RNS Number:6330O
News Corporation Ld
13 August 2003
NEWS CORPORATION REPORTS FOURTH QUARTER OPERATING INCOME OF $570 MILLION, A 26%
INCREASE, ON REVENUE GROWTH OF 20%
FULL YEAR OPERATING INCOME INCREASES 36%
TO A RECORD $2.5 BILLION ON REVENUE GROWTH OF 15%
FOURTH QUARTER NET PROFIT BEFORE OTHER ITEMS INCREASES 181% TO $320 MILLION;
FULL YEAR NET PROFIT BEFORE OTHER ITEMS INCREASES 73% TO $1.1 BILLION
NET PROFIT WAS $370 MILLION FOR THE FOURTH QUARTER AND $1.0 BILLION FOR THE FULL YEAR
QUARTER HIGHLIGHTS
* Television segment operating income up 63% as ratings growth drives
advertising revenues at the broadcast network, television stations and STAR.
* Operating income at Cable Network Programming nearly triples on strong
ratings and advertising growth at Fox News Channel and Regional Sports.
* Continued success of theatrical releases and robust home entertainment
sales of film and television titles increase Filmed Entertainment operating
income by 13%.
* Print businesses report higher earnings contributions in aggregate on
strength of free-standing inserts and advertising demand in Australia.
* BSkyB's operating profit more than doubles on double-digit revenue
growth, primarily from a 12% increase in the DTH subscriber base, now exceeding
6.8 million.
FULL YEAR HIGHLIGHTS
* Record profits from Filmed Entertainment, Cable Network Programming
and Book Publishing segments as well as STAR and Television Station businesses.
* Stronger year-end balance sheet: Cash and Cash on Deposit increased
$1.4 billion to $4.9 billion; Debt reduced $460 million to $8.2 billion.
* Completed several strategic acquisitions including the acquisition of
Italian pay-TV operator Telepiu, which the Company combined with Stream to form
the sole direct to home pay-TV platform in Italy; and the acquisition of
television station WPWR-TV in Chicago, giving the Company duopolies in the top
three television markets in the country.
* Announced agreement to acquire 34% of Hughes Electronics, including
its leading DTH provider DirecTV, for approximately $6.6 billion in cash and
stock.
NEW YORK, NY, August 13, 2003 - The News Corporation Limited (NYSE: NWS, NWS.A)
today reported fourth quarter consolidated revenues of $4.6 billion, a 20%
increase over the $3.8 billion reported in the prior year, and full year
revenues of $17.5 billion, an increase of 15% over the $15.2 billion reported a
year ago.
Consolidated operating income for the fourth quarter was $570 million, up 26%
over the $452 million reported a year ago. The year-on-year quarterly growth
was driven primarily by double-digit increases in the Television, Cable Network
Programming and Filmed Entertainment segments. For the full year, operating
income was a record $2.5 billion, an increase of 36% over the $1.9 billion
reported in fiscal 2002. The Company achieved this record high on the strength
of double-digit increases reported at the majority of its operating segments.
Fourth quarter and full year gains were partially reduced by the inclusion of
$68 million of losses from the consolidation of SKY Italia beginning May 1,
2003.
Net profit for the fourth quarter was $370 million, a $2.1 billion increase over
the $1.7 billion net loss reported a year ago. For the full year net profit was
$1.0 billion, an increase of $7.3 billion over the $6.3 billion net loss in
fiscal 2002. Prior-year results include a $6.9 billion write-down of the
Company's carrying value for certain investments, with $1.9 billion in last
year's fourth quarter.
Commenting on the results, Chairman and Chief Executive Rupert Murdoch said:
"The dramatic growth we achieved during our fourth quarter was a fitting
conclusion to a record-breaking year: record profits at our film, television,
cable and book publishing segments; record ratings and market share growth at
our broadcast and cable properties; and, for the first time, full-year operating
profits at our Asian television platform, STAR. It was a year in which we made
enormous progress, not only financially but strategically - particularly with
the completion of our deal to create a unique Italian pay-TV platform, SKY
Italia, and with our pending acquisition of a 34-percent interest in Hughes
Electronics and its leading pay-TV platform, DirecTV.
"This past year was not without its challenges, including a cover price war in
the UK newspaper market that, while now ended, lasted longer than expected as
well as the costs associated with covering the war in Iraq. Our strong results
in the face of such obstacles are clear testimony to both the fundamental
strength of our Company and the resilience of our underlying businesses. At the
same time, we took prompt steps to improve businesses we felt were not
delivering on their full potential. We addressed head-on the ratings weakness at
the FOX network during the first half of the year, and as a result FOX finished
the broadcast season with two straight sweeps victories, vastly improved
revenues and significantly higher earnings.
"Overall, we are extremely pleased with the performance of all our businesses
during the past year, and we are determined to build on our success in fiscal
2004. Certainly the indications are promising: the exceptionally strong
broadcast and cable upfronts; the growing popularity of our television and print
products; and the continued health of the advertising market. All of these
factors, as well as the momentum we have achieved across our key businesses,
give us confidence that fiscal 2004 will be another year of operational
excellence and healthy profitability."
