News Corporation (NASDAQ: NWS, NWSA; ASX: NWS, NWSLV) today
reported $9.54 billion of total revenue for the three months ending
March 31, 2013, a $1.14 billion or 14% increase over the $8.40
billion of revenue reported in the prior year quarter.
Approximately 55% of the revenue increase reflects growth at the
Cable Network Programming, Filmed Entertainment and Television
segments, partially offset by lower revenues at the Publishing
segment. The balance of the growth primarily relates to the
inclusion of Sky Deutschland AG (“Sky Deutschland”) and Fox Sports
Australia revenues.
The Company reported third quarter total segment operating
income(1) of $1.36 billion, as compared to $1.31 billion reported a
year ago. The improvement was led by operating income growth at the
Company’s Cable Network Programming, Filmed Entertainment and
Television segments. The third quarter results included $42 million
of costs related to the ongoing investigations initiated upon the
closure of The News of the World as compared to $63 million in the
corresponding period of the prior year. This year’s third quarter
results also included $25 million of costs related to the proposed
separation of the Company’s entertainment and publishing
businesses. Excluding these costs from both years, third quarter
adjusted total segment operating income of $1.43 billion increased
$54 million or 4% from $1.38 billion reported in the third quarter
of the prior year.
The Company reported quarterly net income attributable to
stockholders of $2.85 billion ($1.22 per share), as compared to
$937 million ($0.38 per share) reported in the corresponding period
of the prior year. This quarter’s pre-tax results included $2.43
billion of income in Other, net, principally related to gains on
the acquisition of an additional ownership stake in Sky Deutschland
and the sale of the ownership stake in SKY Network Television in
New Zealand, as well as a $11 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 partially offset by $56 million of
restructuring charges, primarily related to the Company’s
international newspaper businesses. Excluding the net income
effects of these items, the costs related to the investigations in
the U.K. and the proposed separation of the Company’s entertainment
and publishing businesses, along with comparable items in both
years, third quarter adjusted earnings per share(2) was $0.36
versus the adjusted prior year quarter result of $0.37.
Commenting on the results, Chairman and Chief Executive Officer
Rupert Murdoch said:
“In our fiscal third quarter News Corp.
achieved organic growth across our cable, film and television
segments and, through the consolidation of Sky Deutschland and sale
of stakes in SKY New Zealand and Phoenix Satellite Television, we
advanced our strategic agenda to simplify our global portfolio. We
also announced our plans to broaden our core cable business with
the unveiling of our national sports channel Fox Sports 1 and our
third branded FX channel, FXX. Both initiatives underscore our
strategy of maximizing existing assets and leadership positions to
drive sustainable growth and long-term value.
“We are on target to complete the proposed
separation of our businesses near the end of our fiscal year. As we
prepare to launch two new industry leaders with new News
Corporation and 21st Century Fox, I am more confident than ever of
the long-term value the separation will unlock for the Company and
its shareholders.”
____________________________________________________________
(1) Total segment operating income is a non-GAAP financial
measure. See page 11 for a description of total segment operating
income and for a reconciliation of total segment operating income
to income before income tax expense.
(2) See page 14 for a reconciliation of reported net income and
earnings per share to adjusted net income and adjusted earnings per
share.
REVIEW OF SEGMENT OPERATING RESULTS
Total Segment Operating Income (Loss) 3 Months
Ended 9 Months Ended March 31, March 31,
2013
2012
2013
2012
US $ Millions Cable Network Programming $ 993 $ 846 $
2,891 $ 2,503 Filmed Entertainment 289 272 1,072 1,012 Television
196 171 576 493 Direct Broadcast Satellite Television (11 ) 40 (8 )
165 Publishing 85 130 376 458 Other (190 ) (147 )
(587 ) (437 )
Total Segment Operating Income *
$ 1,362 $ 1,312 $
4,320 $ 4,194
*
The three months ended March 31, 2013 and
2012 include $42 million and $63 million, respectively, of costs
related to the ongoing investigations in the U.K. The three months
ended March 31, 2013 include $25 million of costs related to the
proposed separation of the Company’s entertainment and publishing
businesses. Excluding these charges, adjusted total segment
operating income is $1,429 and $1,375 million in the three months
ended March 31, 2013 and 2012, respectively.
