FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of February 2004 (February 11, 2004)
THE NEWS CORPORATION LIMITED
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(Name of Registrant)
2 Holt Street, Sydney, New South Wales, 2010, Australia
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F:
Form 20-F X Form 40-F
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Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1):
Yes No X
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Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7):
Yes No X
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Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): Not Applicable
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Annexed hereto are copies of announcements by The News Corporation Limited
("News Corporation") of its financial results for the quarter ended December 31,
2003 in Australian and U.S. dollars.
Such announcements were filed with the Australian Stock Exchange and released in
New York on February 11, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE NEWS CORPORATION LIMITED
Date: February 11, 2004 By: /s/ Arthur M. Siskind
--------------------------
Arthur M. Siskind
Director
EXHIBIT INDEX
Exhibit Page No. in Sequential
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Numbering System
----------------
A. Announcement made by News Corporation 5
of its financial results in Australian dollars
for the quarter ended December 31, 2003.
B. Announcement made by News Corporation 23
of its financial results in U.S. dollars
for the quarter ended December 31, 2003.
EXHIBIT A
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EARNINGS RELEASE FOR THE QUARTER ENDED 31 DECEMBER, 2003 IN AUSTRALIAN DOLLARS
NEWS CORPORATION REPORTS SECOND QUARTER OPERATING
INCOME OF A$1.1 BILLION ON REVENUES OF A$7.9 BILLION
NET PROFIT BEFORE OTHER ITEMS OF A$575; NET PROFIT
INCREASES 17% TO A$501 MILLION
QUARTER HIGHLIGHTS
o Strong revenue growth across all major cable channels substantially drives
up Cable Network Programming operating income.
o Television segment operating income up slightly on a US$ basis as strong
advertising demand for the broadcast network's sports schedule and STAR's
growing profitability offset tough political advertising comparisons at the
station group; Market share at stations group up nearly a full percentage
point.
o Filmed Entertainment operating income on a US$ basis in line with a year
ago as robust home entertainment sales of film and television titles match
prior-year success of Ice Age.
o All print businesses report higher earnings on a US$ basis led by
advertising and circulation revenue gains in U.K. and Australian
newspapers, increased page volume at free-standing inserts and several
leading titles at HarperCollins.
o BSkyB's operating profit more than doubles on revenue growth of 17%,
primarily from a 10% increase in the DTH subscriber base, now exceeding 7.2
million.
o Completed acquisition of 34% interest in Hughes Electronics, including
leading DTH provider DIRECTV.
SYDNEY, 12 February, 2004 - The News Corporation Limited (ASX: NCP, NCPDP) today
reported second quarter consolidated revenues of A$7.9 billion, a 6% decrease
over the A$8.4 billion in the prior year, and consolidated operating income of
A$1.1 billion, down 19% over the A$1.3 billion a year ago. The year-on-year
declines were primarily a result of the unfavourable impact of the strong
Australian dollar. On a US$ basis revenues increased 19% and operating income
increased 4% driven by double-digit increases at the Cable Network Programming,
Newspaper and Book Publishing segments.
Net profit for the fiscal second quarter was A$501 million, an increase of A$71
million over the A$430 million reported in the second quarter a year ago. Net
profit before other items was A$575 million, in line with the A$576 million
reported in the prior year.
Commenting on the results, Chairman and Chief Executive Rupert Murdoch said:
"This past quarter saw the Company achieve significant operational and
strategic gains. Operationally, we recorded our eighth consecutive quarter
of operating income growth, led by double-digit gains at our cable
networks, newspapers and book publishing segments, and strong performances
from our filmed entertainment and television segments despite difficult
comparisons to prior year results. All of our key assets are performing
well, including the television network, which after a difficult start to
the broadcast season has once again reclaimed ratings momentum and is now
strongly competitive in the key 18-49 demographic.
"Strategically, we have continued to expand our global distribution
capabilities with the acquisition of our interest in DirecTV and the rapid
growth at SKY Italia. We are looking forward to the unique opportunities
these businesses provide us as we position ourselves for continued strong
growth in the years to come."
Management Review of Performance
The Statement of Financial Performance, Statement of Financial Position,
Statement of Cash Flows and Supplemental Financial Data for the three and six
months ended 31 December are attached. The following commentary is made in
respect of those statements, including an analysis of certain information
contained therein.
Net Profit Attributable to Members of the Parent Entity
The reported net profit attributable to members of the parent entity consisted
of the following items:
3 Months Ended 6 Months Ended
31 December, 31 December,
2003 2002 2003 2002
-------------- -------------- -------------- --------------
A$ Millions (except per share amounts)
Revenue $ 7,899 $ 8,420 $ 14,980 $ 15,351
-------------- -------------- -------------- --------------
Operating income 1,069 1,313 2,164 2,309
Associated entities before other items 68 (69) 155 (243)
Interest expense, net (154) (207) (327) (432)
Exchangeable securities expense (27) (23) (55) (46)
-------------- -------------- -------------- --------------
Profit before income tax expense, outside
equity interest and other items 956 1,014 1,937 1,588
Income tax expense (306) (322) (609) (500)
Outside equity interest (75) (116) (164) (217)
-------------- -------------- -------------- --------------
Net profit before other items 575 576 1,164 871
-------------- -------------- -------------- --------------
Other items, net of tax and outside equity interest:
Group (49) (25) 6 (25)
Associated entities (25) (121) (25) (121)
-------------- -------------- -------------- --------------
Total other items (74) (146) (19) (146)
-------------- -------------- -------------- --------------
Net profit attributable to members of the
parent entity $ 501 $ 430 $ 1,145 $ 725
============== ============== ============== ==============
Earnings per share (diluted) on net profit
before other items, net $ 0.107 $ 0.110 $ 0.219 $ 0.165
============== ============== ============== ==============
Weighted average number of shares outstanding
in millions (diluted) 5,354 5,146 5,300 5,137
============== ============== ============== ==============
The following commentary discusses the major components of these results.
Consolidated Operating Income 3 Months Ended 6 Months Ended
31 December, 31 December,
2003 2002 2003 2002
-------------- -------------- -------------- --------------
A$ Millions A$ Millions
Filmed Entertainment $ 351 $ 460 $ 850 $ 641
Television 236 296 509 639
Cable Network Programming 265 218 468 432
Direct Broadcast Satellite Television* (149) - (327) -
Magazines & Inserts 89 107 177 199
Newspapers 243 184 398 287
Book Publishing 80 86 170 192
Other (46) (38) (81) (81)
-------------- -------------- -------------- --------------
Consolidated Operating Income $ 1,069 $ 1,313 $ 2,164 $ 2,309
============== ============== ============== ==============
* New segment reflecting the results of SKY Italia, consolidated as of 1 May,
2003
Second quarter net earnings from associated entities before other items were
A$68 million versus losses of A$69 million in the same period a year ago,
primarily due to the absence of Stream's losses in the current year. In
addition, contributions from BSkyB increased partly due to improved earnings
resulting from a 10% increase in the DTH subscriber base, as well as earnings
that were not reflected for a portion of the prior year's quarter. These
favourable variances were partially offset by lower foreign currency gains at
Sky Brasil. A detailed discussion of the components of associated entities
earnings is provided later in the release.
Second quarter net profit before other items of A$575 million (A$0.107 per
share) was in-line with the A$576 million (A$0.110 per share) in the prior year
primarily due to lower consolidated operating income offset by the significant
improvement in net earnings from associated entities.
The following commentary is discussed primarily in U.S. dollars
REVIEW OF OPERATING RESULTS
FILMED ENTERTAINMENT
The Filmed Entertainment segment reported second quarter operating income of
US$253 million, in-line with the US$255 million reported in the same period a
year ago, which included the blockbuster worldwide home entertainment
performances of Ice Age and Star Wars Episode II: Attack of the Clones.
Current-year results primarily reflected strong contributions from several film
and television home entertainment releases as well as pay-TV and free-TV
contributions from catalog titles.
Very strong current-quarter film results were largely driven by the worldwide
home entertainment performances of X-2: X-Men United and 28 Days Later as well
as various catalog titles. Additionally, the domestic home entertainment
performances of Bend it Like Beckham and League of Extraordinary Gentlemen also
contributed to the strong quarterly results. These contributions were partially
offset by marketing costs for several new releases including Master and
Commander: The Far Side of The World which garnered ten Academy Award
nominations, including Best Picture, the Farrelly Brothers comedy Stuck on You
and Cheaper by the Dozen, which has brought in more than US$130 million
domestically since its Christmas release.