MANagement Review of Performance
The Statement of Financial Performance, Statement of Financial Position,
Statement of Cash Flows and Supplemental Financial Data for the three and twelve
months ended June 30th are attached. The following commentary is made in
respect to those statements, including an analysis of certain information
contained therein.
Net Profit (Loss) Attributable to Members of the Parent Entity
The reported net profit (loss) attributable to members of the parent entity
consisted of the following items:
3 Months Ended 12 Months Ended
June 30, June 30,
2003 2002 2003 2002
US $ Millions (except per ADR amounts)
Revenue $ 4,592 $ 3,829 $ 17,474 $ 15,195
Operating income 570 452 2,532 1,855
Associated entities before other items 68 (97) (93) (165)
Interest expense, net (111) (130) (461) (524)
Dividends on exchangeable securities (17) (12) (55) (49)
Profit before income tax expense, outside 510 213 1,923 1,117
equity interest and other items
Income tax expense (132) (64) (577) (335)
Outside equity interest (58) (35) (246) (146)
Net profit before other items 320 114 1,100 636
Other items, net of tax and outside equity
interest:
Group (72) (1,843) (95) (6,315)
Associated entities 122 (13) 41 (586)
Total other items 50 (1,856) (54) (6,901)
Net profit (loss) attributable to members of $ 370 $ (1,742) $ 1,046 $ (6,265)
the parent entity
Earnings per ADR (diluted) on net profit $ 0.24 $ 0.08 $ 0.83 $ 0.49
before other items, net
Weighted average number of ADRs outstanding 1,292 1,287 1,286 1,245
in millions (diluted)
The following commentary discusses the major components of these results.
Consolidated Operating Income 3 Months Ended 12 Months Ended
June 30, June 30,
2003 2002 2003 2002
US $ Millions US $ Millions
Filmed Entertainment $ 85 $ 75 $ 641 $ 473
Television 291 179 851 458
Cable Network Programming 96 34 430 199
Direct Broadcast Satellite Television* (68) - (68) -
Magazines & Inserts 70 64 256 235
Newspapers 126 117 400 430
Book Publishing 4 13 133 118
Other (34) (30) (111) (58)
Consolidated Operating Income $ 570 $ 452 $ 2,532 $ 1,855
* New segment reflecting the results of SKY Italia from May 1,
2003
Fourth quarter net earnings from associated entities before other items was $68
million versus losses of $97 million in the same period a year ago. For the
full year, losses from the associated entities before other items was $93
million compared with losses of $165 million in fiscal 2002. The year over year
improvements in both the fourth quarter and full year were primarily due to
increased contributions from BSkyB and National Geographic Channel (US) as well
as the favorable impact of foreign currency fluctuations at the Latin America
DTH platforms. The inclusion of Stream's losses from April 1, 2002 through
April 30, 2003 also affected the fourth quarter and full year comparisons. A
detailed discussion of the components of associated entities' losses is provided
later in the release.
Fourth quarter net profit before other items increased to $320 million ($0.24
per ADR) versus $114 million ($0.08 per ADR) in the prior year. Full year net
profit before other items grew to $1,100 million ($0.83 per ADR) compared with
$636 million ($0.49 per ADR) a year ago. Fourth quarter and full year increases
were primarily due to higher consolidated income and improved associated
entities results.
The Company reported income from other items in the quarter of $50 million
versus a loss of $1.86 billion a year ago which primarily included a write-down
of the Company's carrying value of its Gemstar investment. Current year fourth
quarter other items primarily reflect the Company's share of gains from asset
sales by Independent Newspapers Limited partially offset by the write-down of
certain investments and the Company's share of transponder obligation charges
from Latin American businesses. For the full year, the Company reported a loss
from other items of $54 million compared with $6.90 billion in fiscal 2002.
Prior year losses primarily included write-downs of the Company's carrying value
of its Gemstar, KirchMedia and Stream investments, as well as a write-down of
the Company's national sports contracts, partially offset by a gain from the
sale of a 49.5% interest in Fox Family Worldwide.
REVIEW OF OPERATING RESULTS
FILMED ENTERTAINMENT
The Filmed Entertainment segment reported fourth quarter operating income of $85
million versus $75 million in the same period a year ago. The 13% increase
reflects the record-breaking worldwide theatrical release of X2: X-Men United
and the continued worldwide home entertainment and pay-TV success of Ice Age and
catalog titles. Additionally, several domestic home entertainment releases,
including Drumline and Transporter, contributed to the quarter's growth. These
contributions were partially offset by the marketing costs for several
successful spring and summer theatrical releases, including Phone Booth, 28 Days
Later, and League of Extraordinary Gentlemen. The fourth quarter a year ago
included the worldwide theatrical performance of Ice Age and the domestic home
entertainment release of Behind Enemy Lines.
