Attached files
| file | filename |
|---|---|
| 8-K - 8-K - TWENTY-FIRST CENTURY FOX, INC. | d132293d8k.htm |
Exhibit 99.1
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
21ST CENTURY FOX REPORTS SECOND QUARTER TOTAL SEGMENT
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION OF $1.73
BILLION, A 2% INCREASE OVER THE PRIOR YEAR ADJUSTED RESULTS, ON
TOTAL REVENUE OF $7.38 BILLION AND INCOME FROM CONTINUING
OPERATIONS PER SHARE OF $0.34
NEW YORK, NY, February 8, 2016 – Twenty-First Century Fox, Inc. (“21st Century Fox” or the “Company” — NASDAQ: FOXA, FOX) today reported financial results for the three months ended December 31, 2015.
The Company reported total quarterly revenues of $7.38 billion, a decrease of $49 million, or 1%, from the $7.42 billion of adjusted revenues(1) reported in the prior year. The decline compared to last year’s adjusted revenues reflects higher affiliate and advertising revenues at the Cable Network Programming and Television segments that were more than offset by lower revenues generated at the Filmed Entertainment segment due to lower home entertainment revenues and the absence of revenues from Shine in the current quarter. The adverse impact of foreign exchange rates in the current quarter impacted adjusted revenue growth by $207 million, or 3% in total.
Quarterly total segment operating income before depreciation and amortization (“OIBDA” )(2) of $1.73 billion increased $35 million, or 2%, from the $1.70 billion of adjusted OIBDA(3) reported in the prior year. The increase compared to last year’s adjusted OIBDA primarily reflects 8% growth at the Company’s Cable Network Programming segment partially offset by reduced contributions from the Filmed Entertainment segment. The adverse impact of foreign exchange rates impacted adjusted OIBDA growth by $109 million, or 6%.
The Company reported quarterly income from continuing operations attributable to stockholders of $674 million ($0.34 per share), compared with $6.22 billion ($2.89 per share) in the prior year. Excluding the net income effects of Other, net and gains and other adjustments related to Sky and Endemol Shine Group included in Equity earnings from affiliates, adjusted quarterly earnings per share(4) from continuing operations attributable to stockholders was $0.44 compared with the adjusted year-ago result of $0.53, which included the recognition of various tax benefits of $0.12 per share.
Commenting on the results, Executive Chairmen Rupert and Lachlan Murdoch said:
“During the quarter, our cable business continued to drive our growth, delivering sustained increases in domestic affiliate fees and gains in advertising revenue, underscoring the power of our global brands and distinctive programming. In addition, we are encouraged by progress at the FOX Broadcast Network, which delivered significant advertising gains from both our sports and entertainment programming. At our television production business, we deliberately invested in a higher number of new original series this quarter in support of the network’s new primetime schedule and in creating valuable long-term assets for the Company. We continued with our top priority of delivering standout storytelling and are proud of our industry-leading Academy Award nominations as well as Golden Globe wins across both our film and television businesses.”
