~~Table~~UNITED ofSTATES ~~Contents~~

~~UNITED~~SECURITIES ~~STATES~~AND EXCHANGE COMMISSION

~~SECURITIES~~Washington, ~~AND~~DC ~~EXCHANGE~~20549 ~~COMMISSION~~

~~Washington,~~FORM DC10-K ~~20549~~

~~FORM~~(Mark ~~10-K~~One)

~~(Mark~~x ~~One~~ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

xFor ~~ANNUAL~~the ~~REPORT~~fiscal ~~PURSUANT~~year TOended ~~SECTION~~June 1330, OR2004 ~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~OR ~~the fiscal year ended June 30, 2003~~

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨For ~~TRANSITION~~the ~~REPORT~~transition ~~PURSUANT~~period ~~TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~from to

~~For~~Commission ~~the~~file ~~transition~~number ~~period~~1-14595 ~~from to~~

~~Commission~~FOX ~~file~~ENTERTAINMENT ~~number~~GROUP, ~~1-14595~~INC.

~~FOX~~(Exact ~~ENTERTAINMENT~~name ~~GROUP,~~of ~~INC.~~registrant as specified in its charter)

(Exact name of registrant as specified in its charter)


Delaware		95-4066193
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1211 Avenue of the Americas, New York, New York		10036
(Address of principal executive offices)		(Zip Code)

Delaware		95-4066193
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1211 Avenue of the Americas, New York, New York		10036
(Address of principal executive offices)		(Zip Code)

(212) 852-7111

~~(212)~~Registrant’s ~~852-7111~~ telephone number, including area code

~~Registrant’s~~Securities ~~telephone~~registered ~~number,~~pursuant ~~including~~to ~~area~~Section ~~code~~12(b) of the Act:

Securities registered pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered
Class A Common Stock, $.01 par value		New York Stock Exchange

Title of each class		Name of each exchange on which registered
Class A Common Stock, $.01 par value		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

~~Securities~~None ~~registered pursuant to Section 12(g) of the Act:~~

~~None~~Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark ~~whether~~if ~~the~~disclosure ~~registrant:~~of ~~(1)~~delinquent ~~has~~filers ~~filed~~pursuant ~~all reports required~~ to beItem ~~filed~~405 byof ~~Section~~Regulation 13S-K oris ~~15(d)~~not ofcontained ~~the~~herein, ~~Securities~~and ~~Exchange~~will ~~Act~~not ofbe ~~1934~~contained, ~~during~~to the ~~preceding~~best 12of ~~months~~registrant’s ~~(or~~knowledge, ~~for~~in ~~such~~definitive ~~shorter~~proxy ~~period~~or ~~that~~information ~~the~~statements ~~registrant~~incorporated ~~was~~by ~~required~~reference toin ~~file~~Part ~~such~~III ~~reports),~~of ~~and~~this ~~(2)~~Form ~~has~~10-K ~~been~~or ~~subject~~any amendment to ~~such~~this ~~filing~~Form ~~requirements for the past 90 days~~10-K. ~~Yes~~ x ~~No ¨~~

Indicate by check mark ifwhether ~~disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to~~ the ~~best of~~ registrant’s ~~knowledge,~~is inan ~~definitive~~accelerated ~~proxy~~filer or(as defined ~~information statements incorporated by reference~~ in ~~Part~~Rule ~~III~~12b-2 of ~~this~~the ~~Form~~Securities ~~10-K~~Exchange orAct ~~any~~of ~~amendment to this Form 10-K~~1934). Yes x No ¨

~~Indicate~~The byaggregate ~~check~~market ~~mark~~value ~~whether~~of the ~~registrant~~Class isA common anstock ~~accelerated~~and ~~filer~~the ~~(as~~Class ~~defined~~B incommon ~~Rule~~stock ~~12b~~held by non-2affiliates of the ~~Securities~~registrant ~~Exchange~~as ~~Act~~ of ~~1934~~December 31, 2003 was approximately $5,094,736,607.40 (based on the closing price on such date as reported on the New York Stock Exchange—Composite Transactions). ~~Yes x No ¨~~

As of September 1910, ~~2003~~2004, ~~the~~426,959,080 ~~aggregate~~shares ~~market value~~ of ~~common~~Class ~~stock~~A ~~held~~Common Stock, bypar ~~non-affiliates~~value of$.01 ~~the~~per ~~registrant~~share, ~~(based~~and on547,500,000 ~~the closing~~shares ~~price~~of onClass ~~such~~B ~~date~~Common asStock, ~~reported~~par onvalue ~~the~~$.01 ~~New~~per ~~York~~share, ~~Stock~~were ~~Exchange—Composite Transactions) was $5,400,595,580~~outstanding.~~40.~~

AsDOCUMENTS ofINCORPORATED ~~September~~BY ~~19,~~REFERENCE ~~2003, 352,436,375 shares of Class A Common Stock, par value $.01 per share, and 547,500,000 shares of Class B Common Stock, par value $.01 per share, were outstanding.~~

~~DOCUMENTS~~Portions ~~INCORPORATED~~of BYFox Entertainment Group, Inc.’s proxy statement to be filed with the Securities and Exchange Commission within 120 days of June 30, 2004 pursuant to ~~REFERENCE~~Regulation 14A of the Securities Exchange Act of 1934, as amended, are incorporated by reference into Part III of this report.

~~Portions~~PART ofI Fox Entertainment Group, Inc.’s Notice of 2003 Annual Meeting and Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, are incorporated by reference into Part III of this report.

~~Table~~ITEM of1. ~~Contents~~BUSINESS

~~PART~~Background I

~~ITEM~~Fox 1Entertainment Group, Inc. ~~BUSINESS~~ (together with its direct and indirect subsidiaries, and their respective predecessors, unless the context otherwise requires, the “Company”) is a multi-faceted entertainment company with operations in four business segments: (i) Filmed Entertainment; (ii) Television Stations; (iii) Television Broadcast Network; and (iv) Cable Network Programming. For financial information regarding the Company’s segments and operations in geographic areas see “Item 8. Financial Statements and Supplementary Data—Note 20 to the Consolidated Financial Statements.”

~~Background~~The News Corporation Limited (“News Corporation”), an Australian corporation, is the beneficial owner of 252,159,080 shares of Class A Common Stock and 547,500,000 shares of Class B Common Stock, which in the aggregate represents approximately 82.06% of the equity and 97.04% of the voting power of the Company. News Corporation has announced that its Board of Directors has approved a reorganization transaction which will result in its place of incorporation being in the United States. This reorganization transaction, subject to the approval of shareholders, optionholders and the Australian Federal Court, as well as certain other conditions, is expected to be completed prior to the end of this calendar year.

~~Fox~~The ~~Entertainment~~address ~~Group,~~of ~~Inc.~~the ~~(together~~Company’s ~~with~~principal ~~its~~executive offices ~~direct~~is ~~and~~1211 ~~indirect~~Avenue ~~subsidiaries~~of the Americas, New York, New York 10036, and ~~their~~its ~~respective~~telephone ~~predecessors~~number is (212) 852-7111. The Company’s website is www.fox.com. The Company makes available, ~~unless~~free ~~the~~of ~~context~~charge, ~~otherwise~~through its Internet website, its annual ~~requires~~report on Form 10-K, ~~the~~quarterly ~~“Company”)~~reports ison aForm ~~multi~~10-~~faceted~~Q, ~~entertainment~~current ~~company~~reports ~~with~~on ~~operations~~Form in8-K, ~~four~~and ~~business~~amendments ~~segments:~~to ~~(i)~~those ~~Filmed~~reports ~~Entertainment;~~filed or furnished pursuant to Section 13(iia) ~~Television~~or ~~Stations;~~ 15(~~iii~~d) ~~Television~~of ~~Broadcast~~the ~~Network;~~Securities ~~and~~Exchange ~~(iv)~~Act ~~Cable~~of ~~Network~~1934, ~~Programming.~~as ~~For~~amended, as soon as reasonably ~~financial~~practicable ~~information~~after ~~regarding~~such ~~the~~material ~~Company’s~~is ~~segments~~electronically ~~and~~filed ~~operations~~with inor ~~geographic~~furnished ~~areas~~to ~~see~~the ~~“Item~~Securities 8and Exchange Commission. ~~Financial~~The ~~Statements~~Company ~~and~~maintains ~~Supplementary~~a ~~Data—Note~~52-53 19week fiscal year ending on the Sunday nearest to June 30 in each year. At June 30, 2004, the ~~Consolidated~~Company had ~~Financial~~approximately ~~Statements~~12,500 full-time and part-time employees.”

~~The~~Special ~~News Corporation Limited (“News Corporation”) is the beneficial~~Note ~~owner~~Regarding ofForward-Looking ~~177,636,375~~Statements ~~shares of Class A Common Stock and 547,500,000 shares of Class B Common Stock, which in the aggregate represent approximately 80.58% of the equity and 97% of the voting power of the Company.~~

~~The~~This ~~address~~document contains statements that constitute “forward-looking statements” within the meaning of Section 21E of the ~~Company’s~~Securities ~~principal~~Exchange ~~executive~~Act ~~offices~~of is1934, ~~1211~~as ~~Avenue~~ amended, and Section 27A of the ~~Americas,~~Securities ~~New~~Act ~~York~~of 1933, ~~New~~as ~~York~~amended. ~~10036~~The words “expect,” “estimate,” “anticipate,” “predict,” “believe” and ~~its~~similar ~~telephone~~expressions ~~number~~and isvariations ~~(212)~~thereof ~~852~~are intended to identify forward-~~7111~~looking statements. ~~The~~These ~~Company’s~~statements ~~website~~appear isin ~~www.fox.com.~~a ~~The~~number ~~Company~~of ~~makes~~places ~~available~~in this document and include statements regarding the intent, ~~free~~belief or current expectations of ~~charge~~the Company, ~~through~~ its ~~Internet~~directors ~~website,~~or its ~~annual~~officers ~~report~~with onrespect ~~Form~~to, ~~10-K~~among other things, trends affecting the Company’s financial condition or results of operations. The ~~quarterly~~readers ~~reports~~of onthis ~~Form~~document ~~10-Q,~~are ~~current~~cautioned ~~reports~~that onany ~~Form~~such 8forward-K,looking statements are not guarantees of future performance and ~~amendments~~involve torisks ~~those~~and ~~reports~~uncertainties. ~~filed~~Those orrisks ~~furnished~~and ~~pursuant~~uncertainties toare ~~Section~~discussed ~~13(a)~~under orthe 15heading “Risk Factors” in the Company’s Registration Statement on Form S-3 (dSEC file no. 333-85978) ofas declared effective by the Securities and Exchange ~~Act~~Commission ofon ~~1934~~May 3, ~~as amended~~2002, as ~~soon~~well as ~~reasonably~~the ~~practicable~~information ~~after~~set ~~such~~forth below. The Company does not ordinarily make ~~material~~projections isof ~~electronically~~its ~~filed~~future ~~with~~operating orresults ~~furnished~~and undertakes no obligation to ~~the~~publicly ~~Securities~~update ~~and~~or ~~Exchange~~revise ~~Commission.~~any ~~The~~forward-looking ~~Company~~statements, ~~maintains~~whether as a ~~52-53~~result ~~week~~of ~~fiscal~~new ~~year~~information, ~~ending~~future onevents or otherwise, except as required by law. Readers should carefully review the ~~Sunday~~risk ~~nearest~~factors referred to ~~June~~above 30and inthe ~~each~~other ~~year~~documents filed by the Company with the Securities and Exchange Commission. AtThis ~~June~~section ~~30,~~should ~~2003,~~be read in conjunction with the ~~Company~~audited ~~had~~consolidated ~~approximately~~condensed ~~12,900~~financial statements of ~~full-time~~the Company and ~~part-time~~related ~~employees~~notes set forth elsewhere herein.

~~Special Note Regarding Forward-Looking~~Business ~~Statements~~

~~This~~Filmed ~~document~~Entertainment contains statements that constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. The words “expect,” “estimate,” “anticipate,” “predict,” “believe” and similar expressions and variations thereof are intended to identify forward-looking statements. These statements appear in a number of places in this document and include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things, trends affecting the Company’s financial condition or results of operations. The readers of this document are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Those risks and uncertainties are discussed under the heading “Risk Factors” in the Company’s Registration Statement on Form S-3 (SEC file no. 333-85978) as declared effective by the Securities and Exchange Commission on May 3, 2002, as well as the information set forth below. The Company does not ordinarily make projections of its future operating results and undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Readers should carefully review the risk factors referred to above and the other documents filed by the Company with the Securities and Exchange Commission. This section should be read in conjunction with the audited consolidated condensed financial statements of the Company and related notes set forth elsewhere herein.

