NEW YORK, Nov. 7, 2018 /PRNewswire/ -- Twenty-First
Century Fox, Inc. ("21st Century Fox" or the "Company" -- NASDAQ: FOXA, FOX) today reported financial results for the three
months ended September 30, 2018.
The Company reported quarterly income from continuing operations attributable to 21st Century Fox stockholders of $1.29 billion ($0.69 per share), a 54% increase compared to $839 million ($0.45 per share) reported in the prior year quarter.
The current quarter income from continuing operations attributable to 21st Century Fox stockholders includes a non-cash tax
benefit of approximately $220 million, or $0.11 per share, related to
the Company's decision on September 26, 2018 to sell its interest in Sky plc ("Sky"). Adjusted
quarterly earnings per share from continuing operations attributable to 21st Century Fox stockholders1 was
$0.52, 6% higher than the adjusted result of $0.49 reported in the
same quarter of the prior year.
The Company reported total quarterly revenues of $7.18 billion, a 2% increase from the
$7.00 billion of revenues reported in the prior year quarter. This increase principally reflects
higher affiliate and advertising revenues reported at the Television and Cable segments partially offset by lower theatrical
revenue reported at the Filmed Entertainment segment. The impact of foreign exchange rates adversely impacted revenue growth by
approximately $110 million, or 2% in total.
Quarterly income from continuing operations before income tax expense of $1.48 billion increased
15% from the $1.30 billion reported in the prior year quarter. Quarterly total segment OIBDA
of $1.87 billion was 5% higher than the prior year quarter driven by higher contributions reported
at our Television, Cable Network Programming and Filmed Entertainment segments. The impact of foreign exchange rates
negatively impacted quarterly OIBDA growth by $58 million, or 3%.
Commenting on the results, Executive Chairmen Rupert and Lachlan Murdoch said:
"We continue to deliver against our growth plan even as we make important strides toward
completing our Disney transaction and launching FOX in the first half of 2019. We have assembled a stellar leadership
team for FOX, giving us further confidence in the new company's ability to capture opportunities in live programming while
delivering long-term value for shareholders. Our quarterly performance builds on the operational and financial achievements
of last year and sets up our businesses for continued momentum under both the enlarged Disney and the future FOX."
1
|
Excludes net income effects of Impairment and restructuring charges,
adjustments to Equity earnings of affiliates, Other, net, and Sky non-cash tax benefit. See page 14 for a
reconciliation of reported income and earnings per share from continuing operations attributable to 21st Century Fox
stockholders to adjusted income and adjusted earnings per share from continuing operations attributable to 21st Century
Fox stockholders, which may be considered non-GAAP financial measures. See footnote (a) on page 14 for a description of
the adjustments to Equity earnings of affiliates.
|
REVIEW OF SEGMENT OPERATING RESULTS
|
|
Three Months Ended
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
US $ Millions
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable Network Programming
|
|
$
|
4,347
|
|
|
$
|
4,196
|
|
Television
|
|
|
1,276
|
|
|
|
1,065
|
|
Filmed Entertainment
|
|
|
1,816
|
|
|
|
1,963
|
|
Other, Corporate and Eliminations
|
|
|
(262)
|
|
|
|
(222)
|
|
Total revenues
|
|
$
|
7,177
|
|
|
$
|
7,002
|
|
|
|
|
|
|
|
|
|
|
Segment OIBDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable Network Programming
|
|
$
|
1,537
|
|
|
$
|
1,511
|
|
Television
|
|
|
168
|
|
|
|
122
|
|
Filmed Entertainment
|
|
|
277
|
|
|
|
256
|
|
Other, Corporate and Eliminations
|
|
|
(109)
|
|
|
|
(98)
|
|
Total Segment OIBDA(a)
|
|
$
|
1,873
|
|
|
$
|
1,791
|
|
|
|
(a)
|
Total segment OIBDA may be considered a non-GAAP financial
measure. See page 12 for a description of total segment OIBDA and for a reconciliation from income from continuing
operations before income tax expense to total segment OIBDA.