The nine months ended March 31, 2013 and
2012 include $165 million and $167 million, respectively, of costs
related to the ongoing investigations in the U.K. The nine months
ended March 31, 2013 include $53 million of costs related to the
proposed separation of the Company’s entertainment and publishing
businesses. Excluding these charges, adjusted total segment
operating income is $4,538 and $4,361 million in the nine months
ended March 31, 2013 and 2012, respectively.
CABLE NETWORK PROGRAMMING
Cable Network Programming reported quarterly segment operating
income of $993 million, a $147 million or 17% increase over the
prior year quarter, driven by a 17% increase in revenue. Operating
income contributions from the domestic channels increased 16%.
Revenue growth across all domestic channels, led by strong growth
at the Company’s regional sports networks (“RSNs”) and FX Networks,
was partially offset by increased programming and marketing costs
at the Company’s FX Networks and National Geographic Channels. The
Company’s international cable channels’ quarterly earnings
contributions increased 21% from the same period a year ago,
reflecting strong operating profit growth at the Fox International
Channels (“FIC”), partially offset by the adverse impact of the
strengthened U.S. dollar.
Affiliate revenue grew 11% and 42% at the domestic and
international cable channels, respectively. Domestic network growth
reflects higher rates across all networks, led by growth at the
RSNs, Fox News Channel and FX Networks. Approximately 60% of the
international affiliate revenue increase reflects strong local
currency growth at the non-sports channels at FIC and STAR. The
balance of the growth was attributable to the new sports channels,
including Fox Star Sports Asia and Eredivisie Media & Marketing
CV (“EMM”), partially offset by the impact of the strengthened U.S.
dollar.
Advertising revenue at the domestic cable channels grew 2% in
the quarter over the prior year period driven by double-digit
growth at the FX Networks and National Geographic Channels,
partially offset by lower advertising revenues at the Fox News
Channel, due to the absence of the presidential primaries which
occurred in the prior year, and at the RSNs, due to the broadcast
of fewer National Basketball Association (“NBA”) games. Nearly
two-thirds of the international cable channels’ 30% advertising
revenue improvement reflects strong local currency growth at the
non-sports channels at FIC and STAR. The balance of the growth was
attributable to the new sports channels, including Fox Star Sports
Asia and EMM networks, partially offset by the impact of the
strengthened U.S. dollar.
Expenses at Cable Network Programming grew 17% in the quarter
over the corresponding period in the prior year. More than
two-thirds 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 and marketing costs at the
FX Networks and National Geographic Channels, partially offset by
reduced NBA rights costs at the RSNs resulting from the broadcast
of fewer games.
FILMED ENTERTAINMENT
Filmed Entertainment reported quarterly segment operating income
of $289 million, as compared to $272 million reported in the same
period a year ago. Quarterly results reflect the successful
worldwide theatrical and domestic home entertainment performances
of Life of Pi, which has grossed more than $600 million in
worldwide box office and was the winner of 4 Academy Awards, the
most for any film this year. The quarter also included the
successful worldwide home entertainment performances of Taken 2 and
Ice Age: Continental Drift and theatrical release costs for the
successful release of The Croods, the first feature in our
DreamWorks Animation distribution deal which has grossed more than
$500 million in worldwide box office to date. Prior year third
quarter film results included the successful worldwide theatrical
and domestic home entertainment performance of Alvin and the
Chipmunks: Chipwrecked and pay-television availability of Rio.
TELEVISION
Television reported quarterly segment operating income of $196
million, an increase of $25 million or 15% versus the same period a
year ago. This increase reflects a near doubling of retransmission
consent revenues and lower programming costs at the Fox
Broadcasting Company. These improvements were partially offset by
lower national and local advertising revenues, primarily reflecting
lower primetime ratings driven by declines at American Idol, now in
its twelfth season.
DIRECT BROADCAST SATELLITE TELEVISION (“DBS”)
DBS generated a quarterly segment operating loss of $11 million,
compared to operating income of $40 million reported in the same
period a year ago. The decline was driven by the consolidation of
Sky Deutschland results, following the Company’s acquisition of an
additional 5% ownership stake in this entity in January 2013, as
well as lower contributions from SKY Italia. Revenues increased
$377 million versus the same period a year ago, reflecting the
inclusion of Sky Deutschland revenues. Sky Deutschland grew net
subscribers by approximately 42,000 during the quarter, bringing
total direct subscribers to 3.41 million. Quarterly local currency
revenue at SKY Italia declined slightly from the corresponding
period of the prior year. SKY Italia experienced a net reduction of
approximately 51,000 subscribers during the quarter, bringing total
subscribers to 4.78 million.
