Exhibit 99.1
News Corporation |
EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007
NEWS CORPORATION REPORTS RECORD THIRD
QUARTER OPERATING INCOME OF $1.2 BILLION;
GROWTH OF 23% OVER THIRD QUARTER A YEAR AGO
REVENUES INCREASE 21% TO $7.5 BILLION
NET INCOME INCREASES 6% TO $871 MILLION
QUARTER HIGHLIGHTS
• | Filmed Entertainment delivers record operating income contribution of $410 million, up 82%, on strong theatrical release slate and continued success of film and television home entertainment titles. |
• | Cable Network Programming operating income up 34% as increased affiliate revenues drive growth at the Fox News Channel, the FX Network and the Regional Sports Networks. |
• | SKY Italia generates operating income of $91 million, an improvement of 32% versus a year ago, reflecting net subscriber additions of 456,000 over the past 12 months as the subscriber base expands to 4.17 million. |
• | Television operating income decreases as advertising strength at the FOX broadcast network and the station group is offset primarily by losses from the first year of MyNetworkTV. |
• | Publishing businesses aggregate operating income increases primarily on strength of free-standing inserts and in-store marketing products at Magazines and Inserts. |
NEW YORK, NY, May 9, 2007 –News Corporation (NYSE: NWS, NWSA; ASX: NWS, NWSLV) today reported third quarter net income of $871 million ($0.27 per share on a diluted combined basis1) as compared with $820 million ($0.26 per share on a diluted combined basis1) reported in the third quarter a year ago. The year-on-year growth primarily reflects increased consolidated operating income partially offset by lower equity earnings of affiliates and a decline in Other, net, both resulting primarily from the sale of Innova that was included in the prior year results.
Consolidated operating income for the third quarter of $1.2 billion was up 23% versus the $1.0 billion reported a year ago, primarily driven by double-digit percentage increases at the Filmed Entertainment, Cable Network Programming, Direct Broadcast Satellite Television and Magazines and Inserts segments.
(1) | See supplemental financial data on page 12 for detail on earnings per share |
News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007 |
Commenting on the results, Chairman and Chief Executive Officer Rupert Murdoch said:
“We continue to be pleased with the broad-based momentum we are achieving across our various operating segments. While filmed entertainment’s record quarter was the biggest driver of our 23% operating income and 21% revenue growth, it was far from our only catalyst. Sustained subscriber momentum at SKY Italia, ratings strength at our broadcast network and growth across our myriad of cable assets also resulted in very solid returns. Additionally, the popularity of our internet assets is translating into improved results, and we have just begun to scrape the surface of their potential.
“Along those lines we took several additional steps during the quarter to further capitalize on the evolving digital world. We announced, along with NBC Universal, the launch of the largest internet video distribution network ever assembled. And separately, we finalized a joint venture combining Jamba and Fox Mobile Entertainment assets to form a leading global provider of mobile entertainment. Both of these transactions ideally complement our existing asset base and further solidify our position as a leader in the evolving media landscape.”
Consolidated Operating Income
3 Months Ended March 31, | 9 Months Ended March 31, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
US $ Millions | ||||||||||||||||
Filmed Entertainment | $ | 410 | $ | 225 | $ | 1,119 | $ | 892 | ||||||||
Television | 273 | 286 | 577 | 629 | ||||||||||||
Cable Network Programming | 282 | 211 | 806 | 670 | ||||||||||||
Direct Broadcast Satellite Television | 91 | 69 | 66 | (45 | ) | |||||||||||
Magazines and Inserts | 102 | 90 | 254 | 242 | ||||||||||||
Newspapers | 156 | 153 | 450 | 347 | ||||||||||||
Book Publishing | 29 | 26 | 138 | 173 | ||||||||||||
Other | (104 | ) | (49 | ) | (176 | ) | (68 | ) | ||||||||
Total Consolidated Operating Income | $ | 1,239 | $ | 1,011 | $ | 3,234 | $ | 2,840 | ||||||||
REVIEW OF OPERATING RESULTS
FILMED ENTERTAINMENT
The Filmed Entertainment segment reported record third quarter operating income of $410 million versus the $225 million reported in the same period a year ago. The 82% growth primarily reflects increased contributions from theatrical releases as well as higher contributions from film and television home entertainment releases.