|
CABLE NETWORK PROGRAMMING
Cable Network Programming reported quarterly segment OIBDA of $1.54 billion, a 2% increase over
the prior year quarter as 4% revenue growth on higher affiliate and advertising revenues was partially offset by a 5% increase in
expenses. The increase in expenses was primarily due to higher global sports programming costs reflecting the impact of the FIFA
World Cup at both FS1 and FOX Networks Group International ("FNG International") and contractual increases at the Regional Sports
Networks ("RSNs"). Foreign exchange fluctuations, primarily in Latin America, adversely
impacted segment OIBDA growth by 4%.
Domestic cable revenue increased 7% led by higher affiliate and advertising revenues partially offset by lower content revenue
due to lower third-party licensing of scripted content at FX Networks. Domestic affiliate revenue increased 9%
reflecting continued contractual rate increases across all of our domestic brands, and domestic advertising revenue increased 7%
from the prior year period largely due to higher pricing at FOX News. Domestic OIBDA contributions increased 6% over the
prior year quarter led by higher contributions from FOX News and the RSNs.
International cable revenue declined 4% as higher constant currency affiliate revenue was more than offset by a 9% adverse
impact from the strengthened U.S. dollar. International affiliate revenue decreased 1% as 10% local currency growth at FNG
International and STAR was more than offset by an 11% adverse impact from the strengthened U.S. dollar. International advertising
revenue decreased 8% as the adverse impact from the strengthened U.S. dollar and lower local currency advertising revenue at FNG
International more than offset local currency advertising growth at STAR. International OIBDA contributions were 24% lower
than the prior year quarter primarily due to the adverse impact from the strengthened U.S. dollar.
TELEVISION
Television reported quarterly segment OIBDA of $168 million, an increase of $46 million, or 38%, over the amount reported in the prior year quarter on revenue growth of 20%.
Advertising revenue was 22% higher than the prior year quarter reflecting a higher volume of sports broadcast in the
current year quarter, including FIFA World Cup matches and more National Football League games, as well as higher political
advertising revenue related to the midterm U.S. elections at the TV stations. Retransmission consent revenue grew 19% over
the prior year reflecting contractual rate increases. The revenue increases were partially offset by 17% higher expenses
due to higher sports programming costs reflecting the higher volume of National Football League games and FIFA World Cup matches
in the current year.
FILMED ENTERTAINMENT
Filmed Entertainment generated quarterly segment OIBDA of $277 million, an 8% increase over the
$256 million reported in the prior year quarter. The OIBDA increase reflects higher contributions
from the television production studio led by higher SVOD licensing of animated product. Quarterly segment revenues
decreased 7% to $1.82 billion, primarily reflecting lower theatrical revenue at the film studio
from a lower volume and mix of films released in the current quarter partially offset by higher SVOD revenue at the television
production studio.
REVIEW OF EQUITY EARNINGS OF AFFILIATES' RESULTS
The Company's share of equity earnings of affiliates is as follows:
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
% Owned
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
US $ Millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sky
|
|
39%(1)
|
|
|
$
|
147
|
|
|
$
|
110
|
|
Hulu
|
|
30%
|
|
|
|
(114)
|
|
|
|
(62)
|
|
Other equity affiliates
|
|
Various(2)
|
|
|
|
2
|
|
|
|
12
|
|
Total equity earnings of affiliates
|
|
|
|
|
|
$
|
35
|
|
|
$
|
60
|
|
|
|
(1)
|
On October 9, 2018, the Company disposed of its investment in Sky.
See page 5 for more details.
|
(2)
|
Primarily comprised of Endemol Shine Group and Tata Sky.
|
Quarterly equity earnings of affiliates were $35 million as compared to $60 million reported in the same period a year-ago. The $25 million
decrease in earnings primarily reflects higher equity losses at Hulu partially offset by higher equity earnings at
Sky.