Twentieth Century Fox Television (TCFTV) contributions primarily reflected
continued momentum in home entertainment sales, most notably from The Simpsons,
Buffy the Vampire Slayer, Family Guy and 24, offset by lower network revenue
from The Practice. Several TCFTV shows garnered Golden Globe nominations during
the quarter including Bernie Mac, Arrested Development, Reba and Best Drama
winner 24.
TELEVISION
The Television segment reported second quarter operating income of US$168
million, an increase of US$3 million versus the same period a year ago,
primarily reflecting improvement at the FOX Broadcasting Company and higher
contributions from STAR, partially offset by a decline at the Fox Television
Stations.
At the FOX Broadcasting Company, second quarter operating income improved by
US$21 million compared to a year ago due principally to improved sports
advertising, particularly from Major League Baseball with ratings up nearly 30%
for the post-season. Additionally, higher pricing for the primetime
entertainment schedule more than offset a 10% decline in ratings and increased
promotional costs. Following the end of the quarter, the network premiered
several shows that are winning their time slots among all key demographics,
including American Idol and My Big Fat Obnoxious Fiance.
Fox Television Stations (FTS) second quarter operating income declined 9% from
the prior year as market share growth of nearly a full percentage point was more
than offset by an overall market-wide decline, primarily from non-recurring
political advertising. FTS, excluding primetime, achieved ratings growth in the
quarter across all key day-parts, particularly during the morning and early
evening news programming periods.
STAR, bolstered by a 20% increase in revenues, substantially increased its
second quarter operating income versus prior year. Revenue gains were driven by
both advertising and subscription growth primarily at STAR Plus which, on
average, continues to deliver all of the top 10 cable programs in India.
CABLE NETWORK PROGRAMMING
Cable Network Programming reported second quarter operating income of US$187
million, an increase of US$66 million or 55% over last year's results reflecting
strong growth across all of the Company's primary cable television channels as
well as the recovery of US$15 million of Adelphia receivables which had been
previously written off.
The Fox News Channel (FNC) reported operating income growth of 23% compared to
the second quarter a year ago fueled by double-digit revenue growth, primarily
from increased ad sales, partially offset by higher costs associated with
covering the war. During the quarter, FNC once again achieved the highest
viewership among all cable news channels, expanding its lead to 42% in primetime
and 57% on a 24-hour basis.
Fox Cable Networks' (including the Regional Sports Networks (RSNs), the FX
Channel (FX) and SPEED Channel) operating profit improved 52% during the quarter
driven by double-digit revenue growth at both the RSNs and FX. The revenue
increase at the RSNs was largely due to higher affiliate rates, additional DTH
subscribers and increased advertising sales versus a year ago. FX achieved
revenue gains from increases in both advertising and affiliate revenues fueled
by ratings gains, higher advertising pricing and a 4% expansion in the
subscriber base over the past year.
DIRECT BROADCAST SATELLITE TELEVISION
On 30 April, 2003 the Company completed the acquisition of the Italian pay-TV
business Telepiu and combined it with Stream. News Corporation owns 80.1% of the
combined entity, SKY Italia, whose results comprise this segment. During the
second quarter, SKY Italia reported an operating loss of US$106 million on
revenues of US$421 million while increasing the subscriber base to more than 2.4
million. Over 90% of the new subscribers during the quarter opted for a
premium-programming tier including movies and/or sports programming.
MAGAZINES AND INSERTS
The Magazines and Inserts segment reported second quarter operating income of
US$63 million, an increase of US$4 million versus a year ago. The improvement
was primarily driven by higher contributions from the Free Standing Inserts
division, principally as a result of increased demand for packaged goods pages,
partially offset by lower contributions from the InStore division.
NEWSPAPERS
The Newspaper segment reported second quarter operating income of US$170
million, a 67% increase versus the same period a year ago reflecting circulation
revenue increases in the U.K. combined with advertising strength in both the
U.K. and Australia.
The U.K. newspaper group reported operating income growth of 61% in local
currency terms for the second quarter compared to the prior year, driven by both
circulation and advertising revenue gains partially offset by costs associated
with the launch of the tabloid version of The Times. Circulation revenue growth
was achieved across all titles, with the largest increase at The Sun, where
reduced cover price initiatives during the second quarter a year ago adversely
affected results. The improvement in advertising was primarily driven by growth
at The Sun on the strength of higher classified and display advertisements.
The Australian newspaper group reported a 16% increase in operating income in
local currency terms, primarily driven by an 11% increase in advertising revenue
compared to a year ago. Both display and classified advertising showed increases
across all categories, with the strongest growth in the national, retail and
real estate sectors.
BOOK PUBLISHING
HarperCollins reported operating income of US$57 million during the quarter, an
increase of US$9 million compared to the same period a year ago. The 19% growth
was led by the phenomenal success of Zondervan's The Purpose Driven Life, the
best-selling non-fiction book of calendar 2003 with more than 11 million English
language copies sold in the United States. During the quarter, HarperCollins had
30 titles on The New York Times bestseller lists including three titles that
reached the #1 spot.
OTHER
At the end of the quarter, the Company completed the acquisition of 34% of the
outstanding common stock of Hughes Electronics for approximately US$3.1 billion
in cash and 522.8 million preferred limited voting ordinary shares. At closing,
News Corporation's ownership interest was transferred to Fox Entertainment
Group, Inc. (FEG) in exchange for US$4.5 billion in promissory notes and
approximately 74.5 million shares in FEG, increasing News Corporation's
ownership interest in FEG from 80.6% to approximately 82%.
Also during the quarter, the Company announced it had reached an agreement in
principle for the sale of the Los Angeles Dodgers. The sale has been approved by
Major League Baseball and is expected to close shortly, subject to customary
closing conditions.
An interim unfranked dividend of A$0.015 per Ordinary share and an unfranked
dividend of A$0.0375 per Preferred Limited Voting Ordinary share has been
declared and is payable on 30 April, 2004. 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
26 March, 2004. The ex-dividend date will be 22 March, 2004.
REVIEW OF ASSOCIATED ENTITIES RESULTS
Second quarter net earnings from associated entities before other items were
A$68 million versus losses of A$69 million in the same period a year ago,
primarily due to the absence of Stream's losses in the current year. In
addition, contributions from BSkyB increased partly due to improved earnings
resulting from a 10% increase in the DTH subscriber base, as well as earnings
that were not reflected for a portion of the prior year's quarter. These
favourable variances were partially offset by lower foreign currency gains at
Sky Brasil.
The Company's share of associated entities' earnings (losses) is as follows:
3 Months Ended 6 Months Ended
31 December, 31 December,
% Owned 2003 2002 2003 2002
-------------- -------------- --------- ---------------- -------------
US$ Millions US$ Millions
BSkyB 35.4% (a) $ 42 $ 19 $ 95 $ 19
Sky Brasil 49.7% (b) (6) 10 (14) (57)
Innova - Mexico 30.0% - (9) (10) (17)
FOXTEL - Australia 25.0% (4) (2) (7) (4)
Stream 50.0% (c) - (61) - (100)
Fox Sports Cable Networks Various - (3) 9 9
ESPN STAR Sports 50.0% 1 - 2 1
Other Associates Various (d) 16 7 31 14
------------ ------------ -------------- ---------------
Total associated entities'
earnings (losses) before other
items $ 49 $ (39) $ 106 $ (135)
Other items (17) (67) (17) (67)
------------ ------------ -------------- ---------------
Total associated entities'
earnings (losses) $ 32 $ (106) $ 89 $ (202)
============ ============ ============== ===============
Total associated entities'
earnings (losses) A$ 43 A$ (190) A$ 130 A$ (364)
============ ============ ============== ===============
Further details on the associated entities follow.
------------------------------------
(a) The Company's investment basis in BSkyB was negative from 31 December, 2001
through 11 November, 2002. Accordingly, the Company's share of BSkyB's
results was not recognised during that period.
(b) Represents the Company's economic interest, which was 46.7% as of 31
December, 2002. The Company continues to hold a 36% equity interest in Sky
Brasil.
(c) The Company's share of Stream's losses was included as part of associated
entities from 1 April, 2002 through 30 April, 2003, when it merged with
Telepiu to form the consolidated entity SKY Italia.