Higher third quarter film results were driven by the strong worldwide theatrical performance ofNight at the Museum,grossing over $570 million in worldwide box office
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News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007 |
to date, and the worldwide home entertainment performances of theatrical hitsBorat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan, The Devil Wears Prada, Little Miss Sunshine,Ice Age: The MeltdownandEragon.
Twentieth Century Fox Television increased contributions versus the third quarter a year ago, primarily reflecting continued momentum in home entertainment sales, most notably fromPrison Breakand24.
TELEVISION
The Television segment reported third quarter operating income of $273 million, a decline of $13 million versus the same period a year ago as increased contributions from the FOX Broadcasting Company and Fox Television Stations were more than offset by lower contributions from STAR and by losses from the first year of MyNetworkTV.
At the FOX Broadcasting Company (FBC), third quarter operating income increased 49% versus a year ago as higher pricing drove primetime advertising revenue growth. The higher primetime advertising revenues were partially offset by increased programming costs for several returning series includingAmerican Idol, 24, andHouse, as well as new seriesAre You Smarter than a 5th Grader,which was FBC’s highest rated series premiere in more than 13 years among Adults 18-49.
Fox Television Stations’ third quarter operating income increased 4% from the same period a year ago as advertising revenues expanded primarily on the strength of FBC’s primetime and sports programming. The increased revenues from the FBC affiliated stations were partially offset by lower revenues at the MyNetworkTV stations as well as by costs associated with the further expansion of local newscasts and spending on local station internet initiatives.
STAR’s third quarter operating income decreased from the same period a year ago as 11% revenue growth, primarily from higher advertising revenues, was more than offset by higher programming costs. The increased advertising revenue reflects the broadcast on STAR PLUS ofKaun Banega Crorepati 3, India’s version ofWho Wants to Be a Millionaire.
CABLE NETWORK PROGRAMMING
Cable Network Programming reported third quarter operating income of $282 million, an increase of $71 million over last year’s results. The 34% growth primarily reflects higher contributions from Fox News Channel, the FX Network (FX), the Regional Sports Networks (RSNs) and the Fox International Channels.
The Fox News Channel (FNC) reported operating income growth of 49% compared to the third quarter a year ago primarily from increased affiliate rates driving affiliate revenue growth. During the quarter, viewership at FNC was nearly double its nearest competitor in primetime and was over 60% higher on a 24-hour basis reflecting FNC broadcasting the top six shows in cable news.
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News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007 |
At our other cable channels (including the RSNs, FX, Fox International Channels and SPEED Channel) operating profit increased nearly 30% from last year’s third quarter results. Revenue gains at the RSNs, primarily from increased affiliate rates and subscribers, were partially offset by higher programming costs associated with an expanded slate of NBA and NHL games. At FX, increased contributions were driven by higher affiliate revenues from increased rates and subscribers, and by advertising revenue growth on continued ratings strength. Additionally, lower programming costs versus the prior year, which included NASCAR, as well as several non-returning original series, also contributed to the year-on-year growth. The current quarter also included marketing and programming costs for several new original series, includingDirtandThe Riches,both of which premiered during the quarter and contributed to increased ratings versus the same period a year ago.
DIRECT BROADCAST SATELLITE TELEVISION
SKY Italia reported third quarter operating income of $91 million, an increase of $22 million versus the $69 million a year ago. This 32% improvement on local currency revenue growth of 12% primarily reflects subscriber additions, with more than 456,000 net subscribers added over the past 12 months, bringing SKY Italia’s subscriber base to 4.17 million at quarter end. The revenue growth was partially offset by increased programming spending associated with the larger subscriber base, as well as costs associated with broadcasting additional Series A and Series B soccer matches.
MAGAZINES AND INSERTS
The Magazines and Inserts segment reported third quarter operating income of $102 million, an increase of 13% versus the $90 million reported in the quarter a year ago. The growth was primarily driven by increased page volume and lower printing costs for free-standing inserts, as well as by reduced operating costs for in-store marketing products.
