news corp david haslingden at merrill lynch 2008 media fall preview
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MERRILL LYNCH CONFERENCE DAVID HASLINGDEN / CEO
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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS.
This document contains certain “forward‐looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward‐looking statements are based on management’s present expectations and beliefs about future events.
As with any projection or forecast, these statements are inherently susceptible to risks, uncertainty and changes in circumstance. Important factors could cause actual results to differ materially from those expressed or implied by theseforward‐looking statements and should be considered in evaluating the outlook of the Company.
Risks and uncertainties are detailed from time to time in News Corporation’s filings with the U.S. Securities and Exchange Commission. News Corporation is under no obligation to, and expressly disclaims any obligation to, update or alter itsforward‐looking statements, whether as a result of changes, new information, subsequent events or otherwise.
For additional information, please visit Newscorp website:www.newscorp.com/investor/index.html
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• 7,500 different Affiliates
• 3,500 different Advertisers
• 1,800 staff
• 37 offices
• FOX and National Geographic branded Channels
• 140 Channels
• 32 Languages
• 383m Cumulative Subscribers
WHAT IS FOX INTERNATIONAL CHANNELS
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CHANNELDistribution
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CHANNELDistribution
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FOR EXAMPLE: OUR ITALIAN CHANNEL LINEUP
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CHANNELDistribution
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CHANNELDistribution
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CHANNELDistribution
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CHANNELDistribution
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DIVERSE MARKETS
12Source: SNL Kagan, FIC analysis
PayTV penetration 2008
US PayTV
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DIVERSE MARKETS
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US PayTV
Digital PayTV penetration 2008
US Digital PayTV
Source: SNL Kagan, FIC analysis
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With similar experience curves: young markets will be key growth driversSTILL EARLY ON IN THE GROWTH CURVE
14Source: World Bank 2008, SNL Kagan 2008
US vs UK vs Chile starting from the year they reached 20% penetration
YEAR
US starting in 1977 UK starting in 1994 Chile starting in 2004
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US Broadcast vs. cable network’s share of audienceSTILL EARLY ON IN THE GROWTH CURVE
15Source: Nielsen, Merrill Lynch Research
Broadcast Cable Networks
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Industry PayTV revenue ‐ international CAGR 13% (2004‐2008)THAT HAVE DELIVERED GROWTH
16Source: FIC analysis of SNL Kagan PayTV programmer Income (excluding platforms)
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3 Key FactorsGROWTH DRIVERS
1. Socio‐demographic change
2. Competition among distributors
3. Acceptance of cable advertising
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Revenues up at 30%+ CAGR to $926mFIC REVENUE PERFORMANCE / FY03‐08
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FY03‐07 are proforma, including National Geographic Channels International
$926m
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Every segment showing growth
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InternetProductionNGC LatAm
FOX LatAm
NGC Europe
FOX Europe
NGC AsiaFOX Asia
FIC REVENUE PERFORMANCE / FY03‐08
$926m
FY03‐07 are proforma, including National Geographic Channels International
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Launching new channelsGROWTH DRIVERS / FY03 ‐ 08
“Channel” means a unique distribution feed. FIC launched 40 in FY08
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PayTV subscribers growing at 11% CAGREXAMPLE: LATIN AMERICA
2121
CAGR 11%
CAGR 2%
Source: FIC analysis, SNL Kagan
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19 new basic channels in 6 years ‐ cumulative FIC subscribers +31% CAGREXAMPLE: LATIN AMERICA
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CAGR 11%
CAGR 2%
CAGR 31%
Source: FIC analysis, SNL Kagan
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FIC’s Ad revenue grew at a 43% CAGREXAMPLE: LATIN AMERICA
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CAGR 11%
CAGR 2%
CAGR 43%
CAGR 31%
Source: FIC analysis, SNL Kagan
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FIC PROFIT PERFORMANCE /FY03‐08
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Operating Profits grown to $232m (50%+ CAGR)
$232m
FY03‐07 are proforma, including National Geographic Channels International and excludes acquisition related amortization of $14 million in FY08.