| (1) | Prior year adjusted revenues of $7.42 billion exclude $631 million of revenues related to the Direct Broadcast Satellite (“DBS”) businesses which were sold to Sky plc (“Sky”) in November 2014. |
| (2) | 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 total segment OIBDA to income from continuing operations before income tax expense. |
| (3) | Prior year adjusted OIBDA of $1.70 billion excludes $27 million of OIBDA related to the DBS businesses. |
| (4) | See page 14 for a reconciliation of reported income and earnings per share from continuing operations attributable to stockholders to adjusted income and adjusted earnings per share from continuing operations attributable to stockholders. |
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
REVIEW OF SEGMENT OPERATING RESULTS
| Three Months Ended December 31, |
Six Months Ended December 31, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| US $ Millions | ||||||||||||||||
| Revenues: |
||||||||||||||||
| Cable Network Programming |
$ | 3,703 | $ | 3,384 | $ | 7,167 | $ | 6,615 | ||||||||
| Television |
1,716 | 1,623 | 2,765 | 2,671 | ||||||||||||
| Filmed Entertainment |
2,361 | 2,753 | 4,146 | 5,229 | ||||||||||||
| Direct Broadcast Satellite Television |
— | 663 | — | 2,112 | ||||||||||||
| Other, Corporate and Eliminations |
(405 | ) | (368 | ) | (626 | ) | (685 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
$ | 7,375 | $ | 8,055 | $ | 13,452 | $ | 15,942 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less: DBS businesses, net of intercompany eliminations |
— | (631 | ) | — | (2,035 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Total Revenues |
$ | 7,375 | $ | 7,424 | $ | 13,452 | $ | 13,907 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Segment OIBDA: |
||||||||||||||||
| Cable Network Programming |
$ | 1,250 | $ | 1,159 | $ | 2,556 | $ | 2,197 | ||||||||
| Television |
279 | 290 | 475 | 464 | ||||||||||||
| Filmed Entertainment |
302 | 336 | 451 | 794 | ||||||||||||
| Direct Broadcast Satellite Television |
— | 27 | — | 234 | ||||||||||||
| Other, Corporate and Eliminations |
(101 | ) | (90 | ) | (217 | ) | (188 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Segment OIBDA |
$ | 1,730 | $ | 1,722 | $ | 3,265 | $ | 3,501 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less: DBS businesses |
— | (27 | ) | — | (234 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Total Segment OIBDA |
$ | 1,730 | $ | 1,695 | $ | 3,265 | $ | 3,267 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Page 2
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
CABLE NETWORK PROGRAMMING
Cable Network Programming quarterly segment OIBDA increased 8% to $1.25 billion, driven by a 9% revenue increase on strong affiliate revenue growth and higher advertising revenues partially offset by a 10% increase in expenses. The increase in expenses was primarily due to the impact from the consolidation of newly acquired National Geographic Partners businesses as well as higher planned sports programming costs led by soccer, Major League Baseball and college football rights. Foreign exchange fluctuations, primarily in Latin America and Europe, adversely impacted segment OIBDA growth by 5%.
Domestic affiliate revenue increased 10% reflecting continued strong growth at FS1 and Fox News and sustained growth across all of the other domestic cable networks. Domestic advertising revenue grew 3% over the prior year period reflecting solid growth at Fox News and the Regional Sports Networks, led by higher ratings for National Basketball Association games, partially offset by lower advertising revenues at FX Networks from lower ratings. Domestic OIBDA contributions increased 7% over the prior year led by higher contributions from Fox News and the domestic sports channels.
International affiliate revenue decreased 1% as 11% local currency growth at STAR and the Fox International Channels (“FIC”) was more than offset by a 12% adverse impact from the strengthened U.S. dollar. Despite an 11% adverse impact from the strengthened U.S. dollar, international advertising revenue increased 15% as the STAR and FIC channels generated strong local currency growth. Quarterly OIBDA at the international cable channels increased 8% reflecting strong local currency growth partially offset by the adverse impact of the strengthened U.S. dollar.
TELEVISION
Television generated quarterly segment OIBDA of $279 million, an $11 million decrease over the $290 million reported in the prior year quarter. Quarterly segment revenues were 6% higher than the corresponding period in the prior year due to strong retransmission consent revenue growth and a 4% increase in advertising revenues, primarily reflecting low double digit advertising growth at the FOX Broadcast Network, which benefited from higher national pricing and increased audiences for both the National Football League and the new primetime schedule led by Empire, partially offset by lower cyclical political advertising revenues at the TV stations. The decrease in segment OIBDA was driven by higher contractual sports programming costs at the FOX Broadcast Network that more than offset the higher revenues.
FILMED ENTERTAINMENT
Filmed Entertainment generated quarterly segment OIBDA of $302 million, a $34 million decrease from the $336 million reported in the same period a year-ago. Quarterly segment revenues decreased $392 million to $2.36 billion, primarily due to lower worldwide home entertainment revenues reflecting difficult comparisons to last year’s strong performance of X-Men: Days of Futures Past and Dawn of the Planet of the Apes with this year’s home entertainment performance of Spy, the absence of revenue contributions from Shine and the adverse impact of the strengthened U.S. dollar partially offset by higher television production network revenues. The OIBDA decline over the prior year primarily reflects lower contributions from the television production business due to higher deficits related to more new series delivered during the quarter and the absence of contributions from successful series that concluded in the prior year, including Sons of Anarchy, partially offset by higher film studio contributions driven by the worldwide theatrical performance of The Martian, which has grossed over $600 million in worldwide box office to date. Segment OIBDA comparisons were also adversely impacted by a 14% negative impact from foreign exchange rate fluctuations.