NEWSPAPERS
The Newspapers segment reported third quarter operating income of $156 million, a slight increase from the $153 million reported in last year’s results as increased contributions from the Australian newspaper group were offset by lower contributions from the U.K. newspaper group.
The Australian newspaper group reported third quarter operating income slightly above a year ago in local currency terms as advertising and circulation revenue growth was mostly offset by increased newsprint and production costs. Advertising revenue gains were primarily driven by the strength of retail, real estate and employment advertising, while circulation revenues expanded slightly on higher cover prices.
The U.K. newspaper group reported an operating income decline in local currency terms as modest advertising and circulation revenue decreases were partially offset by increased internet revenues and lower promotional and production costs. The
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News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007 |
advertising revenue declines were across all major titles, led by softness in both display and classified advertising, while circulation revenue declines were primarily the result of decreased circulation and regional cover price reductions atThe Sun.
BOOK PUBLISHING
HarperCollins reported third quarter operating income of $29 million, an increase of $3 million versus the same period a year ago. The 12% year-on-year increase included strong sales ofThe Measure of a Man by Sidney Poitier, an Oprah Book Club selection,The Proper Care and Feeding of Marriage by Dr. Laura Schlessinger andSomebody’s Gotta Say It by Neal Boortz. During the quarter, HarperCollins had 48 books on The New York Times bestseller list, including seven books that reached the #1 spot.
OTHER
Operating results from the Other segment during the third quarter declined by $55 million primarily due to losses associated with the 2007 Cricket World Cup. These losses, which related to the final event under the Company’s programming contract with the International Cricket Council, were due to substantial advertising weakness as viewership declined with the early elimination of popular teams India and Pakistan.
OTHER ITEMS
In April 2007, the previously announced share exchange agreement with Liberty Media Corporation was approved by News Corporation’s Class B common stockholders. Upon completion, Liberty will exchange its entire 16.3 percent economic position in News Corporation for the Company’s entire interest in The DIRECTV Group, three Regional Sports Networks and $588 million of cash, subject to adjustment. The transaction remains subject to customary closing conditions including various regulatory approvals. Completion is expected during the second half of calendar 2007 and, when consummated, will be immediately accretive to News Corporation’s earnings per share.
On June 13, 2005, the Company announced that its Board of Directors approved a stock repurchase program, under which the Company was authorized to acquire up to an aggregate of $3.0 billion in the Company’s Class A and Class B common stock. On May 10, 2006, the Board authorized an increase of that $3.0 billion buyback to $6.0 billion. As of May 9, 2007, the Company has purchased over $3.3 billion of stock under the program. The remaining repurchases are expected to be completed by May 2008, but may be suspended or discontinued at any time.
In May 2007, the Company confirmed that it has made a friendly offer to Dow Jones and Company to acquire all of the outstanding shares of the company for $60 per share in cash, or in a combination of cash and News Corporation stock.
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News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007 |
REVIEW OF EQUITY EARNINGS OF AFFILIATES’ RESULTS
Third quarter net earnings from affiliates were $255 million versus $264 million in the same period a year ago. The $9 million decrease was primarily due to absence of equity earnings from Innova, sold in February 2006, and Sky Brasil, sold in August 2006, partially offset by improved earnings from The DIRECTV Group. The DIRECTV Group’s results reflect subscriber growth and increased pricing, as well as lower expenses from the set-top receiver lease program.