For the year, Filmed Entertainment reported record operating profit of $641
million, which was $168 million higher than a year ago. The 36% increase was
primarily driven by the worldwide home entertainment performances of Ice Age,
Shallow Hal and Behind Enemy Lines combined with a string of successful
theatrical releases during the year, including X2: X-Men United, Daredevil, One
Hour Photo, Brown Sugar, Drumline, Just Married and Phone Booth.
Twentieth Century Fox Television (TCFTV) also contributed to the Filmed
Entertainment fourth quarter and full year earnings increases, primarily
reflecting higher syndication profits from King of the Hill, The Simpsons and
X-Files as well as continued momentum in home entertainment sales, most notably
from The Simpsons, Buffy the Vampire Slayer, 24 and Dark Angel. For the
upcoming broadcast season TCFTV will once again be a leading supplier of
prime-time series with 24 shows scheduled across five broadcast networks,
including twelve new series.
TELEVISION
The Television segment reported fourth quarter operating income of $291 million,
an increase of $112 million versus the same period a year ago, and full year
operating income of $851 million, a $393 million improvement over fiscal 2002.
These gains primarily reflect the sustained improvement at the FOX Broadcasting
Company in addition to higher contributions from the Fox Television Stations and
STAR.
At the FOX Broadcasting Company (FBC), fourth quarter operating income improved
by $91 million compared to a year ago, largely the result of 25% ratings growth
in primetime compared with the same period a year ago. The substantial ratings
improvement was fueled by the success of American Idol as well as 24, The
Simpsons, That 70's Show and Bernie Mac and resulted in FBC's second consecutive
sweeps victory among Adults 18-49. On a full year basis, operating income
improved by $187 million over fiscal 2002 as the network posted a 16% increase
in primetime ratings combined with higher pricing.
Fox Television Stations (FTS) fourth quarter operating income grew 9% over the
fourth quarter a year ago reflecting ratings strength at the FOX
network-affiliated stations in conjunction with stable operating cost trends.
Ratings growth was across most dayparts, including continued momentum in
primetime from the ratings improvement at the FOX network. For the full year,
strong advertising market growth in conjunction with a 1.4 percentage point
increase in market share drove FTS revenue up 13% and operating income up 24%
versus fiscal 2002. Current year earnings growth was also fueled by margin
expansion primarily from cost reductions achieved through FTS' integration of
its duopoly stations.
STAR, bolstered by continued revenue growth and ongoing efficiency gains,
improved its fourth quarter operating income and, for the first time in the
Company's ownership of this business, achieved profitability for the full year.
This was achieved despite absorbing start-up losses from the Xing Kong Wei Shi
channel in mainland China and from regional advertising declines due to the SARS
outbreak. STAR's revenue increase was the result of both subscription and
advertising revenue growth.
CABLE NETWORK PROGRAMMING
Cable Network Programming, comprising the Fox News Channel, Fox Cable Networks
(including the Regional Sports Networks (RSNs), the FX Channel (FX) and SPEED
Channel), the Los Angeles Dodgers and other cable-related businesses, reported
fourth quarter operating income of $96 million, an improvement of $62 million
over last year's results, and record full year operating income of $430 million,
more than double fiscal 2002. This success reflects strong revenue growth
across all of the Company's primary cable television channels, slightly offset
by the impact of war coverage at Fox News and higher programming and marketing
costs at FX. Year-ago results included a $30 million charge related to the
bankruptcy of Adelphia Communications.
The Fox News Channel (FNC) reported operating income growth of 93% in the fourth
quarter and 147% for the full year as strong revenue growth, primarily from
increased ad sales, more than offset pre-emptions and higher costs associated
with continuing war coverage. Viewership in the fourth quarter increased 92% in
primetime and 108% on a 24-hour basis, while for the year primetime was up 47%
and total day increased 53% compared to a year ago. Over the past year FNC
achieved the highest ratings growth among all cable news channels, increasing
its lead over the competition by a greater than two to one margin and
solidifying its #1 position in cable news.
Fox Cable Networks' operating profit increased 126% for the quarter and 71% for
the full year, primarily driven by higher revenues at both the RSNs and FX. The
revenue growth at the RSNs was largely due to an increase in DTH subscribers and
affiliate rates and higher advertising sales versus a year ago. The growth at
FX was the result of increases in both advertising and affiliate revenues fueled
by higher advertising pricing and increased subscribers over the past year.
During the quarter FX's revenue growth was offset by higher marketing costs for
original programming, including several new series, most notably Nip/Tuck, which
premiered to the highest ratings for any new basic cable series this season, and
the FX original movie 44 Minutes, which premiered to the highest ratings in the
network's history.
DIRECT BROADCAST SATELLITE TELEVISION
On April 30th, 2003 the Company, along with Telecom Italia, completed the
previously announced acquisition of the Italian pay-TV business Telepiu from
Vivendi Universal and combined it with Stream. News Corporation now owns 80.1%
of the combined entity, SKY Italia, whose results comprise this new segment.
For the two-month period ending June 30th, 2003 SKY Italia reported an operating
loss of $68 million on revenues of $220 million, reflecting initial losses from
the integration of the two platforms. The integration process is focusing on
the subscriber management systems, broadcast operations and programming content
to support the new unified platform launched on July 31, 2003.