Page 3
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
REVIEW OF EQUITY EARNINGS OF AFFILIATES’ RESULTS
The Company’s share of equity earnings of affiliates is as follows:
| Three Months Ended December 31, |
Six Months Ended December 31, |
|||||||||||||||||
| % Owned | 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| US $ Millions | ||||||||||||||||||
| Sky |
39%(1) | $ | 100 | $ | 296 | $ | 210 | $ | 692 | |||||||||
| Other equity affiliates |
Various(2) | (88 | ) | (46 | ) | (163 | ) | (63 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Total equity earnings of affiliates |
$ | 12 | $ | 250 | $ | 47 | $ | 629 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) | Please refer to Sky’s earnings releases for detailed information. |
| (2) | Primarily comprised of Endemol Shine Group, Hulu and STAR equity affiliates |
Quarterly equity earnings of affiliates were $12 million as compared to $250 million in the same period a year-ago. This $238 million decrease primarily reflects lower contributions from Sky, principally due to prior year gains on the sales of its ownership stake of National Geographic Channels International (“NGCI”) and its remaining shares of ITV plc (“ITV”), higher losses from Hulu and the inclusion of Endemol Shine Group losses this year.
OTHER ITEMS
Share repurchases
On August 4, 2015, the Board of Directors authorized the repurchase of an additional $5 billion of Class A Common Stock, excluding commissions. The Company expects to fully utilize this stock repurchase authorization over the twelve month period ending in August 2016. The remaining authorized amount under the Company’s stock repurchase program as of December 31, 2015, excluding commissions, was approximately $2.4 billion.
During the quarter, the Company repurchased 45 million shares of Class A Common Stock for $1.3 billion. As a result of the stock repurchase program, diluted weighted average common stock outstanding of 1.96 billion in this year’s quarter declined 9% from 2.15 billion in the same period a year ago.
Dividends
The Company has declared a dividend of $0.15 per Class A and Class B share. The dividend declared is payable on April 13, 2016 with a record date for determining dividend entitlements of March 9, 2016.
Page 4
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
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 second 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.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.
| CONTACTS: |
||
| Reed Nolte, Investor Relations |
Julie Henderson, Press Inquiries | |
| 212-852-7092 Mike Petrie, Investor Relations 212-852-7130 |
310-369-0773 Nathaniel Brown, Press Inquiries 212-852-7746 |
Page 5
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended December 31, |
Six Months Ended December 31, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| US $ Millions, except per share amounts | ||||||||||||||||
| Revenues |
$ | 7,375 | $ | 8,055 | $ | 13,452 | $ | 15,942 | ||||||||
| Operating expenses |
(4,757 | ) | (5,366 | ) | (8,430 | ) | (10,418 | ) | ||||||||
| Selling, general and administrative |
(903 | ) | (988 | ) | (1,792 | ) | (2,067 | ) | ||||||||
| Depreciation and amortization |
(130 | ) | (201 | ) | (258 | ) | (477 | ) | ||||||||
| Equity earnings of affiliates |
12 | 250 | 47 | 629 | ||||||||||||
| Interest expense, net |
(298 | ) | (310 | ) | (593 | ) | (615 | ) | ||||||||
| Interest income |
7 | 9 | 16 | 23 | ||||||||||||
| Other, net |
(142 | ) | 5,040 | (225 | ) | 5,075 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations before income tax expense |
1,164 | 6,489 | 2,217 | 8,092 | ||||||||||||
| Income tax expense |
(414 | ) | (189 | ) | (727 | ) | (692 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations |
750 | 6,300 | 1,490 | 7,400 | ||||||||||||
| Loss from discontinued operations, net of tax |