OTHER ITEMS
Acquisition by Disney and Spin-Off of FOX
On June 20, 2018, the Company entered into an amended and restated merger agreement (the "Disney
Merger Agreement") with The Walt Disney Company (NYSE: DIS) pursuant to which Disney has agreed to acquire, for a price of
$38 per Company share, the Company, including the Twentieth Century Fox Film and Television studios
and certain cable and international television businesses. Prior to the acquisition by Disney, the Company will separate
the FOX Broadcasting Company, FOX Television Stations, FOX News Channel, FOX Business Network, FS1, FS2, Big Ten Network and
certain other assets and liabilities into a newly formed subsidiary, FOX, and distribute all of the issued and outstanding common
stock of FOX to the Company's stockholders on a pro rata basis. The closing of the transactions contemplated by the Disney Merger
Agreement are subject to the satisfaction of certain conditions, including, among others, regulatory approvals and the receipt of
certain tax opinions with respect to the treatment of the transaction under U.S. and Australian tax laws. The pending
acquisition of the Company by Disney was cleared by the Antitrust Division of the United States Department of Justice on
June 27, 2018 and by the European Commission on November 6, 2018.
On July 27, 2018 at a special meeting of the Company's stockholders, the Company's stockholders
approved the Disney Merger Agreement and approved the other proposals voted on at the special meeting.
The Company anticipates the transactions closing in the first half of calendar 2019.
Disposition of Sky Shares
Following the recommended revised cash offer by Comcast Corporation ("Comcast") for the entire issued and to be issued share
capital of Sky at a price of £17.28 for each Sky share, the Company announced during the quarter that it intended to dispose of
its stake in Sky. On October 9, 2018, the Company sold its 672,783,139 Sky shares to Comcast for
total proceeds of £11.6 billion, or $15.1 billion.
To access a copy of this press release through the Internet, access 21st Century Fox's corporate Web site located at
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, and the proposed Disney transaction may not be
consummated in a timely manner or at all. More detailed information about these and other factors that could affect future
results is contained in our filings with the Securities and Exchange Commission, and more detailed information about these and
other factors and risks associated with the proposed Disney transaction are more fully discussed in the updated joint proxy
statement/prospectus included in the Form S-4 that was declared effective by the SEC on June 28,
2018 and will be more fully discussed in the registration statement with respect to FOX. Investors and shareholders of the
Company are urged to read the joint proxy statement/prospectus and other relevant documents filed or to be filed with the SEC
carefully when they become available because they will contain important information about the proposed Disney transaction. 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
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
US $ Millions, except
per share amounts
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
7,177
|
|
|
$
|
7,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
(4,424)
|
|
|
|
(4,381)
|
|
Selling, general and administrative
|
|
|
(890)
|
|
|
|
(848)
|
|
Depreciation and amortization
|
|
|
(158)
|
|
|
|
(142)
|
|
Impairment and restructuring charges
|
|
|
(16)
|
|
|
|
(21)
|
|
Equity earnings of affiliates
|
|
|
35
|
|
|
|
60
|
|
Interest expense, net
|
|
|
(300)
|
|
|
|
(313)
|
|
Interest income
|
|
|
8
|
|
|
|
10
|
|
Other, net
|
|
|
52
|
|
|
|
(72)
|
|
Income from continuing operations before income tax expense
|
|
|
1,484
|
|
|
|
1,295
|
|
Income tax expense
|
|
|
(126)
|
|
|
|
(391)
|
|
Income from continuing operations
|
|
|
1,358
|
|
|
|
904
|
|
(Loss) income from discontinued operations, net of tax
|
|
|
(7)
|
|
|
|
16
|
|
Net income
|
|
|
1,351
|
|
|
|
920
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
(66)
|
|
|
|
(65)
|
|
Net income attributable to Twenty-First Century Fox, Inc.