~~Business~~The Company engages in feature film and television production and distribution principally through the following businesses: (i) Fox Filmed Entertainment (“FFE”), a producer and distributor of feature films, including those produced by its divisions and subsidiaries

~~Filmed~~2 ~~Entertainment~~

~~The~~Twentieth ~~Company~~Century ~~engages~~Fox, inFox ~~feature~~2000, ~~film~~Fox ~~and~~Searchlight ~~television~~Pictures ~~production~~ and ~~distribution~~ ~~principally~~Twentieth ~~through~~Century ~~the~~Fox ~~following~~Animation, ~~businesses:~~and ~~Fox~~a ~~Filmed~~distributor ~~Entertainment~~of television ~~(“FFE”)~~programming, aincluding ~~producer~~network ~~and~~television ~~distributor~~programming ofproduced ~~feature~~by ~~films;~~its division Twentieth Century Fox Television (“TCFTV”); (ii) Twentieth Television, a ~~producer~~distributor of ~~network~~ television programming~~; Twentieth~~ ~~Television,~~and afeature ~~producer~~films, ~~and~~including ~~distributor~~those produced ofby ~~television~~its ~~programming~~production companies; and (iii) Fox Television Studios (“FtvS”), a producer of broadcast and cable programming.

1Fox Filmed Entertainment / Motion Picture Production and Distribution

~~Table~~One of ~~Contents~~the world’s largest producers and distributors of motion pictures, FFE produces, acquires and distributes motion pictures throughout the world under a variety of arrangements. During fiscal 2002, 2003 and 2004, FFE placed 22, 23 and 24 motion pictures, respectively, in general release in the United States. Those motion pictures were produced or acquired by the following units of FFE: Twentieth Century Fox and Fox 2000, which produce motion pictures for mainstream audiences; Fox Searchlight Pictures, which produces and acquires specialized motion pictures; and Twentieth Century Fox Animation, which produces feature length animated motion pictures. Motion pictures produced and/or distributed by FFE in the United States and international territories since the beginning of fiscal 2002 include Planet of the Apes, Ice Age, Star Wars Episode II: Attack of the Clones, Minority Report (together with DreamWorks SKG), Road to Perdition (together with DreamWorks SKG), X-2: X-Men United, Daredevil, 28 Days Later, Bend it Like Beckham, League of Extraordinary Gentlemen, Master and Commander (together with Universal Studios and Miramax Film Corp.), Cheaper by the Dozen, Man on Fire (co-financed with New Regency), The Day After Tomorrow, Garfield, Dodgeball: A True Underdog Story, Thirteen, Johnson Family Vacation and Napoleon Dynamite (together with Paramount Pictures Corporation and MTV). The Company has already released or currently plans to release approximately 30 motion pictures in the United States in fiscal 2005, including I, Robot, Alien vs. Predator, Robots, Star Wars Episode III: Revenge of the Sith, Kingdom of Heaven, Electra (co-financed with New Regency), Fat Albert and Garden State (together with Miramax Film Corp.).

~~Fox~~In ~~Filmed~~addition, pursuant to an agreement with Monarchy Enterprises Holdings B.V. (“MEH”), the parent company of Regency Entertainment (USA), Inc. (“New Regency”) in which the Company has a 20% interest, FFE distributes certain New Regency films and all films co-financed by the Company and New Regency in all media worldwide, excluding certain international territories with respect to theatrical and home video rights and most international territories with respect to television rights. Among its 2005 releases, the Company currently expects to release five New Regency films, two of which are co-financed by the Company and New Regency.

~~One~~Motion ofpicture ~~the~~companies, ~~world’s~~such ~~largest~~as ~~producers and distributors of motion pictures,~~ FFE ~~produces~~, ~~acquires~~typically ~~and~~seek ~~distributes~~to ~~motion pictures~~generate ~~throughout~~revenues ~~the~~from ~~world~~various ~~under~~distribution ~~a variety of arrangements~~channels. ~~During~~FFE ~~fiscal~~derives ~~2001,~~its ~~2002~~worldwide ~~and~~motion ~~2003,~~picture ~~FFE~~revenues ~~placed~~primarily from ~~20,~~four 22basic ~~and~~sources 23(set ~~motion~~forth ~~pictures, respectively,~~ in general ~~release~~chronology inof ~~the~~exploitation): ~~United~~(i) ~~States.~~distribution ~~Those~~of motion pictures ~~were~~for ~~produced~~theatrical orexhibition ~~acquired~~in by the ~~following~~ ~~units~~United ofStates ~~FFE:~~and ~~Twentieth~~Canada ~~Century Fox~~ and ~~Fox~~markets ~~2000,~~outside ~~which~~of ~~produce~~the ~~motion~~United ~~pictures~~States ~~for~~and ~~mainstream~~Canada ~~audiences~~(“International” markets); ~~Fox~~(ii) ~~Searchlight~~distribution ~~Pictures,~~of ~~which produces and acquires specialized~~ motion pictures; ~~and~~in ~~Twentieth~~various ~~Century~~home ~~Fox~~media ~~Animation,~~formats; ~~which produces~~(iii) ~~feature~~distribution ~~length~~of ~~animated~~ motion pictures. ~~Successful~~for ~~motion~~exhibition ~~pictures~~on ~~produced~~pay-per-view, video-on-demand and~~/or~~ ~~distributed~~premium bypay ~~FFE~~television inprogramming ~~the~~services; ~~United States~~ and ~~international~~(iv) ~~territories~~distribution ~~since~~of ~~the~~motion pictures ~~beginning~~for ofexhibition ~~fiscal~~on ~~2001~~free ~~include~~television ~~X-Men~~networks, ~~Cast~~other ~~Away~~broadcast ~~(together~~program ~~with DreamWorks SKG)~~services, ~~Moulin~~independent ~~Rouge,~~television ~~Dr.~~stations ~~Dolittle~~and 2,basic ~~Ice~~cable ~~Age,~~programming ~~Planet of the Apes~~services, ~~Star~~including ~~Wars~~certain ~~Episode~~services ~~II:~~which ~~Attack~~are affiliates of the ~~Clones,~~Company ~~Minority~~and ~~Report~~News ~~(together~~Corporation. ~~with DreamWorks SKG), Road to Perdition (together with~~The ~~DreamWorks~~Company ~~SKG),~~does ~~X-2:~~not ~~X-Men~~always ~~United,~~have ~~Daredevil,~~rights 28in ~~Days~~all ~~Later~~media ~~and~~of ~~Bend~~exhibition ~~it Like Beckham. The Company currently plans~~ to ~~release~~all ~~approximately 25~~ motion pictures inwhich ~~the~~it ~~United States in fiscal 2004~~releases, ~~including Master~~ and ~~Commander~~ ~~(together~~does ~~with~~not ~~Universal~~necessarily ~~Studios~~distribute ~~and~~a ~~Miramax~~given ~~Film~~motion ~~Corp.),~~picture ~~Stuck~~in onall ~~You,~~of ~~Cheaper by~~ the ~~Dozen,~~foregoing ~~The~~media ~~Day~~in ~~After~~all ~~Tomorrow and Garfield~~markets.

InThe ~~addition,~~Company ~~pursuant~~distributes toand anmarkets ~~agreement~~its ~~with~~films ~~Monarchy~~worldwide ~~Enterprises~~principally ~~Holdings~~through ~~B.V.~~its ~~(“MEH”), the parent company of~~own ~~Regency~~distribution ~~Entertainment~~and ~~(USA),~~marketing ~~Inc~~companies. ~~(“New~~The ~~Regency”)~~Company inbelieves ~~which~~that the ~~Company has a 20% interest, FFE distributes certain New Regency films and all films co~~pre-~~financed~~release bymarketing ~~the~~of ~~Company~~a ~~and~~feature ~~New~~film ~~Regency~~is inan ~~all~~integral ~~media~~part ~~worldwide,~~of ~~excluding~~its ~~certain international~~motion ~~territories~~picture ~~with~~distribution ~~respect~~strategy ~~to theatrical~~ and ~~home~~generally ~~video~~begins ~~rights~~marketing ~~and~~efforts ~~most~~three ~~international territories with respect~~ to ~~television~~six ~~rights.~~months ~~Among~~in ~~its~~advance ~~2004 releases, the Company currently expects to release four New Regency films, one~~ of ~~which~~a isfilm’s ~~co-financed~~release bydate ~~the~~in ~~Company~~any ~~and~~given ~~New Regency~~territory.

~~Due~~Through ~~to increased~~Twentieth ~~competition~~Century and costs associated with film production, film studios and the Company constantly evaluate the risks and rewards of production. Various strategies are used to balance risk with capital needs, including co-production,Fox ~~contingent~~Home ~~profit participations~~Entertainment, ~~acquisition of distribution rights only and insurance~~Inc. ~~In March 2001~~, the Company ~~entered~~distributes ~~into~~motion apictures ~~new~~and ~~series~~other ofprogramming ~~film~~produced ~~rights~~by ~~agreements~~units ~~whereby a controlled consolidated subsidiary~~ of ~~the Company~~FFE, ~~Cornwall~~its ~~Venture~~affiliates ~~LLC (“NM2”),~~and ~~that~~other ~~holds~~producers ~~certain library film rights, funds the production or acquisition costs of all eligible films, as defined~~ in the ~~agreements,~~United ~~to be produced or acquired by Twentieth Century Fox Film Corporation (“TCF”)~~States, ~~a subsidiary~~Canada ~~of the Company, between 2001~~ and ~~2005~~International ~~(these~~markets ~~film~~in ~~rights~~all ~~agreements,~~home asmedia ~~amended~~formats, ~~are~~including ~~collectively referred to as~~ the ~~“New Millennium II Agreement”). NM2 is a separate legal entity from the Company and TCF and has separate assets~~sale and ~~liabilities.~~rental NM2 issued a preferred limited liability membership interest (“Preferred Interest”) to a third party to fund the film financing, which is presented on the consolidated balance sheets as Minority interest in subsidiaries. The Preferred Interest has no fixed redemption rights but is entitled to an allocation of ~~the~~DVDs ~~gross~~and ~~receipts to be derived by NM2 from the distribution of each eligible film~~videocassettes. ~~Such~~In ~~allocation,~~fiscal ~~to the extent available based on the gross receipts from the distribution of the eligible films~~2004, ~~consists of (i) a return on~~ the ~~Preferred~~domestic ~~Interest~~home ~~(the~~entertainment ~~“Preferred~~division ~~Payments”),~~released ~~based on certain reference rates (generally based on commercial paper rates~~ or ~~LIBOR)~~re-released ~~prevailing~~over on500 ~~the~~produced ~~respective dates of determination,~~ and ~~(ii)~~acquired ~~a redemption of the Preferred Interest~~titles, ~~based~~including on26 anew ~~contractually~~FFE ~~determined~~film amortization schedule. The Preferred Interest has a preference in the event of a liquidation of NM2 equal to the unredeemed portion of the investment plus any accrued and unpaid Preferred Payments. As of June 30releases, ~~2003, there was~~ approximately ~~$762~~315 ~~million~~catalog oftitles Preferred Interests outstanding, which is included in the consolidated balance sheets as Minority interest in subsidiaries. On September 19, 2003, the Company purchased substantially all of the outstanding equity of Tintagel Investors L.L.C. (“Tintagel”), the entity that currently holds the Preferred Interest in NM2, for $25.5 million plus accrued and ~~unpaid Preferred Payments in the amount of~~ approximately ~~$106,000.~~160 television ~~As a result of the acquisition of this equity interest, the Company will consolidate the assets~~ and ~~liabilities~~non-theatrical ~~of Tintagel for accounting purposes~~titles. ~~The~~In ~~June~~International 30markets, ~~2003 outstanding NM2 Preferred Interest of $762 million, included in Minority interest in subsidiaries prior to~~ the ~~acquisition, will be eliminated upon consolidation; and Tintagel’s June 30, 2003 outstanding indebtedness of $736 million will now be included in Borrowings on the consolidated balance sheet of the~~ Company. ~~After the acquisition~~distributed, ~~Tintagel~~produced ~~will continue to be a separate legal entity from the Company with separate assets~~ and ~~liabilities.~~acquired ~~See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—New Millennium II.”~~

~~Table~~titles ofboth ~~Contents~~directly and through foreign distribution channels, with approximately 725 releases in fiscal 2004, including approximately 22 new FFE film releases, over 350 catalog titles and approximately 350 television and non-theatrical releases. In addition, the Company continued an agreement with Metro-Goldwyn-Mayer (“MGM”) to distribute its video product in certain international markets in return for fees. The Company released nearly 450 MGM Home Entertainment theatrical, catalog and television programs internationally in fiscal 2004.