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Every segment profitableFIC PROFIT PERFORMANCE /FY03‐08
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InternetProductionNGC LatAm
FOX LatAm
NGC Europe
FOX Europe
NGC AsiaFOX Asia
$232m
FY03‐07 are proforma, including National Geographic Channels InternationalFY03‐07 are proforma, including National Geographic Channels International and excludes acquisition related amortization of $14 million in FY08.
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40 Channels
FIC New Channels
Operating margin increased from below 10% to above 25% MARGIN GROWTH
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FIC Margin
>25%
<10%
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New channels broke‐even by 6th quarter after launchCHANNEL AGE & PROFITABILITY
Channels launched less than 3 years ago contribute >$20m in aggregate profits.
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>$20m
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RATINGS PERFORMANCENat Geo vs. Discovery
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Nat Geo Discovery
Source: FIC analysis of people‐meter ratings in multichannel homes, prime time, 2008 to date
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Catching up on ratingsNAT GEO vs. DISCOVERY IN LATAM
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DiscoveryNat Geo
Source: FIC analysis of people‐meter ratings in multichannel homes, prime time, 2008 to date
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Our FOX channel is a ratings leader in Latin AmericaNAT GEO vs. DISCOVERY vs FOX
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DiscoveryNat Geo FOX
Source: FIC analysis of people‐meter ratings in multichannel homes, prime time, 2008 to date
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FOX: #1 IN ENTERTAINMENT
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LATIN AMERICA SPAIN
ITALY JAPAN
Pay/P18‐34HM
FOXTNTDisney ChannelUniversal ChannelCartoon Network
Source: FIC analysis of people‐meter ratings in multichannel homes, prime time, 2008 to date
rat%
0.590.500.390.340.30
D+/Cable/P18‐34
FOXC+PARAMOUNT COMEDYAXN
CALLE 13
rat%
0.550.510.460.410.25
Pay/P18‐34HM
FOXSky Sport 1FOX LIFEFOX CRIMESky Cinema 1
rat%
0.500.450.420.390.30
Pay/P18‐34HM
FOXAnimaxKids StationSky A Sports+Jidaigeki Senmon Channel
rat%
0.350.280.260.200.20
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OUR CHANNELS
DELIVER 21%
OF ALL TV RATINGS
IN SKY HOMES
Driving viewership on SKYFIC RATINGS ON SKY ITALIA
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DOCUMENTARIES KIDSFOXFOX +1FOX LifeFOX Life +1FOX CrimeFOX Crime +1 FXCultSKY VivoSKY ShowJimmyRaiSat ExtraRaiSat Premium
BBC PrimeHallmarkE! EntertainmentComedy CentralAXNDiscoveryRealTimeFantasyCurrentCooltoonGXT GXT+1
National GeographicNational Geographic +1NatGeoAdventureNatGeoWildHistoryChannelHistoryChannel+1RaiSat Gambero RossoMarco PoloAliceLeonardoDiscoveryChannelDiscoveryTravel& Living
Discovery ScienceDiscovery CivilizationAnimal Planet
Cartoon NetworkCartoon Network +1BoomerangRaiSat SmashJetixJetix +1NickelodeonDisney ChannelDisney Channel +1Toon Disney ToonDisney +1Playhouse DisneyRaiSat YoYoJimJam
Eurosport NewsESPN ClassicNuvolariSnai SatSport ItaliaYacht &Sail
Music on SKY Radio on SKY*MTV Brand NewMTV HitsMTV GoldMTV Pulse
NatGeoMusicVideo ItaliaDeejay TVMatch Music Rock TVMusic BoxVH1
NEWSCORP OPPORTUNITIES / ITALY
ENTERTAINMENT
SPORT MUSIC
* FIC CHANNELS 33
SKY CINEMA 1SKY Cinema 2SKY CINEMA 3SKY Cinema HitsSKY Cinema MAXSKY Cinema Mania
CINEMASKY Cinema ClassicsThe MGM ChannelRAISAT CinemaSKY Cinema HD
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DOCUMENTARIES KIDSENTERTAINMENT
MUSIC
