Annual Report 2013

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Annual Report 2013 Annual report 2013 435216_Cover.Cs6.indd 1 Untitled-1 3 8/29/138/28/13 7:05 7:57 PM AM 435216_Cover.Cs6.inddUntitled-1 4 2 8/29/13 7:05 PM 8/29/13 2:38 PM Looking forward to the future 435216_PAGE 01.Cs6.indd 1 8/28/13 8:29 PM Dear Fellow Stockholder, move ahead of our peers. This unique culture allows us to attract and keep the best leaders and talent because it provides opportunities to grow and take on new challenges. That spirit will remain a cornerstone for us, to the benefit of our viewers, colleagues and investors. Shareholders of 21st Century Fox will see value driven by a commitment to bring consumers across the globe the very best stories in film and television, the greatest moments in sports, unrivaled TV news coverage, and an array of satellite products and services that deliver the world like never before. Our potential to expand our Rupert Murdoch, Chairman & Chief Executive Officer, 21st Century Fox franchises outside the U.S. is limitless, and, with many international markets still in their infancy, largely untapped. This past June, 21st Century Fox came into It is through this lens – dynamic content, global being as a separate public company, launching reach and entrepreneurial culture – that we view both a new era for a group of entertainment and the foundation and future of 21st Century Fox. While news entities that have time and again proven I’m not one to look back, the past 12 months have made to be among the most creative, innovative and me especially proud. At the same time, our prospects successful in the world. for the next 12 months and beyond are as bright as ever. The following review of our cable business, sports Today I write to you as the Chairman and CEO of this programming, broadcast network, film and television new company, which is so full of promise and which assets and satellite services is a snapshot of the strong represents a great opportunity for those in the investment foundation we have built over the years, which will serve community who recognize our potential for growth and us well as we focus on the opportunities that lie ahead. appreciate our vision. As you know, this new status as a distinct public Business Segment Overview company – with its own identity, strategy, growth and The outstanding performance of our cable channels capital plan – allows 21st Century Fox to focus more business has proved to be the backbone of our financial tightly on building value for you, our shareholders. results, and its success continued this past year. In fiscal We are driven by a rich history and a clear corporate year 2013, the Cable Network Programming segment vision, based upon an opportunistic, entrepreneurial surpassed $10 billion in revenue for the first time in our spirit; focused, bold initiatives; original thinking; smart history, and in many ways we feel like the business is just allocation of capital; the embracing of new platforms and getting started. We also grew this segment’s operating technologies; and a faith in talent, innovative leadership income before depreciation and amortization (OIBDA) and independence throughout our organization. by more than $600 million this past year, driven mainly We strive every day to foster a culture that exudes by higher fees from cable and satellite television operators energy and excitement. Agility and decisiveness are in the U.S. and around the world. Fees for international characteristics that enable us to be opportunistic and affiliates saw a 35% uptick. 435216_PAGES 2-3-4.Cs6.indd 2 8/29/13 11:58 AM In February, we reached a landmark agreement with distribution and sports rights to create something Comcast, which will prove to be a significant step forward that we believe will be an enormous growth opportunity in the evolution of partnerships between programmers and for us and our shareholders. pay TV providers. It’s more than a carriage agreement, it’s On the entertainment side of our cable group, a true partnership that keeps the consumer at the center both FX and National Geographic Channels have had of our efforts, enabling them to view the content they breakout years. In January, FX achieved the highest want, when and how they want it. viewership month in the channel’s history, backed by Sports programming has always been a central focus the premiere of THE AMERICANS and the continued for our cable television group, and in fiscal year 2013 we popularity of AMERICAN HORROR STORY and SONS OF had one of our most active years ever in this space. ANARCHY. The channel has had so much success over In November, we consolidated our ownership of ESPN the past several years, that we decided one FX wasn’t STAR Sports (now operating as Fox enough. A sister channel, FXX, will Sports Asia), by acquiring from ESPN Shareholders of 21st Century launch in September, offering both the 50% we did not already own. This Fox will see value driven by a original programming and movies. acquisition adds another important commitment to bring consumers At National Geographic Channels, asset to our global sports footprint, across the globe the very best we have reinvigorated our program- which now extends from the U.S. to ming slate with hit events and stories in film and television, Asia, Europe and Latin America, with shows such as BRAIN GAMES and leading channels in each region. the greatest moments in sports, DOOMSDAY PREPPERS. In December, we purchased a 49% unrivaled TV news coverage, In 2013, Fox News celebrated stake in the Yankee Entertainment and an array of satellite products its eleventh consecutive year as and Sports (YES) Network, and have and services that deliver the America’s most-watched cable news created a clear path to a controlling world like never before. network. Despite its long-standing interest in the channel within the dominance in the ratings, the next few years. This deal enabled us to re-enter the channel continues to push forward, adding fresh new New York regional sports market and align ourselves personalities and programming that will ensure it stays with an important partner – the New York Yankees. on top for many years to come. In addition, Fox Business We also purchased Sports Time Ohio (STO) in Network has continued to show signs of growth. While December and cemented a long-term relationship there is still much work to be done, we are very pleased with the Cleveland Indians, which has one of Major with its development in the business news landscape League Baseball’s most loyal fan bases. Both deals and look forward to even more success in the future. bolster our fast-growing regional sports network While we are just getting started in the national cable business, which for years has been a driving force sports business, our national sports footprint on the behind our cable channels group. broadcast side in the U.S. has never been stronger. FOX This summer we took our cable sports offering national Sports recently renewed its Major League Baseball and with the launch of Fox Sports 1, our first national cable NASCAR broadcast rights agreements, and our broadcast sports network. The new network builds on Fox’s powerful network continues to bring American sports fans the very connection with sports fans as well as our existing best in baseball, motorsports and, of course, the NFL. 435216_PAGES 2-3-4.Cs6.indd 3 8/29/13 11:28 AM It’s no secret that the FOX broadcast network has had half of the year, and cementing long-term partnerships, a challenging year, but I have great faith in our ability to such as a rights deal for Bundesliga soccer. In Italy, the turn the tide over the next 12 months. While comparatively headwinds of that country’s economy have continued ratings have dipped at some of our longer-running to affect Sky Italia’s growth, but we continue to focus on shows, such as AMERICAN IDOL, our network still delivers our goal of reducing costs and empowering the business enormous audiences to the advertising community and to grow topline revenue – and profits – for the long term. we’ve cultivated several new shows in recent years, such In the U.K., BSkyB continues to thrive, posting its most as NEW GIRL and THE MINDY PROJECT, that have quickly profitable year ever in 2013 and elevating its total found loyal audiences. In addition, THE FOLLOWING subscriber base to 11.1 million. premiered in January to both critical acclaim and a string of ratings wins. Coupled with our longstanding animated The Past is Now Prologue pillars, such as FAMILY GUY, THE SIMPSONS and others, We consider our performance over the past 12 months we have the makings of a very bright future in broadcast as but a prologue to the new era our company is entering. programming over the next several years. At 21st Century Fox, the status quo will never suffice. We The creative prowess of our film and television studios have reimagined our operations in light of our emergence has continued to garner them critical acclaim, industry as a separate company and at the same time recommitted accolades and record viewership ourselves to a familiar heritage – innovation numbers. In the past year alone, Agility and decisiveness are and leadership. The history of our business we wowed film audiences with the characteristics that enable units is marked everywhere with brash, enchanting world of Academy Award us to be opportunistic and confident forays against the status quo. winner LIFE OF PI, and we thrilled move ahead of our peers.
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