(2 | ) | (16 | ) | (5 | ) | (23 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
$ | 748 | $ | 6,284 | $ | 1,485 | $ | 7,377 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less: Net income attributable to noncontrolling interests |
(76 | ) | (77 | ) | (138 | ) | (133 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income attributable to Twenty-First Century Fox, Inc. stockholders |
$ | 672 | $ | 6,207 | $ | 1,347 | $ | 7,244 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Weighted average shares: |
1,958 | 2,152 | 1,985 | 2,173 | ||||||||||||
| Income from continuing operations attributable to Twenty-First Century Fox, Inc. stockholders per share: |
$ | 0.34 | $ | 2.89 | $ | 0.68 | $ | 3.34 | ||||||||
| Net income attributable to Twenty-First Century Fox, Inc. stockholders per share: |
$ | 0.34 | $ | 2.88 | $ | 0.68 | $ | 3.33 | ||||||||
Page 6
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
CONSOLIDATED BALANCE SHEETS
| December 31, 2015 |
June 30, 2015 |
|||||||
| US $ Millions | ||||||||
| Assets: |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 4,293 | $ | 8,428 | ||||
| Receivables, net |
6,842 | 5,912 | ||||||
| Inventories, net |
3,305 | 2,749 | ||||||
| Other |
386 | 287 | ||||||
|
|
|
|
|
|||||
| Total current assets |
14,826 | 17,376 | ||||||
|
|
|
|
|
|||||
| Non-current assets: |
||||||||
| Receivables, net |
410 | 394 | ||||||
| Investments |
4,053 | 4,529 | ||||||
| Inventories, net |
6,815 | 6,411 | ||||||
| Property, plant and equipment, net |
1,668 | 1,722 | ||||||
| Intangible and other long-term assets, net |
6,764 | 6,320 | ||||||
| Goodwill |
12,716 | 12,513 | ||||||
| Other non-current assets |
844 | 786 | ||||||
|
|
|
|
|
|||||
| Total assets |
$ | 48,096 | $ | 50,051 | ||||
|
|
|
|
|
|||||
| Liabilities and Equity: |
||||||||
| Current liabilities: |
||||||||
| Borrowings |
$ | 486 | $ | 244 | ||||
| Accounts payable, accrued expenses and other current liabilities |
3,359 | 3,937 | ||||||
| Participations, residuals and royalties payable |
1,781 | 1,632 | ||||||
| Program rights payable |
1,098 | 1,001 | ||||||
| Deferred revenue |
544 | 448 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
7,268 | 7,262 | ||||||
|
|
|
|
|
|||||
| Non-current liabilities: |
||||||||
| Borrowings |
19,251 | 18,795 | ||||||
| Other liabilities |
3,190 | 3,105 | ||||||
| Deferred income taxes |
2,275 | 2,082 | ||||||
| Redeemable noncontrolling interests |
617 | 621 | ||||||
| Commitments and contingencies |
||||||||
| Equity: |
||||||||
| Class A common stock, $0.01 par value |
11 | 12 | ||||||
| Class B common stock, $0.01 par value |
8 | 8 | ||||||
| Additional paid-in capital |
12,573 | 13,427 | ||||||
| Retained earnings |
3,851 | 5,343 | ||||||
| Accumulated other comprehensive loss |
(1,939 | ) | (1,570 | ) | ||||
|
|
|
|
|
|||||
| Total Twenty-First Century Fox, Inc. stockholders’ equity |
14,504 | 17,220 | ||||||
| Noncontrolling interests |
991 | 966 | ||||||
|
|
|
|
|
|||||
| Total equity |
15,495 | 18,186 | ||||||
|
|
|
|
|
|||||
| Total liabilities and equity |
$ | 48,096 | $ | 50,051 | ||||
|
|
|
|
|
|||||
Page 7
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended December 31, |
||||||||
| 2015 | 2014 | |||||||
| US $ Millions | ||||||||
| Operating activities: |
||||||||
| Net income |
$ | 1,485 | $ | 7,377 | ||||
| Less: Loss from discontinued operations, net of tax |
(5 | ) | (23 | ) | ||||
|
|
|
|
|
|||||
| Income from continuing operations |
1,490 | 7,400 | ||||||
| Adjustments to reconcile income from continuing operations to cash provided by operating activities: |
||||||||
| Depreciation and amortization |
258 | 477 | ||||||
| Amortization of cable distribution investments |
35 | 44 | ||||||
| Equity-based compensation |
119 | 91 | ||||||
| Equity earnings of affiliates |
(47 | ) | (629 | ) | ||||
| Cash distributions received from affiliates |
219 | 221 | ||||||
| Other, net |