PUBLISHING
Publishing reported quarterly segment operating income of $85
million, a $45 million decrease from the $130 million reported in
the same period a year ago. Increased contributions from the U.K.
newspapers, which benefitted from the launch of the Sunday edition
of The Sun in February 2012, were more than offset by lower
advertising revenues at the Australian newspapers and integrated
marketing services businesses.
OTHER
The Other segment quarterly operating loss of $190 million
increased from the $147 million reported in the same period a year
ago. The current quarter included an increased operating loss at
Amplify, the Company’s education business, reflecting higher
product development costs. The increased operating loss was
partially offset by a benefit from the consolidation of FOX SPORTS
Australia, net of non-cash amortization, related to the acquisition
of the additional ownership stake in the prior quarter. The current
year quarterly results also included $42 million of costs related
to the ongoing investigations initiated upon the closure of The
News of the World, as compared to $63 million of comparable costs
included in the prior year quarterly results, as well as $25
million of costs related to the proposed separation of the
Company’s entertainment and publishing businesses.
OTHER ITEMS
Sky Deutschland
In January 2013, the Company reached an agreement with Sky
Deutschland and its new bank syndicate to support both a new
financing structure and the issuance of €438 million (approximately
$585 million) of new equity, which includes the outstanding €144
million (approximately $195 million) of equity under the capital
measures announced by Sky Deutschland in February 2012. Sky
Deutschland finalized the equity offering in early February 2013
and the Company acquired, through a combination of a private
placement and a rights offering, approximately 92 million
additional shares of Sky Deutschland increasing its ownership to
approximately 55%. The aggregate cost of the shares acquired by the
Company was approximately €410 million (approximately $550
million). As a result of these transactions, the results of Sky
Deutschland have been included in the Company’s consolidated
results of operations in the fiscal third quarter of 2013. The
carrying amount of the Company’s previously held equity interest in
Sky Deutschland was revalued to fair value as of the acquisition
date, resulting in a gain of approximately $2.1 billion which was
included in Other, net in the unaudited consolidated statements of
operations.
In addition, the Company has guaranteed Sky Deutschland’s new
€300 million (approximately $400 million) five-year bank credit
facility, which replaces Sky Deutschland’s existing bank debt
facilities. Additionally, the Company will act as guarantor to the
German Football League for Sky Deutschland’s Bundesliga
broadcasting license for the 2013/14 to 2016/17 seasons in an
amount up to 50% of the license fee per season. The Company has
also agreed to extend the maturity of existing shareholder
loans.
SKY Network Television (New Zealand)
In March 2013, the Company sold its 44% equity interest in SKY
Network Television Ltd. for approximately $675 million, net of fees
and commissions, and recorded a gain of approximately $321 million
which was included in Other, net in the unaudited consolidated
statements of operations.
Phoenix Satellite Television
In March 2013, the Company sold a portion of its interest in
Phoenix Satellite Television (“Phoenix”), for approximately $90
million in cash. The Company decreased its interest in Phoenix to
approximately 12% from the 18% it owned at June 30, 2012. The
Company recorded a gain of approximately $81 million on this
transaction which was included in Other, net in the unaudited
consolidated statements of operations.
Share repurchases
On May 9, 2012, News Corporation announced that its Board of
Directors approved an increase to the previously authorized stock
repurchase program from $5 billion to $10 billion. Through May 7,
2013, the Company has purchased more than $6.6 billion of Class A
common stock under the program, at an average price of $19.50 per
share. As a result of the stock repurchase program, diluted
weighted Class A shares outstanding of 2,330 million in this year’s
quarter declined 6% from 2,475 million in the same period a year
ago.
