News Corporation
EARNINGS RELEASE FOR THE QUARTER ENDED SEPTEMBER 30, 2009
NEWS CORPORATION REPORTS FIRST QUARTER
OPERATING INCOME OF $1.04 BILLION;
GROWTH OF 9% OVER THE YEAR AGO QUARTER
NET INCOME INCREASES BY 11% TO $571 MILLION
ON REVENUE OF $7.2 BILLION
NEW YORK, NY, November 4, 2009
News Corporation (NASDAQ: NWS, NWSA; ASX:
NWS, NWSLV) today reported first quarter consolidated operating income of $1.04 billion,
an increase of 9% compared with $953 million of operating income reported a year ago.
This result reflects double-digit percentage profit increases at the Filmed Entertainment,
Cable Network Programming and Book Publishing segments, partially offset by decreases
at the Television, Direct Broadcast Satellite Television, Newspapers and Information
Services and Other segments.
First quarter net income of $571 million ($0.22 per share) increased 11% versus net income
of $515 million ($0.20 per share) reported in the first quarter a year ago. The year-on-year
increase is largely driven by higher operating profit and equity contributions from affiliates
due to the absence of a $422 million write-down of the Company's investment in Sky
Deutschland AG (formerly known as Premiere AG) taken during the prior year period.
These improvements were partially offset by the absence of the gain on the sale of eight
television stations included in Other, net in the prior year.
Commenting on the results, Chairman and Chief Executive Officer Rupert Murdoch said:
"I am pleased that News Corporation has delivered exceptionally strong results this
quarter, despite continued macro-economic challenges. Operating income growth was
led by gains at our worldwide cable network programming businesses and renewed
momentum at our Filmed Entertainment segment, reflecting our strong slate of films at
the global box office.
"The strategic steps we took last year to ensure stability during the downturn have
proven successful, with significant cost reductions offsetting much of the revenue
declines in our Television and Newspapers and Information Services segments. The
economies in which we do business are clearly in better shape than they were a year
ago, and we have further positioned our operations to take advantage of the
improvements we are seeing globally. We will continue to manage our businesses
smartly and confidently under the security of a strong balance sheet."
News Corporation
E A R N I N G S R E L E A S E F O R T H E Q U A R T E R E N D E D S E P T E M B E R 3 0 , 2 0 0 9
Page 2
REVIEW OF OPERATING RESULTS
As a result of a restructuring in the first quarter, the operating results of STAR Group
Limited (STAR) which were previously reported in the Television segment are now
included within the Cable Network Programming segment. Prior year STAR results have
also been reclassified to the Cable Network Programming segment to conform to the
current year presentation. A schedule of fiscal 2009 revenue and operating income
(loss) by quarter reflecting this reclassification is included in Note 1. In addition, the
Magazines and Inserts segment has been renamed the Integrated Marketing Services
segment.
Operating Income (Loss)
3 Months Ended
September
30,
2009 2008
US $ Millions
Filmed
Entertainment
$
391 $ 251
Television
38
83
Cable Network Programming
495
350
Direct Broadcast Satellite Television
128
165
Integrated Marketing Services
73
68
Newspapers and Information Services
25
134
Book
Publishing
20
3
Other
(128)
(101)
Total Operating Income
$ 1,042 $
953
Filmed Entertainment
The Filmed Entertainment segment reported fiscal first quarter operating income of $391
million, compared with $251 million reported in the same period a year ago. This set a
record for the highest fiscal first quarter operating income ever for this segment. The
increase was driven by the worldwide theatrical success of Ice Age: Dawn of the Dinosaurs,
which is the highest international grossing animated film of all time and the third highest
international grossing film ever, having generated more than $880 million in worldwide box-
office receipts to date. First
quarter film results also include the worldwide home
entertainment performance of X-Men Origins: Wolverine and the home entertainment and
pay-TV performance of Taken.
Twentieth Century Fox Television reported decreased contributions versus a year ago,
primarily due to lower contributions from home entertainment releases and reduced
domestic television revenue.
Television
The Television segment reported first
quarter operating income of $38 million, a decline of
$45 million versus the same period a year ago, due to lower contributions from the Fox
Television Stations (FTS) and FOX Broadcasting Company.