225 | (5,075 | ) | |||||
| CLT20 contract termination costs |
(420 | ) | — | |||||
| Deferred income taxes and other taxes |
179 | (246 | ) | |||||
| Change in operating assets and liabilities, net of acquisitions and dispositions: |
||||||||
| Receivables and other assets |
(1,035 | ) | (809 | ) | ||||
| Inventories net of program rights payable |
(792 | ) | (940 | ) | ||||
| Accounts payable and other liabilities |
1 | 318 | ||||||
|
|
|
|
|
|||||
| Net cash provided by operating activities from continuing operations |
232 | 852 | ||||||
|
|
|
|
|
|||||
| Investing activities: |
||||||||
| Property, plant and equipment |
(92 | ) | (261 | ) | ||||
| Acquisitions, net of cash acquired |
(908 | ) | — | |||||
| Investments in equity affiliates |
(86 | ) | (1,076 | ) | ||||
| Other investments |
(214 | ) | (39 | ) | ||||
| Proceeds from dispositions, net |
— | 8,613 | ||||||
|
|
|
|
|
|||||
| Net cash (used in) provided by investing activities from continuing operations |
(1,300 | ) | 7,237 | |||||
|
|
|
|
|
|||||
| Financing activities: |
||||||||
| Borrowings |
1,124 | 2,447 | ||||||
| Repayment of borrowings |
(439 | ) | (2,059 | ) | ||||
| Excess tax benefit from equity-based compensation |
11 | 48 | ||||||
| Repurchase of shares |
(3,202 | ) | (2,730 | ) | ||||
| Dividends paid and distributions |
(419 | ) | (436 | ) | ||||
| Purchase of subsidiary shares from noncontrolling interests |
(62 | ) | (650 | ) | ||||
|
|
|
|
|
|||||
| Net cash used in financing activities from continuing operations |
(2,987 | ) | (3,380 | ) | ||||
|
|
|
|
|
|||||
| Net decrease in cash and cash equivalents from discontinued operations |
(10 | ) | (28 | ) | ||||
| Net (decrease) increase in cash and cash equivalents |
(4,065 | ) | 4,681 | |||||
| Cash and cash equivalents, beginning of year |
8,428 | 5,415 | ||||||
| Exchange movement on cash balances |
(70 | ) | (45 | ) | ||||
|
|
|
|
|
|||||
| Cash and cash equivalents, end of period |
$ | 4,293 | $ | 10,051 | ||||
|
|
|
|
|
|||||
Page 8
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
SEGMENT INFORMATION
| Three Months Ended December 31, |
Six Months Ended December 31, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| US $ Millions | ||||||||||||||||
| Revenues: |
||||||||||||||||
| Cable Network Programming |
$ | 3,703 | $ | 3,384 | $ | 7,167 | $ | 6,615 | ||||||||
| Television |
1,716 | 1,623 | 2,765 | 2,671 | ||||||||||||
| Filmed Entertainment |
2,361 | 2,753 | 4,146 | 5,229 | ||||||||||||
| Direct Broadcast Satellite Television |
— | 663 | — | 2,112 | ||||||||||||
| Other, Corporate and Eliminations |
(405 | ) | (368 | ) | (626 | ) | (685 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
$ | 7,375 | $ | 8,055 | $ | 13,452 | $ | 15,942 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less: DBS businesses, net of intercompany eliminations |
— | (631 | ) | — | (2,035 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Total Revenues |
$ | 7,375 | $ | 7,424 | $ | 13,452 | $ | 13,907 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Segment OIBDA: |
||||||||||||||||
| Cable Network Programming |
$ | 1,250 | $ | 1,159 | $ | 2,556 | $ | 2,197 | ||||||||
| Television |
279 | 290 | 475 | 464 | ||||||||||||
| Filmed Entertainment |
302 | 336 | 451 | 794 | ||||||||||||
| Direct Broadcast Satellite Television |
— | 27 | — | 234 | ||||||||||||
| Other, Corporate and Eliminations |
(101 | ) | (90 | ) | (217 | ) | (188 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Segment OIBDA |
$ | 1,730 | $ | 1,722 | $ | 3,265 | $ | 3,501 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less: DBS businesses |
— | (27 | ) | — | (234 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Total Segment OIBDA |
$ | 1,730 | $ | 1,695 | $ | 3,265 | $ | 3,267 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Depreciation and amortization: |
||||||||||||||||
| Cable Network Programming |