MAGAZINES AND INSERTS
The Magazines and Inserts segment reported fourth quarter operating income of
$70 million, a 9% increase versus a year ago, and full year operating income of
$256 million, a 9% increase over fiscal 2002. The improvement was primarily
driven by higher contributions from the Free Standing Inserts division,
principally from higher volume as a result of increased market share, partially
offset by lower contributions from the InStore division.
NEWSPAPERS
The Newspaper segment reported fourth quarter operating income of $126 million,
an 8% increase versus the same period a year ago, driven primarily by display
advertising growth in Australia. For the full year, operating income of $400
million was $30 million below prior year as advertising growth, particularly in
Australia, was more than offset by the impact of the discounted pricing
initiative in place for the majority of the year at The Sun in the U.K. The
pricing war, during which The Sun expanded its circulation by 3% and its
competitive lead by 7% compared to a year ago, was concluded during the fourth
quarter.
The U.K. newspaper group reported a 10% operating income decline in local
currency terms for the fourth quarter versus a year ago. Circulation revenue
grew across all titles, including The Sun, as the pricing war abated late in the
quarter. On a full year basis, operating income in local currency terms
declined 28%, as advertising revenue gains at The Sun and The News of the World
from higher classified and display volumes were more than offset by circulation
revenue declines, primarily from The Sun's discounted pricing to match its
competition.
The Australian newspaper group reported a 4% increase in fourth quarter
operating income in local currency terms, driven by a 6% increase in advertising
revenue over a year ago. Advertising growth was primarily fueled by strength in
display advertising with continued growth in the retail and real estate
categories. The revenue growth was partially offset during the quarter by
circulation-driven marketing initiatives and the launch of new editorial
sections in several mastheads. For the full year, the growth in display
advertising led to advertising growth of 6%, which combined with a 2% increase
in circulation revenue, resulted in a 10% increase in full year operating income
in local currency terms.
In the United States, The New York Post continued to grow its circulation at a
pace unmatched by any other major American newspaper. Now the eighth-largest
daily newspaper in the country, the Post is fast closing the gap with its New
York competitor.
BOOK PUBLISHING
HarperCollins reported operating income of $4 million during the quarter versus
$13 million in the same period a year ago. The prior year included strong sales
of higher margin backlist titles as well as several highly successful books
connected to major film releases, while the current year reflected higher
provisions on certain frontlist titles and costs associated with the bankruptcy
of a major wholesaler in the United States. During the quarter, HarperCollins
had 47 books on The New York Times bestseller lists including 5 books that
reached the number one spot. For the full year, the segment reported record
operating profits of $133 million versus $118 million in fiscal 2002. These
results were driven by solid performances across all divisions worldwide
highlighted by blockbuster sales of Michael Crichton's Prey, the ongoing
popularity of Lemony Snicket's A Series of Unfortunate Events and the breakout
success of Zondervan's The Purpose Driven Life by Rick Warren. During the
fiscal year, HarperCollins had 111 books on The New York Times bestseller lists
including 13 books that reached the number one spot.
OTHER MATTERS
On April 9th, the Company and Fox Entertainment Group, Inc. (FEG), an
80.6%-owned News Corporation subsidiary, announced a definitive agreement to
acquire 34% of Hughes Electronics for approximately $6.6 billion in cash and
stock. The closing of this transaction is subject to a number of conditions,
including approval by General Motors shareholders, a favorable ruling from the
Internal Revenue Service and regulatory clearance. At closing, News
Corporation's ownership interest will be transferred to FEG, in exchange for
$4.5 billion in promissory notes and approximately 74.2 million shares in FEG,
increasing News Corporation's ownership interest in FEG to approximately 82%.
A final unfranked dividend of A$0.06 per Ordinary ADR and an unfranked dividend
of A$0.15 per Preferred Limited Voting Ordinary ADR has been declared and is
payable on October 22, 2003. The Company's Dividend Reinvestment Plan ("Plan")
remains in operation and a discount of 10% will apply in determining the
allotment price calculated in accordance with the Plan rules. The record date
for determining dividend entitlements and Plan participation is September 11,
2003. The ex-dividend date will be September 8, 2003.
ANNUAL GENERAL MEETING
The annual general meeting will be held in Adelaide, Australia on October 15,
2003 at the Hyatt Regency, Adelaide. Notices of meeting and annual reports will
be mailed to shareholders on or around September 12, 2003.
REVIEW OF ASSOCIATED ENTITIES RESULTS
Fourth quarter net earnings from associated entities before other items was $68
million versus losses of $97 million in the same period a year ago. For the
full year, losses from the associated entities before other items was $93
million compared with losses of $165 million in fiscal 2002. The year over year
improvements in both the fourth quarter and full year were primarily due to
increased contributions at BSkyB and National Geographic Channel (US) as well as
the favorable impact of foreign currency fluctuations at the Latin America DTH
platforms. The inclusion of Stream's losses from April 1, 2002 through April
30, 2003 also affected the fourth quarter and full year comparisons.