~~Motion~~Units ~~picture~~of ~~companies,~~FFE ~~such~~license asmotion ~~FFE,~~pictures ~~typically~~and ~~seek~~other toprograms ~~generate~~in ~~revenues~~the ~~from~~United States, Canada and International markets to various ~~distribution~~third party and ~~channels~~certain affiliated subscription pay television services, pay-per-view services and video-on-demand services. ~~FFE~~The ~~derives~~license ~~its~~agreements ~~worldwide~~reflecting ~~motion~~the ~~picture~~subscription ~~revenues~~pay ~~primarily~~television ~~from~~arrangements ~~four~~generally ~~basic~~provide ~~sources~~for ~~(set~~a ~~forth~~specified innumber ~~general~~of ~~chronology~~exhibitions of the ~~exploitation):~~program ~~(i)~~during ~~distribution~~a offixed ~~motion~~term ~~pictures~~in exchange for ~~theatrical~~a ~~exhibition~~license infee, which is based on a variety of factors, including the ~~United~~box ~~States~~office ~~and~~performance ~~Canada~~of each program and ~~markets~~ ~~outside~~the number of subscribers to the ~~United~~service ~~States~~or system. The license agreements reflecting the pay-per-view and ~~Canada~~video-on-demand ~~(“International”~~arrangements ~~markets);~~generally ~~(ii)~~provide ~~distribution~~for a license fee based on a percentage of ~~motion~~the ~~pictures~~licensee’s gross receipts from the exhibition of the program, and in ~~various~~some ~~home~~cases, ~~media~~a ~~formats;~~guaranteed ~~(iii)~~minimum ~~distribution~~fee. ofIn ~~motion~~addition, ~~pictures~~these agreements generally provide for ~~exhibition~~a onminimum number of scheduled pay-per-view, exhibitions and a minimum video-on-demand ~~and~~exhibition period during a fixed term. Among third-party license agreements that units of FFE have in place in the United States ~~premium~~for television exhibition of its motion pictures are exclusive subscription pay television ~~programming~~license ~~services;~~agreements ~~and~~with Home Box Office (iv“HBO”), ~~distribution~~providing for the licensing of ~~motion~~films ~~pictures~~initially released for theatrical exhibition onthrough ~~free~~the ~~television networks~~year 2009, ~~other~~as ~~broadcast~~well ~~program~~as ~~services,~~arrangements ~~independent~~with ~~television~~the ~~stations~~Starz ~~and~~Encore ~~basic~~Group. ~~cable~~Units ~~programming~~of FFE also license motion pictures in the United States to direct broadcast satellite (“DBS”) pay-per-view services operated by The DIRECTV Group, ~~including~~Inc. (“DIRECTV”) ~~certain~~and ~~services~~EchoStar ~~which~~Communications ~~are~~Corporation, ~~affiliates~~as ofwell ~~the~~as ~~Company~~to pay-per-view and ~~News~~video-on-demand ~~Corporation.~~services ~~The~~operated ~~Company~~by ~~does~~iN ~~not~~Demand ~~always~~L.L.C. ~~have~~In ~~rights~~addition, in ~~all~~International ~~media~~markets, units of ~~exhibition~~FFE tolicense ~~all~~ motion pictures ~~which~~to itleading ~~releases,~~third-party pay television services and ~~does~~pay-per-view ~~not~~services ~~necessarily~~as ~~distribute~~well aas ~~given~~to ~~motion~~emerging ~~picture~~video-on-demand inservices ~~all of~~and ~~the~~programming ~~foregoing~~services ~~media~~operated inby ~~all~~various ~~markets~~affiliated entities.

~~The~~Units ~~Company~~of ~~distributes and~~FFE ~~markets~~also ~~its~~license ~~films~~motion ~~worldwide~~pictures ~~principally~~to ~~through~~broadcast ~~its~~television ~~own~~networks, ~~distribution~~including ~~and~~the ~~marketing~~Fox ~~companies.~~Broadcasting ~~The~~ Company ~~believes~~(“FOX”), ~~that~~independent ~~the~~broadcast ~~pre-release~~television stations ~~marketing~~and ofbasic acable ~~feature~~networks, ~~film~~pursuant isto anagreements ~~integral~~which ~~part~~generally ofallow ~~its~~a ~~motion~~fixed ~~picture~~number ~~distribution~~of ~~strategy~~telecasts ~~and~~of ~~generally begins~~a ~~marketing~~motion ~~efforts~~picture ~~three~~over toa ~~six~~fixed ~~months~~term in ~~advance~~exchange offor a ~~film’s~~specified ~~release~~license ~~date in any given territory~~fee.

~~Through Twentieth Century~~ Fox ~~Home~~Filmed Entertainment, ~~Inc.,~~/ ~~the~~Television ~~Company~~Production ~~distributes motion pictures~~ and ~~other~~Distribution programming produced by units of FFE, its affiliates and other producers in the United States, Canada and International markets in all home media formats, including the sale and rental of videocassettes and DVDs. In fiscal 2003, the domestic home entertainment division released or re-released over 450 produced and acquired titles, including 23 new FFE releases, approximately 390 catalog titles and approximately 60 television and non-theatrical titles. In International markets, the Company distributes produced and acquired titles both directly and through foreign distribution channels, with approximately 500 releases in fiscal 2003, including 45 new FFE releases, nearly 300 catalog titles and approximately 200 television and non-theatrical releases. In addition, the Company has an agreement with Metro-Goldwyn-Mayer (“MGM”) to distribute its video product in most International markets in return for certain fees. The Company released over 300 MGM Home Entertainment theatrical, catalog and television programs internationally in fiscal 2003.

~~Units~~During ofthe ~~FFE~~past ~~license motion~~three ~~pictures~~fiscal ~~and~~years, ~~other~~TCFTV produced television programs infor the ~~United~~FOX, ~~States~~ABC, CBS, ~~Canada~~NBC, ~~and~~UPN ~~International markets to various third parties~~ and ~~certain~~WB ~~affiliated~~broadcast ~~subscription pay~~ television ~~services, pay-per-view services and video-on-demand services~~networks. ~~The~~TCFTV ~~license agreements~~currently ~~reflecting~~produces ~~the~~or ~~subscription~~has ~~pay~~orders ~~television~~to ~~arrangements~~produce ~~generally~~episodes ~~provide for a specified number~~ of ~~exhibitions of~~ the ~~program~~following ~~during~~television aseries: ~~fixed~~Boston ~~term~~Legal inand ~~exchange~~Untitled ~~for~~John aStamos ~~license~~Project ~~fee,~~for ~~which~~ABC; isJudging ~~based on a variety of factors~~Amy, ~~including~~Still ~~the box~~Standing ~~office~~and ~~performance~~Yes ofDear (each ~~program~~co-produced ~~and~~with ~~the~~CBS ~~number~~Worldwide ofInc.) ~~subscribers~~for toCBS; ~~the~~24, ~~service~~American orDad, ~~system.~~Arrested Development, The ~~license~~Bernie ~~agreements~~Mac ~~reflecting~~Show ~~the~~(a ~~pay~~co-~~per-view~~production ~~and~~with ~~video-on-demand~~Regency ~~arrangements~~Television), ~~generally~~Family ~~provide~~Guy, ~~for~~The aInside, ~~license~~The ~~fee~~Jury, ~~based~~King ~~on a percentage~~ of the ~~licensee’s~~Hill, ~~gross~~Method ~~receipts~~& ~~from~~Red ~~the~~(a ~~exhibition~~co-production ofwith ~~the~~Regency ~~program~~Television), ~~and~~North ~~in some cases~~Shore, ~~a guaranteed minimum fee. In addition~~Quintuplets, ~~these~~The ~~agreements~~Simpsons ~~generally~~and ~~provide~~Tru Calling for aFOX; ~~minimum number of scheduled pay-per-view exhibitions~~ and aReba ~~minimum~~for ~~video-on-demand exhibition~~the ~~period~~WB. ~~during~~Generally, a ~~fixed~~network ~~term.~~will ~~Among third-party~~ license ~~agreements~~a ~~that~~specified ~~units~~number of ~~FFE have in place in the United States for television exhibition of its motion pictures are exclusive subscription pay television license agreements with Home~~episodes ~~Box Office (“HBO”), providing~~ for ~~the licensing of films initially released for theatrical~~ exhibition ~~through~~on the ~~year~~network ~~2009,~~during ~~as well as arrangements with~~ the ~~Starz Encore Group and an exclusive basic cable television~~ license ~~agreement with American Movie Classics~~period. ~~Units~~All ofother ~~FFE~~distribution ~~also~~rights, ~~license~~including ~~motion~~international ~~pictures~~and ~~in the United States to direct~~off-~~to-home~~network ~~(“DTH”)~~syndication ~~pay-per-view services operated by DIRECTV~~rights, ~~Inc.~~are ~~and~~typically ~~EchoStar~~retained ~~Communications~~by ~~Corporation,~~TCFTV ~~as well as to pay-per-view~~ and ~~video-on-demand~~ ~~services~~exercised ~~operated~~ by iNother ~~DEMAND L.L.C. In addition, in International markets,~~ units of ~~FFE~~the license motion pictures to leading third-party pay television services and pay-per-view services as well as to emerging video-on-demand services and programming services operated by various affiliated entitiesCompany.

~~Units~~Generally, television programs are produced under contracts that provide for license fees which may cover only a portion of ~~FFE~~the ~~also~~anticipated production costs. As these costs have increased in recent years, the resulting deficit between production costs and license ~~motion~~fees ~~pictures~~for todomestic ~~broadcast~~first-run ~~television~~programming ~~networks~~has also increased. Therefore, additional ~~including~~licensing is often critical to the ~~Fox~~financial ~~Broadcasting~~success ~~Company~~of a series since the license fee paid by a network generally does not fully recover production costs. Successful network television series are licensed for (~~“FOX”~~i) first-run exhibition in Canadian and International markets, ~~independent~~(ii) ~~broadcast~~off-network ~~television~~exhibition ~~stations~~in ~~and~~the ~~basic~~United States (including in syndication or to cable ~~networks~~programmers) and (iii) syndication in International markets. Generally, ~~pursuant~~a series must be broadcast for at least three to four ~~agreements~~television ~~which~~seasons ~~generally~~for ~~allow~~there to be a ~~fixed~~sufficient number of ~~telecasts~~episodes to offer the series in syndication in the United States or to cable and DBS programmers in the United States. The decision of a ~~motion~~television ~~picture~~network ~~over~~to continue a ~~fixed~~series ~~term~~through inan entire ~~exchange~~television ~~for~~season or to renew a ~~specified~~series ~~license~~for ~~fee~~another television season depends largely on the series’ audience ratings.

~~Table~~Twentieth ofTelevision ~~Contents~~

Twentieth ~~Century~~Television licenses both television programming and feature films for domestic syndication. Twentieth Television has a program portfolio that includes original reality and first-run television programming produced by its production companies for sales to the Fox Television Stations, other local stations throughout the United States, the Company’s cable network business and basic cable networks. Twentieth Television sells national advertising units retained by Twentieth Television in off-network and first-run programming. Twentieth Television also sells advertising units for DIRECTV. Twentieth Television derives revenue from off-network and first-run program sales in the form of cash license fees paid by both broadcast and cable licensees, and from the sales of national advertising units retained by Twentieth Television in its programs. Twentieth Television’s current and future off-network shows include The Simpsons, The X-Files, Malcolm in the Middle, Yes, Dear, The Bernie Mac Show, Reba, Buffy the Vampire Slayer, Angel and The Hughleys. Reality and first-run programming includes America’s Most Wanted, Cops, Divorce Court, Good Day Live, Texas Justice, and Ambush Makeover.