stockholders
|
|
$
|
1,285
|
|
|
$
|
855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares:
|
|
|
1,863
|
|
|
|
1,853
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations attributable to Twenty-First Century Fox,
Inc.
stockholders per share:
|
|
$
|
0.69
|
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Twenty-First Century Fox, Inc. stockholders per
share:
|
|
$
|
0.69
|
|
|
$
|
0.46
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
September 30,
2018
|
|
|
June 30,
2018
|
|
Assets:
|
|
US $ Millions
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
7,083
|
|
|
$
|
7,622
|
|
Receivables, net
|
|
|
7,326
|
|
|
|
7,120
|
|
Inventories, net
|
|
|
3,804
|
|
|
|
3,669
|
|
Other
|
|
|
915
|
|
|
|
922
|
|
Total current assets
|
|
|
19,128
|
|
|
|
19,333
|
|
|
|
|
|
|
|
|
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
Receivables, net
|
|
|
892
|
|
|
|
724
|
|
Investments
|
|
|
4,640
|
|
|
|
4,112
|
|
Inventories, net
|
|
|
7,760
|
|
|
|
7,518
|
|
Property, plant and equipment, net
|
|
|
1,949
|
|
|
|
1,956
|
|
Intangible assets, net
|
|
|
6,032
|
|
|
|
6,101
|
|
Goodwill
|
|
|
12,755
|
|
|
|
12,768
|
|
Other non-current assets
|
|
|
1,356
|
|
|
|
1,319
|
|
Total assets
|
|
$
|
54,512
|
|
|
$
|
53,831
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity:
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Borrowings
|
|
$
|
872
|
|
|
$
|
1,054
|
|
Accounts payable, accrued expenses and other current liabilities
|
|
|
3,381
|
|
|
|
3,248
|
|
Participations, residuals and royalties payable
|
|
|
1,634
|
|
|
|
1,748
|
|
Program rights payable
|
|
|
1,151
|
|
|
|
1,368
|
|
Deferred revenue
|
|
|
764
|
|
|
|
826
|
|
Total current liabilities
|
|
|
7,802
|
|
|
|
8,244
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
18,379
|
|
|
|
18,469
|
|
Other liabilities
|
|
|
3,907
|
|
|
|
3,664
|
|
Deferred income taxes
|
|
|
1,949
|
|
|
|
1,892
|
|
Redeemable noncontrolling interests
|
|
|
551
|
|
|
|
764
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
Class A common stock, $0.01 par value
|
|
|
11
|
|
|
|
11
|
|
Class B common stock, $0.01 par value
|
|
|
8
|
|
|
|
8
|
|
Additional paid-in capital
|
|
|
12,534
|
|
|
|
12,612
|
|
Retained earnings
|
|
|
10,499
|
|
|
|
8,934
|
|
Accumulated other comprehensive loss
|
|
|
(2,354)
|
|
|
|
(2,001)
|
|
Total Twenty-First Century
Fox, Inc. stockholders' equity
|
|
|
20,698
|
|
|
|
19,564
|
|
Noncontrolling interests
|
|
|
1,226
|
|
|
|
1,234
|
|
Total equity
|
|
|
21,924
|
|
|
|
20,798
|
|
Total liabilities and equity
|
|
$
|
54,512
|
|
|
$
|
53,831
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Three Months Ended
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
US $ Millions
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,351
|
|
|
$
|
920
|
|
Less: (Loss) income from discontinued operations, net of tax
|
|
|
(7)
|
|
|
|
16
|
|
Income from continuing operations
|
|
|
1,358
|
|
|
|
904
|
|
Adjustments to reconcile income from continuing operations to cash provided
by operating activities
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
158
|
|
|
|
142
|
|
Amortization of cable distribution investments
|
|
|
10
|
|
|
|
18
|
|