FOXPremiere 4Premiere NostalgiePremiere KrimiPremiere HD13th StreetSci FiHeimatkanal
Discovery ChannelDiscovery GeschichteDiscovery HDAnimal PlanetFocus Gesundheit
Disney ChannelJunior Jetix
Hit24Goldstar TVClassica
NEWSCORP OPPORTUNITIES / GERMANY
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Premiere Sportportal
SPORTPremiere 1Premiere 2Premiere 3Premiere FilmfestPremiere Film ClassicsMGM
CINEMA
* FIC CHANNELS
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MARKET GROWTH /02‐0813% CAGR Intl Markets (industry multichannel revenue)
Source: FIC analysis of SNL Kagan PayTV programmer Income (excluding platforms)
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MARKET GROWTH /08‐12
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Not 13%, but 10% CAGR is not too shabby
Source: FIC analysis of SNL Kagan PayTV programmer Income (excluding platforms)
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Many and youngFINANCIAL PROFILE OF BUSINESS
Profit Contribution ($m) by Channel
WELL POSITIONED TO:
‐Increase subscribers above the organic growth of current platforms
‐Increase ratings
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“While branding has not historically been overly important in
television… brand is increasing in importance, along with the
growth of multi‐platform opportunities”
Jessica Reif Cohen
STRONG BRANDS
38Source: Scripps Networks Interactive – Merrill Lynch Equity Report Sept 2008
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OFFICESDistribution
ChannelsCum. Subs.AffiliatesAdvertisersEmployeesOffices
140383m7,5003,5001,800
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OFFICESDISTRIBUTION
AVERAGE 10 YEARS AT FIC
ChannelsCum. Subs.AffiliatesAdvertisersEmployeesOffices
140383m7,5003,5001,800
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OFFICESDISTRIBUTION
AVERAGE 10 YEARS AT FIC
AVERAGE 6 YEARS AT FIC
ChannelsCum. Subs.AffiliatesAdvertisersEmployeesOffices
140383m7,5003,5001,800
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OFFICESDISTRIBUTION
AVERAGE 10 YEARS AT FIC
AVERAGE 6 YEARS AT FIC
ChannelsCum. Subs.AffiliatesAdvertisersEmployeesOffices
140383m7,5003,5001,800
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Medium term?SLEEPING GIANTS
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CHINA JAPAN
RUSSIA KOREA
•369m TV homes•164m PayTV home (45%)•41m digital homes (11%)•National Geographic Magazine recently approved for distribution
•48m TV homes•11m PayTV home (23%)•$17bn TV Ad market•Pay Channels get 2% of this ad spend•48m TV homes•FIC has 6 Channels, second intl. player behind Liberty’s Jupiter
•50m TV homes•17m PayTV home (34%)•4.5m digital homes (9%)•Digital penetration growing at 20% p.a.•We have 4 channels, avg. 2m homes•Extremely embryonic•Still in investment phase
•18m TV homes•17m PayTV home (95%)•4m digital homes (23%)•FOX and Nat Geo are the two leading international channel brands
• Impending changes to Media laws will permit foreign operators to increase ownership; greater return possibilities
Source: eMarketer, SNL Kagan, FIC analysis
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• Limited channel distribution in 80 cities
• 50m Households viewing Nat Geo programming blocks
• At some point foreign channels will be granted access
CHINAOne day?
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CHINAOne day?
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ENGINE OF GROWTH FOR NWS
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We are well positioned for the opportunities that lay in front of us
50% Historical CAGR
FIC Op Inc
FY03‐07 are proforma, including National Geographic Channels International and excludes acquisition related amortization of $14 million in FY08.
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