~~During~~Fox ~~the~~Television ~~past~~Studios three fiscal years, TCFTV produced television programs for the FOX, ABC, CBS, NBC, UPN and WB broadcast television networks. TCFTV currently produces or has orders to produce episodes of the following television series: The Big House, Married to the Kellys and The Practice for ABC; Judging Amy, Still Standing, Yes Dear (each co-produced with CBS Worldwide Inc.) and The Brotherhood of Poland, New Hampshire for CBS; 24, Arrested Development, The Bernie Mac Show (a co-production with FtvS), Boston Public, Cedric the Entertainer Presents, Cracking Up, King of the Hill, Luis, Oliver Beene (a co-production with DreamWorks SKG), The Simple Life, The Simpsons, Still Life, Tru Calling and Wonderfalls for FOX; The Lyon’s Den and Miss Match for NBC; and Angel and Reba for the WB. Generally, a network will license a specified number of episodes for exhibition on the network during the license period. All other distribution rights, including international and off-network syndication rights, are typically retained by TCFTV.

~~Generally,~~Fox ~~television programs~~Television ~~are~~Studios ~~produced~~(“FtvS”) ~~under~~is ~~contracts~~a ~~that~~program ~~provide~~supplier ~~for~~to ~~license~~the ~~fees~~major ~~which~~U.S. ~~may~~broadcast ~~cover~~and ~~only~~cable anetworks, ~~portion~~including ofFX, ~~the~~Sci-Fi, ~~anticipated~~TNT ~~production~~and ~~costs.~~A&E, Asas ~~these~~well ~~costs~~as ~~have~~a growing ~~increased~~number inof ~~recent~~international ~~years,~~networks (including the ~~resulting~~BBC). ~~deficit~~FtvS ~~between~~produces ~~production~~or ~~costs~~has ~~and~~orders ~~license~~to ~~fees for~~produce ~~domestic~~several ~~first-run~~broadcast ~~programming~~series ~~has~~through ~~also~~Regency ~~increased.~~Television ~~Therefore,~~(a ~~additional~~partnership ~~licensing~~with isNew ~~often~~Regency), ~~critical~~including toMalcolm in the ~~financial~~Middle, ~~success~~The ofBernie Mac Show (a ~~series~~co-production ~~since~~between ~~the~~Regency ~~license~~Television ~~fee~~and ~~paid~~TCFTV), byand aMethod ~~network~~& ~~generally~~Red ~~does~~(a ~~not~~co-production ~~fully~~between ~~recover~~Regency ~~production~~Television ~~costs.~~and ~~Successful network~~TCFTV) ~~television~~for ~~series~~FOX; ~~are~~Listen ~~licensed~~Up ~~for~~ (i)a ~~first~~co-~~run~~production ~~exhibition~~with inCBS ~~Canadian~~Productions) ~~and~~for ~~International~~CBS; ~~markets,~~and ~~(ii)~~Shacking ~~off-network~~Up ~~exhibition in~~ for the ~~United~~WB. ~~States~~FtvS ~~(including~~also inproduces ~~syndication~~The orShield tofor ~~cable~~FX, ~~programmers)~~ and ~~(iii)~~has ~~syndication in International markets. Generally,~~ a ~~series~~pilot ~~must~~order befrom ~~broadcast~~FX for atThief ~~least~~(through ~~three~~Regency toTelevision). ~~four~~FtvS ~~television~~has ~~seasons~~or ~~for~~will ~~there~~produce toa bevariety aof ~~sufficient~~television ~~number~~movies/extended ofseries ~~episodes~~including toAnonymous ~~offer~~Rex ~~the~~for ~~series~~Sci-Fi; The inGrid ~~syndication~~for inTNT/BBC; ~~the~~and ~~United~~Riverman ~~States~~for orA&E. toThe ~~cable~~studio ~~and~~produces ~~direct~~non-fiction ~~broadcast~~shows ~~satellite (“DBS”)~~including ~~programmers~~A&E’s inBiography ~~the~~and ~~United~~Animal ~~States.~~Planet’s The ~~decision~~Most ofExtreme. aIts ~~television~~international ~~network~~productions toinclude ~~continue~~multiple aversions of ~~series~~Temptation ~~through~~Island anand ~~entire~~Joe ~~television~~Millionaire. ~~season~~FtvS oralso toproduces ~~renew~~game ashows, ~~series~~specials ~~for~~and ~~another~~other ~~television~~forms ~~season~~of ~~depends~~programming ~~largely~~for onU.S. ~~the~~and ~~series’~~international ~~audience ratings~~broadcasters.

~~Twentieth~~Motion Picture and Television Libraries

~~Twentieth~~The ~~Television~~Company’s ~~licenses~~motion ~~both~~picture and television ~~programming~~library ~~and~~(the ~~feature~~“Fox ~~films for~~Library”) ~~domestic~~consists ~~syndication;~~of ~~develops~~varying ~~and~~rights ~~produces~~to ~~original~~over ~~reality~~3,260 ~~and~~previously released ~~first-run~~motion ~~television~~pictures, ~~programming~~of ~~for~~which ~~sales~~over to400 ~~the~~have ~~Fox~~been ~~Television~~released ~~Stations~~since 1980, ~~national~~and ~~syndication,~~many ~~FOX,~~well-known ~~the~~television ~~Company’s~~programs. ~~cable~~The ~~network~~motion ~~business~~pictures ~~and~~in ~~basic~~the ~~cable~~Fox ~~networks;~~Library ~~and~~include ~~sells national~~many ~~advertising~~successful ~~units~~and ~~retained~~well-known bytitles, ~~Twentieth~~such ~~Television~~as inThe ~~off-network~~Sound ~~and~~of ~~syndicated~~Music, ~~programming~~Mrs. Doubtfire, ~~Twentieth~~Planet ~~Television~~of ~~derives~~the ~~revenue~~Apes, ~~from~~Dr. ~~off~~Dolittle, X-~~network~~Men, ~~and~~The ~~syndication~~Day ~~licensing~~After inTomorrow ~~the~~and ~~form~~eight of ~~cash~~the ~~license~~top ~~fees~~23 ~~paid~~domestic bybox ~~both~~office ~~broadcast~~grossing ~~and~~films ~~cable licensees~~of ~~and~~all ~~the~~time, ~~sale~~which ofare ~~national~~Titanic ~~advertising~~(together ~~units~~with ~~retained~~Paramount byPictures ~~Twentieth~~Corporation), ~~Television~~Star inWars ~~the~~Episode ~~programs.~~I: The ~~Twentieth~~Phantom ~~Television’s~~Menace, ~~current~~Independence ~~and~~Day, ~~future~~Star ~~off-network~~Wars, ~~shows~~Return ~~include~~of ~~The~~the ~~Simpsons~~Jedi, The ~~X-Files~~Empire Strikes Back, ~~Malcolm~~Star inWars ~~the~~Episode ~~Middle, Buffy~~II: ~~the~~Attack ~~Vampire~~of ~~Slayer,~~the ~~Angel~~Clones and ~~The~~Home ~~Hughleys~~Alone. ~~Reality~~The ~~and~~Company ~~first-run~~earns ~~original~~significant ~~programming~~revenues ~~includes~~through ~~America’s~~licensing of ~~Most~~titles ~~Wanted,~~in ~~COPS,~~the ~~Divorce~~Fox ~~Court,~~Library ~~Good~~in ~~Day~~many ~~Live,~~distribution ~~Texas Justice~~channels, ~~Extreme Dating~~including television and ~~Ryan~~home ~~Seacrest~~entertainment formats.

The Fox ~~Television~~Library ~~Studios~~contains varying rights to many television series and made-for-television motion pictures. The television programming in the Fox Library consists of such classic series as Batman, The Mary Tyler Moore Show, M*A*S*H, Hill Street Blues, Doogie Howser, M.D., L.A. Law, The Wonder Years, Picket Fences, Room 222, Trapper John, M.D., Daniel Boone, The X-Files and Buffy the Vampire Slayer, as well as such current hits as The Simpsons, NYPD Blue, King of the Hill, Judging Amy (together with CBS Worldwide, Inc.), Malcolm in the Middle, The Bernie Mac Show, 24, The Shield, Yes, Dear, Family Guy, American Idol, The Simple Life, Joe Millionaire and The Swan.

~~Fox~~Licensing ~~Television Studios (FtvS) is a program supplier to the major U.S. broadcast~~ and ~~cable~~Merchandising networks as well as a growing number of emerging and international networks. FtvS produces or has orders to produce several broadcast and cable series including Malcolm in the Middle (through Regency Television, a co-venture with New Regency), The Bernie Mac Show and Wonderfalls (co-productions with TCFTV) for FOX; The Shield (produced in association with Sony Pictures Television) and Driveshaft for FX; and Beverly Hills Vet for Animal Planet. It also has or will produce a variety of television movies including 44 Minutes: The North Hollywood Shootout for FX; Footsteps and Twelve Mile Road for CBS; and 12 Days of Terror for Discovery. It produces non-fictional shows including A&E’s Biography and Animal Planet’s The Most Extreme. Its international productions include 14 separate versions of Temptation Island. FtvS also produces a variety of game shows, specials and other forms of programming for top U.S. and international telecasters.

~~Motion~~Through ~~Picture~~its licensing and merchandising division, the Company exploits its motion picture and television properties and characters by entering into licensing agreements for merchandising, literary publishing, wireless, video games, themed entertainment and promotional tie-ins. Television ~~Libraries~~series and films which have been licensed and

~~The~~5 Company’s motion picture and television library (the “Fox Library”) consists of varying rights to over 3,260 previously released motion pictures, of which over 400 have been released since 1980, and many well-known

4merchandised throughout the world include The Simpsons, The X-Files, 24, Buffy the Vampire Slayer, Family Guy, the Alien series of motion pictures, Titanic, Planet of the Apes, Ice Age and Robots, as well as a complete library of classic movies.

~~Table~~Fox ofMusic ~~Contents~~and Music Publishing

~~television series. The motion pictures in the~~ Fox ~~Library~~Music ~~have~~produces ~~included many successful~~ and ~~well-known titles~~licenses, ~~such~~for asdistribution ~~The~~through ~~Sound~~third ~~of Music and Miracle on 34th Street~~parties, ~~and~~soundtracks ~~eight~~ of the Company’s ~~top~~motion 18picture ~~domestic~~and ~~box~~television ~~office~~productions. ~~grossing~~Among ~~films~~the ofCompany’s ~~all~~successful ~~time,~~soundtrack ~~which~~releases are Titanic, ~~(together~~Romeo ~~with~~+ ~~Paramount Pictures Corporation)~~Juliet, ~~Star~~Waiting ~~Wars~~to ~~Episode I: The Phantom Menace~~Exhale, ~~Independence~~Ally ~~Day~~McBeal, ~~Star~~ ~~Wars,~~Master ~~Return~~and ~~of the Jedi~~Commander, ~~The~~Brown ~~Empire Strikes Back~~Sugar, ~~Star~~Moulin ~~Wars~~Rouge ~~Episode II: Attack of the Clones~~ and ~~Home Alone~~ Daredevil. ~~The~~In ~~Company~~addition, ~~earns~~Fox ~~significant~~Music ~~revenues~~Publishing ~~through~~generally ~~licensing~~owns ofthe ~~titles~~publishing inrights ~~the~~for ~~Fox~~songs ~~Library~~and inscores ~~many media,~~commissioned ~~including~~for ~~television~~the ~~and~~Company’s ~~home~~filmed entertainment. ~~formats,~~Fox ~~and~~Music ~~through~~Publishing ~~licensing~~licenses ~~and~~these ~~merchandising~~rights ofto ~~films~~third ~~and~~parties ~~characters~~for inextensive multimedia ~~films~~uses.

InTelevision ~~addition,~~Stations the Fox Library contains varying rights to many television series and made-for-television motion pictures. The television library contains such classic series as Batman, The Mary Tyler Moore Show, M*A*S*H, Hill Street Blues, Doogie Howser, M.D., L.A. Law, The Wonder Years, Picket Fences, Room 222, Trapper John, M.D., Daniel Boone, The X-Files and Buffy the Vampire Slayer, as well as such current hits as The Simpsons, NYPD Blue, The Practice, King of the Hill, Judging Amy (together with CBS Worldwide, Inc.), Malcolm in the Middle, The Bernie Mac Show, 24, The Shield and Boston Public.

~~Licensing~~Fox Television Stations currently owns and ~~Merchandising~~operates 35 full power stations including stations located in nine of the top 10 largest designated market areas (“DMAs”). Fox Television Stations owns and operates two stations in nine DMAs, including New York, Los Angeles, and Chicago, the first, second, and third largest DMAs, respectively.

