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21st Century Fox fiscal revenue up 15%

MUMBAI: 21st Century Fox has reported annual revenues of $31.87 billion, a $4.19 billion or 15 per cent increase over prior year revenues of $27.68 billion.

The growth includes a $1.59 billion increase at the DBS segment, led by the full year consolidation of Sky Deutschland revenues, and double-digit rate revenue growth at the Cable Network Programming and film segments led by higher affiliate and content revenues, respectively. Foreign exchange rate fluctuations, primarily in India and Latin America had an impact on the Cable Network Programming performance.

The company reported annual total segment OIBDA of $6.72 billion compared with prior year OIBDA of $6.26 billion. This seven per cent increase was driven by increased contributions from all of the company’s segments, with more than half reflecting growth at the company’s cable network programming segment.

The company reported annual income from continuing operations attributable to stockholders of $3.79 billion ($1.67 per share), compared with $6.82 billion ($2.91 per share) in the prior year. Current year results included a $345 million increase above prior year levels in depreciation and amortisation expense principally resulting from the amortization of intangible assets related to the company’s acquisition of controlling ownership stakes in Sky Deutschland and the YES Network.

The prior year amount principally related to gains on the acquisition of additional ownership stakes in Sky Deutschland and ESPN Star Sports Networks (now operating as Fox Sports Asia and Star Sports) (“ESS”), as well as the sale of the ownership stake in NDS.

In addition, the current year results included a $134 million gain from the company’s participation in BSkyB’s share repurchase programme, which is reflected in Equity earnings of affiliates.

21st Century Fox chairman, CEO Rupert Murdoch said, “In the fiscal fourth quarter we built on our operational momentum with double-digit earnings and revenue gains. The Company’s strong financial performance was driven by sustained affiliate revenue increases at our cable networks and record fourth quarter contributions at our filmed entertainment segment on the strength of global box office successes X- Men: Days of Future Past, Rio 2 and The Fault In Our Stars. As we close the fiscal year, I continue to have confidence in our ability to execute our growth plan and drive value for our shareholders.

“Our new $6 billion share buyback program, to be executed over the next twelve months, further underscores our disciplined approach to increasing shareholder value.”

The company reported quarterly revenues of $8.42 billion, a $1.21 billion or 17 per cent increase over prior year quarterly revenues of $7.21 billion. This growth reflects a substantial increase at the film segment, led by higher theatrical revenues, and double-digit growth at the Cable Network Programming and Direct Broadcast Satellite Television (DBS) segments from higher affiliate and subscription revenues, respectively.

Quarterly total segment operating income before depreciation and amortization (“OIBDA”) grew by 19 per cent to $1.77 billion as compared with prior year quarterly OIBDA of $1.49 billion. This improvement was led by a near tripling of Filmed Entertainment segment contributions and double-digit growth at the Cable Network Programming segment. These increases were partially offset by lower contributions at the Television segment.

The Company reported quarterly income from continuing operations attributable to stockholders of $966 million ($0.43 per share), compared with $977 million ($0.42 per share) in the corresponding period of the prior year. Current year quarterly results included a $74 million increase above the prior year quarter in Depreciation and amortization expense principally resulting from the amortization of intangible assets related to the company’s acquisition of controlling ownership stakes in Sky Deutschland and the Yankees Entertainment and Sports Network (Yes Network). This year’s quarterly results also included a $50 million gain from the company’s participation in BSkyB share repurchase programme, which is reflected in Equity earnings of affiliates and Other, net income of $51 million, which was principally driven by gains from asset sales.

Fourth Quarter Segment Results

Cable Network Programming quarterly segment OIBDA increased by 11 per cent to $1.20 billion, driven by a 13 per cent revenue increase led by continued affiliate revenue growth. The revenue improvement was partially offset by a 14 per cent increase in expenses, approximately a third of which reflects the planned investments related to the launches of new channels, including Fox Sports 1, Star Sports and FXX, and the consolidation of the Yes Network. Segment OIBDA growth was also adversely impacted by three per cent from foreign exchange rate fluctuations, primarily in Latin America and India.

Domestic affiliate revenue grew by 19 per cent reflecting the combination of sustained growth at the regional sports networks (RSNs), FX Networks and Fox News Channel, the contributions from the launches of Fox Sports 1 and FXX, as well as the consolidation of the Yes Network. Reported international affiliate revenue increased by eight per cent driven by strong local currency growth at the Fox International Channels (Fic) and Star channels which was partially offset by a 10 per cent adverse impact from the strengthened U.S. dollar.

Domestic ad revenue grew by 12 per cent in the quarter over the prior year period driven by solid growth at the RSNs and FX Networks. The growth at the RSNs included the impact from the consolidation of the Yes Network while the FX Networks growth included increases attributable to FXX. Reported international advertising revenue increased by five per cent due to strong local currency growth at Star and FIC which was partially offset by a 10 per cent adverse impact from the strengthened US dollar.

OIBDA from the domestic channels increased 17 per cent from the corresponding period in the prior year, reflecting strong OIBDA growth at the RSNs, which includes contributions from the YES Network. Reported quarterly OIBDA at the company’s international cable channels’ declined 3 per cent from the corresponding period of the prior year as strong local currency growth at the FIC and STAR entertainment channels was more than offset by a 15 per cent adverse impact from the strengthened U.S. dollar.

