21st Century Fox Reports Full Year Total Segment Operating Income before Depreciation and Amortizati

21st Century Fox Reports Full Year Total Segment Operating Income before Depreciation and Amortization of $6.26 Billion, a 9% Increase over the Prior Year Results on Revenue of $27.68 Billion

Fourth Quarter Total Segment Operating Income before Depreciation and Amortization of $1.49 Billion, Increased 14% on Revenue of $7.21 Billion

NEW YORK--(BUSINESS WIRE)-- Twenty-First Century Fox Inc. ("21st Century Fox" or the "Company" -- NASDAQ: FOXA, FOX; ASX: FOXLV, FOX) today reported financial results for the three months and full year ended June 30, 2013.


On June 28, 2013, the Company, formerly known as News Corporation, completed the separation of its businesses into two independent, publicly-traded companies (the "Separation"). The Company has retained the media and entertainment businesses and the new News Corporation ("News Corp") holds the Company's former publishing, digital education and Australian media businesses. Following the Separation, the Company does not hold any equity interest in News Corp. As a result of this transaction, News Corp's historical financial results for periods prior to June 28, 2013 are reflected in the Company's financial statements as discontinued operations.

Full Year Company Results

The Company reported annual revenues of $27.68 billion, a $2.62 billion, or 10%, increase over prior year revenues of $25.05 billion. Nearly three-quarters of this increase reflects growth at the Cable Network Programming, Filmed Entertainment and Television segments. The balance of the growth primarily relates to the inclusion of Sky Deutschland AG ("Sky Deutschland") revenues beginning in January 2013.

The Company reported annual total segment operating income before depreciation and amortization ("OIBDA")(1) of $6.26 billion compared with prior year OIBDA of $5.76 billion. This 9% increase was driven by growth at the Company's Cable Network Programming and Television segments partially offset by decreases at the Direct Broadcast Satellite Television ("DBS") segment.

The Company reported annual income from continuing operations attributable to stockholders of $6.82 billion ($2.91 per share), compared with $3.18 billion ($1.27 per share) in the prior year. The full year results included $3.76 billion of income in Other, net, principally related to gains on the acquisition of additional ownership stakes in Sky Deutschland and ESPN Star Sports (now operating as Fox and Star Sports Asia), as well as the sale of the ownership stake in NDS Group Limited ("NDS"). The full year results also included a $306 million gain from the Company's participation in British Sky Broadcasting's ("BSkyB") share repurchase program, which is reflected in Equity earnings of affiliates. These gains were slightly offset by restructuring and impairment charges of $48 million, primarily related to the Company's digital media business which was sold in February 2013. Excluding the net income effects of these items, along with comparable items in both years, adjusted annual income per share from continuing operations attributable to stockholders(2) was $1.36 compared with the adjusted year-ago result of $1.20.

_________________________

     

(1)

 

Total segment operating income before depreciation and amortization ("OIBDA") is a non-GAAP financial measure.See page 11 for a description of total segment OIBDA and for a reconciliation from revenues to total segment OIBDA and from OIBDA to income from continuing operations before income tax expense.

 

(2)

See page 14 for a reconciliation of reported net income and earnings per share from continuing operations attributable to stockholders to adjusted net income and adjusted earnings per share from continuing operations attributable to stockholders.

 

Fourth Quarter Company Results

The Company reported quarterly revenues of $7.21 billion, a $977 million, or 16% increase over prior year quarterly revenues of $6.24 billion. Approximately half of this increase reflects growth at the Cable Network Programming and Filmed Entertainment segments with the balance primarily relating to this year's inclusion of Sky Deutschland revenues.

The Company reported quarterly total segment OIBDA of $1.49 billion compared with prior year quarterly OIBDA of $1.31 billion. This 14% growth was led by 25% growth at the Cable Network Programming segment which was partially offset by lower contributions at the Filmed Entertainment, Television and DBS segments.

The Company reported quarterly income from continuing operations attributable to stockholders of $977 million ($0.42 per share), compared with $596 million ($0.25 per share) in the corresponding period of the prior year. The quarterly results included an $89 million gain from the Company's participation in BSkyB's share repurchased program, which is reflected in Equity earnings of affiliates and Other, net income of $81 million, which includes net gains on asset sales and acquisitions. Excluding the net income effects of these items, and the $6 million restructuring and impairment charge, along with comparable items in both years, adjusted quarterly income per share from continuing operations attributable to stockholders was $0.31 compared with the adjusted result from the corresponding period of $0.27.

