FOX - 1st Quarter Results
06 November 2003 - 8:01AM
UK Regulatory
RNS Number:7438R
News Corporation Ld
05 November 2003
FOX REPORTS FIRST QUARTER OPERATING INCOME OF $611 MILLION, A 57% INCREASE, ON
REVENUE GROWTH OF 18%
FIRST QUARTER Operating income BEFORE DEPRECIATION AND AMORTIZATION GROWS
46% TO $684 MILLION
QUARTER HIGHLIGHTS
* Filmed Entertainment operating income before depreciation and amortization
nearly triples on robust home entertainment sales of film and television
titles as well as strong syndication contributions.
* Sustained ratings and advertising growth at the Regional Sports Networks and
Fox News Channel drives 12% operating income before depreciation and
amortization growth at Cable Network Programming.
* Operating income before depreciation and amortization at Television Stations
up 6% on higher advertising revenues from increased market share.
* Television Broadcast Network operating income before depreciation and
amortization down due to the inclusion of American Idol in the quarter a year
ago.
NEW YORK, NY, November 5, 2003 - The Fox Entertainment Group (NYSE: FOX) today
reported first quarter consolidated revenues of $2.8 billion, a 18% increase
over the $2.3 billion in prior year and operating income before depreciation and
amortization(1) of $684 million, up 46% over the $467 million reported a year
ago. The year-on-year operating growth was driven primarily by a near
three-fold increase at Filmed Entertainment as well as increases at the Cable
Network Programming and Television Station segments.
Commenting on the results, Chairman and Chief Executive Officer Rupert Murdoch
said:
"The unparalleled growth we delivered during the first quarter - our seventh
consecutive quarter of double-digit earnings increases - is a clear
demonstration of the strength we are enjoying across our balanced collection of
businesses. Operating income before depreciation and amortization growth of
46%, on revenue growth of 18%, was generated by increases at nearly every
operating segment: at our film and television production businesses, which
continue to capitalize on the expanding home entertainment market; at our cable
channels, which have benefited from sustained viewership gains; and at our
television stations, which have expanded market share. Overall, the first
quarter has given us a great start to the fiscal year, and we are well on our
way to meeting our growth forecast for 2004."
Consolidated Operating Income (Loss)
3 Months Ended
September 30,
2003 2002
US $ Millions
Filmed Entertainment $ 333 $ 105
Television Stations 221 209
Television Broadcast Network (45) (8)
Cable Network Programming 102 83
Consolidated operating income $ 611 $ 389
Consolidated Operating Income (Loss) Before Depreciation and Amortization(1)
3 Months Ended
September 30,
2003 2002
US $ Millions
Filmed Entertainment $ 345 $ 118
Television Stations 237 224
Television Broadcast Network (41) (3)
Cable Network Programming 143 128
Consolidated operating income before depreciation and $ 684 $ 467
amortization
Equity earnings of affiliates of $7 million for the first quarter improved $5
million versus the same period a year ago, principally due to improved results
from the National Geographic Channel - Domestic as increased distribution drove
affiliate and advertising revenues.
This quarter's results reflect a $26 million gain, included in other income,
related to the settlement of the Company's insurance claim for losses at the
World Trade Center.
First quarter net income increased to $401 million ($0.45 per share) as compared
to net income of $214 million ($0.25 per share) in the prior year primarily due
to higher consolidated operating income before depreciation and amortization.
FILMED ENTERTAINMENT
The Filmed Entertainment segment reported first quarter operating income before
depreciation and amortization of $345 million, a $227 million increase over the
$118 million reported in the same period a year ago. The substantial growth
primarily reflects increased contributions from the worldwide home entertainment
release of film and television titles and higher syndication profits from
Twentieth Century Fox Television (TCFTV). Operating income increased to $333
million versus $105 million a year ago reflecting the factors described above.
Current quarter film results were largely driven by the worldwide home
entertainment performances of Daredevil and Phone Booth combined with strong
worldwide home entertainment, pay-TV and free-TV contributions from various
catalog titles. These contributions were partially offset by the worldwide
theatrical launch costs for the successful release of League of Extraordinary
Gentlemen, which has grossed over $170 million in worldwide box office to date.
The first quarter a year ago included the worldwide home entertainment
performances of Shallow Hal, Behind Enemy Lines and catalog titles.
At TCFTV, earnings grew year-on-year primarily reflecting higher syndication
profits from the initial releases of Angel and Judging Amy as well as increased
contributions from M*A*S*H. Increased DVD sales of television series, most
notably from The Simpsons, Buffy the Vampire Slayer and 24, also contributed to
the year-on-year growth.
TELEVISION STATIONS
At the Fox Television Stations first quarter operating income before
depreciation and amortization of $237 million grew 6% over the same period a
year ago as market share gains more than offset a decline in political spending
and the non-recurrence of American Idol on the broadcast network in the current
quarter. Current year earnings growth was also fueled by margin expansion
primarily from lower local programming and promotional costs as well as duopoly
savings versus the first quarter of fiscal 2003. Operating income increased to
$221 million versus $209 million a year ago reflecting the factors described
above.
TELEVISION BROADCAST NETWORK
The FOX Broadcasting Company (FBC) reported first quarter operating losses
before depreciation and amortization of $41 million versus losses of $3 million
a year ago. Improved advertising pricing was more than offset by cancellation
costs for several series and projects as well as a 20% decline in primetime
ratings versus the first quarter a year ago which included the record-breaking
performance of American Idol. During the quarter, FBC launched several new
series, including The O.C., which gained audience share every week following its
August premiere and was the highest-rated new scripted show of the summer among
Adults 18-49. Subsequent to quarter-end, primetime ratings have improved with
the current broadcast season's ratings up 15% compared to a year ago led by the
strength of post-season Major League Baseball and new season series premieres.