~~Through~~Fox ~~its~~Television ~~licensing~~Stations owns and ~~merchandising~~operates ~~division,~~stations ~~the~~that ~~Company~~are affiliated ~~exploits~~with ~~its~~the ~~motion~~United ~~picture~~Paramount ~~and~~Network ~~television~~(“UPN”) ~~properties~~in ~~and~~nine ~~characters~~markets, byincluding ~~entering~~four ~~into licensing~~of ~~agreements~~the ~~for~~top ~~merchandising,~~10 ~~literary~~DMAs. ~~publishing,~~The ~~wireless,~~affiliation ~~video~~agreements ~~games,~~with ~~themed~~UPN ~~entertainment~~generally ~~and~~extend ~~promotional~~through ~~tie~~the 2005-~~ins~~2006 season. ~~Television~~UPN ~~series~~provides ~~and~~approximately ~~films~~13 ~~which~~hours ~~have~~of ~~been~~programming a ~~successfully~~week, ~~licensed~~including ~~and~~two-hour ~~merchandised~~prime ~~throughout~~time ~~the~~programming ~~world~~blocks ~~include~~five ~~The Simpsons,~~nights ~~The~~a ~~X-Files~~week, ~~24,~~to ~~Buffy~~its ~~the~~affiliates. ~~Vampire~~The ~~Slayer,~~remaining ~~King~~stations ofowned ~~the~~by ~~Hill,~~Fox ~~Futurama,~~Television ~~the~~Stations ~~Alien~~are ~~series~~FOX ofaffiliates. ~~motion~~For ~~pictures,~~a ~~Titanic,~~description ~~Planet~~ of ~~the~~FOX ~~Apes~~programming, ~~and~~see ~~Ice~~“—Television ~~Age~~Broadcast Network”.

~~Fox~~6 ~~Music and Music Publishing~~

~~Fox Music produces and licenses, for distribution through third parties, soundtracks of the Company’s motion picture and television productions.~~ The ~~Company’s~~following ~~successful~~table ~~soundtrack~~lists ~~releases~~certain ~~include~~information ~~Brown~~about ~~Sugar,~~each ~~Moulin Rouge, Titanic, Romeo + Juliet, Hope Floats, Ally McBeal, Waiting to Exhale and Buffy the Vampire Slayer. In addition~~ Fox ~~Music~~Television ~~Publishing generally owns the publishing rights for songs and scores commissioned for the Company’s filmed entertainment~~Station. ~~Fox~~Unless ~~Music~~otherwise ~~Publishing~~noted, ~~licenses~~all ~~these~~stations ~~rights to third parties for~~are ~~extensive~~FOX ~~multimedia uses~~affiliates.

Television Stations


	DMA/RANK	STATION		CHANNEL/TYPE		PERCENTAGE OF U.S. TELEVISION HOUSEHOLDS REACHED(1)
New York, NY	1	WNYW		5	VHF	6.8	%
		WWOR	(2)	9	VHF
Los Angeles, CA	2	KTTV		11	VHF	5.0	%
		KCOP	(2)	13	VHF
Chicago, IL	3	WFLD		32	UHF	3.1	%
		WPWR	(2)	50	UHF
Philadelphia, PA	4	WTXF		29	UHF	2.7	%
Boston, MA	6	WFXT		25	UHF	2.2	%
Dallas, TX	7	KDFW		4	VHF	2.1	%
		KDFI	(3)	27	UHF
Washington, DC	8	WTTG		5	VHF	2.1	%
		WDCA	(2)	20	UHF
Atlanta, GA	9	WAGA		5	VHF	1.9	%
Detroit, MI	10	WJBK		2	VHF	1.8	%
Houston, TX	11	KRIV		26	UHF	1.7	%
		KTXH	(2)	20	UHF
Tampa, FL	13	WTVT		13	VHF	1.5	%
Minneapolis, MN (4)	14	KMSP		9	VHF	1.5	%
		WFTC	(2)	29	UHF
Phoenix, AZ	15	KSAZ		10	VHF	1.4	%
		KUTP	(2)	45	UHF
Cleveland, OH	16	WJW		8	VHF	1.4	%
Denver, CO(5)	18	KDVR		31	UHF	1.3	%
Orlando, FL	20	WOFL		35	UHF	1.1	%
		WRBW	(2)	65	UHF
St. Louis, MO	21	KTVI		2	VHF	1.2	%
Baltimore, MD	23	WUTB	(2)	24	VHF	1.0	%
Milwaukee, WI	33	WITI		6	VHF	0.8	%
Kansas City, MO	31	WDAF		4	VHF	0.8	%
Salt Lake City, UT	36	KSTU		13	VHF	0.7	%
Birmingham, AL	40	WBRC		6	VHF	0.6	%
Memphis, TN	43	WHBQ		13	VHF	0.6	%
Greensboro, NC	46	WGHP		8	VHF	0.6	%
Austin, TX	54	KTBC		7	VHF	0.5	%
Gainesville, FL	162	WOGX		51	UHF	0.1	%

Total:						44.5	%

~~Fox~~Source: ~~Television~~Nielsen ~~Stations~~Media currently owns and operates 35 full power stations including stations located in nine of the top 10 largest designated market areas (“DMAs”). Fox Television Stations owns and operates two stations in nine DMAsResearch, ~~including~~January ~~New York, Los Angeles, and Chicago, the first, second, and third~~2004 ~~largest DMAs, respectively.~~

~~Fox~~(1) ~~Television~~VHF ~~Stations~~television ~~owns~~stations transmit on Channels 2 through 13 and ~~operates~~ ~~stations~~UHF ~~that~~television ~~are~~stations ~~affiliated~~on ~~with~~Channels ~~the~~14 ~~United~~through ~~Paramount~~69. ~~Network~~UHF ~~(“UPN”)~~television stations in ~~nine~~many ~~markets,~~cases ~~including~~have ~~four~~a ofweaker ~~the~~signal ~~top~~and 10therefore ~~DMAs.~~do ~~The~~not ~~affiliation~~achieve ~~agreements~~the ~~with~~same ~~UPN~~coverage ~~generally~~as ~~extend~~VHF ~~through~~television atstations. ~~least~~To address this disparity, the ~~2003-2004~~FCC ~~broadcast~~ownership ~~season~~rule ~~and may~~applies bea ~~extended~~UHF atdiscount (the ~~option~~“UHF Discount”) which attributes only 50% of the ~~stations~~television ~~through~~households in a local television market to the ~~2005-2006~~audience ~~season.~~reach ~~UPN~~of ~~provides~~a ~~approximately~~UHF 13television ~~hours~~station for purposes of ~~programming~~calculating awhether ~~week~~that station’s owner complies with the national station ownership cap imposed by FCC regulations and by statute. In addition, ~~including~~the coverage of two~~-hour~~ ~~prime~~commonly ~~time~~owned ~~programming~~stations ~~blocks~~in ~~five~~the ~~nights~~same amarket ~~week,~~is toonly ~~its~~counted ~~affiliates~~once. The ~~remaining~~percentages ~~stations owned~~listed byare ~~Fox~~rounded ~~Television~~and ~~Stations~~do ~~are~~not ~~FOX~~take ~~affiliates~~into account the UHF Discount. For amore ~~description~~information ofregarding ~~FOX~~the ~~programming~~FCC’s national station ownership cap, see “Regulation—Television Stations and Television Broadcast Network”. ”

5(2) UPN affiliate.

~~Table~~(3) ofIndependent ~~Contents~~station and secondary FOX affiliate, carrying children’s programming provided by FOX.

(4) The ~~following~~Company ~~table~~also ~~lists~~owns ~~certain~~and ~~information~~operates ~~about~~KFTC, ~~each~~Channel ~~Fox~~26, ~~Television~~Bemidji, ~~Station.~~MN ~~Unless~~as ~~otherwise~~a ~~noted~~satellite station of WFTC, ~~all~~ ~~stations~~Channel ~~are~~29, ~~FOX~~Minneapolis, ~~affiliates~~MN.

	DMA/RANK	STATION	CHANNEL/TYPE		PERCENTAGE OF U.S.TELEVISION HOUSEHOLDS REACHED(1)
New York, NY	1	WNYW	5	VHF	6.8%
		WWOR(2)	9	VHF
Los Angeles, CA	2	KTTV	11	VHF	5.0%
		KCOP(2)	13	VHF
Chicago, IL	3	WFLD	32	UHF	3.1%
		WPWR(2)	50	UHF
Philadelphia, PA	4	WTXF	29	UHF	2.7%
Boston, MA	6	WFXT	25	UHF	2.3%
Dallas, TX	7	KDFW	4	VHF	2.0%
		KDFI(3)	27	UHF
Washington, DC	8	WTTG	5	VHF	2.0%
		WDCA(2)	20	UHF
Atlanta, GA	9	WAGA	5	VHF	1.8%
Detroit, MI	10	WJBK	2	VHF	1.8%
Houston, TX	11	KRIV	26	UHF	1.7%
		KTXH(2)	20	UHF
Tampa, FL	13	WTVT	13	VHF	1.5%
Minneapolis, MN	14	KMSP	9	VHF	1.5%
		WFTC(2)	29	UHF
Cleveland, OH	15	WJW	8	VHF	1.4%
Phoenix, AZ	16	KSAZ	10	VHF	1.4%
		KUTP(2)	45	UHF
Denver, CO(4)	18	KDVR	31	UHF	1.3%
Orlando, FL	20	WOFL	35	UHF	1.1%
		WRBW(2)	65	UHF
St. Louis, MO	22	KTVI	2	VHF	1.1%
Baltimore, MD	24	WUTB(2)	24	VHF	1.0%
Milwaukee, WI	31	WITI	6	VHF	0.8%
Kansas City, MO	33	WDAF	4	VHF	0.8%
Salt Lake City, UT	36	KSTU	13	VHF	0.7%
Birmingham, AL	40	WBRC	6	VHF	0.6%
Memphis, TN	43	WHBQ	13	VHF	0.6%
Greensboro, NC	46	WGHP	8	VHF	0.6%
Austin, TX	54	KTBC	7	VHF	0.5%
Gainesville, FL	162	WOGX	51	UHF	0.1%
Total:					44.2%

(5)	The Company also owns and operates KFCT, Channel 22, Fort Collins, CO, as a satellite station of KDVR, Channel 31, Denver, CO.

~~Source: Nielsen~~7 ~~Media Research, January 2003~~

~~(1)~~The ~~VHF~~Fox ~~television~~Television ~~stations~~Stations ~~transmit~~derive onsubstantially ~~Channels~~all 2of ~~through~~their 13revenues ~~and~~from ~~UHF~~national ~~television~~spot ~~stations~~and onlocal ~~Channels 14 through 69~~advertising. Advertising ~~UHF~~rates ~~television~~are ~~stations~~determined inby ~~many~~each ~~cases~~Fox ~~have~~Television aStation ~~weaker~~based ~~signal~~on ~~and~~market ~~therefore~~conditions doin ~~not achieve~~ the ~~same~~area ~~coverage~~which asit ~~VHF television stations~~serves. ToIn ~~address~~addition ~~this~~to ~~disparity~~cash sales, the ~~FCC~~Fox ~~ownership~~Television ~~rule~~Stations ~~applies~~enter ainto ~~UHF~~customary ~~discount~~agreements ~~(the~~with ~~“UHF~~syndicators, ~~Discount”)~~pursuant to which ~~attributes only 50% of~~ the Fox ~~television~~Television ~~households~~Stations inacquire aprogramming ~~local~~and ~~television~~the ~~market~~rights to ~~the~~sell ~~audience reach of~~ a ~~UHF~~specified ~~television~~amount ~~station for purposes~~ of ~~calculating~~advertising ~~whether~~time ~~that~~for ~~station’s~~use ~~owner~~in ~~complies with the 35%~~ national ~~station~~spot ~~ownership~~and ~~cap~~local ~~imposed~~advertising bymarkets ~~FCC~~in ~~regulations.~~exchange Infor ~~addition,~~allowing the ~~coverage~~syndicator ofto ~~two~~retain ~~commonly~~a ~~owned~~specified ~~stations~~amount inof ~~the~~advertising ~~same~~time for ~~market~~sale isin ~~only counted once. The percentages listed are rounded and do not take into account~~ the ~~UHF~~national ~~Discount.~~advertising ~~For~~market ~~more~~in ~~information~~lieu ~~regarding~~of, ~~the~~or ~~FCC’s~~in ~~national~~addition ~~station ownership cap~~to, ~~see~~cash ~~“—Regulation—Television Stations and Television Broadcast Network~~consideration.”