Intent to pursue separation of entertainment and publishing
businesses
On June 28, 2012, News Corporation announced its intent to
pursue the separation of its business into two separate independent
companies, one of which will hold the Company’s global media and
entertainment businesses and the other which will hold the
businesses comprising the Company’s newspapers, information
services and integrated marketing services, digital real estate
services, book publishing, digital education and sports programming
and pay-TV distribution in Australia. In addition to final approval
from the Board of Directors and stockholder approval of certain
amendments to the Company’s Restated Certificate of Incorporation,
the completion of the separation will be subject to receipt of
regulatory approvals, opinions from tax counsel and favorable
rulings from certain tax jurisdictions regarding the tax-free
nature of the transaction to the Company and to its stockholders,
further due diligence as appropriate, the execution of certain
agreements relating to the distribution, and the filing and
effectiveness of appropriate filings with the SEC. There can be no
assurances given that the separation of the Company's businesses as
described will occur.
REVIEW OF EQUITY EARNINGS (LOSSES) OF AFFILIATES’
RESULTS
Quarterly earnings from affiliates were $157 million as compared
to $204 million in the same period a year ago. The decreased
contributions from affiliates are primarily due to lower
contributions from BSkyB, resulting from the Company’s pre-tax gain
related to the its participation in BSkyB’s share repurchase
declining from $111 million gain in the corresponding period of the
prior year to $11 million in the current quarter. This decrease was
partially offset by the absence of Sky Deutschland operating losses
resulting from its consolidation in the quarter.
The Company’s share of equity earnings (losses) of affiliates is
as follows:
3 Months Ended
9 Months Ended March 31, March 31,
% Owned
2013
2012
2013
2012
US $ Millions BSkyB 39%(1) $ 160 $ 262 $ 667 $
577 Other affiliates Various(2) (3 ) (58 )
(146 ) (110 )
Total equity earnings of affiliates
$ 157 $ 204 $
521 $ 467
(1)
Please refer to BSkyB’s earnings releases
for detailed information.
(2)
Primarily comprised of Sky Deutschland
(consolidated as of January 2013), Hulu, Australian and STAR equity
affiliates, as well as NDS in the prior year.
Foreign Exchange Rates
Average foreign exchange rates used in the quarter-to-date
profit results are as follows:
3 Months Ended March 31, 2013
2012 Australian Dollar/U.S. Dollar 1.04 1.06 U.K.
Pounds Sterling/U.S. Dollar 1.55 1.57 Euro/U.S. Dollar 1.32 1.31
To receive a copy of this press release through the Internet,
access News Corporation’s corporate Web site located at
http://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 4:30
p.m. Eastern Daylight Savings 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.
CONSOLIDATED STATEMENTS OF
OPERATIONS 3 Months Ended 9 Months Ended March
31, March 31, 2013 2012
2013 2012 US $ Millions (except share
related amounts) Revenues $ 9,538
$ 8,402 $ 27,099 $ 25,336
Operating expenses (6,114 ) (5,216 ) (16,831 )
(15,552 ) Selling, general and administrative expenses (1,705 )
(1,580 ) (4,981 ) (4,721 ) Depreciation and amortization (357 )
(294 ) (967 ) (869 ) Impairment and restructuring charges (56 ) (27
) (273 ) (154 ) Equity earnings of affiliates 157 204 521 467
Interest expense, net (276 ) (258 ) (809 ) (773 ) Interest income
32 26 100 91 Other, net 2,431 27 5,206 22
Income from continuing operations before income tax
expense 3,650 1,284 9,065 3,847
Income tax expense (741 ) (281 ) (1,402 ) (931 )
Net income
2,909 1,003 7,663 2,916
Less: Net income attributable to
noncontrolling interests
(55 ) (66 ) (195 ) (184 )
Net income attributable to News
Corporation stockholders $ 2,854 $
937 $ 7,468 $
2,732 Weighted average shares: 2,330 2,475
2,348 2,534 Net income attributable to News Corporation
stockholders per share: $ 1.22 $ 0.38 $ 3.18 $ 1.08
CONSOLIDATED BALANCE SHEETS March 31,
June 30, 2013 2012 Assets: US