Commenting on the results, Chairman and Chief Executive Officer Rupert Murdoch said:

"With the Separation complete 21st Century Fox launches as a distinct public company with its own identity, its own strategy and its own growth and capital plan. Although a significant amount of time and effort was spent over the past twelve months on this Separation, we never lost focus on the operation of our businesses. The Company not only delivered strong earnings and revenue growth led by our channels businesses, we also positioned ourselves for future success with strategic investments in our global channels businesses, including the acquisitions of Sports Time Ohio and an ownership stake in the YES Network, as well as the announcement of the impending launches of Fox Sports 1 and FXX. As a result of these advances, 21st Century Fox is poised to deliver continued innovation for our customers as well as sustained growth and long-term value for our stockholders."

REVIEW OF SEGMENT OPERATING RESULTS
 
 3 Months Ended 12 Months Ended
June 30,June 30,
2013 2012 2013 2012 2011
US $ Millions
Revenues   
 
Cable Network Programming$2,953$2,540$10,881$9,324$8,212
Television1,0961,1014,8604,8034,844
Filmed Entertainment2,0351,9778,6428,3637,813
Direct Broadcast Satellite Television1,3799484,4393,7403,761
Other, Corporate and Eliminations (251) (331) (1,147) (1,179) (398)
Total Revenues$7,212 $6,235 $27,675 $25,051 $24,232 
 
Segment OIBDA
 
Cable Network Programming$1,079$860$4,177$3,549$3,009
Television213235855791770
Filmed Entertainment1171401,3081,3121,058
Direct Broadcast Satellite Television156168397561546
Other, Corporate and Eliminations (77) (98) (476) (456) (563)
Total Segment OIBDA$1,488 $1,305 $6,261 $5,757 $4,820 
 

CABLE NETWORK PROGRAMMING

Full Year Segment Results

Cable Network Programming reported annual segment OIBDA of $4.18 billion, a $628 million, or 18%, increase over the prior year, driven by a 17% increase in revenues. OIBDA contributions from the domestic channels increased 17%, underpinned by growth at the Regional Sports Networks ("RSNs"), Fox News Channel and FX Networks. OIBDA contributions from the Company's international cable channels grew 18%, reflecting strong growth at the Fox International Channels ("FIC") and the STAR general entertainment channels, which was partially offset by STAR's investment in BCCI cricket rights and a 9% adverse impact from the strengthened U.S. dollar.

Affiliate revenues growth of 12% at the domestic cable channels primarily reflects higher rates across all networks, led by growth at the RSNs, Fox News Channel and FX Networks. Affiliate revenues at the international cable channels increased 35% over the prior year. Over half of the international affiliate revenues increase reflects strong local currency growth at the non-sports channels at FIC and STAR, which was partially offset by a 7% adverse impact from the strengthened U.S. dollar. The balance of the growth was attributable to the international sports channels, including Fox Sports Latin America and Asia, Star Sports Asia and Eredivisie Media & Marketing ("EMM").

Advertising revenues at the domestic cable channels grew 6% in fiscal 2013 over the prior year, reflecting growth at the FX Networks, National Geographic Networks and RSNs. Approximately three-quarters of the international cable channels' 20% advertising revenues growth reflects strong local currency growth at the non-sports channels at FIC and STAR which was partially offset by an 8% adverse impact from the strengthened U.S. dollar. The balance of the growth was attributable to the international sports channels, including Fox Sports Latin America and Asia, Star Sports Asia and EMM.

In fiscal 2013, expenses at Cable Network Programming grew 16% over the prior year. Nearly half of this increase was attributable to the new international sports networks at FIC and STAR, including the investment in BCCI cricket rights in India. The balance of the increase was due to higher programming costs related to expanded college football coverage, a full year of UFC rights fees, higher NBA costs at the RSNs due to the shortened season in the prior year, and investments in new programming at the FX and National Geographic Networks, partially offset by lower NHL costs at the RSNs due to this year's shortened season.

Fourth Quarter Segment Results

Cable Network Programming reported quarterly segment OIBDA of $1.08 billion, a $219 million, or 25%, increase over the corresponding period in the prior year, driven by a 16% increase in revenues. OIBDA contributions from the domestic channels increased 18%, underpinned by growth at the Fox News and National Geographic channels. OIBDA contributions from the Company's international cable channels grew 47%, reflecting strong growth at FIC, including contributions from Fox Sports Latin America and Asia, and EMM, which was partially offset by a 7% adverse impact from the strengthened U.S. dollar.