News Corporation
E A R N I N G S R E L E A S E F O R T H E Q U A R T E R E N D E D S E P T E M B E R 3 0 , 2 0 0 9
Page 3
FTS' first quarter operating income decreased 26% from the same period a year ago
reflecting overall local advertising trends, particularly in the automotive and movie sectors,
as well as lower comparative political advertising. FTS achieved record market share for the
fiscal first quarter, with FTS revenues down only 14% for the quarter compared to estimated
market declines of 21%.
FOX Broadcasting Company's first quarter results were lower due to higher primetime
programming costs driven by increased license fees for returning series and decreased
advertising revenue. While primetime advertising revenues increased as a result of pricing,
sports revenue declined, principally due to fewer National Football League games broadcast
and lower Major League Baseball contributions.
Cable Network Programming
Cable Network Programming reported first
quarter operating income of $495 million, an
increase of $145 million over the first quarter a year ago. The 41% growth reflects
increased contributions from FOX News Channel (FNC), the Fox International Channels,
STAR, the Regional Sports Networks (RSNs) and the Big Ten Network.
FNC achieved its highest ever quarterly profit and increased its operating income 79%
versus the first quarter a year ago primarily from increased affiliate revenues on higher rates
and lower political coverage costs. During the quarter, viewership at FNC was 125% greater
than its nearest competitor in primetime and 94% higher on a 24-hour basis, reflecting
FNC's broadcasting of the top ten shows in cable news. In terms of total viewers, FNC
achieved its third highest rated quarter ever in primetime and fifth highest rated quarter ever
in total day.
At the Company's other cable channels, operating profit increased 28% from the prior year's
first quarter results. Higher contributions at the Big Ten Network and RSNs were primarily
the result of increased affiliate revenues. Increased contributions from the Fox International
Channels were driven by continued affiliate revenue growth in Latin America, Europe and
Asia. STAR's first
quarter operating results improved versus the same quarter a year ago
on advertising and subscription revenue gains, as well as the absence of the expense
related to the termination of a distribution agreement in the prior year. Restructuring costs
and related asset write-downs of $28 million arising from a reorganization of STAR in the
first quarter partially offset these improvements.
Direct Broadcast Satellite Television
SKY Italia reported first
quarter operating income of $128 million, a decrease of $37 million
versus the $165 million in operating income reported a year ago. Slight local currency
revenue growth was more than offset by increased programming costs, reflecting a larger
average subscriber base, higher soccer costs and the addition of 16 new channels over the
year ago quarter. SKY Italia's 4.8 million quarter-end subscriber base remained unchanged
compared with fiscal year end, as gross subscriber additions in the quarter were fully offset
by existing subscriber cancellations.
News Corporation
E A R N I N G S R E L E A S E F O R T H E Q U A R T E R E N D E D S E P T E M B E R 3 0 , 2 0 0 9
Page 4
Integrated Marketing Services
The Integrated Marketing Services segment reported first
quarter operating income of $73
million, a 7% increase versus the $68 million reported in the same quarter a year ago.
Higher demand for in-store marketing products and increased contributions from free-
standing inserts, partially offset by higher commissions for in-store marketing products,
primarily drove the improved results.
Newspapers and Information Services
The Newspapers and Information Services segment reported first
quarter operating income
of $25 million, a decrease of $109 million compared with the same period a year ago. The
decline was driven by lower advertising revenues, partially offset by lower operating
expenses.
The U.K. newspaper group reported lower first quarter operating income contributions
compared to the year ago quarter due to a 15% reduction in advertising revenues and a 6%
decline in circulation revenues in local currency terms.
The Australian newspaper group reported lower first quarter operating income versus a
strong first quarter of fiscal 2009, primarily due to a 17% decline in local currency advertising
revenues, reflecting reduced classified, national and real estate advertising. Circulation
revenues were in line with the prior year quarter. The reduced revenue contribution was
partially offset by lower operating expenses.
Dow Jones' first quarter operating results declined from the same period a year ago, due to
lower advertising revenue at The Wall Street Journal and lower information services
revenue. These declines were partially offset by reduced operating expenses and increased
circulation revenues which were driven by price increases at The Wall Street Journal. The
Wall Street Journal now has the largest circulation of any newspaper in the U.S.