The Company’s share of equity earnings of affiliates is as follows:
3 Months Ended March 31, | 9 Months Ended March 31, | |||||||||||||||||
% Owned | 2007 | 2006 | 2007 | 2006 | ||||||||||||||
US $ Millions | ||||||||||||||||||
BSkyB | 39 | % | (a | )(c) | $ | 101 | $ | 100 | $ | 273 | $ | 286 | ||||||
The DIRECTV Group | 38 | % | (b | )(c) | 106 | 61 | 336 | 89 | ||||||||||
Other affiliates | Various | (d | ) | 48 | 103 | 138 | 235 | |||||||||||
Total equity earnings of affiliates | $ | 255 | $ | 264 | $ | 747 | $ | 610 | ||||||||||
(a) | Due to BSkyB’s stock repurchase program, News Corporation’s ownership in BSkyB increased to 39% as of March 31, 2007 from approximately 38% as of March 31, 2006. |
(b) | Due to The DIRECTV Group’s stock repurchase program, News Corporation’s’ ownership in The DIRECTV Group increased to 38% at March 31, 2007 from 37% at March 31, 2006. |
(c) | Please refer to respective companies’ earnings releases for detailed information. |
(d) | Primarily comprised of Gemstar-TV Guide International, Fox Cable Networks affiliates, Sky Network Television Limited, Innova (through February 16, 2006) and Sky Brasil (through August 23, 2006). |
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News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007 |
Foreign Exchange Rates
Average foreign exchange rates used in the year-to-date results are as follows:
9 Months Ended | ||||
March 31, | ||||
2007 | 2006 | |||
Australian Dollar/U.S. Dollar | 0.77 | 0.75 | ||
U.K. Pounds Sterling/U.S. Dollar | 1.91 | 1.76 | ||
Euro/U.S. Dollar | 1.29 | 1.20 |
To receive a copy of this press release through the Internet, access News Corporation’s corporate website located athttp://www.newscorp.com
Audio from News Corporation’s conference call with analysts on the third quarter results can be heard live on the internet at 8:30 A.M. Eastern Daylight Time today. To listen to the call, visithttp://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 |
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News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007 |
CONSOLIDATED STATEMENTS OF OPERATIONS
3 Months Ended | 9 Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
US $ Millions (except per share amounts) | ||||||||||||||||
Revenues | $ | 7,530 | $ | 6,198 | $ | 21,288 | $ | 18,545 | ||||||||
Expenses: | ||||||||||||||||
Operating | 4,915 | 4,006 | 14,000 | 12,116 | ||||||||||||
Selling, general and administrative | 1,145 | 989 | 3,400 | 2,926 | ||||||||||||
Depreciation and amortization | 224 | 189 | 637 | 561 | ||||||||||||
Other operating charges | 7 | 3 | 17 | 102 | ||||||||||||
Operating income | 1,239 | 1,011 | 3,234 | 2,840 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest expense, net | (141 | ) | (141 | ) | (406 | ) | (410 | ) | ||||||||
Equity earnings of affiliates | 255 | 264 | 747 | 610 | ||||||||||||
Other, net | 47 | 170 | 493 | 243 | ||||||||||||
Income from continuing operations before income tax expense and minority interest in subsidiaries | 1,400 | 1,304 | 4,068 | 3,283 | ||||||||||||
Income tax expense | (517 | ) | (471 | ) | (1,486 | ) | (1,145 | ) | ||||||||
Minority interest in subsidiaries, net of tax | (12 | ) | (13 | ) | (46 | ) | (44 | ) | ||||||||
Income from continuing operations | 871 | 820 | 2,536 | 2,094 | ||||||||||||
Gain on disposition of discontinued operations, net of tax | — | — | — | 381 | ||||||||||||
Income before cumulative effect of accounting change | 871 | 820 | 2,536 | 2,475 | ||||||||||||
Cumulative effect of accounting change, net of tax | — | — | — | (1,013 | ) | |||||||||||
Net income | $ | 871 | $ | 820 | $ | 2,536 | $ | 1,462 | ||||||||