$ | 76 | $ | 69 | $ | 150 | $ | 149 | ||||||||
| Television |
29 | 29 | 59 | 55 | ||||||||||||
| Filmed Entertainment |
20 | 30 | 40 | 63 | ||||||||||||
| Direct Broadcast Satellite Television |
— | 69 | — | 202 | ||||||||||||
| Other, Corporate and Eliminations |
5 | 4 | 9 | 8 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total depreciation and amortization * |
$ | 130 | $ | 201 | $ | 258 | $ | 477 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less: DBS businesses |
— | (69 | ) | — | (202 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted total depreciation and amortization |
$ | 130 | $ | 132 | $ | 258 | $ | 275 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| * | The three months ended December 31, 2015 and 2014 include the amortization of definite lived intangible assets of $59 million and $81 million, respectively. The six months ended December 31, 2015 and 2014 include the amortization of definite lived intangible assets of $118 million and $183 million, respectively. These amounts principally reflect purchase price amortization related to acquisitions. |
Page 9
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
CONSOLIDATED REVENUES BY COMPONENT
| Three Months Ended December 31, |
Six Months Ended December 31, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| US $ Millions | ||||||||||||||||
| Affiliate fees |
$ | 2,696 | $ | 2,480 | $ | 5,382 | $ | 4,912 | ||||||||
| Subscription |
— | 605 | — | 1,964 | ||||||||||||
| Advertising |
2,444 | 2,370 | 4,043 | 4,104 | ||||||||||||
| Content |
2,033 | 2,487 | 3,758 | 4,749 | ||||||||||||
| Other |
202 | 113 | 269 | 213 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
$ | 7,375 | $ | 8,055 | $ | 13,452 | $ | 15,942 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
CONSOLIDATED ADJUSTED REVENUES BY COMPONENT (EXCLUDING DBS BUSINESSES, NET OF ELIMINATIONS)
| Three Months Ended December 31, |
Six Months Ended December 31, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| US $ Millions | ||||||||||||||||
| Affiliate fees |
$ | 2,696 | $ | 2,492 | $ | 5,382 | $ | 4,955 | ||||||||
| Advertising |
2,444 | 2,325 | 4,043 | 3,998 | ||||||||||||
| Content |
2,033 | 2,501 | 3,758 | 4,772 | ||||||||||||
| Other |
202 | 106 | 269 | 182 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Adjusted Revenues |
$ | 7,375 | $ | 7,424 | $ | 13,452 | $ | 13,907 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Page 10
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
NOTE 1 – TOTAL SEGMENT OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION
The Company evaluates the performance of its operating segments based on segment operating income before depreciation and amortization (“OIBDA”), and management uses total segment OIBDA as a measure of the performance of operating businesses separate from non-operating factors. Total segment OIBDA is a non-GAAP measure 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, this measure does not reflect cash available to fund requirements. This measure excludes items, such as depreciation and amortization as well as impairment charges, which are significant components in assessing the Company’s financial performance.
Management believes that total segment OIBDA is an appropriate measure for evaluating the operating performance of the Company’s business and provides investors and equity analysts a measure to analyze operating performance of the Company’s business and enterprise value against historical data and competitors’ data. Segment OIBDA 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.
Segment OIBDA does not include 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.
In addition, total segment OIBDA does not include: Discontinued operations, Equity earnings of affiliates, Interest expense, net, Interest income, Other, net, Income tax expense and Net income attributable to noncontrolling interests.