(d) Primarily comprising Gemstar-TV Guide International, Independent Newspapers
Limited, and Queensland Press.
BSkyB (in STG) - Europe 3 Months Ended 6 Months Ended
31 December, 31 December,
2003 2002* 2003 2002*
-------------- -------------- --------------- --------------
Millions (except subscribers) Millions (except subscribers)
Revenues (pound) 916 (pound) 785(pound) 1,766 (pound) 1,511
Operating profit before exceptional items 103 48 225 94
Net income before exceptional items (pound) 40 (pound) 36(pound) 104 (pound) 36
============== ============== =============== ==============
AGAAP adjustment (in US$) (1) 18 13 34 29
-------------- -------------- --------------- --------------
News' 35.4% share (in US$) $ 42 $ 34 $ 95 $ 50
============== ============== =============== ==============
Investment basis adjustment (a) - (15) - (31)
-------------- -------------- --------------- --------------
News' reportable share (in US$) $ 42 $ 19 $ 95 $ 19
============== ============== =============== ==============
Net debt (excluding capitalised leases) (pound) 751 (pound) 1,378
Ending Subscribers 11,070,000 10,513,000
DTH Subscribers 7,208,000 6,562,000
* Does not reflect BSkyB's adoption of accounting abstract UITF 38.
BSkyB's quarterly revenues increased 17% in local currency terms largely due to
DTH subscriber growth, an increase in average revenue per subscriber and
improved interactive revenues. Operating profit before exceptional items
increased 115% due to increased revenues, partially offset by higher programming
expenses from increased sports rights (mainly soccer and cricket) as well as
higher betting and subscriber management costs. The increase in net income
before exceptional items reflects the improvement in operating income largely
offset by an increase in the tax provision resulting from higher earnings in the
current year as well as the absence of a tax benefit that was recorded in the
prior year's quarter.
Sky Brasil (in US$)
-------------------
3 Months Ended 6 Months Ended
31 December, 31 December,
2003 2002 2003 2002
-------------- -------------- --------------- --------------
Millions (except subscribers) Millions (except subscribers)
Revenues (in local currency) R$ 158 R$ 138 R$ 320 R$ 268
Revenues 55 37 110 79
Operating loss (3) (8) - (12)
Net income (loss) $ (11) $ 21 $ (28) $ (136)
============== ============== =============== ==============
News' reportable 49.7%/46.7% share (in US$) $ (6) $ 10 $ (14) $ (57)
============== ============== =============== ==============
Net debt (excluding capitalised leases) $ 216 $ 213
Ending Subscribers 784,000 732,000
Sky Brasil's revenues grew 14% in local currency terms in the quarter compared
to prior year primarily driven by a higher subscriber base and increased average
revenue per subscriber. The revenue growth for the quarter was partly offset by
increased marketing costs due to new campaigns to grow the subscriber base. The
increase in net loss in the current quarter principally reflects lower foreign
currency gains versus a year ago.
Innova (in US$) - Mexico
-------------------------
3 Months Ended 6 Months Ended
31 December, 31 December,
2003 2002 2003 2002
--------------- --------------- --------------- --------------
Millions (except subscribers) Millions (except subscribers)
Revenues (in local currency) Ps 1,013 Ps 805 Ps 1,922 Ps 1,639
Revenues 90 80 175 164
Operating income 16 6 28 13
Net loss $ (1) $ (30) $ (33) $ (58)
=============== =============== =============== ==============
News' reportable 30% share (in US$) $ - $ (9) $ (10) $ (17)
=============== =============== =============== ==============
Net Debt (excluding capitalised leases) $ 344 $ 350
Ending Subscribers 857,000 742,000
Innova's revenues grew 26% in local currency terms compared to prior year
primarily driven by a 15% increase in the subscriber base. The decrease in net
loss during the quarter principally reflects lower interest expense resulting
from the refinancing of debt and lower foreign currency losses versus a year
ago.
FOXTEL (in A$)
--------------
3 Months Ended 6 Months Ended
31 December, 31 December,
2003 2002 2003 2002
-------------- -------------- ----------------- --------------
Millions (except subscribers) Millions (except subscribers)
Revenues A$ 186 A$ 150 A$ 368 A$ 288
Operating loss (31) (20) (58) (44)
Net loss A$ (22) A$ (13) A$ (40) A$ (30)
============== ============== ================= ==============
News' reportable 25% share (in US$) $ (4) $ (2) $ (7) $ (4)
============== ============== ================= ==============
Ending Subscribers (including Optus) 1,073,000 1,050,000
FOXTEL's revenues for the quarter increased 24% principally due to an increase
of 18% in satellite subscribers compared to a year ago, higher average revenue
per subscriber, and the inclusion of Optus wholesale subscribers as of 1,
December, 2002. Net loss for the quarter increased A$9 million against the prior
year as the increased subscriber revenues were more than offset by subscriber
acquisition expenses, the development of a future digital service, higher
depreciation expense and the inclusion of Optus license fee costs. Total
subscribers (including Optus wholesale) have increased by 2.2% over prior year
while FOXTEL managed subscribers have increased by 6.6%.
Fox Sports Cable 3 Months Ended 6 Months Ended
Networks* (in US$) 31 December, 31 December,
2003 2002 2003 2002
--------------- --------------- --------------- ---------------
Millions (except subscribers) Millions (except subscribers)
News' reportable share* $ - $ (3) $ 9 $ 9
=============== =============== =============== ===============
Ending Subscribers 44,068,000 44,072,000
The improved results for the quarter primarily reflect the effect of cost
savings at the Metro Channels and reduced programming costs at National Sports
Partners.
* Various associated interests ranging from approximately 20 percent to 60
percent, primarily comprising Regional Programming Partners (including
Madison Square Garden), National Sports Partners and National Advertising
Partners.
ESPN STAR Sports (in US$) - Asia 3 Months Ended 6 Months Ended
31 December, 31 December,
2003 2002 2003 2002
-------------- ----------------------------------- ----------------
Millions Millions
Revenues $ 42 $ 39 $ 76 $ 76
Operating income (loss) 4 (1) 6 4
Net income (loss) $ 3 $ (1) $ 4 $ 2
============== =================================== ================
News' reportable 50% share $ 1 $ - $ 2 $ 1
============== =================================== ================
Operating income improved $5 million due to higher subscription revenues from
India, stronger syndication revenues from Bangladesh Cricket and lower costs
associated with various cricket events.
1 Principally reflects adjustments for reporting under Australian Generally
Accepted Accounting Principles ("AGAAP") relating to identifiable intangible
amortisation.
Foreign Exchange Rates
-----------------------
Average foreign exchange rates used in the year-to-date profit results are as
follows:
6 Months Ended
31 December,
2003 2002
-------------- ---------------
Australian Dollar/U.S Dollar 0.68 0.55
U.K. Pounds Sterling/U.S. Dollar 1.66 1.56
Euro/U.S. Dollar 1.16 0.99
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 second quarter
results can be heard live on the Internet at 2:00 a.m. Eastern Summer
(Australia) 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 a 3 Months Ended 6 Months Ended
Note 31 December, 31 December,
2003 2002 2003 2002
-------------- -------------- -------------- --------------
A$ Millions (except per share amounts)
Sales revenue 1 $ 7,899 $ 8,420 $ 14,980 $ 15,351
Operating expenses (6,830) (7,107) (12,816) (13,042)
-------------- -------------- -------------- --------------
Operating income 1 1,069 1,313 2,164 2,309
Net profit (loss) from associated entities 43 (190) 130 (364)
Borrowing costs (203) (249) (428) (526)
Interest income 49 42 101 94
-------------- -------------- -------------- --------------
Net borrowing costs (154) (207) (327) (432)
Exchangeable securities expense (27) (23) (55) (46)
Other items before income tax, net (99) (47) (6) (47)
-------------- -------------- -------------- --------------
Profit from ordinary activities before income tax 832 846 1,906 1,420
-------------- -------------- -------------- --------------
Income tax expense on:
Ordinary activities before other items (306) (322) (609) (500)
Other items 35 22 2 22
-------------- -------------- -------------- --------------
Net income tax expense (271) (300) (607) (478)
-------------- -------------- -------------- --------------
Net profit from ordinary activities after tax 561 546 1,299 942
Net profit attributable to outside equity interests (60) (116) (154) (217)
---------------------------------------------------------------------------------------------------------------------------------
Net Profit Attributable to Members of the Parent Entity $ 501 $ 430 $ 1,145 $ 725
---------------------------------------------------------------------------------------------------------------------------------
Net exchange gains recognised directly in equity (2,016) (799) (2,592) 371
Other items recognised directly in equity - 152 - 152
-------------- -------------- -------------- --------------
Total change in equity other than those resulting from
transactions with owners as owners $ (1,515) $ (217) $ (1,447) $ 1,248
============== ============== ============== ==============
Diluted earnings per share on net profit attributable to
members of the parent entity
Ordinary shares $ 0.083 $ 0.072 $ 0.191 $ 0.121
Preferred limited voting ordinary shares $ 0.099 $ 0.087 $ 0.229 $ 0.146
Ordinary and preferred limited voting ordinary shares $ 0.093 $ 0.081 $ 0.215 $ 0.136
------------------------------
a Following the issuance in June 2002 of the revised Australian Accounting
Standard AASB 1018 "Statement of Financial Performance" this statement has been
reformatted from previous presentations to be consistent with the format
prescribed in the revised Australian Accounting Standard.