Book Publishing
HarperCollins operating income of $20 million increased $17 million versus the same period
a year ago due to higher sales at the Children's and General Books divisions, as well as
reduced operating expenses from restructuring efforts in the prior year. First quarter results
included strong sales of Where the Wild Things Are by Maurice Sendak, The Vampire
Diaries by L.J. Smith and the paperback edition of The Story of Edgar Sawtelle by David
Wroblewski. During the quarter, HarperCollins had 47 books on The New York Times
bestseller list, including four books that reached the number 1 spot.
Other
The Other segment reported a first quarter operating loss of $128 million, $27 million greater
than the prior year. This decline was primarily due to the absence of contributions from NDS
Group Limited (NDS) reflecting the sale of a portion of the Company's ownership stake in
February 2009. The prior year quarter included NDS revenue and operating income of $163
million and $29 million, respectively. As a result of the sale, the Company's portion of NDS
operating results subsequent to February 5, 2009 is included within Equity earnings of
affiliates. In addition, earnings contributions from the Digital Media Group decreased by $22
News Corporation
E A R N I N G S R E L E A S E F O R T H E Q U A R T E R E N D E D S E P T E M B E R 3 0 , 2 0 0 9
Page 5
million from a year ago, principally due to lower search and advertising revenue. These
declines were partially offset by improved operating results at our eastern European
television stations.
REVIEW OF EQUITY EARNINGS (LOSSES) OF AFFILIATES' RESULTS
First quarter net earnings from affiliates were $32 million versus a loss of $359 million in the
same period a year ago. The increased contributions from affiliates are due to the absence
of a $422 million write-down taken a year ago of the Company's investment in Sky
Deutschland, partially offset by the Company's increase in ownership. The first quarter
results were also positively impacted by higher contributions from BSkyB due to higher
subscription revenues and the absence of the prior year write-down of its ITV investment.
The Company's share of equity earnings (losses) of affiliates is as follows:
3 Months Ended
September 30,
% Owned
2009 2008
US $ Millions
BSkyB 39%
(a)
$ 81
$
52
Other affiliates
Various
(b)
(49)
(411)
Total equity earnings (losses) of affiliates
$
32 $
(359)
(a)
Please refer to BSkyB's earnings releases and SEC filings for detailed information.
(b)
Primarily comprised of Sky Deutschland, NDS (beginning in February 2009), Australian and STAR equity
affiliates.
News Corporation
E A R N I N G S R E L E A S E F O R T H E Q U A R T E R E N D E D S E P T E M B E R 3 0 , 2 0 0 9
Page 6
Foreign Exchange Rates
Average foreign exchange rates used in the year-to-date results are as follows:
3 Months Ended
September
30,
2009
2008
Australian Dollar/U.S. Dollar
0.83
0.89
U.K. Pounds Sterling/U.S. Dollar
1.64
1.89
Euro/U.S.
Dollar
1.43
1.50
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 first quarter results can be heard
live on the Internet at 4:30 p.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.
CONTACTS:
Reed Nolte, Investor Relations
Teri Everett, Press Inquiries
212-852-7092 212-852-7070
News Corporation
E A R N I N G S R E L E A S E F O R T H E Q U A R T E R E N D E D S E P T E M B E R 3 0 , 2 0 0 9
Page 7
CONSOLIDATED STATEMENTS OF OPERATIONS
3 Months Ended
September
30,
2009 2008
US $ Millions
(except per share amounts)
Revenues
$
7,199
$
7,509
Expenses:
Operating
4,405
4,571
Selling, general and administrative
1,435
1,681
Depreciation and amortization
297
296
Other operating charges
20
8
Operating income
1,042
953
Other income (expense):
Equity earnings (losses) of affiliates
32
(359)
Interest expense, net
(245)
(221)
Interest income
25
40
Other, net
(12)
304
Income before income tax expense
842
717
Income tax expense
(245)
(181)
Net income
597
536
Less: Net income attributable to noncontrolling interests