$ Millions Current assets: Cash and cash equivalents $
9,324 $ 9,626 Receivables, net 7,136 6,608 Inventories, net 3,476
2,595 Other 857 619 Total current assets
20,793 19,448
Non-current assets: Receivables
431 387 Investments 6,622 4,968 Inventories, net 5,002 4,596
Property, plant and equipment, net 5,984 5,814 Intangible assets,
net 8,331 7,133 Goodwill 20,139 13,174 Other non-current assets
1,188 1,143
Total assets $
68,490 $ 56,663 Liabilities
and Equity: Current liabilities: Borrowings $ 157 $ 273
Accounts payable, accrued expenses and other current liabilities
6,030 5,405 Participations, residuals and royalties payable 1,915
1,691 Program rights payable 1,776 1,368 Deferred revenue
1,175 880 Total current liabilities 11,053
9,617
Non-current liabilities: Borrowings 16,317
15,182 Other liabilities 4,279 3,650 Deferred income taxes 2,947
2,388 Redeemable noncontrolling interests 645 641 Commitments and
contingencies
Equity: Class A common stock, $0.01 par value
15 15 Class B common stock, $0.01 par value 8 8 Additional paid-in
capital 15,902 16,140 Retained earnings and accumulated other
comprehensive income 14,139 8,521 Total News
Corporation stockholders' equity 30,064 24,684 Noncontrolling
interests 3,185 501 Total equity 33,249
25,185
Total liabilities and equity $ 68,490
$ 56,663 CONSOLIDATED STATEMENTS OF CASH
FLOWS 9 Months Ended March 31, 2013
2012 US $ Millions Operating
activities: Net Income $ 7,663 $ 2,916 Adjustments to reconcile
net income to cash provided by operating activities: Depreciation
and amortization 967 869 Amortization of cable distribution
investments 67 69 Equity earnings of affiliates (521 ) (467 ) Cash
distributions received from affiliates 311 313 Impairment charges,
net of tax 35 10 Other, net (5,206 ) (22 ) Change in operating
assets and liabilities, net of acquisitions: Receivables and other
assets (295 ) (551 ) Inventories, net (1,043 ) (577 ) Accounts
payable and other liabilities 785 161
Net cash provided by operating activities
2,763 2,721 Investing
activities: Property, plant and equipment, net of acquisitions
(627 ) (651 ) Acquisitions, net of cash acquired (2,746 ) (532 )
Investments in equity affiliates (618 ) (14 ) Other investments (63
) (198 ) Proceeds from dispositions 2,670 408
Net cash used in investing activities
(1,384 ) (987 )
Financing activities: Borrowings 1,277 - Repayment of
borrowings (989 ) (32 ) Issuance of shares 170 87 Repurchase of
shares (1,834 ) (3,294 ) Dividends paid (384 ) (323 ) Purchase of
subsidiary shares from noncontrolling interests (9 ) - Other, net
70 -
Net cash used in financing
activities (1,699 ) (3,562
) Net decrease in cash and cash equivalents (320 )
(1,828 ) Cash and cash equivalents, beginning of period 9,626
12,680 Exchange movement on opening cash balance 18
(166 )
Cash and cash equivalents, end of period
$ 9,324 $ 10,686
SEGMENT INFORMATION 3 Months Ended 9
Months Ended March 31, March 31, 2013
2012 2013 2012 US $
Millions Revenues Cable Network
Programming $ 2,782 $ 2,375 $ 7,790 $ 6,656 Filmed Entertainment
2,014 1,722 5,826 5,563 Television 1,225 1,208 3,716 3,651 Direct
Broadcast Satellite Television 1,300 923 3,007 2,792 Publishing
1,938 2,025 6,105 6,224 Other 279 149
655 450
Total Revenues $
9,538 $ 8,402 $
27,099 $ 25,336
Segment Operating Income (Loss) Cable Network
Programming $ 993 $ 846 $ 2,891 $ 2,503 Filmed Entertainment 289
272 1,072 1,012 Television 196 171 576 493 Direct Broadcast
Satellite Television (11 ) 40 (8 ) 165 Publishing 85 130 376 458
Other (190 ) (147 ) (587 ) (437 )
Total Segment Operating Income * $ 1,362
$ 1,312 $ 4,320
$ 4,194 *
The three months ended March 31,
2013 and 2012 include $42 million and $63 million, respectively, of
costs related to the ongoing investigations in the U.K. The three
months ended March 31, 2013 include $25 million of costs related to
the proposed separation of the Company’s entertainment and
publishing businesses. Excluding these charges, adjusted total
segment operating income is $1,429 and $1,375 million in the three
months ended March 31, 2013 and 2012, respectively.