~~(2)~~Television ~~UPN~~Broadcast ~~affiliate.~~Network

FOX has 196 affiliated stations (3“FOX Affiliates”), ~~Independent~~including ~~station~~25 ~~and~~full ~~secondary~~power television stations that are owned by subsidiaries of the Company, which reach, along with Fox Net, a Company-owned cable service which reaches areas not served by an over-the-air FOX affiliate, ~~carrying~~approximately 98% of all U.S. television households. In general, each week FOX regularly delivers to its affiliates 15 hours of prime-time programming and one hour of late-night programming on Saturday. FOX’s prime time programming features such series as The Simpsons, King of the Hill, That ‘70s Show, Malcolm in the Middle, The OC, 24 and The Bernie Mac Show; unscripted series such as American Idol; and various movies and specials. In addition, a significant component of FOX’s programming consists of sports programming, with FOX providing to its affiliates live coverage (including post-season) of the National Football Conference of the National Football League (the “NFL”) and Major League Baseball (“MLB”) as well as live coverage of the premiere racing series (the Nextel Cup and the Busch series) of the National Association of Stock Car Auto Racing (“NASCAR”). FOX also provides a four-hour block of children’s programming ~~provided~~on Saturday morning, programmed by 4Kids Entertainment (“4Kids”), a children’s entertainment company. FOX’s agreement with 4Kids extends until the 2005-2006 broadcast season.

~~(4)~~FOX ~~The~~derives ~~Company~~the ~~also~~majority ~~owns~~of ~~and~~its revenues ~~operates~~from ~~KFCT~~sales of commercial advertising time in the national advertising marketplace. FOX’s programming line-up is intended to appeal primarily to target audiences of 18 to 49-year old adults, ~~Channel~~the 22demographic group that advertisers seek to reach most often. During the 2003-2004 broadcast season, ~~Fort~~FOX ~~Collins~~ranked second in prime-time programming based on viewership of adults aged 18 to 49 (NBC had a 4.2 rating and a 12 share, COFOX had a 4.1 rating and an 11 share, asCBS had a ~~satellite~~3.9 ~~station~~rating and an 11 share and ABC had a 3.2 rating and a 9 share). The median age of ~~KDVR,~~the ~~Channel~~FOX 31viewer is 36 years, ~~Denver~~as compared to 46 years for NBC, CO45 years for ABC and 53 years for CBS.

6The Company obtains programming for FOX from major television studios and independent television production companies pursuant to license agreements. The terms of such agreements generally provide the Company with the right to broadcast a television series for a minimum of four seasons. FOX licenses its film programming from major film studios and independent film production companies. National sports programming, such as NFL, MLB and NASCAR programming, is obtained under license agreements with professional sports leagues or organizations. The Company’s current licenses with the NFL, MLB, and NASCAR extend until the 2005-2006 NFL season, the 2006 MLB season, and the 2008 NASCAR season, respectively, assuming no early terminations.

~~Table~~FOX provides programming to the FOX Affiliates in accordance with affiliation agreements of ~~Contents~~varying durations, which grant to each affiliate the right to broadcast network television programming on the affiliated station. Such agreements typically run three or more years and have staggered expiration dates. These affiliation agreements generally require primary FOX Affiliates to carry FOX programming in all time periods in which FOX programming is offered to such affiliates, subject to certain exceptions stated in the affiliation agreements. In 2003, FOX renewed agreements with FOX Affiliates primarily relating to the amount of commercial advertising time FOX provides them in NFL programming and the affiliates’ contributions toward the cost of those rights.

~~Regulatory~~Cable approval of the Company’s acquisition of television stations from Chris-Craft Industries, Inc. and its subsidiaries in July 2001 required the Company to divest sufficient stations to come into compliance with the FCC’s national station ownership cap. For more detail regarding the status of the FCC’s national station ownership cap, see “—Regulation—Television Stations and Television Broadcast Network.” Programming

The ~~Fox~~Company ~~Television~~holds ~~Stations~~interests ~~derive~~in ~~substantially~~cable ~~all~~network ofprogramming ~~their~~businesses ~~revenues from national spot and local advertising. Advertising rates are determined by each Fox Television Station based on market conditions~~ in the ~~area~~areas ~~which~~of ~~it serves. In addition to cash sales~~news, ~~the Fox Television Stations enter into customary agreements with syndicators~~sports, ~~pursuant~~general toentertainment ~~which~~and ~~the~~movies. The Fox ~~Television~~Cable ~~Stations~~Networks ~~acquire~~Group ~~programming~~includes ~~and~~all ~~the rights to sell a specified amount~~ of ~~advertising time for use in national spot and local advertising markets in exchange for allowing~~ the ~~syndicator~~Company’s tocable ~~retain~~network aprogramming ~~specified~~businesses ~~amount~~other ofthan ~~advertising time for sale in~~ the ~~national~~Fox ~~advertising~~News ~~market in lieu of cash consideration~~Channel.

~~Television~~8 ~~Broadcast Network~~

~~FOX has 196 affiliated stations (“FOX Affiliates”), including 25 full power television stations that are owned by subsidiaries of the Company, which reach, along with~~ Fox ~~Net,~~News aChannel Company-owned cable service which reaches areas not served by an over-the-air Fox affiliate, approximately 98% of all U.S. television households. In general, each week FOX regularly delivers to its affiliates 15 hours of prime-time programming and one hour of late-night programming on Saturday. FOX’s prime time programming features such series as The Simpsons, King of the Hill, That 70’s Show, Malcolm in the Middle, Boston Public, 24 and The Bernie Mac Show; unscripted series such as American Idol; and various movies and specials. In addition, a significant component of FOX’s programming consists of sports programming, with FOX providing to its affiliates live coverage (including post-season) of the National Football Conference of the National Football League (“NFL”) and Major League Baseball (“MLB”) as well as live coverage of the premiere racing series (the Winston/Nextel Cup and the Busch series) of the National Association of Stock Car Auto Racing (“NASCAR”). FOX also provides a four-hour block of children’s programming on Saturday morning, programmed by 4Kids Entertainment (“4Kids”), a children’s entertainment company. FOX’s agreement with 4Kids extends until the 2005-2006 broadcast season.

~~FOX~~Fox ~~derives~~News ~~its~~Channel ~~revenues~~(“Fox ~~from~~News”) ~~sales of commercial advertising time in the national advertising marketplace. FOX’s programming line-up~~ is ~~intended~~a ~~to appeal primarily to target audiences of 18 to 49~~24-~~year~~hour ~~old~~all ~~adults,~~news ~~the~~cable ~~demographic~~channel ~~group~~which ~~that~~is ~~advertisers~~currently ~~seek~~available to ~~reach~~approximately ~~most often~~85.2 ~~During~~million ~~the~~U.S. ~~2002-2003~~cable ~~broadcast~~and ~~season,~~DBS ~~FOX~~households. ~~ranked~~Fox ~~second~~News inalso ~~prime-time~~produces ~~programming~~a ~~based~~weekend onpolitical ~~viewership~~commentary ofshow, ~~adults~~Fox ~~aged~~News 18Sunday, tofor 49broadcast ~~(NBC~~on ~~had a 4~~FOX.5 ~~rating~~Fox ~~and a 12 share~~News, ~~FOX~~through ~~had~~its aFox ~~4.3~~News ~~rating~~Edge ~~and a 12 share~~service, ~~CBS~~licenses ~~had~~news afeeds ~~3.8~~to ~~rating~~Fox ~~and~~Affiliates ~~a 10 share~~ and ~~ABC~~other ~~had~~subscribers ato ~~3.8~~use as ~~rating~~part ~~and~~of alocal 10news ~~share)~~broadcasts. ~~The~~Fox ~~median~~News ~~age~~has ofalso launched the ~~FOX~~national ~~viewer~~Fox isNews 35Radio ~~years,~~Network aswhich ~~compared~~licenses tohourly 44updates ~~years~~and ~~for~~long ~~NBC,~~form 46programs ~~years~~to ~~for~~local ~~ABC~~radio ~~and 52 years for CBS~~stations.

~~The~~Fox ~~Company~~Cable ~~obtains~~Networks ~~programming~~Group for FOX from major television studios and independent television production companies pursuant to license agreements. The terms of such agreements generally provide the Company with the right to broadcast a television series for a minimum of four seasons. FOX licenses its film programming from major film studios and independent film production companies. National sports programming, such as NFL, MLB and NASCAR programming, is obtained under license agreements with professional sports leagues or organizations. The Company’s current licenses with the NFL, MLB, and NASCAR extend until the 2005-2006 NFL season, the 2006 MLB season, and the 2008 NASCAR season, respectively, assuming no early terminations.

~~FOX~~Fox ~~provides~~Cable ~~programming~~Networks toGroup ~~the~~owns, ~~Fox~~through ~~Affiliates~~its insubsidiaries ~~accordance~~and ~~with~~various ~~affiliation~~joint ~~agreements of varying durations~~ventures, ~~which~~interests ~~grant~~in to19 ~~each~~regional ~~affiliate~~sports ~~the~~networks ~~right~~(“RSNs”), toeight ~~broadcast~~nationally-delivered ~~network~~sports ~~television~~and ~~programming~~entertainment onnetworks ~~the affiliated station. Such agreements typically run three or more years~~ and ~~have~~other ~~staggered~~related ~~expiration dates~~businesses. ~~These~~In ~~affiliation~~addition, ~~agreements~~Fox ~~generally~~Cable ~~require~~Networks ~~primary~~Group ~~FOX~~recently ~~Affiliates~~announced toits ~~carry~~plans ~~FOX~~to ~~programming in~~launch ~~all~~a ~~time~~new ~~periods~~24-hour innational ~~which FOX~~ programming isservice ~~offered~~in toearly ~~such affiliates~~2005, ~~subject~~the toFox ~~certain~~Reality ~~exceptions stated in the~~ Channel.

7Sports Programming Operations. Fox Sports Net, Inc. (“FSN”) is the largest RSN programmer in the United States focusing on live professional and major collegiate home team sports events. FSN’s sports programming business consists primarily of ownership interests in 19 RSNs (the “Fox Sports RSNs”) and National Sports Partners, a partnership between FSN and Rainbow Media Sports Holdings, Inc. (“Rainbow”), an indirect subsidiary of Cablevision Systems Corporation (“Cablevision”), which operates Fox Sports Net, a national sports programming service. Fox Sports Net provides its affiliated RSNs with 24-hour national sports programming featuring original and licensed sports-related programming and live and replay sporting events.

~~Table~~FSN owns an equity interest in, or through Fox Sports Net is affiliated with, 21 RSNs. These RSNs reach approximately 81.3 million households (according to Nielsen Media Research) and have rights to telecast live games of ~~Contents~~65 professional sports teams in the MLB, the National Basketball Association (“NBA”) and the National Hockey League (“NHL”) (out of a total of 81 such teams in the United States) and numerous collegiate conferences and sports teams.

~~affiliation~~FSN ~~agreements.~~owns Ina ~~2002,~~40% ~~FOX~~interest ~~renewed~~in ~~arrangements~~Regional ~~with~~Programming ~~the~~Partners ~~primary~~(“RPP”), ~~FOX~~a ~~Affiliates~~partnership ~~relating~~with toRainbow, ~~both~~which ~~the~~owns ~~amount~~various ofinterests ~~commercial~~in ~~advertising~~RSNs, ~~time~~the inNew ~~FOX~~York Knickerbockers ~~prime~~NBA ~~time~~franchise, ~~programming~~the ~~that~~New ~~FOX~~York ~~provides~~Rangers toNHL ~~each~~franchise, ~~affiliate for~~ the ~~affiliate~~Madison toSquare ~~sell~~Garden toentertainment ~~advertisers~~complex ~~(“local~~in ~~commercial~~New ~~advertising~~York, ~~time”)~~New York, and ~~the~~Radio ~~compensation~~City ~~each~~Music ~~affiliate~~Hall ~~pays~~in toNew ~~FOX~~York, ~~for~~New ~~such time~~York. ~~FOX~~In isDecember ~~currently~~2003, ~~completing~~the Company sold to RPP the 50% direct interests that RPP ~~renewals~~did ofnot ~~the~~own ~~agreements~~in ~~with~~each of the Fox ~~Affiliates~~Sports ~~which~~Net ~~expired~~Bay inArea ~~June~~RSN ~~2003~~and ~~primarily~~the ~~relating~~Fox toSports ~~the~~Net ~~amount~~Chicago ofRSN ~~commercial~~for ~~advertising~~an ~~time~~aggregate ~~FOX~~of ~~provides~~$150 ~~them~~million. inFor ~~NFL,~~a ~~MLB~~discussion of purchase and ~~NASCAR~~sale ~~programming~~rights ~~and~~related to the ~~affiliates’~~investment ~~contributions~~in ~~toward~~RPP, ~~the~~see ~~cost~~“Item 8 Financial Statements – ofNote ~~FOX’s~~15 ~~sports~~– ~~rights~~Commitments and Contingencies.”