STATEMENT OF FINANCIAL POSITION 31 December, 30 June,
2003 2003
------------------- -------------------
ASSETS A$ Millions
Current Assets
Cash $ 3,377 $ 6,746
Cash on deposit 396 -
Receivables 6,188 5,701
Inventories 2,341 1,931
Other 659 483
------------------- -------------------
Total Current Assets 12,961 14,861
------------------- -------------------
Non-Current Assets
Cash on deposit - 698
Receivables 1,125 1,219
Investments in associated entities 14,318 5,526
Other investments 869 1,195
Inventories 3,772 4,103
Property, plant and equipment 5,666 6,299
Publishing rights, titles and television licenses 29,994 32,724
Goodwill 328 377
Other 737 745
------------------- -------------------
Total Non-Current Assets 56,809 52,886
------------------- -------------------
Total Assets $ 69,770 $ 67,747
=================== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Interest bearing liabilities $ 414 $ 33
Payables 8,104 8,298
Tax liabilities 762 714
Provisions 252 258
------------------- -------------------
Total Current Liabilities 9,532 9,303
------------------- -------------------
Non-Current Liabilities
Interest bearing liabilities 11,702 12,396
Payables 3,093 3,545
Tax liabilities 711 666
Provisions 1,074 1,032
------------------- -------------------
Total Non-Current Liabilities Excluding Exchangeable Preferred Securities 16,580 17,639
------------------- -------------------
Exchangeable preferred securities 1,903 2,084
------------------- -------------------
Total Liabilities 28,015 29,026
Shareholders' Equity
Contributed equity 34,303 28,427
Reserves 528 2,760
Retained profits 1,768 1,137
------------------- -------------------
Shareholders' equity attributable to members of the parent entity 36,599 32,324
Outside equity interests in controlled entities 5,156 6,397
------------------- -------------------
Total Shareholders' Equity 41,755 38,721
------------------- -------------------
Total Liabilities and Shareholders' Equity $ 69,770 $ 67,747
=================== ===================
STATEMENT OF CASH FLOWS 6 Months Ended 31 December,
2003 2002
------------------- -------------------
Operating Activity A$ Millions
Net profit attributable to members of the parent entity $ 1,145 $ 725
Adjustment for non-cash and non-operating activities:
Equity earnings, net (140) 262
Outside equity interest 164 217
Depreciation and amortisation 437 368
Other items, net 19 146
Change in assets and liabilities:
Receivables (1,496) (2,195)
Inventories (570) (611)
Payables 789 1,293
Other liabilities 449 316
------------------- -------------------
Cash provided by operating activity 797 521
Investing and other activity
Property, plant and equipment (184) (327)
Acquisitions, net of cash acquired (199) (767)
Investments and acquisitions of interests in associated entities (4,297) (633)
Other investments (66) (86)
Repayment of loans by associate - 170
Proceeds from sale of non-current assets 523 95
------------------- -------------------
Cash used in investing activity (4,223) (1,548)
Financing activity
Issuance of debt 485 -
Repayment of debt and exchangeable securities (647) (1,953)
Decrease in cash on deposit 212 -
Issuance of shares 759 2,167
Dividends paid (131) (133)
Leasing and other finance costs - (2)
------------------- -------------------
Cash provided by financing activity 678 79
------------------- -------------------
Net decrease in cash (2,748) (948)
Opening cash balance 6,746 6,337
Exchange movement on opening balance (621) 74
------------------- -------------------
Closing cash balance $ 3,377 $ 5,463
=================== ===================
Note 1 - SEGMENT DATA 3 Months Ended 6 Months Ended
31 December, 31 December,
BY GEOGRAPHIC AREAS 2003 2002 2003 2002
-------------- -------------- -------------- --------------
A$ Millions A$ Millions
Revenues
United States $ 5,564 $ 6,605 $ 10,607 $ 11,855
Europe 1,635 1,151 3,048 2,224
Australasia 700 664 1,325 1,272
-------------- -------------- -------------- --------------
$ 7,899 $ 8,420 $ 14,980 $ 15,351
============== ============== ============== ==============
Operating Income
United States $ 888 $ 1,052 $ 1,939 $ 1,902
Europe 28 149 (10) 251
Australasia 153 112 235 156
-------------- -------------- -------------- --------------
$ 1,069 $ 1,313 $ 2,164 $ 2,309
============== ============== ============== ==============
BY INDUSTRY SEGMENT
Revenues
Filmed Entertainment $ 1,940 $ 2,403 $ 3,841 $ 4,007
Television 2,215 2,598 3,755 4,458
Cable Network Programming 836 901 1,791 1,908
Direct Broadcast Satellite Television* 600 - 1,002 -
Magazines and Inserts 321 387 660 740
Newspapers 1,212 1,208 2,337 2,311
Book Publishing 479 587 1,007 1,217
Other 296 336 587 710
-------------- -------------- -------------- --------------
$ 7,899 $ 8,420 $ 14,980 $ 15,351
============== ============== ============== ==============
Operating Income
Filmed Entertainment $ 351 $ 460 $ 850 $ 641
Television 236 296 509 639
Cable Network Programming 265 218 468 432
Direct Broadcast Satellite Television* (149) - (327) -
Magazines and Inserts 89 107 177 199
Newspapers 243 184 398 287
Book Publishing 80 86 170 192
Other (46) (38) (81) (81)
-------------- -------------- -------------- --------------
$ 1,069 $ 1,313 $ 2,164 $ 2,309
============== ============== ============== ==============
* New segment reflecting the results of SKY Italia, consolidated as of 1 May,
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 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 should be considered in addition to, not as a substitute for
the Company's operating income, net profit 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 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 13 of this
release.