Impairment and restructuring charges
|
|
|
16
|
|
|
|
21
|
|
Equity-based compensation
|
|
|
19
|
|
|
|
27
|
|
Equity earnings of affiliates
|
|
|
(35)
|
|
|
|
(60)
|
|
Cash distributions received from affiliates
|
|
|
3
|
|
|
|
5
|
|
Other, net
|
|
|
(52)
|
|
|
|
72
|
|
Deferred income taxes
|
|
|
10
|
|
|
|
(11)
|
|
Change in operating assets and liabilities, net of acquisitions and
dispositions
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
37
|
|
|
|
(287)
|
|
Inventories net of program rights payable
|
|
|
(725)
|
|
|
|
(183)
|
|
Accounts payable and accrued expenses
|
|
|
(296)
|
|
|
|
(100)
|
|
Other changes, net
|
|
|
77
|
|
|
|
200
|
|
Net cash provided by operating activities from continuing
operations
|
|
|
580
|
|
|
|
748
|
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
(100)
|
|
|
|
(81)
|
|
Investments in equity affiliates
|
|
|
(141)
|
|
|
|
(101)
|
|
Proceeds from dispositions, net
|
|
|
29
|
|
|
|
362
|
|
Other investing activities, net
|
|
|
(253)
|
|
|
|
(29)
|
|
Net cash (used in) provided by investing activities from continuing
operations
|
|
|
(465)
|
|
|
|
151
|
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
|
|
75
|
|
|
|
-
|
|
Repayment of borrowings
|
|
|
(343)
|
|
|
|
(67)
|
|
Dividends paid and distributions
|
|
|
(94)
|
|
|
|
(67)
|
|
Other financing activities, net
|
|
|
(184)
|
|
|
|
(32)
|
|
Net cash used in financing activities from continuing
operations
|
|
|
(546)
|
|
|
|
(166)
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents from discontinued
operations
|
|
|
(11)
|
|
|
|
(9)
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(442)
|
|
|
|
724
|
|
Cash and cash equivalents, beginning of year
|
|
|
7,622
|
|
|
|
6,163
|
|
Exchange movement on cash balances
|
|
|
(97)
|
|
|
|
14
|
|
Cash and cash equivalents, end of period
|
|
$
|
7,083
|
|
|
$
|
6,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT INFORMATION
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
US $ Millions
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable Network Programming
|
|
$
|
4,347
|
|
|
$
|
4,196
|
|
Television
|
|
|
1,276
|
|
|
|
1,065
|
|
Filmed Entertainment
|
|
|
1,816
|
|
|
|
1,963
|
|
Other, Corporate and Eliminations
|
|
|
(262)
|
|
|
|
(222)
|
|
Total revenues
|
|
$
|
7,177
|
|
|
$
|
7,002
|
|
|
|
|
|
|
|
|
|
|
Segment OIBDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable Network Programming
|
|
$
|
1,537
|
|
|
$
|
1,511
|
|
Television
|
|
|
168
|
|
|
|
122
|
|
Filmed Entertainment
|
|
|
277
|
|
|
|
256
|
|
Other, Corporate and Eliminations
|
|
|
(109)
|
|
|
|
(98)
|
|
Total Segment OIBDA(a)
|
|
$
|
1,873
|
|
|
$
|
1,791
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable Network Programming
|
|
$
|
97
|
|
|
$
|
85
|
|
Television
|
|
|
26
|
|
|
|
27
|
|
Filmed Entertainment
|
|
|
25
|
|
|
|
23
|
|
Other, Corporate and Eliminations
|
|
|
10
|
|
|
|
7
|
|
Total depreciation and amortization
|
|
$
|
158
|
|
|
$
|
142
|
|
|
|
(a)
|
Total segment OIBDA may be considered a non-GAAP financial
measure. See page 12 for a description of total segment OIBDA and for a reconciliation from income from continuing
operations before income tax expense to total segment OIBDA.