Operating loss increased to $45 million versus $8 million a year ago reflecting
the factors described above.
CABLE NETWORK PROGRAMMING
Cable Network Programming reported first quarter operating income before
depreciation and amortization of $143 million, an improvement of $15 million
over last year's results. The 12% growth reflects strong revenue gains at the
Fox News Channel and the Regional Sports Networks, slightly offset by higher
programming costs at the FX Channel. Operating income increased to $102 million
versus $83 million a year ago reflecting the factors described above.
Fox News Channel (FNC) reported operating income growth of 31% in the first
quarter as strong revenue growth, primarily from increased ad sales, more than
offset slightly higher costs associated with coverage of the war in Iraq and the
California recall election. FNC was the only cable news channel to increase its
viewership during the quarter, with growth of 14% in primetime and 16% on a
24-hour basis compared to the first quarter a year ago.
Fox Cable Networks' (including the Regional Sports Networks (RSNs), the FX
Channel (FX) and SPEED Channel) operating income increased 6% for the quarter
driven by double-digit revenue growth at the RSNs reflecting DTH subscriber
additions, higher affiliate rates and increased advertising sales. At FX,
affiliate revenue growth from an expanded subscriber base was offset by
increased programming costs for original programming and charges related to the
cancellations of Lucky and Orlando Jones. Investment in original programming
continues to drive viewership gains with first quarter viewership among
households and Adults 18-49 up nearly 20% versus the same period a year ago, led
by Nip/Tuck, the highest rated new series on basic cable during calendar 2003.
OTHER MATTERS
Subsequent to quarter end, the Company announced it had reached an agreement in
principle for the sale of the Los Angeles Dodgers. The agreement is subject to
Major League Baseball approval and has been forwarded to Major League Baseball's
ownership committee for review and recommendation to the other club owners, who
will then vote on the proposed sale.
(1) Operating income before depreciation and amortization is defined as
operating income (loss) plus depreciation and amortization and amortization of
cable distribution investments. Depreciation and amortization expense includes
the depreciation of property and equipment, as well as the amortization of
finite-lived intangible assets. Amortization of cable distribution investments
represents a reduction against revenues over the term of a carriage arrangement
and as such it is excluded from operating income before depreciation and
amortization. FEG reconciles this non-GAAP measure to operating income in our
supplemental data beginning on page 8 of this release.
To receive a copy of this press release through the Internet, access Fox's
corporate Web site located at http://www.fox.com
Audio from Fox's conference call with analysts on the first quarter results can
be heard live on the Internet at 5:00 p.m. Eastern Standard Time today. To
listen to the call, visit http://www.fox.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
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except for per share amounts)
3 Months Ended
September 30,
2003 2002
Revenues $ 2,758 $ 2,344
Expenses
Operating 1,786 1,586
Selling, general and administrative 319 322
Depreciation and amortization 42 47
Operating income 611 389
Other income (expense):
Interest expense, net (8) (46)
Equity earnings of affiliates 7 2
Minority interest in subsidiaries (2) (9)
Other, net 26 -
Income before provision for income taxes 634 336
Provision for income tax expense on stand-alone basis (233) (122)
Net income $ 401 $ 214
Basic and diluted earnings per share $ 0.45 $ 0.25
Basic and diluted weighted average number of common equivalent shares 900 850
outstanding
SEGMENT INFORMATION
(in millions)
3 Months Ended
September 30,
2003 2002
Revenues
Filmed Entertainment $ 1,250 $ 883
Television Stations 518 514
Television Broadcast Network 394 424
Cable Network Programming 596 523
Total Revenues $ 2,758 $ 2,344
Operating Income (Loss) Before Depreciation and Amortization
Filmed Entertainment $ 345 $ 118
Television Stations 237 224
Television Broadcast Network (41) (3)
Cable Network Programming 143 128
Total Operating Income Before Depreciation and Amortization $ 684 $ 467
Operating Income (Loss)
Filmed Entertainment $ 333 $ 105
Television Stations 221 209
Television Broadcast Network (45) (8)
Cable Network Programming 102 83
Total Operating Income $ 611 $ 389
SUPPLEMENTAL FINANCIAL DATA
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
September 30,
2003 2002
$ Millions
Operating income $ 611 $ 389
Depreciation and amortization 42 47
Amortization of cable distribution investments 31 31
Operating income before depreciation and amortization $ 684 $ 467
SUPPLEMENTAL FINANCIAL DATA (continued)
For the Three Months Ended September 30, 2003
($ Millions)
Operating Depreciation Amortization of Operating
Income and cable income (loss)
(loss) Amortization distribution before
investments depreciation
and
amortization
Filmed Entertainment $ 333 $ 12 $ - $ 345
Television Stations 221 16 - 237
Television Broadcast (45) 4 - (41)
Network
Cable Network Programming 102 10 31 143
Consolidated Total $ 611 $ 42 $ 31 $ 684
For the Three Months Ended September 30, 2002
($ Millions)
Operating Depreciation Amortization of Operating
Income and cable income (loss)
(loss) Amortization distribution before
investments depreciation
and
amortization
Filmed Entertainment $ 105 $ 13 $ - $ 118
Television Stations 209 15 - 224
Television Broadcast (8) 5 - (3)
Network
Cable Network Programming 83 14 31 128
Consolidated Total $ 389 $ 47 $ 31 $ 467
This information is provided by RNS
The company news service from the London Stock Exchange
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