3 Months Ended 6 Months Ended
31 December, 31 December,
2003 2002 2003 2002
-------------- -------------- --------------- --------------
A$ Millions A$ Millions
Total other items (page 3) $ (74) $ (146) $ (19) $ (146)
Reclassification of other items - associated
entities 25 121 25 121
Reclassification of income tax and net profit
attributable to outside equity interest (50) (22) (12) (22)
-------------- -------------- --------------- --------------
Other items before income tax, net (page 13) $ (99) $ (47) $ (6) $ (47)
============== ============== =============== ==============
Associated entities before other items (page 3) $ 68 $ (69) $ 155 $ (243)
Reclassification of other items - associated
entities (25) (121) (25) (121)
-------------- -------------- --------------- --------------
Net profit (loss) from associated entities (page $ 43 $ (190) $ 130 $ (364)
13)
============== ============== =============== ==============
Income tax expense (page 3) $ (306) $ (322) $ (609) $ (500)
Reclassification of income tax expense
on other items 35 22 2 22
-------------- -------------- --------------- --------------
Net income tax expense (page 13) $ (271) $ (300) $ (607) $ (478)
============== ============== =============== ==============
Outside equity interest (page 3) $ (75) $ (116) $ (164) $ (217)
Reclassification of outside equity interest on
other items, net 15 - 10 -
-------------- -------------- --------------- --------------
Net profit attributable to outside equity interest $ (60) $ (116) $ (154) $ (217)
(page 13)
============== ============== =============== ==============
SUPPLEMENTAL FINANCIAL DATA (continued)
3 Months Ended 6 Months Ended
31 December, 31 December,
2003 2002 2003 2002
-------------- -------------- --------------- --------------
A$ Millions A$ Millions
Net profit before other items (page 3) $ 575 $ 576 $ 1,164 $ 871
Other items before income tax, net (99) (47) (6) (47)
Reclassification of income tax and net profit
attributable to outside equity interest 50 22 12 22
Reclassification of other items - associated
entities (25) (121) (25) (121)
------------- -------------- --------------- --------------
Net profit attributable to members of the parent $ 501 $ 430 $ 1,145 $ 725
entity (page 13)
============= ============== =============== ==============
Earnings per share on net profit before other
items, net (page 3) $ 0.107 $ 0.110 $ 0.219 $ 0.165
Earnings per share on other items before income
tax, net (0.018) (0.009) (0.001) (0.009)
Earnings per share on reclassification of income
tax and net profit attributable to outside
equity interest 0.009 0.004 0.002 0.004
Earnings per share on reclassification of other
items - associated entities (0.005) (0.024) (0.005) (0.024)
------------- -------------- --------------- --------------
Diluted earnings per share on net profit
attributable to members of the parent entity
(page 13) $ 0.093 $ 0.081 $ 0.215 $ 0.136
============= ============== =============== ==============
EXHIBIT B
---------
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2003 IN U.S. DOLLARS
PREPARED FOR THE U.S. MARKET. AUSTRALIAN READERS SHOULD
REFER TO THE AUSTRALIAN DOLLAR EARNINGS RELEASE
News Corporation Reports Second Quarter Operating Income of $760
Million; Eighth Consecutive Quarter of Year-on-Year Growth
Revenues Increase 19% to $5.6 Billion
Net Profit before Other Items Increases 28% to $410 Million;
Net Profit Increases 51% to $361 Million
-- QUARTER HIGHLIGHTS
-- Strong revenue growth across all major cable channels
substantially drives up Cable Network Programming
operating income.
-- Television segment operating income up slightly as
strong advertising demand for the broadcast network's
sports schedule and STAR's growing profitability
offset tough political advertising comparisons at the
station group; Market share at stations group up
nearly a full percentage point.
-- Filmed Entertainment operating income in line with a
year ago as robust home entertainment sales of film
and television titles match prior-year success of Ice
Age.
-- All print businesses report higher earnings led by
advertising and circulation revenue gains in U.K. and
Australian newspapers, increased page volume at
free-standing inserts and several leading titles at
HarperCollins.
-- BSkyB's operating profit more than doubles on revenue
growth of 17%, primarily from a 10% increase in the
DTH subscriber base, now exceeding 7.2 million.
-- Completed acquisition of 34% interest in Hughes
Electronics, including leading DTH provider DIRECTV.
NEW YORK--Feb. 11, 2004--The News Corporation Limited (NYSE: NWS, NWSA)
today reported second quarter consolidated revenues of $5.6 billion, a 19%
increase over the $4.7 billion in the prior year, and consolidated operating
income of $760 million, up 4% over the $729 million a year ago,
despite the inclusion of $106 million in losses from SKY Italia in the
quarter. The year-on-year growth was driven by double-digit increases
at the Cable Network Programming, Newspaper and Book Publishing
segments.
Net profit for the fiscal second quarter was $361 million, an
increase of $122 million over the $239 million reported in the second
quarter a year ago. Net profit before other items was $410 million, an
increase of $90 million over the $320 million reported in the prior
year.
Commenting on the results, Chairman and Chief Executive Rupert
Murdoch said:
"This past quarter saw the Company achieve significant operational
and strategic gains. Operationally, we recorded our eighth consecutive
quarter of operating income growth, led by double-digit gains at our
cable networks, newspapers and book publishing segments, and strong
performances from our filmed entertainment and television segments
despite difficult comparisons to prior year results. All of our key
assets are performing well, including the television network, which
after a difficult start to the broadcast season has once again
reclaimed ratings momentum and is now strongly competitive in the key
18-49 demographic.
"Strategically, we have continued to expand our global
distribution capabilities with the acquisition of our interest in
DirecTV and the rapid growth at SKY Italia. We are looking forward to
the unique opportunities these businesses provide us as we position
ourselves for continued strong growth in the years to come."
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 six months ended December 31st are attached. The
following commentary is made in respect of those statements, including
an analysis of certain information contained therein.
NET PROFIT ATTRIBUTABLE TO MEMBERS OF THE PARENT ENTITY
The reported net profit attributable to members of the parent entity
consisted of the following items:
3 Months Ended 6 Months Ended
December 31, December 31,
2003 2002 2003 2002
------- ------- -------- -------
US $ Millions (except per ADR
amounts)
Revenue $5,588 $4,681 $10,237 $8,494
------- ------- -------- -------
Operating income 760 729 1,479 1,277
Associated entities before other items 49 (39) 106 (135)
Interest expense, net (110) (115) (224) (239)
Exchangeable securities expense (19) (12) (37) (25)
------- ------- -------- -------
Profit before income tax expense,
outside equity interest and other
items 680 563 1,324 878
Income tax expense (217) (178) (416) (276)
Outside equity interest (53) (65) (112) (120)
------- ------- -------- -------
Net profit before other items 410 320 796 482
------- ------- -------- -------
Other items, net of tax and outside
equity interest:
Group (32) (14) 4 (14)
Associated entities (17) (67) (17) (67)
------- ------- -------- -------
Total other items (49) (81) (13) (81)
------- ------- -------- -------
Net profit attributable to members of
the parent entity $ 361 $ 239 $ 783 $ 401
======= ======= ======== =======
Earnings per ADR (diluted) on net
profit before other items, net $ 0.30 $ 0.24 $ 0.60 $ 0.36
======= ======= ======== =======
Weighted average number of ADRs
outstanding in millions (diluted) 1,339 1,286 1,325 1,284
======= ======= ======== =======
The following commentary discusses the major components of these
results.
Consolidated Operating Income
3 Months 6 Months
Ended Ended
December 31, December 31,
2003 2002 2003 2002
------ ----- ------- -------
US $ Millions US $ Millions
Filmed Entertainment $ 253 $255 $ 581 $ 355
Television 168 165 347 353
Cable Network Programming 187 121 320 239
Direct Broadcast Satellite Television* (106) - (223) -
Magazines & Inserts 63 59 121 110
Newspapers 170 102 272 159
Book Publishing 57 48 116 106
Other (32) (21) (55) (45)
------ ----- ------- -------
Consolidated Operating Income $ 760 $729 $1,479 $1,277
====== ===== ======= =======
* New segment reflecting the results of SKY Italia, consolidated as
of May 1, 2003
Second quarter net earnings from associated entities before other
items were $49 million versus losses of $39 million in the same period
a year ago, primarily due to the absence of Stream's losses in the
current year. In addition, contributions from BSkyB increased partly
due to improved earnings resulting from a 10% increase in the DTH
subscriber base, as well as earnings that were not reflected for a
portion of the prior year's quarter. These favorable variances were
partially offset by lower foreign currency gains at Sky Brasil. A
detailed discussion of the components of associated entities earnings
is provided later in the release.
Second quarter net profit before other items increased to $410
million ($0.30 per ADR) versus $320 million ($0.24 per ADR) in the
prior year primarily due to higher consolidated operating income and
the significant improvement in net earnings from associated entities.
REVIEW OF OPERATING RESULTS
FILMED ENTERTAINMENT
The Filmed Entertainment segment reported second quarter operating
income of $253 million, in-line with the $255 million reported in the
same period a year ago, which included the blockbuster worldwide home
entertainment performances of Ice Age and Star Wars Episode II: Attack
of the Clones. Current-year results primarily reflected strong
contributions from several film and television home entertainment
releases as well as pay-TV and free-TV contributions from catalog
titles.
Very strong current-quarter film results were largely driven by
the worldwide home entertainment performances of X-2: X-Men United and
28 Days Later as well as various catalog titles. Additionally, the
domestic home entertainment performances of Bend it Like Beckham and
League of Extraordinary Gentlemen also contributed to the strong
quarterly results. These contributions were partially offset by
marketing costs for several new releases including Master and
Commander: The Far Side of The World which garnered ten Academy Award
nominations, including Best Picture, the Farrelly Brothers comedy
Stuck on You and Cheaper by the Dozen, which has brought in more than
$130 million domestically since its Christmas release.