For the year Cable Network Programming annual segment OIBDA increased by six per cent to $4.41 billion, driven by a 13 per cent revenue increase led by continued affiliate revenue growth. The revenue improvement was partially offset by a 17 per cent increase in expenses, almost half of which reflects the planned investments related to the launches of new channels and the impact of the consolidation of recently acquired ownership stakes in the Yes Network, ESS, Eredivisie Media and Marketing (EMM) and Sports Time Ohio.

Segment OIBDA growth was also adversely impacted by three per cent from foreign exchange rate fluctuations, primarily in Latin America and India. Domestic affiliate revenue grew by 14 per cent reflecting the combination of sustained growth at the RSNs, FX Network and Fox News Channel, contributions from new channel launches and the impact from the consolidation of the YES Network. Reported international affiliate revenue increased by 19 per cent driven by strong local currency growth at Fic and Star as well as the benefit from the full year consolidation of ESS and EMM, partially offset by an eight per cent adverse impact from the strengthened U.S. dollar.

Domestic ad revenue grew by eight per cent over the prior year period led by double-digit growth at the FX Networks, the RSNs and the National Geographic networks. The growth at the FX Networks included increases attributable to FXX while the RSNs growth included the impact from the consolidation of the Yes Network. Reported international ad revenue increased by nine per cent due to strong local currency growth at Star and Fic which was partially offset by a nine per cent adverse impact from the strengthened U.S. dollar.

OIBDA from the domestic channels increased by seven per cent from the prior year, led by strong double-digit growth at the RSNs, which includes contributions from the Yes Network. Full year results also reflect higher contributions at the FX Networks and Fox News Channel. Reported annual OIBDA at the company’s international cable channels’ declined by one per cent from the corresponding period of the prior year as strong local currency growth at FIC and the Star entertainment channels was more than offset by investments in the Star Sports channels and a 12 per cent adverse impact from the strengthened US dollar.

Television: Television reported quarterly segment OIBDA of $145 million compared with the $213 million reported in the prior year quarter, as increased retransmission consent revenues were more than offset by lower advertising revenues. Quarterly advertising revenues declined 11 per cent from the corresponding period of the prior year driven by the impact of lower general entertainment ratings, led by declines at American Idol.

Fiscal segment OIBDA of $882 million increased $27 million or 3% versus the prior year. This increase was driven by continued retransmission consent revenue growth and contributions from the broadcast of Super Bowl XLVIII partially offset by the impact of lower primetime general entertainment ratings led by declines at American Idol and X-Factor and higher programming costs. Advertising revenues increased 5 per cent from the prior year driven by the broadcast of Super Bowl XLVIII and higher rates and ratings for the National Football League and Major League Baseball playoffs, substantially offset by the impact from lower general entertainment ratings.

Film: The film division reported record fourth quarter segment OIBDA of $339 million, nearly triple the $117 million reported in the same period a year-ago, driven by a $768 million or 38 per cent revenue increase. This growth was led by several successful worldwide theatrical releases in the quarter including ‘X-Men: Days of Future Past’, which has grossed $740 million in worldwide box office to date, ‘Rio 2’, which has grossed over $490 million in worldwide box office to date, and ‘The Fault in Our Stars’, which has grossed over $260 million in worldwide box office to date. As a result of the successful releases, the film studio became the first to cross the $3 billion mark in worldwide box office this year. Quarterly results also reflect higher contributions from the television production businesses led by the syndication of Modern Family and the delivery of a new season of 24.

Full year segment OIBDA of $1.36 billion increased $50 million or 4% over prior year amounts. Annual results reflect higher contributions from the television production businesses led by higher SVOD revenues, including the sale of series to Amazon, and the syndication of Modern Family. This growth was partially offset by difficult comparisons to the successful worldwide theatrical performance of Ice Age: Continental Drift in the prior year.

Direct Broadcast Satellite Television: DBS generated quarterly segment OIBDA of $146 million compared with the $156 million reported in the same period a year ago. The $214 million or 16 per cent increase in revenue underpinned by sustained Sky Deutschland subscriber growth was more than offset by higher sports programming costs including SKY Italia’s broadcast of the FIFA World Cup and Sky Deutschland’s exclusive broadcast of Bundesliga soccer. Sky Deutschland grew net direct subscribers by approximately 82,000 during the quarter, bringing total direct subscribers to 3.81 million, while Sky Italia’s subscriber base declined by 25,000 during the quarter bringing total subscribers to 4.73 million.

DBS generated annual segment OIBDA of $424 million, a $27 million or 7per cent increase over the prior year driven by higher contributions from Sky Italia resulting from cost reduction efforts. Annual segment revenues increased $1.59 billion principally reflecting the full year consolidation of Sky Deutschland revenues versus the consolidation of 6-months of Sky Deutschland revenues in the prior year. This revenue increase was offset by the full year consolidation of Sky Deutschland costs, including costs related to its exclusive broadcast of Bundesliga soccer.