The Company's share of associated entities' earnings (losses) is as follows:
3 Months Ended 12 Months Ended
June 30, June 30,
% Owned 2003 2002* 2003 2002*
US $ Millions US $ Millions
Platforms:
BSkyB 35.4% (a) $ 31 $ - $ 77 $ (27)
FOXTEL - Australia 25.0% (3) (2) (9) (8)
Sky Latin America:
Sky Brasil 49.3% (b) 23 (42) (33) (63)
Innova - Mexico 30.0% 5 (28) (22) (48)
Other Various (5) (10) (24) (41)
Stream 50.0% (c) (22) (35) (172) (35)
Channels:
Fox Sports Cable Networks Various 17 18 25 17
STAR Associates:
ESPN STAR Sports 50.0% - (1) 2 (5)
Other STAR Various (d) (5) (3) (12) (8)
Other Associates Various (e) 27 6 75 53
Total associated entities' $ 68 $ (97) $ (93) $ (165)
earnings (losses) before other
items
Other items 122 (13) 41 (586)
Total associated entities' $ 190 $ (110) $ (52) $ (751)
earnings (losses)
Further details on the associated entities follow.
(a) The Company's investment basis in BSkyB was negative from December 31, 2001
through November 11, 2002. Accordingly, the Company's share of BSkyB's results
was not recognized during this period. For the twelve months ended June 30,
2002, the Company's share of BSkyB was 36.2%.
(b) For the 12 months ended June 30, 2002, the Company's share of Sky Brasil
(formerly NetSat) was 36%.
(c) The Company's share of Stream's losses was included as part of associated
entities from April 1, 2002 through April 30, 2003, when it was merged with
Telepiu to form the consolidated entity SKY Italia. The results of SKY Italia
comprise the Direct Broadcast Satellite Television segment.
(d) Primarily comprising Phoenix Satellite Television, Taiwan Cable Systems,
Hathway Cable and Digiwave.
(e) Primarily comprising Gemstar-TV Guide International, Independent Newspapers
Limited, Queensland Press, The National Geographic Channels, Fox Family
Worldwide (until it was sold in October 2001), and Fox Sports International
(until the remaining interest was purchased and consolidated in December 2001).
*Certain prior year amounts have been reclassified to conform to the current
fiscal year presentation.
3 Months Ended 12 Months Ended
BSkyB (in STG) - United Kingdom
June 30, June 30,
2003 2002 2003 2002
Millions (except Millions (except
subscribers) subscribers)
Revenues # 856 # 748 # 3,186 # 2,776
Operating profit before exceptional items 88 33 249 73
Net income (loss) before exceptional items # 28 # (14) # 79 # (268)
AGAAP adjustment (in US$) (1) 16 16 64 129
News' 35/36% share (in US$) $ 31 $ 9 $ 108 $ (11)
Investment basis adjustment* - (9) (31) (16)
News' reportable share (in US$) $ 31 $ - $ 77 $ (27)
Net Debt (including capitalized leases) # 1,105 # 1,528
Ending Subscribers 10,716,000 10,192,000
DTH Subscribers 6,845,000 6,101,000
BSkyB's quarterly revenues increased 14% largely due to DTH subscriber growth,
an increase in average revenue per subscriber and improved interactive and
advertising revenues. Operating profit before exceptional items more than
doubled due to increased revenues, partially offset by higher programming
expenses from increased sports rights costs, mainly soccer and cricket, as well
as higher costs due to growth in new product installations.
*The Company's investment basis in BSkyB was negative from December 31, 2001
through November 11, 2002. Accordingly, the Company's share of BSkyB's results
was not recognized during this period.
3 Months Ended 12 Months Ended
FOXTEL (in A$) - Australia
June 30, June 30,
2003 2002 2003 2002
Millions (except Millions (except
subscribers) subscribers)
Revenues A$ 181 A$ 140 A$ 649 A$ 527
Operating loss (26) (22) (92) (88)
Net loss A$ (18) A$ (16) A$ (61) A$ (62)
News' reportable 25% share (in US$) $ (3) $ (2) $ (9) $ (8)
Ending Subscribers (including Optus) 1,058,000 798,000
FOXTEL's revenues for the quarter increased 29% principally due to the inclusion
of Optus wholesale subscribers as of December 1, 2002, an increase of 14% in
satellite subscribers compared to a year ago and higher average revenue per
subscriber. Operating loss for the quarter increased A$4 million against the
prior year as the increased subscriber revenues were more than offset by the
inclusion of Optus license fee costs and depreciation expense.