|
CONSOLIDATED REVENUES BY COMPONENT BY SEGMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
US $ Millions
|
|
Revenues by Component:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate fee
|
|
$
|
3,495
|
|
|
$
|
3,236
|
|
Advertising
|
|
|
1,772
|
|
|
|
1,623
|
|
Content
|
|
|
1,771
|
|
|
|
2,019
|
|
Other
|
|
|
139
|
|
|
|
124
|
|
Total revenues
|
|
$
|
7,177
|
|
|
$
|
7,002
|
|
|
|
|
|
|
|
|
|
|
Revenues by Segment by Component:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable Network Programming
|
|
|
|
|
|
|
|
|
Affiliate fee
|
|
$
|
3,097
|
|
|
$
|
2,902
|
|
Advertising, content and other
|
|
|
1,250
|
|
|
|
1,294
|
|
Total Cable Network Programming revenues
|
|
|
4,347
|
|
|
|
4,196
|
|
Television
|
|
|
|
|
|
|
|
|
Advertising
|
|
|
799
|
|
|
|
655
|
|
Affiliate fee, content and other
|
|
|
477
|
|
|
|
410
|
|
Total Television revenues
|
|
|
1,276
|
|
|
|
1,065
|
|
Filmed Entertainment
|
|
|
|
|
|
|
|
|
Content
|
|
|
1,725
|
|
|
|
1,891
|
|
Advertising and other
|
|
|
91
|
|
|
|
72
|
|
Total Filmed Entertainment revenues
|
|
|
1,816
|
|
|
|
1,963
|
|
Other, Corporate and Eliminations
|
|
|
(262)
|
|
|
|
(222)
|
|
Total revenues
|
|
$
|
7,177
|
|
|
$
|
7,002
|
|
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 may be considered 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, that 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: (Loss) income from discontinued operations, net of tax, Impairment and
restructuring charges, 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 income from continuing operations before income tax expense to total segment OIBDA:
|
|
Three Months Ended
September 30,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
US $ Millions
|
|
Income from continuing operations before income tax expense
|
|
$
|
1,484
|
|
|
$
|
1,295
|
|
Add:
|
|
|
|
|
|
|
|
|
Amortization of cable distribution investments
|
|
|
10
|
|
|
|
18
|
|
Depreciation and amortization
|
|
|
158
|
|
|
|
142
|
|
Impairment and restructuring charges
|
|
|
16
|
|
|
|
21
|
|
Equity earnings of affiliates
|
|
|
(35)
|
|
|
|
(60)
|
|
Interest expense, net
|
|
|
300
|
|
|
|
313
|
|
Interest income
|
|
|
(8)
|
|
|
|
(10)
|
|
Other, net
|
|
|
(52)
|
|
|
|
72
|
|
Total Segment OIBDA
|
|
$
|
1,873
|
|
|
$
|
1,791
|
|
|
|
Three Months Ended September
30, 2018
|
|
|
|
US $ Millions
|
|
|
|
Revenues
|
|
|
Operating and
Selling, general
and administrative
expenses
|
|
|
Add:
Amortization
of cable
distribution
investments
|
|
|
Segment OIBDA
|
|
Cable Network Programming
|
|
$
|
4,347
|
|
|
$
|
(2,820)
|
|
|
$
|
10
|
|
|
$
|
1,537
|
|
Television
|
|
|
1,276
|
|
|
|
(1,108)
|
|
|
|
-
|
|
|
|
168
|
|
Filmed Entertainment
|
|
|
1,816
|
|
|
|
(1,539)
|
|
|
|
-
|
|
|
|
277
|
|
Other, Corporate and Eliminations
|
|
|
(262)
|
|
|
|
153
|
|
|
|
-
|
|
|
|
(109)
|
|
Consolidated Total
|
|
$
|
7,177
|
|
|
$
|
(5,314)
|
|
|
$
|
10
|
|
|
$
|
1,873
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September
30, 2017
|
|
|
|
US $ Millions
|
|
|
|
Revenues
|
|
|
Operating and
Selling, general
and administrative
expenses
|
|
|
Add:
Amortization
of cable
distribution
investments
|
|
|
Segment OIBDA
|
|
Cable Network Programming
|
|
$
|
4,196
|
|
|
$
|
(2,703)
|
|
|
$
|
18
|
|
|
$
|
1,511
|
|
Television
|
|
|
1,065
|
|
|
|
(943)
|
|
|
|
-
|
|
|
|
122
|
|
Filmed Entertainment
|
|
|
1,963
|
|
|
|
(1,707)
|
|
|
|
-
|
|
|
|
256
|
|