(26)
(21)
Net income attributable to News Corporation stockholders
$
571 $
515
Weighted average shares:
basic
2,616
2,611
diluted
2,617
2,613
Net income attributable to News Corporation stockholders
per share: basic and diluted
$0.22
$0.20
News Corporation
E A R N I N G S R E L E A S E F O R T H E Q U A R T E R E N D E D S E P T E M B E R 3 0 , 2 0 0 9
Page 8
CONSOLIDATED BALANCE SHEETS
September 30,
June 30,
2009
2009
Assets
US $ Millions
Current assets:
Cash and cash equivalents
$
7,832 $
6,540
Receivables,
net
6,208
6,287
Inventories,
net
2,783
2,477
Other
602
532
Total current assets
17,425
15,836
Non-current assets:
Receivables
244
282
Investments
3,105
2,957
Inventories,
net
3,511
3,178
Property, plant and equipment, net
6,248
6,245
Intangible assets, net
8,947
8,925
Goodwill
14,492
14,382
Other non-current assets
1,344
1,316
Total non-current assets
37,891
37,285
Total assets
$
55,316 $
53,121
Liabilities and Equity
Current liabilities:
Borrowings
$
2,071 $
2,085
Accounts payable, accrued expenses and other current liabilities
5,577
5,279
Participations, residuals and royalties
payable
1,376
1,388
Program rights payable
1,180
1,115
Deferred
revenue
786
772
Total current liabilities
10,990
10,639
Non-current liabilities:
Borrowings
13,182
12,204
Other
liabilities
2,997
3,027
Deferred income taxes
3,326
3,276
Redeemable noncontrolling interests
342
343
Commitments and contingencies
Equity:
Class A common stock, $0.01 par value
18
18
Class B common stock, $0.01 par value
8
8
Additional paid-in capital
17,329
17,354
Retained earnings and accumulated other comprehensive
income
6,698
5,844
Total News Corporation stockholders' equity
24,053
23,224
Noncontrolling interests
426
408
Total
equity
24,479
23,632
Total liabilities and equity
$ 55,316
$ 53,121
News Corporation
E A R N I N G S R E L E A S E F O R T H E Q U A R T E R E N D E D S E P T E M B E R 3 0 , 2 0 0 9
Page 9
CONSOLIDATED STATEMENTS OF CASH FLOWS
3 Months Ended September 30,
2009
2008
US $ Millions
Operating activities:
Net income
$
597 $
536
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization
297
296
Amortization of cable distribution investments
23
23
Equity (earnings) losses of affiliates
(32)
359
Cash distributions received from affiliates
16
30
Other, net
12
(304)
Change in operating assets and liabilities, net of acquisitions:
Receivables and other assets
120
(199)
Inventories, net
(623)
(442)
Accounts payable and other liabilities
270
(59)
Net cash provided by operating activities
680
240
Investing activities:
Property, plant and equipment, net of acquisitions
(130)
(213)
Acquisitions, net of cash acquired
(71)
(65)
Investments in equity affiliates
(114)
(15)
Other investments
(51)
(16)
Proceeds from sale of investments and other non-current assets
4
1,010
Net cash (used in) provided by investing activities
(362)
701
Financing activities:
Borrowings
1,006
38
Repayment of borrowings
(73)
(33)
Issuance of shares
21
3
Dividends paid
(13)
(7)
Other, net
1
18
Net cash provided by financing activities
942
19
Net increase in cash and cash equivalents
1,260
960
Cash and cash equivalents, beginning of period
6,540
4,662
Exchange movement on opening cash balance
32
(122)
Cash and cash equivalents, end of period
$
7,832 $
5,500
News Corporation
E A R N I N G S R E L E A S E F O R T H E Q U A R T E R E N D E D S E P T E M B E R 3 0 , 2 0 0 9
Page 10
SEGMENT INFORMATION
As a result of a restructuring in the first quarter, the operating results of STAR which were previously
reported in the Television segment are now included within the Cable Network Programming
segment. Prior year STAR results have also been reclassified to the Cable Network Programming
segment to conform to the current year presentation. A schedule of fiscal 2009 revenue and
operating income (loss) by quarter reflecting this reclassification is included in Note 1. In addition, the
Magazines and Inserts segment has been renamed the Integrated Marketing Services segment.