Twentieth Century Fox Television (TCFTV) contributions primarily
reflected continued momentum in home entertainment sales, most notably
from The Simpsons, Buffy the Vampire Slayer, Family Guy and 24, offset
by lower network revenue from The Practice. Several TCFTV shows
garnered Golden Globe nominations during the quarter including Bernie
Mac, Arrested Development, Reba and Best Drama winner 24.
TELEVISION
The Television segment reported second quarter operating income of
$168 million, an increase of $3 million versus the same period a year
ago, primarily reflecting improvement at the FOX Broadcasting Company
and higher contributions from STAR, partially offset by a decline at
the Fox Television Stations.
At the FOX Broadcasting Company, second quarter operating income
improved by $21 million compared to a year ago due principally to
improved sports advertising, particularly from Major League Baseball
with ratings up nearly 30% for the post-season. Additionally, higher
pricing for the primetime entertainment schedule more than offset a
10% decline in ratings and increased promotional costs. Following the
end of the quarter, the network premiered several shows that are
winning their time slots among all key demographics, including
American Idol and My Big Fat Obnoxious Fiance.
Fox Television Stations (FTS) second quarter operating income
declined 9% from the prior year as market share growth of nearly a
full percentage point was more than offset by an overall market-wide
decline, primarily from non-recurring political advertising. FTS,
excluding primetime, achieved ratings growth in the quarter across all
key day-parts, particularly during the morning and early evening news
programming periods.
STAR, bolstered by a 20% increase in revenues, substantially
increased its second quarter operating income versus prior year.
Revenue gains were driven by both advertising and subscription growth
primarily at STAR Plus which, on average, continues to deliver all of
the top 10 cable programs in India.
CABLE NETWORK PROGRAMMING
Cable Network Programming reported second quarter operating income
of $187 million, an increase of $66 million or 55% over last year's
results reflecting strong growth across all of the Company's primary
cable television channels as well as the recovery of $15 million of
Adelphia receivables which had been previously written off.
The Fox News Channel (FNC) reported operating income growth of 23%
compared to the second quarter a year ago fueled by double-digit
revenue growth, primarily from increased ad sales, partially offset by
higher costs associated with covering the war. During the quarter, FNC
once again achieved the highest viewership among all cable news
channels, expanding its lead to 42% in primetime and 57% on a 24-hour
basis.
Fox Cable Networks' (including the Regional Sports Networks
(RSNs), the FX Channel (FX) and SPEED Channel) operating profit
improved 52% during the quarter driven by double-digit revenue growth
at both the RSNs and FX. The revenue increase at the RSNs was largely
due to higher affiliate rates, additional DTH subscribers and
increased advertising sales versus a year ago. FX achieved revenue
gains from increases in both advertising and affiliate revenues fueled
by ratings gains, higher advertising pricing and a 4% expansion in the
subscriber base over the past year.
DIRECT BROADCAST SATELLITE TELEVISION
On April 30th, 2003 the Company completed the acquisition of the
Italian pay-TV business Telepiu and combined it with Stream. News
Corporation owns 80.1% of the combined entity, SKY Italia, whose
results comprise this segment. During the second quarter, SKY Italia
reported an operating loss of $106 million on revenues of $421 million
while increasing the subscriber base to more than 2.4 million. Over
90% of the new subscribers during the quarter opted for a
premium-programming tier including movies and/or sports programming.
MAGAZINES AND INSERTS
The Magazines and Inserts segment reported second quarter
operating income of $63 million, an increase of $4 million versus a
year ago. The improvement was primarily driven by higher contributions
from the Free Standing Inserts division, principally as a result of
increased demand for packaged goods pages, partially offset by lower
contributions from the InStore division.
NEWSPAPERS
The Newspaper segment reported second quarter operating income of
$170 million, a 67% increase versus the same period a year ago
reflecting circulation revenue increases in the U.K. combined with
advertising strength in both the U.K. and Australia.
The U.K. newspaper group reported operating income growth of 61%
in local currency terms for the second quarter compared to the prior
year, driven by both circulation and advertising revenue gains
partially offset by costs associated with the launch of the tabloid
version of The Times. Circulation revenue growth was achieved across
all titles, with the largest increase at The Sun, where reduced cover
price initiatives during the second quarter a year ago adversely
affected results. The improvement in advertising was primarily driven
by growth at The Sun on the strength of higher classified and display
advertisements.
The Australian newspaper group reported a 16% increase in
operating income in local currency terms, primarily driven by an 11%
increase in advertising revenue compared to a year ago. Both display
and classified advertising showed increases across all categories,
with the strongest growth in the national, retail and real estate
sectors.
BOOK PUBLISHING
HarperCollins reported operating income of $57 million during the
quarter, an increase of $9 million compared to the same period a year
ago. The 19% growth was led by the phenomenal success of Zondervan's
The Purpose Driven Life, the best-selling non-fiction book of calendar
2003 with more than 11 million English language copies sold in the
United States. During the quarter, HarperCollins had 30 titles on The
New York Times bestseller lists including three titles that reached
the #1 spot.
OTHER
At the end of the quarter, the Company completed the acquisition
of 34% of the outstanding common stock of Hughes Electronics for
approximately $3.1 billion in cash and 130.7 million preferred limited
voting ordinary ADRs. At closing, News Corporation's ownership
interest was transferred to Fox Entertainment Group, Inc. (FEG) in
exchange for $4.5 billion in promissory notes and approximately 74.5
million shares in FEG, increasing News Corporation's ownership
interest in FEG from 80.6% to approximately 82%.
Also during the quarter, the Company announced it had reached an
agreement in principle for the sale of the Los Angeles Dodgers. The
sale has been approved by Major League Baseball and is expected to
close shortly, subject to customary closing conditions.
An interim 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 May 7, 2004. 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 March 25,
2004. The ex-dividend date will be March 23, 2004.
REVIEW OF ASSOCIATED ENTITIES RESULTS
Second quarter net earnings from associated entities before other
items were $49 million versus losses of $39 million in the same period
a year ago, primarily due to the absence of Stream's losses in the
current year. In addition, contributions from BSkyB increased partly
due to improved earnings resulting from a 10% increase in the DTH
subscriber base, as well as earnings that were not reflected for a
portion of the prior year's quarter. These favorable variances were
partially offset by lower foreign currency gains at Sky Brasil.
The Company's share of associated entities' earnings (losses) is
as follows:
3 Months 6 Months
Ended Ended
December 31, December 31,
% Owned 2003 2002 2003 2002
------- ----- ------ ----- ------
US $ Millions US $ Millions
BSkyB 35.4%(a) $ 42 $ 19 $ 95 $ 19
Sky Brasil 49.7%(b) (6) 10 (14) (57)
Innova - Mexico 30.0% - (9) (10) (17)
FOXTEL - Australia 25.0% (4) (2) (7) (4)
Stream 50.0%(c) - (61) - (100)
Fox Sports Cable Networks Various - (3) 9 9
ESPN STAR Sports 50.0% 1 - 2 1
Other Associates Various(d) 16 7 31 14
----- ----- ----- -----
Total associated entities' earnings
(losses) before other items $ 49 $ (39) $106 $(135)
Other items (17) (67) (17) (67)
----- ------ ----- ------
Total associated entities' earnings
(losses) $ 32 $(106) $ 89 $(202)
===== ====== ===== ======
Further details on the associated entities follow.
-------------------------------------------
(a) The Company's investment basis in BSkyB was negative from December
31, 2001 through November 11, 2002. Accordingly, the Company's share
of BSkyB's results was not recognized during that period.
(b) Represents the Company's economic interest, which was 46.7% as of
December 31, 2002. The Company continues to hold a 36% equity interest
in Sky Brasil.
(c) The Company's share of Stream's losses was included as part of
associated entities from April 1, 2002 through April 30, 2003, when it
merged with Telepiu to form the consolidated entity SKY Italia.
(d) Primarily comprising Gemstar-TV Guide International, Independent
Newspapers Limited, and Queensland Press.