Sky Brasil (in US$) 3 Months Ended 12 Months Ended
June 30, June 30,
2003 2002 2003 2002
Millions (except Millions (except
subscribers) subscribers)
Revenues (in local currency) R$ 155 R$ 118 R$ 563 R$ 482
Revenues $ 52 $ 47 $ 171 $ 193
Operating income (loss) 2 (11) (11) (27)
Net income (loss) $ 48 $ (116) $ (86) $ (175)
News' reportable 49.3%/36% share (in $ 23 $ (42) $ (33) $ (63)
US$)
Net Debt (excluding capitalized leases) $ 211 $ 216
Ending Subscribers 759,000 706,000
Sky Brasil's revenues in the quarter grew 31% in local currency terms compared
to the prior year quarter, principally due to a higher subscriber base and
increased average revenue per subscriber. Operating income growth for the
quarter also reflects the impact of lower set-top box subsidy and marketing
costs, partly offset by increased programming costs, mainly relating to the
Brazilian Soccer Championships. The increase in net income principally reflects
the favorable impact of foreign currency fluctuations due to the strengthening
of the Brazilian Real on U.S. dollar denominated liabilities during the quarter.
Innova (in US$) - Mexico 3 Months Ended 12 Months Ended
June 30, June 30,
2003 2002 2003 2002
Millions (except Millions (except
subscribers) subscribers)
Revenues (in local currency) Ps 926 Ps 835 Ps 3,423 Ps 3,192
Revenues $ 88 $ 88 $ 331 $ 344
Operating income (loss) 12 1 33 (27)
Net income (loss) $ 17 $ (93) $ (73) $ (161)
News' reportable 30% share (in US$) $ 5 $ (28) $ (22) $ (48)
Net Debt (excluding capitalized leases) $ 334 $ 347
Ending Subscribers 809,000 723,000
Innova's revenues, which grew 11% in local currency terms in the quarter due to
an increase in the subscriber base and higher revenue from pay-per-view events.
Operating income growth reflects lower depreciation and SG&A expenses. The
increase in net income principally reflects the favorable impact of foreign
currency fluctuations due to the strengthening of the Mexican Peso on U.S.
dollar denominated liabilities during the quarter.
Fox Sports Cable 3 Months Ended 12 Months Ended
Networks* (in US$) June 30, June 30,
2003 2002 2003 2002
Millions (except Millions (except
subscribers) subscribers)
Net income (loss) $ 17 $ 19 $ 25 $ (16)
AGAAP Adjustments (1) - (1) - 33
News' reportable share $ 17 $ 18 $ 25 $ 17
Ending Subscribers 45,258,000 43,889,000
The decrease in net income for the quarter primarily reflects the decline in the
results at Madison Square Garden, partly offset by the effect of cost savings at
the Metro Channels and improved results at National Sports Partners.
*Various associated interests ranging from 20 percent to 50 percent, primarily comprising Regional Programming
Partners (including Madison Square Garden), Sunshine Network (until January 2002), Fox Sports Bay Area, Fox Sports
Chicago, National Sports Partners and National Advertising Partners.
ESPN STAR Sports (in US$) - Asia 3 Months Ended 12 Months Ended
June 30, June 30,
2003 2002 2003 2002
Millions Millions
Revenues $ 39 $ 43 $ 149 $ 135
Operating income (loss) 3 (2) 10 (7)
Net income (loss) $ 1 $ (3) $ 4 $ (10)
News' reportable 50% share $ - $ (1) $ 2 $ (5)
Operating income improved $5 million principally due to lower programming and
production costs for the West Indies cricket events compared to the prior year,
partially offset by lower advertising revenues.
FOREIGN EXCHANGE RATES
Average foreign exchange rates used in the year-to-date profit results are as
follows:
12 Months Ended
June 30,
2003 2002
Australian Dollar/U.S Dollar 0.58 0.52
U.K. Pounds Sterling/U.S. Dollar 1.59 1.44
Euro/U.S. Dollar 1.16 0.89
1 Principally reflects adjustments for reporting under Australian Generally
Accepted Accounting Principles ("AGAAP") relating to identifiable intangible
amortization.
To receive a copy of this press release through the Internet, access News Corp's
corporate Web site located at http://www.newscorp.com
Audio from News Corp's conference call with analysts on the fourth quarter and
full year results can be heard live on the Internet at 8:30 a.m. Eastern
Daylight Time today. To listen to the call, visit http://www.newscorp.com
Cautionary Statement Concerning Forward-Looking Statements
This document contains certain "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements are
based on management's views and assumptions regarding future events and business
performance as of the time the statements are made. Actual results may differ
materially from these expectations due to changes in global economic, business,
competitive market and regulatory factors. More detailed information about
these and other factors that could affect future results is contained in our
filings with the Securities and Exchange Commission. The "forward-looking
statements" included in this document are made only as of the date of this
document and we do not have any obligation to publicly update any "
forward-looking statements" to reflect subsequent events or circumstances,
except as required by law.