Basic earnings per share: | ||||||||||||||||
Income from continuing operations | ||||||||||||||||
Class A | $ | 0.29 | $ | 0.27 | $ | 0.85 | $ | 0.68 | ||||||||
Class B | $ | 0.24 | $ | 0.23 | $ | 0.71 | $ | 0.57 | ||||||||
Net income | ||||||||||||||||
Class A | $ | 0.29 | $ | 0.27 | $ | 0.85 | $ | 0.48 | ||||||||
Class B | $ | 0.24 | $ | 0.23 | $ | 0.71 | $ | 0.40 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Income from continuing operations | ||||||||||||||||
Class A | $ | 0.29 | $ | 0.27 | $ | 0.84 | $ | 0.68 | ||||||||
Class B | $ | 0.24 | $ | 0.22 | $ | 0.70 | $ | 0.57 | ||||||||
Net income | ||||||||||||||||
Class A | $ | 0.29 | $ | 0.27 | $ | 0.84 | $ | 0.48 | ||||||||
Class B | $ | 0.24 | $ | 0.22 | $ | 0.70 | $ | 0.40 |
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News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007 |
CONSOLIDATED BALANCE SHEETS
March 31, | June 30, | |||||
2007 | 2006 | |||||
US $ Millions | ||||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 7,246 | $ | 5,783 | ||
Receivables, net | 6,047 | 5,150 | ||||
Inventories, net | 2,264 | 1,840 | ||||
Other | 404 | 350 | ||||
Total current assets | 15,961 | 13,123 | ||||
Non-current assets: | ||||||
Receivables | 485 | 593 | ||||
Investments | 11,407 | 10,601 | ||||
Inventories, net | 2,610 | 2,410 | ||||
Property, plant and equipment, net | 5,280 | 4,755 | ||||
Intangible assets, net | 11,526 | 11,446 | ||||
Goodwill | 13,361 | 12,548 | ||||
Other non-current assets | 984 | 1,173 | ||||
Total non-current assets | 45,653 | 43,526 | ||||
Total assets | $ | 61,614 | $ | 56,649 | ||
Liabilities and Stockholders’ Equity | ||||||
Current liabilities: | ||||||
Borrowings | $ | 362 | $ | 42 | ||
Accounts payable, accrued expenses and other current liabilities | 4,683 | 4,047 | ||||
Participations, residuals and royalties payable | 1,362 | 1,007 | ||||
Program rights payable | 874 | 801 | ||||
Deferred revenue | 540 | 476 | ||||
Total current liabilities | 7,821 | 6,373 | ||||
Non-current liabilities: | ||||||
Borrowings | 12,112 | 11,385 | ||||
Other liabilities | 2,977 | 3,536 | ||||
Deferred income taxes | 6,053 | 5,200 | ||||
Minority interest in subsidiaries | 413 | 281 | ||||
Commitments and contingencies | ||||||
Stockholders’ Equity: | ||||||
Class A common stock, $0.01 par value | 22 | 22 | ||||
Class B common stock, $0.01 par value | 10 | 10 | ||||
Additional paid-in capital | 27,781 | 28,153 | ||||
Retained earnings and accumulated other comprehensive income | 4,425 | 1,689 | ||||
Total stockholders’ equity | 32,238 | 29,874 | ||||
Total liabilities and stockholders’ equity | $ | 61,614 | $ | 56,649 | ||
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News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
9 Months Ended March 31, | ||||||||
2007 | 2006 | |||||||
US $ Millions | ||||||||
Operating activities: | ||||||||
Net income | $ | 2,536 | $ | 1,462 | ||||
Gain on disposition of discontinued operations, net of tax | — | (381 | ) | |||||
Cumulative effect of accounting change, net of tax | — | 1,013 | ||||||
Income from continuing operations | 2,536 | 2,094 | ||||||
Adjustments to reconcile income from continuing operations to cash provided by operating activities: | ||||||||
Depreciation and amortization | 637 | 561 | ||||||
Amortization of cable distribution investments | 56 | 78 | ||||||
Equity earnings of affiliates | (747 | ) | (610 | ) | ||||
Cash distributions received from affiliates | 145 | 111 | ||||||
Other, net | (493 | ) | (243 | ) | ||||
Minority interest in subsidiaries, net of tax | 46 | 44 | ||||||
Change in operating assets and liabilities, net of acquisitions: | ||||||||
Receivables and other assets | (546 | ) | (692 | ) | ||||