The following table reconciles revenues to total segment OIBDA and from total segment OIBDA to Income from continuing operations before income tax expense:
| Three Months Ended December 31, |
Six Months Ended December 31, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| US $ Millions | ||||||||||||||||
| Revenues |
$ | 7,375 | $ | 8,055 | $ | 13,452 | $ | 15,942 | ||||||||
| Operating expenses |
(4,757 | ) | (5,366 | ) | (8,430 | ) | (10,418 | ) | ||||||||
| Selling, general and administrative |
(903 | ) | (988 | ) | (1,792 | ) | (2,067 | ) | ||||||||
| Add: Amortization of cable distribution investments |
15 | 21 | 35 | 44 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Segment OIBDA |
1,730 | 1,722 | 3,265 | 3,501 | ||||||||||||
| Amortization of cable distribution investments |
(15 | ) | (21 | ) | (35 | ) | (44 | ) | ||||||||
| Depreciation and amortization |
(130 | ) | (201 | ) | (258 | ) | (477 | ) | ||||||||
| Equity earnings of affiliates |
12 | 250 | 47 | 629 | ||||||||||||
| Interest expense, net |
(298 | ) | (310 | ) | (593 | ) | (615 | ) | ||||||||
| Interest income |
7 | 9 | 16 | 23 | ||||||||||||
| Other, net |
(142 | ) | 5,040 | (225 | ) | 5,075 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from continuing operations before income tax expense |
$ | 1,164 | $ | 6,489 | $ | 2,217 | $ | 8,092 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Page 11
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
| Three Months Ended December 31, 2015 | ||||||||||||||||
| US $ Millions | ||||||||||||||||
| Revenues | Operating and Selling, general and administrative expenses |
Add: Amortization of cable distribution investments |
Segment OIBDA | |||||||||||||
| Cable Network Programming |
$ | 3,703 | $ | (2,468 | ) | $ | 15 | $ | 1,250 | |||||||
| Television |
1,716 | (1,437 | ) | — | 279 | |||||||||||
| Filmed Entertainment |
2,361 | (2,059 | ) | — | 302 | |||||||||||
| Direct Broadcast Satellite Television |
— | — | — | — | ||||||||||||
| Other, Corporate and Eliminations |
(405 | ) | 304 | — | (101 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Consolidated Total |
$ | 7,375 | $ | (5,660 | ) | $ | 15 | $ | 1,730 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less: DBS businesses, net of intercompany eliminations |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Consolidated Total |
$ | 7,375 | $ | (5,660 | ) | $ | 15 | $ | 1,730 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Three Months Ended December 31, 2014 | ||||||||||||||||
| US $ Millions | ||||||||||||||||
| Revenues | Operating and Selling, general and administrative expenses |
Add: Amortization of cable distribution investments |
Segment OIBDA | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Cable Network Programming |
$ | 3,384 | $ | (2,246 | ) | $ | 21 | $ | 1,159 | |||||||
| Television |
1,623 | (1,333 | ) | — | 290 | |||||||||||
| Filmed Entertainment |
2,753 | (2,417 | ) | — | 336 | |||||||||||
| Direct Broadcast Satellite Television |
663 | (636 | ) | — | 27 | |||||||||||
| Other, Corporate and Eliminations |
(368 | ) | 278 | — | (90 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Consolidated Total |
$ | 8,055 | $ | (6,354 | ) | $ | 21 | $ | 1,722 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less: DBS businesses, net of intercompany eliminations |
(631 | ) | 604 | — | (27 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Consolidated Total |
$ | 7,424 | $ | (5,750 | ) | $ | 21 | $ | 1,695 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
Page 12
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
| Six Months Ended December 31, 2015 | ||||||||||||||||
| US $ Millions | ||||||||||||||||
| Revenues | Operating and Selling, general and administrative expenses |
Add: Amortization of cable distribution investments |
Segment OIBDA | |||||||||||||
| Cable Network Programming |
$ | 7,167 | $ | (4,646 | ) | $ | 35 | $ | 2,556 | |||||||
| Television |
2,765 | (2,290 | ) | — | 475 | |||||||||||
| Filmed Entertainment |
4,146 | (3,695 | ) | — | 451 | |||||||||||
| Direct Broadcast Satellite Television |
— | — | — | — | ||||||||||||
| Other, Corporate and Eliminations |
(626 | ) | 409 | — | (217 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Consolidated Total |