~~Cable~~FX Network. Launched ~~Programming~~in June 1994, FX Networks LLC (“FX”) currently reaches approximately 84.8 million U.S. cable and DBS households according to Nielsen Media Research. FX is a general entertainment network that provides a growing roster of original series and films, as well as acquired television series and motion pictures. In addition, FX carries sports programming with live coverage of certain NASCAR events. FX’s line-up for the Fall 2004 season includes the following syndicated shows: King of the Hill, Fear Factor, Cops, The Practice, Buffy the Vampire Slayer and Married… with Children; and the following original programming, the Emmy® and Golden Globe® award winning drama series The Shield, the critically-acclaimed drama series Nip/Tuck, and the new drama series, Rescue Me. Also, slated for this fall is FX’s original movie Smallpox.

~~The~~SPEED ~~Company~~Channel. ~~holds~~Currently ~~interests~~reaching inapproximately 63.2 million U.S. cable ~~network programming~~and ~~businesses~~DBS inhouseholds according to Nielsen Media Research, SPEED Channel focuses on the ~~areas~~world of ~~news~~racing, ~~sports~~automobile and motorcycle enthusiast programming, ~~general~~including ~~entertainment~~NASCAR races, events and ~~movies.~~original ~~The~~programming ~~Fox~~as ~~Cable~~well ~~Networks~~as ~~Group~~other top ~~includes~~racing ~~all~~series, ofsuch ~~the~~as ~~Company’s~~Formula ~~cable~~One, ~~network~~World ~~programming~~Rally, ~~businesses~~Grand ~~other~~American ~~than~~Road ~~the~~Racing, ~~Fox~~American ~~News~~Motorcycle ~~Channel~~Association and Moto GP racing and events.

~~Fox~~FUEL. ~~News~~Launched ~~Channel~~on July 1, 2003 and currently reaching approximately 8.1 million U.S. cable and DBS

~~Fox~~9 News Channel (“Fox News”) is a 24-hour all news cable channel which is currently available to approximately 83 million U.S. cable and DBS households. Fox News also produces a weekend political commentary show, Fox News Sunday, for broadcast on FOX. Fox News, through its Fox News Edge service, licenses news feeds to Fox Affiliates and other subscribers to use as part of local news broadcasts.

~~Fox~~subscribers, ~~Sports~~FUEL ~~Networks~~is a 24-hour programming service dedicated to the world of extreme sports. FUEL covers both competitive and performance action in the arenas of skateboarding, surfing, BMX, freestyle motocross, snowboarding and wakeboarding. Programming includes international extreme sports events and competitions, and original and co-produced series.

~~Sports~~Fox ~~programming~~College ~~operations~~Sports. Fox College Sports ~~Networks, Inc.~~ (~~“FSN”)~~formerly isFox ~~the~~Sports ~~largest~~Digital ~~regional sports network (“RSN”~~Nets), ~~programmer~~consists inof three ~~the~~regionally-aligned ~~United~~networks, ~~States~~FCS ~~focusing~~Pacific, onFCS ~~live~~Central ~~professional~~ and ~~major collegiate~~FCS ~~home team sports events~~Atlantic. ~~FSN’s~~Fox ~~sports~~College ~~programming~~Sports ~~business~~currently ~~consists~~reaches ~~primarily~~approximately of2.9 ~~ownership~~million ~~interests~~subscribers in ~~19 RSNs (~~the ~~“Fox~~U.S. ~~Sports RSNs”)~~ and ~~National~~provides ~~Sports~~over ~~Partners,~~800 alive ~~partnership~~collegiate ~~between~~events ~~FSN~~from ~~and~~the ~~Rainbow~~nation’s ~~Media~~top ~~Sports~~collegiate ~~Holdings~~conferences, ~~Inc.~~daily ~~(“Rainbow”),~~regional annews ~~indirect~~and ~~subsidiary~~coaches’ ofshows ~~Cablevision~~to ~~Systems Corporation (“Cablevision”), which operates~~ Fox Sports Net, ~~a national sports programming service. Fox Sports Net provides its~~ affiliated RSNs ~~with~~across ~~24-hour national~~the ~~sports programming featuring original and licensed sports-related programming and live and replay sporting events~~country.

~~FSN owns an equity interest in, or through~~ Fox ~~Sports~~Movie ~~Net is affiliated with, 21 RSNs~~Channel. ~~These~~Currently ~~RSNs~~reaching ~~reach~~ approximately 7523.74 million ~~households~~U.S. cable and ~~have rights~~DBS ~~to telecast live games of 70 professional sports teams in the MLB~~subscribers, the ~~National~~Fox ~~Basketball~~Movie ~~Association~~Channel (“~~NBA~~FMC”) ~~and~~is ~~the~~Hollywood’s ~~National~~first ~~Hockey~~and ~~League~~only ~~(“NHL”)~~studio-based ~~(out~~movie ofnetwork. aFMC showcases ~~total~~commercial-free, ofunedited 80contemporary ~~such~~hits ~~teams~~and inclassics from the ~~United~~Fox ~~States)~~Library, ~~and~~as ~~numerous collegiate~~well ~~conferences~~as documentaries and ~~sports~~series ~~teams~~exploring the movie-making process.

~~FSN~~Fox ~~owns~~Sports aInternational. ~~40% interest~~Fox inSports ~~Regional~~International ~~Programming Partners (“RPP”), a partnership with Rainbow which~~ owns ~~various~~Fox ~~interests~~Sports ~~in RSNs~~World, ~~the~~a ~~New~~U.S. ~~York~~programming ~~Knickerbockers~~English-language ~~NBA~~service ~~franchise,~~devoted ~~the~~to ~~New~~international ~~York~~sports ~~Rangers~~such ~~NHL franchise, the Madison Square Garden entertainment~~as ~~complex,~~soccer and ~~Radio~~rugby ~~City~~which ~~Music~~service ~~Hall,~~is ~~both~~available into ~~New~~approximately ~~York, New York~~19.2 ~~For~~million acable ~~discussion~~and ofDBS ~~purchase~~subscribers, and ~~sale~~Fox ~~rights~~Sports ~~related~~World toMiddle ~~the investment in RPP~~East, ~~see~~an ~~“Item~~English-language 7.sports ~~Management’s~~network ~~Discussion~~which ~~and~~airs ~~Analysis~~in ofthe ~~Financial~~Middle ~~Condition and Results of Operations—Contingencies—Regional Programming Partners~~East.”

InFox ~~January~~Sports ~~2002,~~International ~~the~~owns ~~Company~~approximately ~~acquired an approximate 23.3~~38% ~~voting~~of ~~interest~~Fox inPan ~~the~~American ~~Sunshine~~Sports ~~Network~~ LLC (“~~Sunshine~~FPAS”), ~~for~~with ~~approximately~~Liberty ~~$23.3~~Media ~~million.~~Corporation ~~This~~(“Liberty”) ~~resulted~~and inHicks, ~~the~~Muse, ~~acquisition~~Tate of& aFurst ~~controlling~~Incorporated ~~interest~~owning ~~in Sunshine and increased~~ the ~~Company’s~~remainder. ~~ownership~~FPAS ~~percentage~~owns toand ~~approximately~~operates ~~83.3%.~~Spanish-language Insports ~~February 2002~~businesses, including the ~~Company~~Fox ~~acquired~~Sports anLatin ~~additional~~America ~~approximate~~network (a ~~0.4%~~Spanish-language ~~interest~~sports innetwork ~~Sunshine.~~distributed Into ~~October~~subscribers ~~2002,~~in ~~the~~certain ~~Company~~Caribbean ~~acquired~~and ~~News~~Central ~~Corporation’s~~and ~~9.8%~~South ~~equity~~American ~~interest~~nations ~~in Sunshine~~outside ~~for~~of ~~approximately~~Brazil) $3and ~~million.~~Fox ~~This~~Sports ~~acquisition~~en ~~increased~~Español ~~the~~(a ~~Company’s~~Spanish-language ~~interest~~sports innetwork ~~Sunshine~~serving toapproximately 936.7%5 ~~with~~million ~~the~~U.S. cable ~~remaining~~and ~~minority~~DBS ~~interest held by third parties~~subscribers).

FXNational ~~Network~~Geographic Channel. ~~Launched~~ inThe ~~June~~Company, NBC ~~1994~~and National Geographic Television (“NGT”) own 50%, FX25% ~~Networks~~and 25% interests, respectively, in NGC Network International, LLC (“FXNGCI”), ~~currently~~which ~~reaches~~produces the National Geographic Channel for distribution in various international ~~approximately~~markets, 80including certain countries in Europe and Asia.3 ~~million~~The UCompany and NGT also own 66.S7% and 33.3% ~~cable~~interests, respectively, in NGC Network Latin America, LLC, which owns and ~~DBS~~operates ~~households~~the National Geographic Channel in Latin America. FXThe National Geographic Channel airs documentary programming on such topics as natural history, adventure, science, exploration and culture. The National Geographic Channel is acurrently ~~general~~shown ~~entertainment~~in ~~network~~approximately ~~that~~147 ~~provides~~countries internationally, excluding the United States. National Geographic programming is provided in Australia, Africa, Israel, the UK, Scandinavia and central and eastern Europe, by a ~~growing~~partnership ~~roster~~in ofwhich British Sky Broadcasting Limited, NBC and NGT are currently partners.

8The Company holds a non-controlling 66.67% interest in the National Geographic Channel in the U.S., with NGT holding the remaining interest. The National Geographic Channel currently reaches approximately 51.6 million U.S. cable and DBS households according to Nielsen Media Research.

~~Table~~Recent ofTransactions ~~Contents~~

~~original~~In ~~series~~December ~~and films~~2003, asthe ~~well~~Company asexercised ~~acquired~~its ~~television~~right ~~series~~to ~~and~~require ~~motion~~Discovery ~~pictures. In addition~~Communications, FXInc. (“Discovery”) ~~carries~~to ~~sports~~purchase ~~programming~~the ~~with~~Company’s ~~live~~10% ~~coverage~~interest ~~of certain~~in ~~NASCAR~~Discovery ~~events.~~Health ~~FX’s~~Channel, ~~line-up~~LLC for ~~the~~a ~~Fall~~purchase ~~2003~~price ~~season~~of ~~includes~~approximately ~~the~~$93 ~~following~~million. ~~syndicated shows: Ally McBeal,~~ The ~~Practice,~~Company ~~Married…with~~had ~~Children,~~acquired ~~Beverly~~this ~~Hills~~interest ~~90210~~in ~~and~~connection ~~COPS;~~with ~~and~~ the ~~following~~sale ~~original programming:~~of ~~the Emmy® and Golden Globe® award winning drama series~~ The ~~Shield,~~Health ~~the~~Network ~~new~~to ~~drama~~Discovery ~~series:~~in ~~Nip/Tuck,~~June ~~and~~2001. ~~the~~This ~~new~~transaction ~~nightly,~~is ~~half-hour~~expected ~~comedy~~to ~~variety~~close ~~series~~in ~~The~~fiscal ~~Orlando~~year ~~Jones Show. Also~~2005, ~~slated~~subject ~~for~~to ~~December~~the issatisfaction ~~FX’s~~of ~~original~~customary ~~movie~~closing ~~Redemption: The Stan “Tooke” Williams Story starring Jamie Foxx~~conditions.