BSkyB (in STG) - Europe 3 Months Ended 6 Months Ended
December 31, December 31,
2003 2002* 2003 2002*
--------- ------- ----------- ---------
Millions Millions
(except subscribers) (except subscribers)
Revenues GBP 916 GBP 785 GBP 1,766 GBP 1,511
Operating profit before
exceptional items 103 48 225 94
Net income before
exceptional items GBP 40 GBP 36 GBP 104 GBP 36
======== ======== ========== ==========
AGAAP adjustment (in US$) (1) 18 13 34 29
------- -------- --------- ----------
News' 35.4% share (in US$) $ 42 $ 34 $ 95 $ 50
======= ======= ========= ==========
Investment basis
adjustment (a) - (15) - (31)
------- -------- --------- -----------
News' reportable
share (in US$) $ 42 $ 19 $ 95 $ 19
======= ======= ========= ===========
Net debt (excluding capitalized
leases) GBP 751 GBP 1,378
Ending Subscribers 11,070,000 10,513,000
DTH Subscribers 7,208,000 6,562,000
* Does not reflect BSkyB's adoption of accounting abstract
UITF 38.
BSkyB's quarterly revenues increased 17% in local currency terms
largely due to DTH subscriber growth, an increase in average revenue
per subscriber and improved interactive revenues. Operating profit
before exceptional items increased 115% due to increased revenues,
partially offset by higher programming expenses from increased sports
rights (mainly soccer and cricket) as well as higher betting and
subscriber management costs. The increase in net income before
exceptional items reflects the improvement in operating income largely
offset by an increase in the tax provision resulting from higher
earnings in the current year as well as the absence of a tax benefit
that was recorded in the prior year's quarter.
3 Months 6 Months
Sky Brasil (in US$) Ended Ended
December 31, December 31,
2003 2002 2003 2002
---------- -------- --------- ---------
Millions Millions
(except subscribers) (except subscribers)
Revenues (in local currency) R$ 158 R$ 138 R$ 320 R$ 268
Revenues 55 37 110 79
Operating loss (3) (8) - (12)
Net income (loss) $(11) $ 21 $ (28) $ (136)
====== ====== ======== ========
News' reportable 49.7%/46.7%
share (in US$) $ (6) $ 10 $ (14) $ (57)
====== ====== ======== =======
Net debt (excluding capitalized
leases) $ 216 $ 213
Ending Subscribers 784,000 732,000
Sky Brasil's revenues grew 14% in local currency terms in the
quarter compared to prior year primarily driven by a higher subscriber
base and increased average revenue per subscriber. The revenue growth
for the quarter was partly offset by increased marketing costs due to
new campaigns to grow the subscriber base. The increase in net loss in
the current quarter principally reflects lower foreign currency gains
versus a year ago.
Innova (in US$) - Mexico 3 Months Ended 6 Months Ended
December 31, December 31,
2003 2002 2003 2002
---------- -------- --------- ---------
Millions Millions
(except subscribers) (except subscribers)
Revenues (in local currency) Ps 1,013 Ps 805 Ps 1,922 Ps 1,639
Revenues 90 80 175 164
Operating income 16 6 28 13
Net loss $ (1) $(30) $ (33) $ (58)
======== ====== ======== ========
News' reportable 30%
share (in US$) $ - $ (9) $ (10) $ (17)
======== ====== ======== ========
Net Debt (excluding capitalized
leases) $ 344 $ 350
Ending Subscribers 857,000 742,000
Innova's revenues grew 26% in local currency terms compared to
prior year primarily driven by a 15% increase in the subscriber base.
The decrease in net loss during the quarter principally reflects lower
interest expense resulting from the refinancing of debt and lower
foreign currency losses versus a year ago.
FOXTEL (in A$)
3 Months 6 Months
Ended Ended
December 31, December 31,
2003 2002 2003 2002
---------- -------- --------- ---------
Millions Millions
(except subscribers) (except subscribers)
Revenues A$ 186 A $150 A$ 368 A$ 288
Operating loss (31) (20) (58) (44)
Net loss A$ (22) A$ (13) A$ (40) A$ (30)
======= ======= ======= =======
News' reportable 25%
share (in US$) $ (4) $ (2) $ (7) $ (4)
====== ===== ======= =======
Ending Subscribers
(including Optus) 1,073,000 1,050,000
FOXTEL's revenues for the quarter increased 24% principally due to
an increase of 18% in satellite subscribers compared to a year ago,
higher average revenue per subscriber, and the inclusion of Optus
wholesale subscribers as of December 1, 2002. Net loss for the quarter
increased A$9 million against the prior year as the increased
subscriber revenues were more than offset by subscriber acquisition
expenses, the development of a future digital service, higher
depreciation expense and the inclusion of Optus license fee costs.
Total subscribers (including Optus wholesale) have increased by 2.2%
over prior year while FOXTEL managed subscribers have increased by
6.6%.
Fox Sports Cable
Networks* (in US$)
3 Months 6 Months
Ended Ended
December 31, December 31,
2003 2002 2003 2002
---------- -------- --------- ---------
Millions Millions
(except subscribers) (except subscribers)
News' reportable share* $- $(3) $9 $9
======= ===== ====== =====
Ending Subscribers 44,068,000 44,072,000
The improved results for the quarter primarily reflect the effect of
cost savings at the Metro Channels and reduced programming costs at
National Sports Partners.
* Various associated interests ranging from approximately 20 percent
to 60 percent, primarily comprising Regional Programming Partners
(including Madison Square Garden), National Sports Partners and
National Advertising Partners.
ESPN STAR Sports (in US$) - Asia
3 Months 6 Months
Ended Ended
December 31, December 31,
2003 2002 2003 2002
----- ----- ----- -----
Millions Millions
Revenues $42 $39 $76 $76
Operating income (loss) 4 (1) 6 4
Net income (loss) $ 3 $(1) $ 4 $ 2
===== ===== ===== =====
News' reportable 50% share $ 1 $ - $ 2 $ 1
===== ===== ===== =====
Operating income improved $5 million due to higher subscription
revenues from India, stronger syndication revenues from Bangladesh
Cricket and lower costs associated with various cricket events.
(1) Principally reflects adjustments for reporting under
Australian Generally Accepted Accounting Principles ("AGAAP") relating
to identifiable intangible amortization.
Foreign Exchange Rates
Average foreign exchange rates used in the year-to-date profit
results are as follows:
6 Months Ended
December 31,
2003 2002
---------- ------------
Australian Dollar/U.S Dollar 0.68 0.55
U.K. Pounds Sterling/U.S. Dollar 1.66 1.56
Euro/U.S. Dollar 1.16 0.99
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 second
quarter results can be heard live on the Internet at 10:00 a.m.
Eastern Standard 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.
STATEMENT OF FINANCIAL PERFORMANCE(a) 3 Months Ended 6 Months Ended
December 31, December 31,
2003 2002 2003 2002
------- ------- -------- -------
Note US $ Millions (except per
ADR amounts)
Sales revenue 1 $5,588 $4,681 $10,237 $8,494
Operating expenses 4,828 3,952 8,758 7,217
------- ------- -------- -------
Operating income 1 760 729 1,479 1,277
Net profit (loss) from associated
entities 32 (106) 89 (202)
Borrowing costs (145) (139) (293) (291)
Interest income 35 24 69 52
------- ------- -------- -------
Net borrowing costs (110) (115) (224) (239)
Exchangeable securities expense (19) (12) (37) (25)
Other items before income tax, net (65) (26) (4) (26)
------- ------- -------- -------
Profit from ordinary activities
before income tax 598 470 1,303 785
------- ------- -------- -------
Income tax expense on:
Ordinary activities before
other items (217) (178) (416) (276)
Other items 23 12 1 12
------- ------- -------- -------
Net income tax expense (194) (166) (415) (264)
------- ------- -------- -------
Net profit from ordinary
activities after tax 404 304 888 521
Net profit attributable to outside
equity interests (43) (65) (105) (120)
----------------------------------------------------------------------
Net Profit Attributable to Members
of the Parent Entity $ 361 $ 239 $ 783 $ 401
----------------------------------------------------------------------
Net exchange gains recognized
directly in equity 585 186 627 178
Other items recognized directly in
equity - 86 - 86
------- ------- -------- -------
Total change in equity other than
those resulting from transactions
with owners as owners $ 946 $ 511 $ 1,410 $ 665
======= ======= ======== =======
Diluted earnings per ADR on net
profit attributable to members of
the parent entity
Ordinary ADRs $ 0.24 $ 0.16 $ 0.52 $ 0.27
Preferred limited voting ordinary
ADRs $ 0.29 $ 0.19 $ 0.63 $ 0.32
Ordinary and preferred limited
voting ordinary ADRs $ 0.27 $ 0.18 $ 0.59 $ 0.30
(a) Following the issuance in June 2002 of the revised Australian
Accounting Standard AASB 1018 "Statement of Financial Performance"
this statement has been reformatted from previous presentations to be
consistent with the format prescribed in the revised Australian
Accounting Standard.