CONTACTS:
Reed Nolte, Investor Relations Andrew Butcher, Press Inquiries
212-852-7092 212-852-7070
STATEMENT OF FINANCIAL PERFORMANCE 3 Months Ended 12 Months Ended
Note June 30, June 30,
2003 2002 2003 2002
US $ Millions (except per ADR amounts)
Sales revenue 1 $ 4,592 $ 3,829 $ 17,474 $ 15,195
Operating expenses 4,022 3,377 14,942 13,340
Operating income 1 570 452 2,532 1,855
Net profit (loss) from associated 190 (110) (52) (751)
entities
Borrowing costs (149) (184) (583) (676)
Interest income 38 54 122 152
Net borrowing costs (111) (130) (461) (524)
Dividend on exchangeable securities (17) (12) (55) (49)
Other items before income tax, net (165) (1,892) (222) (6,271)
Profit (loss) from ordinary activities 467 (1,692) 1,742 (5,740)
before income tax
Income tax expense on:
Ordinary activities before other items (132) (64) (577) (335)
Other items 91 44 125 (8)
Net income tax expense (41) (20) (452) (343)
Net profit (loss) from ordinary 426 (1,712) 1,290 (6,083)
activities after tax
Net profit attributable to outside equity (56) (30) (244) (182)
interests
Net Profit (Loss) Attributable to Members $ 370 $ (1,742) $ 1,046 $ (6,265)
of the Parent Entity
Net exchange gains recognized directly in 749 513 1,001 565
equity
Other items recognized directly in equity - - 86 (140)
Total change in equity other than those $ 1,119 $ (1,229) $ 2,133 $ (5,840)
resulting from transactions with owners
as owners
Diluted earnings per ADR on net profit
(loss) attributable to members of the
parent entity
Ordinary ADRs $ 0.25 $ (1.26) $ 0.71 $ (4.55)
Preferred limited voting ordinary ADRs $ 0.30 $ (1.51) $ 0.85 $ (5.46)
Ordinary and preferred limited voting $ 0.28 $ (1.40) $ 0.79 $ (5.09)
ordinary ADRs
STATEMENT OF FINANCIAL POSITION June 30, June 30,
2003 2002
ASSETS US $ Millions
Current Assets
Cash $ 4,477 $ 3,574
Receivables 3,784 3,276
Inventories 1,282 1,091
Other 321 319
Total Current Assets 9,864 8,260
Non-Current Assets
Cash on deposit 463 -
Receivables 809 449
Investments in associated entities 3,667 3,878
Other investments 793 966
Inventories 2,723 2,387
Property, plant and equipment 4,180 3,762
Publishing rights, titles and television licenses 21,719 19,936
Goodwill 250 257
Other 495 398
Total Non-Current Assets 35,099 32,033
Total Assets $ 44,963 $ 40,293
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Interest bearing liabilities $ 22 $ 1,047
Payables 5,507 4,553
Tax liabilities 474 478
Provisions 171 129
Total Current Liabilities 6,174 6,207
Non-Current Liabilities
Interest bearing liabilities 8,227 7,662
Payables 2,353 2,286
Tax liabilities 442 245
Provisions 685 679
Total Non-Current Liabilities Excluding Exchangeable Securities 11,707 10,872
Exchangeable securities 1,383 953
Total Liabilities 19,264 18,032
Shareholders' Equity
Contributed equity 17,262 17,137
Reserves 1,685 530
Retained profits 2,506 1,843
Shareholders' equity attributable to members of the parent entity 21,453 19,510
Outside equity interests in controlled entities 4,246 2,751
Total Shareholders' Equity 25,699 22,261
Total Liabilities and Shareholders' Equity $ 44,963 $ 40,293
STATEMENT OF CASH FLOWS 12 Months Ended June 30,
2003 2002
Operating activity US $ Millions
Net profit (loss) attributable to members of the parent entity $ 1,046 $ (6,265)
Adjustment for non-cash and non-operating activities:
Equity earnings, net 113 203
Outside equity interest 246 146
Depreciation and amortization 453 392
Other items, net 54 6,901
Change in assets and liabilities:
Receivables (371) (9)
Inventories (137) 347
Payables (180) (193)
Tax liabilities and provisions 409 213
Cash provided by operating activity 1,633 1,735
Investing and other activity
Property, plant and equipment (366) (285)
Acquisitions, net of cash acquired (427) (999)
Investments in associated entities (527) (531)
Other investments (96) (376)
Repayment of loan by associate 96 -
Proceeds from sale of non-current assets 111 2,416
Cash (used in) provided by investing activity (1,209) 225
Financing activity
Issuance of debt and exchangeable securities 2,105 -
Repayment of debt and exchangeable securities (2,438) (1,230)
Cash on deposit (463) -
Issuance of shares 1,279 75
Dividends paid (181) (158)
Leasing and other finance costs - (4)
Cash provided by (used in) financing activity 302 (1,317)
Net increase in cash 726 643
Opening cash balance 3,574 2,842
Exchange movement on opening balance 177 89
Closing cash balance $ 4,477 $ 3,574
Note 1 - SEGMENT DATA 3 Months Ended 12 Months Ended
June 30, June 30,
BY GEOGRAPHIC AREAS 2003 2002 2003 2002
US $ Millions US $ Millions
Revenues
United States $ 3,308 $ 2,909 $ 13,237 $ 11,623
Europe 884 585 2,772 2,314
Australasia 400 335 1,465 1,258
$ 4,592 $ 3,829 $ 17,474 $ 15,195
Operating Income
United States $ 474 $ 299 $ 2,064 $ 1,311
Europe 39 106 280 419
Australasia 57 47 188 125
$ 570 $ 452 $ 2,532 $ 1,855
BY INDUSTRY SEGMENT
Revenues
Filmed Entertainment $ 1,103 $ 927 $ 4,486 $ 4,040
Television 1,170 1,071 4,763 4,274
Cable Network Programming 669 564 2,270 1,869
Direct Broadcast Satellite Television* 220 - 220 -
Magazines and Inserts 250 229 923 864
Newspapers 738 624 2,718 2,411
Book Publishing 242 234 1,162 1,078
Other 200 180 932 659
$ 4,592 $ 3,829 $ 17,474 $ 15,195
Operating Income
Filmed Entertainment $ 85 $ 75 $ 641 $ 473
Television 291 179 851 458
Cable Network Programming 96 34 430 199
Direct Broadcast Satellite Television* (68) - (68) -
Magazines and Inserts 70 64 256 235
Newspapers 126 117 400 430
Book Publishing 4 13 133 118
Other (34) (30) (111) (58)
$ 570 $ 452 $ 2,532 $ 1,855
* New segment reflecting the results of SKY
Italia from May 1, 2003.