3 Months Ended
September 30,
2009
2008
US $ Millions
Revenues
Filmed
Entertainment
$ 1,521
$ 1,259
Television
765
829
Cable Network Programming
1,606
1,454
Direct Broadcast Satellite Television
927
969
Integrated Marketing Services
267
259
Newspapers and Information Services
1,403
1,705
Book
Publishing
310
315
Other
400
719
Total
Revenues
$ 7,199
$ 7,509
Operating Income (Loss)
Filmed
Entertainment
$ 391
$ 251
Television
38
83
Cable Network Programming
495
350
Direct Broadcast Satellite Television
128
165
Integrated Marketing Services
73
68
Newspapers and Information Services
25
134
Book Publishing
20
3
Other
(128)
(101)
Total Operating Income
$
1,042
$
953
News Corporation
E A R N I N G S R E L E A S E F O R T H E Q U A R T E R E N D E D S E P T E M B E R 3 0 , 2 0 0 9
Page 11
NOTE 1 RECLASSIFICATION OF STAR REVENUE AND OPERATING RESULTS
As a result of a restructuring in the first quarter, the operating results of STAR which were
previously reported in the Television segment are now included within the Cable Network
Programming segment. Prior year STAR results have also been reclassified to the Cable
Network Programming segment to conform to the current year presentation.
The following tables present the reclassified prior year revenue and operating results by
quarter.
For the Three Months Ended
(US $ Millions)
REVENUE
September 30, 2008
December 31, 2008
March 31, 2009
June 30, 2009
Filmed Entertainment
$
1,259 $
1,485 $
1,472 $
1,720
Television 829
1,135
1,149
938
Cable Network Programming
1,454 1,492 1,550
1,635
Direct Broadcast Satellite Television
969
922
924
945
Integrated Marketing Services
259
284
316
309
Newspapers and Information Services
1,705
1,505
1,248
1,400
Book Publishing
315
305
243
278
Other 719
743
471
445
Consolidated Total Revenue
$
7,509
$
7,871
$
7,373
$
7,670
For the Three Months Ended
(US $ Millions)
OPERATING INCOME (LOSS)
September 30, 2008
December 31, 2008
March 31, 2009
June 30, 2009
Filmed
Entertainment
$
251 $
112 $
282 $
203
Television 83
(4,559)
7
83
Cable Network Programming
350
448
426
426
Direct Broadcast Satellite Television
165
10
63
155
Integrated Marketing Services
68
86
97
102
Newspapers and Information Services
134
(2,876)
7
72
Book Publishing
3
23
(38)
(4)
Other
(101)
(870)
(89)
(769)
Consolidated Total Operating
Income
(Loss)
$
953 $
(7,626) $
755 $
268
News Corporation
E A R N I N G S R E L E A S E F O R T H E Q U A R T E R E N D E D S E P T E M B E R 3 0 , 2 0 0 9
Page 12
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.
For the Three Months Ended
September 30,
2009
2008
US $ Millions
Operating income
$
1,042
$
953
Depreciation and amortization
297
296
Amortization of cable distribution investments
23
23
Operating income before depreciation and
amortization
$
1,362
$
1,272
News Corporation
E A R N I N G S R E L E A S E F O R T H E Q U A R T E R E N D E D S E P T E M B E R 3 0 , 2 0 0 9
Page 13
For the Three Months Ended September 30, 2009
(US $ Millions)
Operating
income (loss)
Depreciation
and
amortization
Amortization of
cable distribution
investments
Operating
income
(loss) before
depreciation and
amortization
Filmed Entertainment
$
391
$
23
$
-
$
414
Television
38
21
-
59
Cable Network Programming
495
42
23
560
Direct Broadcast Satellite
Television
128
66
-
194
Integrated Marketing Services
73
3
-
76
Newspapers and Information
Services
25
87
-
112
Book Publishing
20
4
-
24
Other
(128)
51
-
(77)
Total
$
1,042
$
297 $
23
$
1,362
For the Three Months Ended September 30, 2008
(US $ Millions)
Operating
income (loss)
Depreciation
and
amortization
Amortization of
cable distribution
investments
Operating
income
(loss) before
depreciation and
amortization
Filmed Entertainment
$
251
$
23
$
-
$
274
Television
83
20
-
103
Cable Network Programming
350
31
23
404
Direct Broadcast Satellite
Television
165
60
-
225
Integrated Marketing Services
68
2
-
70
Newspapers and Information
Services
134
90
-
224
Book Publishing
3
2
-
5
Other
(101)
68
-
(33)
Total
$
953
$
296 $
23
$
1,272
|
Print Entire Page