$ | 13,452 | $ | (10,222 | ) | $ | 35 | $ | 3,265 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less: DBS businesses, net of intercompany eliminations |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Consolidated Total |
$ | 13,452 | $ | (10,222 | ) | $ | 35 | $ | 3,265 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Six Months Ended December 31, 2014 | ||||||||||||||||
| US $ Millions | ||||||||||||||||
| Revenues | Operating and Selling, general and administrative expenses |
Add: Amortization of cable distribution investments |
Segment OIBDA | |||||||||||||
| Cable Network Programming |
$ | 6,615 | $ | (4,462 | ) | $ | 44 | $ | 2,197 | |||||||
| Television |
2,671 | (2,207 | ) | — | 464 | |||||||||||
| Filmed Entertainment |
5,229 | (4,435 | ) | — | 794 | |||||||||||
| Direct Broadcast Satellite Television |
2,112 | (1,878 | ) | — | 234 | |||||||||||
| Other, Corporate and Eliminations |
(685 | ) | 497 | — | (188 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Consolidated Total |
$ | 15,942 | $ | (12,485 | ) | $ | 44 | $ | 3,501 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Less: DBS businesses, net of intercompany eliminations |
(2,035 | ) | 1,801 | — | (234 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Consolidated Total |
$ | 13,907 | $ | (10,684 | ) | $ | 44 | $ | 3,267 | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
Page 13
EARNINGS RELEASE FOR THE QUARTER ENDED DECEMBER 31, 2015
NOTE 2 – ADJUSTED NET INCOME AND ADJUSTED EPS FROM CONTINUING OPERATIONS
The calculation of income and earnings per share (“EPS”) from continuing operations attributable to stockholders excluding Equity affiliate adjustments and Other, net, net of tax (“adjusted income and diluted EPS from continuing operations attributable to stockholders”) 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 income and diluted EPS from continuing operations attributable to stockholders are not measures of performance under generally accepted accounting principles and should not be construed as substitutes for consolidated net income and EPS 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 Company uses adjusted income and diluted EPS from continuing operations attributable to stockholders to evaluate the performance of the Company’s operations exclusive of certain items that impact the comparability of results from period to period.
The following table reconciles reported income and reported diluted EPS from continuing operations attributable to stockholders to adjusted income and diluted EPS from continuing operations attributable to stockholders for the three months ended December 31, 2015 and 2014.
| Three Months Ended | ||||||||||||||||
| December 31, 2015 |
December 31, 2014 |
|||||||||||||||
| Income | EPS | Income | EPS | |||||||||||||
| US $ Millions, except per share data | ||||||||||||||||
| Income from continuing operations |
$ | 750 | $ | 6,300 | ||||||||||||
| Less: Net income attributable to noncontrolling interests |
(76 | ) | (77 | ) | ||||||||||||
|
|
|
|
|
|||||||||||||
| Income from continuing operations attributable to stockholders |
$ | 674 | $ | 0.34 | $ | 6,223 | $ | 2.89 | ||||||||
| Equity affiliate adjustments (net of provision for income taxes of $31 and -$51 for the three months ended December 31, 2015 and 2014, respectively)(a) |
57 | 0.03 | (93 | ) | (0.04 | ) | ||||||||||
| Other, net (net of provision for income taxes of $18 and -$42 for the three months ended December 31, 2015 and 2014, respectively) |
124 | 0.06 | (4,998 | ) | (2.32 | ) | ||||||||||
| Rounding |
— | 0.01 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| As adjusted |
$ | 855 | $ | 0.44 | $ | 1,132 | $ | 0.53 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Equity earnings of affiliates for the three months ended December 31, 2015 was adjusted to remove from Sky’s results 21st Century Fox’s share of Sky’s purchase price amortization related to its acquisition of the DBS businesses from the Company and from Endemol Shine Group’s results 21st Century Fox’s share of Endemol Shine Group’s debt revaluation and other discrete costs. Equity earnings of affiliates for the three months ended December 31, 2014 was adjusted to remove from Sky’s results 21st Century Fox’s share of Sky’s gain on the sales of its ownership stakes in NGCI and ITV, partially offset by purchase price amortization and professional fees incurred by Sky related to its acquisition of Sky Italia and Sky Deutschland. |
Page 14