Affiliate revenues growth of 9% at the domestic cable channels primarily reflects higher rates across all networks, led by growth at the RSNs, Fox News Channel, FX Networks and National Geographic Channels. Affiliate revenues at the international cable channels increased 41% over the prior year. Over half of the international affiliate revenues increase reflects strong local currency growth at the non-sports channels at FIC and STAR, which was partially offset by a 6% adverse impact from the strengthened U.S. dollar. The balance of the growth was attributable to the international sports channels, including Fox and Star Sports Asia and EMM.

Advertising revenues at the domestic cable channels grew 4% over the corresponding period in the prior year, reflecting growth at the RSNs and FX Networks. Approximately half of the international cable channels' 20% advertising revenues growth reflects strong local currency growth at the non-sports channels at FIC and STAR, which was partially offset by a 5% adverse impact from the strengthened U.S. dollar. The balance of the growth was attributable to the international sports channels, including Fox and Star Sports Asia and EMM.

Expenses at Cable Network Programming grew 12% over the corresponding period in the prior year. This increase was primarily attributable to the consolidation of the Fox and Star Sports Asia networks and EMM, increased sports programming costs in Latin America and the costs associated with the launch of Fox Sports Japan.

TELEVISION

Full Year Segment Results

Full year segment OIBDA of $855 million increased $64 million, or 8%, versus the prior year. This increase was driven by a doubling of retransmission consent revenues and lower programming expenses at the Fox Broadcast Company. These improvements were partially offset by a 7% decline in national advertising revenues reflecting lower primetime ratings driven by declines at X-Factor and American Idol, which recently finished its twelfth season.

Fourth Quarter Segment Results

Television reported quarterly segment OIBDA of $213 million, as compared with prior year quarterly OIBDA of $235 million. This decline reflects a near doubling of retransmission consent revenues and lower programming expenses at the Fox Broadcast Company, which were more than offset by a 7% decline in national and local advertising revenues primarily driven by lower American Idol ratings.

FILMED ENTERTAINMENT

Full Year Segment Results

Full year segment OIBDA of $1.31 billion was in line with prior year amounts. Annual results were led by the strong worldwide theatrical and home entertainment performance as well as the pay-tv availability of Ice Age: Continental Drift. The current year results also include the successful worldwide theatrical and home entertainment performances of Taken 2, Prometheus and Life of Pi as well as the pay-tv availability of Alvin and the Chipmunks: Chipwrecked and Chronicle. Prior year film results were led by the home entertainment release and pay-tv availability of Rio and X-Men: First Class as well as the theatrical and home entertainment release and pay-tv availability of Rise of the Planet of the Apes.

Fourth Quarter Segment Results

Filmed Entertainment reported quarterly segment OIBDA of $117 million, compared with $140 million in the same period a year ago. The $23 million decline was attributable to lower contributions from the television production studios, as a provision for library content more than offset the revenues related to the delivery of the new season of Arrested Development to Netflix. Quarterly results also included the successful theatrical performance of DreamWorks Animation's The Croods (which has grossed over $500 million in worldwide box office), the home entertainment performance of Life of Pi, the pay-tv availabilities of Ice Age: Continental Drift and Prometheus, as well as the theatrical pre-release costs for The Wolverine and DreamWorks Animation's Turbo.

DIRECT BROADCAST SATELLITE TELEVISION

Full Year Segment Results

DBS generated annual segment OIBDA of $397 million, compared with prior year OIBDA of $561 million. The decline was driven by lower contributions from SKY Italia reflecting increased programming expenses, including approximately $150 million of rights costs primarily associated with the broadcast of the Olympics and expanded UEFA Champions League, Europa League and Formula One coverage. This decline was partially offset by the consolidation of Sky Deutschland results, following the Company's acquisition of an additional 5% ownership stake in this entity in January 2013. Revenues increased $699 million versus a year ago, reflecting the inclusion of Sky Deutschland revenues, which were partially offset by lower revenues from SKY Italia. Local currency revenue at SKY Italia declined slightly from the prior year.