The nine months ended March 31, 2013 and
2012 include $165 million and $167 million, respectively, of costs
related to the ongoing investigations in the U.K. The nine months
ended March 31, 2013 include $53 million of costs related to the
proposed separation of the Company’s entertainment and publishing
businesses. Excluding these charges, adjusted total segment
operating income is $4,538 and $4,361 million in the nine months
ended March 31, 2013 and 2012, respectively.
NOTE 1 – TOTAL SEGMENT OPERATING INCOME AND SEGMENT OPERATING
INCOME BEFORE DEPRECIATION AND AMORTIZATION
The Company evaluates the performance of its operating segments
based on segment operating income, and management uses total
segment operating income as a measure of the performance of
operating businesses separate from non-operating factors. Total
segment operating income and segment operating income before
depreciation and amortization are non-GAAP measures and should be
considered in addition to, not as a substitute for, net income,
cash flow and other measures of financial performance reported in
accordance with GAAP. In addition, these measures do not reflect
cash available to fund requirements. These measures exclude items,
such as impairment and restructuring charges, which are significant
components in assessing the Company’s financial performance.
Segment operating income before depreciation and amortization also
excludes depreciation and amortization which are also significant
components in assessing the Company’s financial performance.
Management believes that total segment operating income and
segment operating income before depreciation and amortization are
appropriate measures for evaluating the operating performance of
the Company’s business and provide investors and equity analysts a
measure to analyze operating performance of the Company’s business
and enterprise value against historical data and competitors’ data.
Total segment operating income and segment operating income before
depreciation and amortization is the primary measure used by our
chief operating decision maker to evaluate the performance of and
allocate resources to the Company’s business segments.
Total segment operating income does not include: Impairment and
restructuring charges, discontinued operations, Equity earnings of
affiliates, Interest expense, net, Interest income, Other, net,
Income tax expense and Net income attributable to noncontrolling
interests.
Segment operating income before depreciation and amortization is
defined as segment operating income plus depreciation and
amortization and the amortization of cable distribution investments
and eliminates the variable effect across all business segments of
depreciation and amortization. Depreciation and amortization
expense includes the depreciation of property and equipment, as
well as 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 segment operating income before
depreciation and amortization.
The following table reconciles segment operating income before
depreciation and amortization to income from continuing operations
before income tax expense.
3 Months Ended 9 Months Ended March
31, March 31, 2013 2012
2013 2012 US $ Millions
Segment Operating income before depreciation and
amortization $ 1,742 $ 1,628
$ 5,354 $ 5,132 Depreciation and
amortization (357 ) (294 ) (967 ) (869 ) Amortization of cable
distribution investments (23 ) (22 ) (67 )
(69 )
Total Segment Operating income 1,362
1,312 4,320 4,194 Impairment and restructuring
charges (56 ) (27 ) (273 ) (154 ) Equity earnings of affiliates 157
204 521 467 Interest expense, net (276 ) (258 ) (809 ) (773 )
Interest income 32 26 100 91 Other, net 2,431
27 5,206 22
Income from
continuing operations before income tax expense $
3,650 $ 1,284 $
9,065 $ 3,847
For the Three Months Ended March 31, 2013 (US $
Millions) Segment Operating
income (loss) before Depreciation Amortization
of Segment depreciation and and cable
distribution Operating income amortization
amortization investments (loss) Cable Network
Programming $ 1,069 $ (53 ) $ (23 ) $ 993 Filmed Entertainment 321
(32 ) - 289 Television 219 (23 ) - 196 Direct Broadcast Satellite
Television 90 (101 ) - (11 ) Publishing 203 (118 ) - 85 Other
(160 ) (30 ) - (190 )
Consolidated Total $ 1,742 $
(357 ) $ (23 ) $
1,362 For the Three Months Ended
March 31, 2012 (US $ Millions) Segment Operating
income (loss) before
Depreciation Amortization of Segment