Note 2 - SUPPLEMENTAL FINANCIAL DATA
The Company considers net profit before other items to be an important indicator
of the Company's operating performance on a consolidated basis. Net profit
before other items, defined as net profit (loss) attributable to members of the
parent entity before other items related to the Company and associated entities,
net of applicable income tax expenses and outside equity interests, eliminates
the effect of transactions that are considered significant by reason of their
size, nature or effect on the Company's financial performance for the year. Net
profit before other items, which is the information reported to and used by the
Company's chief decision maker for the purpose of making decisions about the
allocation of resources to segments and assessing their performance, should be
considered in addition to, not as a substitute for the Company's operating
income, net profit (loss) attributable to members of the parent entity, cash
flows and other measures of financial performance prepared in accordance with
generally accepted accounting principles in Australia. Net profit before other
items does not reflect cash available to fund requirements, and the items
excluded from net profit before other items, such as other revenues and
expenses, are significant components in assessing the Company's financial
performance.
The following table reconciles certain components of net profit (loss)
attributable to members of the parent entity as presented on page 3 of this
release to the presentation required under Australian GAAP as required by
Australian Accounting Standard AASB 1018 "Statement of Financial Performance" on
page 14 of this release.
3 Months Ended 12 Months Ended
June 30, June 30,
2003 2002 2003 2002
US $ Millions US $ Millions
Total other items (page 3) $ 50 $ (1,856) $ (54) $ (6,901)
Reclassification of other items - (122) 13 (41) 586
associated entities
Reclassification of income tax and net (93) (49) (127) 44
profit attributable to outside equity
interest
Other items before income tax, net (page $ 14) (165) $ (1,892) $ (222) $ (6,271)
Associated entities before other items $ 68 $ (97) $ (93) $ (165)
(page 3)
Reclassification of other items - 122 (13) 41 (586)
associated entities
Net loss from associated entities (page $ 190 $ (110) $ (52) $ (751)
14)
Income tax expense (page 3) $ (132) $ (64) $ (577) $ (335)
Reclassification of income tax expense 91 44 125 (8)
on other items
Net income tax expense (page 14) $ (41) $ (20) $ (452) $ (343)
SUPPLEMENTAL FINANCIAL DATA (continued)
3 Months Ended 12 Months Ended
June 30, June 30,
2003 2002 2003 2002
US $ Millions US $ Millions
Outside equity interest (page 3) $ (58) $ (35) $ (246) $ (146)
Reclassification of outside equity 2 5 2 (36)
interest on other items, net
Net profit attributable to outside $ (56) $ (30) $ (244) $ (182)
equity interest (page 14)
Net profit before other items (page 3) $ 320 $ 114 $ 1,100 $ 636
Other items before income tax, net (165) (1,892) (222) (6,271)
Reclassification of income tax and net 93 49 127 (44)
profit attributable to outside equity
interest
Reclassification of other items - 122 (13) 41 (586)
associated entities
Net profit (loss) attributable to $ 370 $ (1,742) $ 1,046 $ (6,265)
members
of the parent entity (page 14)
Earnings per ADR on net profit before $ 0.24 $ 0.08 $ 0.83 $ 0.49
other items, net (page 3)
Earnings per ADR on other items before (0.13) (1.49) (0.17) (5.05)
income tax, net
Earnings per ADR on reclassification of 0.07 0.03 0.10 (0.05)
income tax and net profit attributable
to outside equity interest
Earnings per ADR on reclassification of 0.10 (0.02) 0.03 (0.48)
other items - associated entities
Diluted earnings per ADR on net profit $ 0.28 $ (1.40) $ 0.79 $ (5.09)
(loss) attributable to members of the
parent entity (page 14)
This information is provided by RNS
The company news service from the London Stock Exchange
END
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