Inventories, net | (593 | ) | (995 | ) | ||||
Accounts payable and other liabilities | 1,487 | 1,701 | ||||||
Net cash provided by operating activities | 2,528 | 2,049 | ||||||
Investing activities: | ||||||||
Property, plant and equipment, net of acquisitions | (904 | ) | (648 | ) | ||||
Acquisitions, net of cash acquired | (589 | ) | (1,578 | ) | ||||
Investments in equity affiliates | (120 | ) | (39 | ) | ||||
Other investments | (316 | ) | (46 | ) | ||||
Proceeds from sale of investments and other non-current assets | 410 | 404 | ||||||
Proceeds from disposition of discontinued operations | — | 395 | ||||||
Net cash used in investing activities | (1,519 | ) | (1,512 | ) | ||||
Financing activities: | ||||||||
Borrowings | 1,181 | 1,149 | ||||||
Repayment of borrowings | (190 | ) | (839 | ) | ||||
Issuance of shares | 350 | 110 | ||||||
Repurchase of shares | (783 | ) | (1,810 | ) | ||||
Dividends paid | (186 | ) | (246 | ) | ||||
Net cash provided by (used in) financing activities | 372 | (1,636 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 1,381 | (1,099 | ) | |||||
Cash and cash equivalents, beginning of period | 5,783 | 6,470 | ||||||
Exchange movement on opening cash balance | 82 | (47 | ) | |||||
Cash and cash equivalents, end of period | $ | 7,246 | $ | 5,324 | ||||
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SEGMENT INFORMATION
3 Months Ended | 9 Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
US $ Millions | ||||||||||||||||
Revenues | ||||||||||||||||
Filmed Entertainment | $ | 1,802 | $ | 1,388 | $ | 5,280 | $ | 4,414 | ||||||||
Television | 1,568 | 1,347 | 4,271 | 3,991 | ||||||||||||
Cable Network Programming | 998 | 839 | 2,807 | 2,424 | ||||||||||||
Direct Broadcast Satellite Television | 825 | 675 | 2,211 | 1,793 | ||||||||||||
Magazines and Inserts | 303 | 300 | 844 | 832 | ||||||||||||
Newspapers | 1,123 | 1,015 | 3,290 | 3,037 | ||||||||||||
Book Publishing | 291 | 275 | 1,052 | 1,056 | ||||||||||||
Other | 620 | 359 | 1,533 | 998 | ||||||||||||
$ | 7,530 | $ | 6,198 | $ | 21,288 | $ | 18,545 | |||||||||
Operating Income | ||||||||||||||||
Filmed Entertainment | $ | 410 | $ | 225 | $ | 1,119 | $ | 892 | ||||||||
Television | 273 | 286 | 577 | 629 | ||||||||||||
Cable Network Programming | 282 | 211 | 806 | 670 | ||||||||||||
Direct Broadcast Satellite Television | 91 | 69 | 66 | (45 | ) | |||||||||||
Magazines and Inserts | 102 | 90 | 254 | 242 | ||||||||||||
Newspapers | 156 | 153 | 450 | 347 | ||||||||||||
Book Publishing | 29 | 26 | 138 | 173 | ||||||||||||
Other | (104 | ) | (49 | ) | (176 | ) | (68 | ) | ||||||||
$ | 1,239 | $ | 1,011 | $ | 3,234 | $ | 2,840 | |||||||||
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News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007 |
NOTE 1 - SUPPLEMENTAL EARNINGS PER SHARE DATA
Earnings per share is presented on a combined basis as the Company will not be required to present the two class method beginning in Fiscal 2008. Currently under US GAAP, earnings per share is computed individually for the Class A and Class B shares. Class A non-voting shares carry rights to a greater dividend than Class B voting shares through fiscal 2007. As such, net income available to the Company’s common stockholders is allocated between our two classes of common stock. The allocation between classes was based upon the two-class method. Earnings per share by class and by total weighted average shares outstanding (Class A and Class B combined) is as follows:
3 Months Ended | 9 Months Ended | ||||||||||||
March 31, | March 31, | ||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||
Basic earnings per share: | |||||||||||||
