. The increase in
affiliate fees for fiscal 2014 was principally attributable to higher average rates per subscriber across most cable
channels, including the conversion and related launch of new channels, and the acquisition of majority interests in
the YES Network, Fox Sports Asia (formerly ESPN Star Sports) and Eredivisie Media & Marketing CV (“EMM”)
(collectively the “Acquisitions”). Also contributing to the increase in affiliate fees for fiscal 2014 were higher
retransmission consent revenues. The increase in content revenues was primarily due to higher sales of television
and motion picture productions. The increase in advertising revenue for fiscal 2014 was principally attributable to
revenues arising from the broadcast of Super Bowl XLVIII in February 2014, growth at the Cable Network
Programming segment including the conversion and related launch of new channels, Fox Sports 1, STAR Sports
networks and FXX, and the Acquisitions. The strengthening of the U.S. dollar against local currencies (non-Euro)
resulted in a revenue decrease of approximately $285 million for fiscal 2014, as compared to fiscal 2013, partially
offset by the effect of the weakening of the U.S. dollar against the Euro of approximately $225 million.
Operating expenses increased 21% for fiscal 2014, as compared to fiscal 2013, primarily due to the increases
at the DBS, Cable Network Programming and Filmed Entertainment segments of approximately $1,490 million,
$1,070 million and $975 million, respectively. The operating expense increase at the DBS segment was primarily