Other, Corporate and Eliminations
|
|
|
(222)
|
|
|
|
124
|
|
|
|
-
|
|
|
|
(98)
|
|
Consolidated Total
|
|
$
|
7,002
|
|
|
$
|
(5,229)
|
|
|
$
|
18
|
|
|
$
|
1,791
|
|
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 21st Century Fox
stockholders excluding net income effects of Impairment and restructuring charges, Equity affiliate adjustments, Other, net, and
tax provision adjustments ("adjusted income and diluted EPS from continuing operations attributable to 21st Century Fox
stockholders") may not be comparable to similarly titled measures reported by other companies. Adjusted income and diluted EPS
from continuing operations attributable to 21st Century Fox 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 21st Century Fox 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 21st
Century Fox stockholders to adjusted income and diluted EPS from continuing operations attributable to 21st Century Fox
stockholders for the three months ended September 30, 2018 and 2017.
|
|
Three Months Ended
|
|
|
|
September 30, 2018
|
|
|
September 30, 2017
|
|
|
|
Income
|
|
|
EPS
|
|
|
Income
|
|
|
EPS
|
|
|
|
US
$ Millions, except per share data
|
|
Income from continuing operations
|
|
$
|
1,358
|
|
|
|
|
|
|
$
|
904
|
|
|
|
|
|
Less: Net income attributable to noncontrolling
interests
|
|
|
(66)
|
|
|
|
|
|
|
|
(65)
|
|
|
|
|
|
Income from continuing operations
attributable to Twenty-First Century Fox,
Inc. stockholders
|
|
$
|
1,292
|
|
|
$
|
0.69
|
|
|
$
|
839
|
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment and restructuring charges
|
|
|
16
|
|
|
|
0.01
|
|
|
|
21
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity affiliate adjustments(a)
|
|
|
(123)
|
|
|
|
(0.07)
|
|
|
|
19
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other, net
|
|
|
(52)
|
|
|
|
(0.03)
|
|
|
|
72
|
|
|
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax provision(b)
|
|
|
(165)
|
|
|
|
(0.09)
|
|
|
|
(43)
|
|
|
|
(0.02)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rounding
|
|
|
-
|
|
|
|
0.01
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted
|
|
$
|
968
|
|
|
$
|
0.52
|
|
|
$
|
908
|
|
|
$
|
0.49
|
|
|
|
(a)
|
Equity earnings of affiliates for the three months ended September 30,
2018 were adjusted to remove (1) from Sky's results 21st Century Fox's share of (i) the gain on the sale of an
investment, (ii) restructuring costs, (iii) Sky's purchase price amortization related to its acquisition of the Direct
Broadcast Satellite businesses from the Company and (iv) costs related to Sky's acquisition and (2) from Endemol
Shine Group's results 21st Century Fox's share of Endemol Shine Group's debt revaluation movements and restructuring
costs. Equity earnings of affiliates for the three months ended September 30, 2017 were adjusted to remove
(1) from Sky's results 21st Century Fox's share of (i) Sky's purchase price amortization related to its acquisition of
the Direct Broadcast Satellite businesses from the Company and (ii) restructuring costs and (2) from Endemol Shine
Group's results 21st Century Fox's share of Endemol Shine Group's debt revaluation movements and restructuring
costs.
|
(b)
|
Includes the removal of the non-cash tax benefit of approximately $220
million related to the Company's decision on September 26, 2018 to sell its interest in Sky.
|
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SOURCE Twenty-First Century Fox, Inc.