Income from continuing operations | |||||||||||||
Class A | $ | 0.29 | $ | 0.27 | $ | 0.85 | $ | 0.68 | |||||
Class B | $ | 0.24 | $ | 0.23 | $ | 0.71 | $ | 0.57 | |||||
Total | $ | 0.28 | $ | 0.26 | $ | 0.80 | $ | 0.65 | |||||
Gain on disposition of discontinued operations, net of tax | |||||||||||||
Class A | $ | — | $ | — | $ | — | $ | 0.12 | |||||
Class B | $ | — | $ | — | $ | — | $ | 0.10 | |||||
Total | $ | — | $ | — | $ | — | $ | 0.12 | |||||
Cumulative effect of accounting change, net of tax | |||||||||||||
Class A | $ | — | $ | — | $ | — | $ | (0.33 | ) | ||||
Class B | $ | — | $ | — | $ | — | $ | (0.28 | ) | ||||
Total | $ | — | $ | — | $ | — | $ | (0.31 | ) | ||||
Net income | |||||||||||||
Class A | $ | 0.29 | $ | 0.27 | $ | 0.85 | $ | 0.48 | |||||
Class B | $ | 0.24 | $ | 0.23 | $ | 0.71 | $ | 0.40 | |||||
Total | $ | 0.28 | $ | 0.26 | $ | 0.80 | $ | 0.45 | |||||
Diluted earnings per share: | |||||||||||||
Income from continuing operations | |||||||||||||
Class A | $ | 0.29 | $ | 0.27 | $ | 0.84 | $ | 0.68 | |||||
Class B | $ | 0.24 | $ | 0.22 | $ | 0.70 | $ | 0.57 | |||||
Total | $ | 0.27 | $ | 0.26 | $ | 0.80 | $ | 0.64 | |||||
Gain on disposition of discontinued operations, net of tax | |||||||||||||
Class A | $ | — | $ | — | $ | — | $ | 0.12 | |||||
Class B | $ | — | $ | — | $ | — | $ | 0.10 | |||||
Total | $ | — | $ | — | $ | — | $ | 0.12 | |||||
Cumulative effect of accounting change, net of tax | |||||||||||||
Class A | $ | — | $ | — | $ | — | $ | (0.33 | ) | ||||
Class B | $ | — | $ | — | $ | — | $ | (0.27 | ) | ||||
Total | $ | — | $ | — | $ | — | $ | (0.31 | ) | ||||
Net income | |||||||||||||
Class A | $ | 0.29 | $ | 0.27 | $ | 0.84 | $ | 0.48 | |||||
Class B | $ | 0.24 | $ | 0.22 | $ | 0.70 | $ | 0.40 | |||||
Total | $ | 0.27 | $ | 0.26 | $ | 0.80 | $ | 0.45 | |||||
Weighted average shares outstanding (diluted), in millions: | |||||||||||||
Class A | 2,198 | 2,203 | 2,195 | 2,227 | |||||||||
Class B | 987 | 1,004 | 987 | 1,020 | |||||||||
Total | 3,185 | 3,207 | 3,182 | 3,247 | |||||||||
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News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007 |
NOTE 2 - OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION
Operating income before depreciation and amortization, defined as operating income plus depreciation and amortization and the amortization of cable distribution investments, eliminates the variable effect across all business segments of non-cash depreciation and amortization. Since operating income before depreciation and amortization is a non-GAAP measure it should be considered in addition to, not as a substitute for, operating income, net income, cash flow and other measures of financial performance reported in accordance with GAAP. Operating income before depreciation and amortization does not reflect cash available to fund requirements, and the items excluded from operating income before depreciation and amortization, such as depreciation and amortization, are significant components in assessing the Company’s financial performance. Management believes that operating income before depreciation and amortization is an appropriate measure for evaluating the operating performance of the Company’s business segments. Operating income before depreciation and amortization, 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, provides management, investors and equity analysts a measure to analyze operating performance of each business segment and enterprise value against historical and competitors’ data.
The following table reconciles operating income before depreciation and amortization to the presentation of operating income.