STATEMENT OF FINANCIAL POSITION December June
31, 30,
2003 2003
-------- --------
ASSETS US $ Millions
Current Assets
Cash $ 2,498 $ 4,477
Cash on deposit 293 -
Receivables 4,578 3,784
Inventories 1,732 1,282
Other 488 321
-------- --------
Total Current Assets 9,589 9,864
-------- --------
Non-Current Assets
Cash on deposit - 463
Receivables 832 809
Investments in associated entities 10,592 3,667
Other investments 643 793
Inventories 2,791 2,723
Property, plant and equipment 4,192 4,180
Publishing rights, titles and television licenses 22,189 21,719
Goodwill 243 250
Other 545 495
-------- --------
Total Non-Current Assets 42,027 35,099
-------- --------
Total Assets $51,616 $44,963
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Interest bearing liabilities $ 306 $ 22
Payables 5,997 5,507
Tax liabilities 564 474
Provisions 186 171
-------- --------
Total Current Liabilities 7,053 6,174
-------- --------
Non-Current Liabilities
Interest bearing liabilities 8,657 8,227
Payables 2,288 2,353
Tax liabilities 526 442
Provisions 795 685
-------- --------
Total Non-Current Liabilities Excluding Exchangeable
Preferred Securities 12,266 11,707
-------- --------
Exchangeable preferred securities 1,408 1,383
-------- --------
Total Liabilities 20,727 19,264
Shareholders' Equity
Contributed equity 21,608 17,262
Reserves 2,530 1,685
Retained profits 2,937 2,506
-------- --------
Shareholders' equity attributable to members of the
parent entity 27,075 21,453
Outside equity interests in controlled entities 3,814 4,246
-------- --------
Total Shareholders' Equity 30,889 25,699
-------- --------
Total Liabilities and Shareholders' Equity $51,616 $44,963
======== ========
STATEMENT OF CASH FLOWS 6 Months Ended
December 31,
2003 2002
-------- --------
Operating Activity US $ Millions
Net profit attributable to members of the parent
entity $ 783 $ 401
Adjustment for non-cash and non-operating
activities:
Equity earnings, net (96) 145
Outside equity interest 112 120
Depreciation and amortization 299 204
Other items, net 13 81
Change in assets and liabilities:
Receivables (1,107) (1,236)
Inventories (422) (344)
Payables 711 748
Other liabilities 332 178
-------- --------
Cash provided by operating activity 625 297
Investing and other activity
Property, plant and equipment (136) (184)
Acquisitions, net of cash acquired (147) (432)
Investments and acquisitions of interests in
associated entities (3,179) (357)
Other investments (49) (48)
Repayment of loans by associate - 96
Proceeds from sale of non-current assets 387 54
-------- --------
Cash used in investing activity (3,124) (871)
Financing activity
Issuance of debt 359 -
Repayment of debt and exchangeable securities (479) (1,100)
Decrease in cash on deposit 157 -
Issuance of shares 529 1,220
Dividends paid (97) (75)
Leasing and other finance costs - (1)
-------- --------
Cash provided by financing activity 469 44
-------- --------
Net decrease in cash (2,030) (530)
Opening cash balance 4,477 3,574
Exchange movement on opening balance 51 32
-------- --------
Closing cash balance $ 2,498 $ 3,076
======== ========
Note 1 - SEGMENT DATA 3 Months Ended 6 Months Ended
December 31, December 31,
BY GEOGRAPHIC AREAS 2003 2002 2003 2002
------- ------- -------- -------
US $ Millions US $ Millions
Revenues
United States $3,937 $3,670 $ 7,248 $6,559
Europe 1,155 641 2,083 1,231
Australasia 496 370 906 704
------- ------- -------- -------
$5,588 $4,681 $10,237 $8,494
======= ======= ======== =======
Operating Income
United States $ 635 $ 584 $ 1,325 $1,052
Europe 18 83 (7) 139
Australasia 107 62 161 86
------- ------- -------- -------
$ 760 $ 729 $ 1,479 $1,277
======= ======= ======== =======
BY INDUSTRY SEGMENT
Revenues
Filmed Entertainment $1,377 $1,335 $ 2,625 $2,217
Television 1,555 1,443 2,566 2,467
Cable Network Programming 597 502 1,224 1,056
Direct Broadcast Satellite
Television* 421 - 685 -
Magazines and Inserts 229 215 451 409
Newspapers 858 672 1,597 1,279
Book Publishing 341 326 688 673
Other 210 188 401 393
------- ------- -------- -------
$5,588 $4,681 $10,237 $8,494
======= ======= ======== =======
Operating Income
Filmed Entertainment $ 253 $ 255 $ 581 $ 355
Television 168 165 347 353
Cable Network Programming 187 121 320 239
Direct Broadcast Satellite
Television* (106) - (223) -
Magazines and Inserts 63 59 121 110
Newspapers 170 102 272 159
Book Publishing 57 48 116 106
Other (32) (21) (55) (45)
------- ------- -------- -------
$ 760 $ 729 $ 1,479 $1,277
======= ======= ======== =======
* New segment reflecting the results of SKY Italia, consolidated as
of 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 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 should be considered in
addition to, not as a substitute for the Company's operating income,
net profit 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
attributable to members of the parent entity as presented earlier in
this release to the presentation required under Australian GAAP as
required by Australian Accounting Standard AASB 1018 "Statement of
Financial Performance."
3 Months 6 Months
Ended Ended
December 31, December 31,
2003 2002 2003 2002
------ ------ ------ ------
US $ Millions US $ Millions
Total other items $ (49) $ (81) $ (13) $ (81)
Reclassification of other items -
associated
entities 17 67 17 67
Reclassification of income tax and net
profit
attributable to outside equity interest (33) (12) (8) (12)
------ ------ ------ ------
Other items before income tax, net $ (65) $ (26) $ (4) $ (26)
====== ====== ====== ======
Associated entities before other items
$ 49 $ (39) $ 106 $(135)
Reclassification of other items -
associated entities (17) (67) (17) (67)
------ ------ ------ ------
Net profit (loss) from associated entities
$ 32 $(106) $ 89 $(202)
====== ====== ====== ======
Income tax expense $(217) $(178) $(416) $(276)
Reclassification of income tax expense on
other items 23 12 1 12
------ ------ ------ ------
Net income tax expense $(194) $(166) $(415) $(264)
====== ====== ====== ======
Outside equity interest $ (53) $ (65) $(112) $(120)
Reclassification of outside equity
interest on
other items, net 10 - 7 -
------ ------ ------ ------
Net profit attributable to outside equity
interest $ (43) $ (65) $(105) $(120)
====== ====== ====== ======
SUPPLEMENTAL FINANCIAL DATA (continued)
3 Months Ended 6 Months Ended
December 31, December 31,
2003 2002 2003 2002
------- ------- ------- -------
US $ Millions US $ Millions
Net profit before other items $ 410 $ 320 $ 796 $ 482
Other items before income tax, net (65) (26) (4) (26)
Reclassification of income tax and net
profit
attributable to outside equity
interest 33 12 8 12
Reclassification of other items -
associated entities (17) (67) (17) (67)
------- ------- ------- -------
Net profit attributable to members of
the parent entity $ 361 $ 239 $ 783 $ 401
======= ======= ======= =======
Earnings per ADR on net profit before
other items, net $ 0.30 $ 0.24 $ 0.60 $ 0.36
Earnings per ADR on other items before
income tax, net (0.05) (0.02) - (0.02)
Earnings per ADR on reclassification
of income tax and net profit
attributable to outside equity
interest 0.03 0.01 - 0.01
Earnings per ADR on reclassification
of other items - associated entities (0.01) (0.05) (0.01) (0.05)
------- ------- ------- -------
Diluted earnings per ADR on net profit
attributable to members of the parent
entity $ 0.27 $ 0.18 $ 0.59 $ 0.30
======= ======= ======= =======