depreciation and and cable distribution
Operating income amortization amortization
investments (loss) Cable Network Programming $ 910 $
(42 ) $ (22 ) $ 846 Filmed Entertainment 305 (33 ) - 272 Television
192 (21 ) - 171 Direct Broadcast Satellite Television 116 (76 ) -
40 Publishing 236 (106 ) - 130 Other (131 ) (16 )
- (147 )
Consolidated Total $
1,628 $ (294 ) $
(22 ) $ 1,312
For the Nine Months Ended March 31, 2013 (US $
Millions) Segment Operating
income (loss) before Depreciation Amortization
of Segment depreciation and and cable
distribution Operating income amortization
amortization investments (loss) Cable Network
Programming $ 3,098 $ (140 ) $ (67 ) $ 2,891 Filmed Entertainment
1,170 (98 ) - 1,072 Television 642 (66 ) - 576 Direct Broadcast
Satellite Television 241 (249 ) - (8 ) Publishing 724 (348 ) - 376
Other (521 ) (66 ) - (587 )
Consolidated Total $ 5,354 $
(967 ) $ (67 ) $
4,320 For the Nine Months Ended
March 31, 2012 (US $ Millions) Segment Operating
income (loss) before
Depreciation Amortization of Segment
depreciation and and cable distribution
Operating income amortization amortization
investments (loss) Cable Network Programming $ 2,689
$ (117 ) $ (69 ) $ 2,503 Filmed Entertainment 1,107 (95 ) - 1,012
Television 556 (63 ) - 493 Direct Broadcast Satellite Television
393 (228 ) - 165 Publishing 777 (319 ) - 458 Other (390 )
(47 ) - (437 )
Consolidated
Total $ 5,132 $ (869
) $ (69 ) $ 4,194
NOTE 2 – ADJUSTED NET INCOME AND ADJUSTED EPS
The Company uses net income and earnings per share excluding
Segment operating profit adjustments, Impairment and restructuring
charges, Equity affiliate adjustments, “Other, net”, and
discontinued operations, net of tax (“adjusted net income and
adjusted diluted earnings per share”) to evaluate the performance
of the Company’s operations exclusive of certain items that impact
the comparability of results from period to period. The calculation
of adjusted net income and adjusted diluted earnings per share may
not be comparable to similarly titled measures reported by other
companies, since companies and investors may differ as to what type
of events warrant adjustment. Adjusted net income and adjusted
diluted earnings per share are not measures of performance under
generally accepted accounting principles and should not be
construed as substitutes for consolidated net income and earnings
per share as determined under GAAP as a measure of performance.
However, management uses these measures in comparing the Company’s
historical performance and believes that they provide meaningful
and comparable information to investors to assist in their analysis
of our performance relative to prior periods and our
competitors.
The following tables reconcile reported net income and reported
diluted earnings per share (“EPS”) to adjusted net income and
adjusted diluted earnings per share for the three months ended
March 31, 2013 and 2012.
3 Months Ended 3 Months Ended March
31, 2013 March 31, 2012 Net income Net
income attributable to attributable to
stockholders EPS stockholders
EPS (in US$ millions, except per share data)
As reported $ 2,854 $
1.22 $ 937 $ 0.38 Segment
operating profit adjustments (net of provision for income taxes of
$15 and $19 for the three months ended March 31, 2013 and 2012,
respectively)(a) 52 0.02 44 0.02 Impairment and
restructuring charges (net of provision for income taxes of $15 and
$4 for the three months ended March 31, 2013 and 2012,
respectively) 41 0.02 23 0.01 Equity affiliate adjustments
(net of provision for income taxes of $3 and $45 for the three
months ended March 31, 2013 and 2012, respectively)(b) (8 ) - (66 )
(0.03 ) Other, net (net of provision for income taxes of
$325 and $10 for the three months ended March 31, 2013 and 2012)
(2,106 ) (0.90 ) (17 ) (0.01 ) Other/Rounding 1
As adjusted
$ 834 $ 0.36 $
921 $ 0.37
(a)
Segment operating profit for the three
months ended March 31, 2013 and 2012 was adjusted to exclude the
expenses related to the ongoing investigations initiated upon the
closure of The News of the World. The three months ended March 31,
2013 were also adjusted to exclude the expenses related to
separation of the Company’s entertainment and publishing
businesses.
(b)
Equity earnings of affiliates for the
three months ended March 31, 2013 and 2012 was adjusted to exclude
from BSkyB results News Corporation’s gain on the BSkyB repurchase
program.
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