3 Months Ended | 9 Months Ended | |||||||||||
March 31, | March 31, | |||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||
US $ Millions | ||||||||||||
Operating income | $ | 1,239 | $ | 1,011 | $ | 3,234 | $ | 2,840 | ||||
Depreciation and amortization | 224 | 189 | 637 | 561 | ||||||||
Amortization of cable distribution investments | 17 | 25 | 56 | 78 | ||||||||
Operating income before depreciation and amortization | $ | 1,480 | $ | 1,225 | $ | 3,927 | $ | 3,479 | ||||
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News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007 |
For the Three Months Ended March 31, 2007 (US $ Millions) | ||||||||||||||
Operating income (loss) | Depreciation and amortization | Amortization of cable distribution investments | Operating income (loss) before depreciation and amortization | |||||||||||
Filmed Entertainment | $ | 410 | $ | 22 | $ | — | $ | 432 | ||||||
Television | 273 | 23 | — | 296 | ||||||||||
Cable Network Programming | 282 | 15 | 17 | 314 | ||||||||||
Direct Broadcast Satellite Television | 91 | 49 | — | 140 | ||||||||||
Magazines and Inserts | 102 | 2 | — | 104 | ||||||||||
Newspapers | 156 | 72 | — | 228 | ||||||||||
Book Publishing | 29 | 2 | — | 31 | ||||||||||
Other | (104 | ) | 39 | — | (65 | ) | ||||||||
Consolidated Total | $ | 1,239 | $ | 224 | $ | 17 | $ | 1,480 | ||||||
For the Three Months Ended March 31, 2006 (US $ Millions) | ||||||||||||||
Operating income (loss) | Depreciation and amortization | Amortization of cable distribution investments | Operating income (loss) before depreciation and amortization | |||||||||||
Filmed Entertainment | $ | 225 | $ | 17 | $ | — | $ | 242 | ||||||
Television | 286 | 24 | — | 310 | ||||||||||
Cable Network Programming | 211 | 13 | 25 | 249 | ||||||||||
Direct Broadcast Satellite Television | 69 | 37 | — | 106 | ||||||||||
Magazines and Inserts | 90 | 2 | — | 92 | ||||||||||
Newspapers | 153 | 65 | — | 218 | ||||||||||
Book Publishing | 26 | 2 | — | 28 | ||||||||||
Other | (49 | ) | 29 | — | (20 | ) | ||||||||
Consolidated Total | $ | 1,011 | $ | 189 | $ | 25 | $ | 1,225 | ||||||
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News Corporation EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2007 |
For the Nine Months Ended March 31, 2007 (US $ Millions) | ||||||||||||||
Operating income (loss) | Depreciation and amortization | Amortization of cable distribution investments | Operating income (loss) before depreciation and amortization | |||||||||||
Filmed Entertainment | $ | 1,119 | $ | 62 | $ | — | $ | 1,181 | ||||||
Television | 577 | 68 | — | 645 | ||||||||||
Cable Network Programming | 806 | 42 | 56 | 904 | ||||||||||
Direct Broadcast Satellite Television | 66 | 140 | — | 206 | ||||||||||
Magazines and Inserts | 254 | 6 | — | 260 | ||||||||||
Newspapers | 450 | 207 | — | 657 | ||||||||||
Book Publishing | 138 | 6 | — | 144 | ||||||||||
Other | (176 | ) | 106 | — | (70 | ) | ||||||||
Consolidated Total | $ | 3,234 | $ | 637 | $ | 56 | $ | 3,927 | ||||||
For the Nine Months Ended March 31, 2006 (US $ Millions) | ||||||||||||||
Operating income (loss) | Depreciation and amortization | Amortization of investments | Operating income (loss) before depreciation and amortization | |||||||||||
Filmed Entertainment | $ | 892 | $ | 63 | $ | — | $ | 955 | ||||||
Television | 629 | 66 | — | 695 | ||||||||||
Cable Network Programming | 670 | 38 | 78 | 786 | ||||||||||
Direct Broadcast Satellite Television | (45 | ) | 121 | — | 76 | |||||||||
Magazines and Inserts | 242 | 5 | — | 247 | ||||||||||
Newspapers | 347 | 196 | — | 543 | ||||||||||
Book Publishing | 173 | 5 | — | 178 | ||||||||||
Other | (68 | ) | 67 | — | (1 | ) | ||||||||
Consolidated Total | $ | 2,840 | $ | 561 | $ | 78 | $ | 3,479 | ||||||
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