Fourth Quarter Segment Results

DBS generated quarterly segment OIBDA of $156 million, compared with prior year quarterly OIBDA of $168 million. This decline reflects lower contributions from SKY Italia due to higher programming expenses and lower revenues, partially offset by the consolidation of Sky Deutschland results. The increased programming expenses at Sky Italia included approximately $35 million of rights costs primarily associated with Formula One and expanded UEFA Champions and Europa League coverage. Segment revenues increased $431 million versus the same period a year ago, reflecting the inclusion of Sky Deutschland revenues. Sky Deutschland grew net subscribers by 48,000 during the quarter, bringing total direct subscribers to 3.45 million. Quarterly local currency revenue at SKY Italia declined slightly from the corresponding period of the prior year, reflecting lower subscription, activation and advertising revenues. SKY Italia experienced a net reduction of 27,000 subscribers during the quarter, bringing total subscribers to 4.76 million.

REVIEW OF EQUITY EARNINGS (LOSSES) OF AFFILIATES' RESULTS

 

The Company's share of equity earnings (losses) of affiliates is as follows:

 
  3 Months Ended 12 Months Ended
June 30,June 30,
% Owned2013 2012 2013 2012 2011
US $ Millions
BSkyB39%(1)$235 $249$902 $826 $498
Other affiliatesVarious(2) (12) 9  (247) (190) (146)
Total equity earnings of affiliates$223 $258 $655 $636 $352 
    

(1)

 

Please refer to BSkyB's earnings releases for detailed information.

(2)

Primarily comprised of Sky Deutschland (prior to its consolidation as of January 2013), Hulu and STAR equity affiliates, as well as NDS in the prior year.

 

Full Year Results

Annual earnings from affiliates were $655 million as compared with $636 million in the same period a year ago. The increased contributions from affiliates are primarily due to improved results from BSkyB, including the Company's pre-tax gain related to its participation in BSkyB's share repurchase which increased from a $270 million gain in the prior year to $306 million in the current year, and the absence of a full year of Sky Deutschland operating losses resulting from its consolidation in January 2013. This increase was partially offset by increased losses from Hulu, including one-time costs resulting from Hulu's purchase of Providence Equity Partners' ownership stake and the absence of contributions from NDS.

Fourth Quarter Results

Quarterly earnings from affiliates were $223 million as compared with $258 million in the same period a year ago. The decreased contributions from affiliates are primarily due to lower contributions from BSkyB, as improved results were more than offset by a decrease in the Company's pre-tax gain related to its participation in BSkyB's share repurchase which declined from a $115 million gain in the corresponding period of the prior year to $89 million in the current quarter. This decrease was partially offset by the absence of Sky Deutschland operating losses resulting from its consolidation as of January 2013.

OTHER ITEMS

Share repurchases

On May 9, 2012, the Company announced that its Board of Directors approved an increase to the previously authorized stock repurchase program from $5 billion to $10 billion. Through August 5, 2013, the Company has purchased more than $6.9 billion of Class A common stock under the program, at an average price of $19.82 per share. As a result of the stock repurchase program, diluted weighted Class A common stock outstanding of approximately 2,321 million in this year's quarter declined 4% from approximately 2,420 million in the same period a year ago.

To receive a copy of this press release through the Internet, access 21st Century Fox's corporate Web site located at http://www.21cf.com.

Audio from 21st Century Fox's conference call with analysts on the full year and fourth quarter results can be heard live on the Internet at 4:30 p.m. Eastern Daylight Time today. To listen to the call, visit http://www.21cf.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.

CONSOLIDATED STATEMENTS OF OPERATIONS
 3 Months Ended 12 Months Ended
June 30,June 30,
2013 2012 2013 2012 2011
US $ Millions (except share related amounts)
   
Revenues$7,212$6,235$27,675$25,051$24,232
 
 
Operating expenses(4,705)(3,960)(17,496)(15,663)(15,745)
Selling, general and administrative expenses(1,041)(989)(4,007)(3,719)(3,759)
Depreciation and amortization(228)(188)(797)(711)(777)
Impairment and restructuring charges(6)(208)(48)(242)(288)
Equity earnings of affiliates223258655636352
Interest expense, net(261)(261)(1,063)(1,032)(962)
Interest income1827577775
Other, net81 42 3,760 66 (30)
Income from continuing operations before income tax expense1,2939568,7364,4633,098
Income tax expense(253)(327)(1,690)(1,094)(673)
Income from continuing operations1,040629
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