~~SPEED~~In ~~Channel~~February 2004, the Company sold the Los Angeles Dodgers (the “Dodgers”), together with Dodger Stadium and the team’s training facilities in Vero Beach, Florida and the Dominican Republic, to entities owned by Frank McCourt (the “McCourt Entities”). The gross consideration for the sale of the Dodgers franchise and real

~~SPEED~~10 Channel, currently reaching approximately 57.5 million U.S. cable and DBS households, focuses on the world of racing, including NASCAR races, events and original programming as well as other racing series, such as Formula One, the Champ Car World Series, World Rally, and Grand American Road Racing events.

~~FUEL~~estate assets was $421 million, subject to further adjustment. The consideration at closing was comprised of (i) $225 million in cash, (ii) a $125 million two-year note secured by non-team real estate, (iii) a $40 million four-year note secured by bank letters of credit and (iv) a $31 million three-year note that is convertible, at the Company’s option, into preferred equity in the McCourt Entities if unpaid at maturity. The Company has agreed to remit $50 million during the first two years following the closing of the transaction to reimburse the McCourt Entities for certain pre-existing commitments. Pending the final determination of contractual adjustments, the sale has resulted in an estimated pre-tax loss of $19 million, which was recorded in Other, net in the Company’s results of operations.

~~FUEL,~~In ~~launched~~May on2004, ~~July~~the 1,Company ~~2003~~sold ~~and~~its ~~currently~~40% ~~reaching~~interest ~~approximately~~in ~~4.7~~the ~~million~~Staples ~~U.S.~~Center, ~~cable~~a sports and entertainment ~~DBS~~complex ~~households~~in Los Angeles, isCalifornia, aand ~~24-hour programming~~certain ~~service~~related ~~dedicated~~interests tofor ~~the~~aggregate ~~world~~consideration of ~~extreme~~$128 ~~sports~~million. ~~FUEL~~The ~~covers~~Company ~~both~~has ~~competitive~~recorded ~~and~~a ~~performance~~loss ~~action~~on the sale of the interest in the ~~arenas~~Staples Center of ~~skateboarding,~~approximately ~~surfing,~~$7 ~~BMX,~~million. ~~freestyle~~In ~~motocross~~connection with the sale of this interest, ~~snowboarding~~the ~~and~~Company ~~wakeboarding.~~was ~~Programming~~released ~~includes~~from ~~international extreme~~several ~~sports~~guarantees ~~events~~in ~~and~~the ~~competitions,~~aggregate ~~and~~amount ~~original~~of ~~and~~$22.6 ~~co-produced~~million ~~series~~outstanding at the time of this sale.

~~Fox~~In ~~Sports~~May ~~Digital~~2004, ~~Nets~~the Company acquired a 10% interest in an affiliate of Anschutz Entertainment Group, Inc. that has rights to develop and operate an entertainment and sports complex to be located inside and adjacent to the Millennium Dome in London, England for $25 million.

~~Fox~~In ~~Sports~~September ~~Digital Nets~~2004, ~~currently~~the ~~reaching~~Company ~~approximately~~purchased 2a 14.86% ~~million~~limited ~~digital~~partnership ~~cable~~interest ~~households~~ in the ~~U.S.~~Colorado Rockies, ~~provides~~the ~~out-of-market~~MLB ~~sports~~franchise ~~programming~~in ~~from~~Denver, ~~Fox~~Colorado, ~~Sports~~for ~~Net~~a ~~affiliated~~purchase ~~RSNs~~price toof ~~digital~~$20 ~~cable subscribers in the U~~million.S.

~~Fox~~Affiliate ~~Cable~~Interests ~~Network Ventures~~

~~Fox~~On ~~Cable~~December ~~Network~~22, ~~Ventures~~2003, ~~owns~~News Corporation acquired a 4034% interest in anHughes ~~entity~~Electronics ~~that~~Corporation ~~owns~~(“Hughes”) for total consideration of approximately $6.8 billion. General Motors Corporation (“GM”) sold its 19.8% interest in Hughes to News Corporation in exchange for approximately $3.1 billion in cash, and 28.6 million American Depositary Shares, each ~~operates~~representing ~~the~~four ~~Staples~~News ~~Center~~Corporation preferred limited voting ordinary shares (“News Corporation Preferred ADSs”), avalued ~~sports~~at ~~and~~approximately ~~entertainment~~$800 ~~complex~~million. News Corporation acquired 14.2% of Hughes from the former GM Class H common stockholders in ~~downtown~~exchange ~~Los~~for ~~Angeles,~~approximately ~~California~~102.1 ~~The~~million ~~Staples~~News ~~Center~~Corporation isPreferred ADSs valued at $2.9 billion. Immediately following the ~~home~~acquisition, ofNews Corporation transferred its entire 34% interest in Hughes to the ~~Los~~Company ~~Angeles~~in ~~Kings~~exchange ~~NHL~~for ~~franchise~~two promissory notes totaling $4.5 billion and approximately 74.5 million shares of the ~~Los~~Company’s ~~Angeles~~Class ~~Lakers~~A ~~and~~common stock valued at $2.3 billion. Subsequent to the ~~Los~~above ~~Angeles~~transaction, ~~Clippers~~Hughes ~~NBA~~changed ~~franchises~~its corporate name to The DIRECTV Group, Inc.

~~Fox~~DIRECTV ~~Sports~~is ~~International~~the largest provider of DBS television services and the second largest multichannel video programming distributor (“MVPD”), in the U.S., in each case based on the number of subscribers. DIRECTV provides its customers with access to hundreds of channels of digital-quality video and audio programming that are transmitted directly to its customers’ homes or businesses via high-powered geosynchronous satellites. As of June 30, 2004, DIRECTV had approximately 13.0 million subscribers.

~~Fox~~DIRECTV ~~Sports~~has ~~International~~announced ~~owns~~its ~~Fox~~intentions ~~Sports~~to ~~World,~~focus aon Uthe direct-to-home satellite businesses.S. ~~programming~~In ~~service~~August 2004, DIRECTV sold its approximately 80% interest in ~~the~~PanAmSat ~~English-language~~Corporation ~~devoted~~ to ~~international~~an ~~sports~~affiliate ~~such~~of asKohlberg ~~soccer,~~Kravis ~~rugby~~Roberts ~~and~~& ~~cricket,~~Co. ~~which~~L.P. ~~service~~for isapproximately ~~available~~$2.6 tobillion ~~approximately~~in 18cash.1 ~~million~~DIRECTV ~~cable~~has ~~and~~disclosed ~~DBS~~that ~~subscribers,~~it ~~and~~is ~~Fox~~also ~~Sports~~considering ~~World-Middle~~strategic ~~East,~~alternatives anwith ~~English-language~~regard ~~sports~~to ~~network~~other ~~which airs~~of inits ~~the~~investments ~~Middle~~and operating ~~East~~entities.

Canal Fox. ~~Sports~~The ~~International~~Company, ~~owns~~through ~~an approximate~~its ~~38%~~subsidiary ~~interest in~~ Fox Latin ~~Pan~~ American ~~Sports~~Channel, ~~LLC (“FPAS”)~~Inc., ~~with~~operates ~~Liberty~~Canal ~~Media~~Fox, ~~Corporation~~a ~~(“Liberty”)~~general ~~and~~entertainment ~~Hicks,~~cable ~~Muse,~~and ~~Tate~~satellite &service ~~Furst~~for ~~Incorporated~~Latin ~~owning~~America ~~the~~covering ~~remainder.~~Mexico ~~FPAS~~and ~~owns~~Central and ~~operates~~South ~~Spanish-language~~America. ~~sports businesses,~~Canal ~~including the~~ Fox ~~Sports~~broadcasts ~~Latin~~in ~~America~~the ~~network~~Portuguese ~~(a Spanish-~~language ~~sports~~in ~~network~~Brazil ~~distributed~~and ~~to subscribers~~ in ~~certain~~the ~~Central~~Spanish language ~~and~~in ~~South~~the ~~American~~rest ~~nations outside~~ of ~~Brazil)~~the ~~and~~territory. ~~Fox~~The ~~Sports~~channel’s enprogramming ~~Espanol (a Spanish~~line-~~language~~up ~~sports~~consists ~~network serving~~of ~~5.3~~motion ~~million~~pictures, ~~U.S.~~series ~~cable~~ and ~~DBS~~music ~~households)~~specials.

~~National~~11 ~~Geographic Channel~~

~~The~~LAPTV. Fox LAPTV, L.L.C., a subsidiary of the Company, ~~NBC~~owns a 20.2% equity interest in LAPTV, a partnership which ~~and~~distributes ~~National~~three ~~Geographic~~premium ~~Television~~pay television channels (~~“NGT”)~~Movie ~~own~~City ~~approximately~~East ~~50%~~and West, ~~25%~~Cinecanal East and ~~25%~~West ~~interests,~~and ~~respectively,~~its inmultiplex ~~NGC~~channel ~~Network~~Cinecanal ~~International,~~2) ~~LLC~~and one basic television channel (~~“NGCI”~~The Film Zone East and West), ~~which~~in ~~produces~~Latin ~~the~~America ~~National~~(excluding ~~Geographic~~Brazil). Such channels primarily feature theatrical motion pictures of the Company and three other studio partners in the English language with Spanish subtitles.

9Telecine. The Company, through its subsidiary Fox Latin America, Inc., owns a 12.5% equity interest in Telecine, Ltda., which distributes five premium pay television channels (Telecine Premium, Telecine Action, Telecine Emotion, Telecine Happy and Telecine Classic) in Brazil. Such channels primarily feature theatrical motion pictures of the Company and three other studio partners in the English language with Portuguese subtitles.

~~Table~~Premium Movie Partnership. The Company, through its subsidiary Twentieth Century Fox Pay Television (Australia) Pty Limited, owns a 20% equity interest in The Premium Movie Partnership, which distributes three premium pay television channels (Showtime and its multiplex channel, Showtime 2, and Showtime Greats) in Australia. Such channels primarily feature theatrical motion pictures of ~~Contents~~the Company and three other studio partners.

~~Channel~~Competition for distribution in various international markets, including certain countries in Europe, Asia and Latin America. The National Geographic Channel airs documentary programming on such topics as natural history, adventure, science, exploration and culture. The National Geographic Channel is currently shown in approximately 133 countries internationally, as well as the United States. National Geographic programming is provided in Australia and certain countries in Europe and Scandinavia by a partnership in which British Sky Broadcasting Limited, NBC and NGT are currently partners.

The Company ~~holds~~faces acompetition ~~non-controlling~~from ~~66.67%~~companies ~~interest~~within ~~in NGC Network US, LLC,~~ the ~~producer~~motion ofpicture ~~The~~and ~~National~~television ~~Geographic~~industry ~~Channel~~and inalternative ~~the~~forms ~~U.S.,~~of ~~with~~leisure ~~NGT~~and ~~holding~~entertainment ~~the remaining interest~~activities. The ~~National~~entertainment ~~Geographic~~industry ~~Channel~~is ~~currently~~also ~~reaches~~subject ~~approximately~~to ~~44.2~~rapid developments ~~million~~in ~~U.S.~~technology ~~cable~~ and ~~DBS~~shifting ~~households~~consumer tastes.

~~Fox~~Filmed ~~Movie~~Entertainment ~~Channel~~

~~Fox~~Motion ~~Movie~~picture ~~Channel~~and ~~(“FMC”)~~television production and distribution are highly competitive businesses. The Company competes with other film studios, ~~which~~independent isproduction ~~wholly-owned~~companies byand others for the ~~Company~~acquisition of artistic properties, ~~currently~~ ~~reaches~~the ~~approximately~~services ~~19.4~~of ~~million~~creative ~~U.S.~~and ~~cable~~technical personnel, exhibition outlets and ~~DBS~~the ~~households~~public’s interest in its products. ItThe isnumber ~~Hollywood~~of motion pictures released by the Company’s ~~first~~competitors, ~~and~~particularly ~~only~~the ~~studio-based~~other ~~movie~~major ~~network.~~film ~~FMC~~studios, ~~showcases~~in ~~commercial-free,~~any ~~unedited~~given ~~contemporary~~period ~~hits~~may create an oversupply of product in the market, and that ~~classics~~may ~~from~~reduce the ~~Fox~~Company’s ~~Library,~~shares asof ~~well~~gross ~~as documentaries~~box office admissions and ~~series~~may ~~exploring~~make it more difficult for the ~~movie-making~~Company’s ~~process~~motion pictures to succeed.

~~Los~~The ~~Angeles~~commercial ~~Dodgers~~success of the motion pictures produced and/or distributed by the Company is substantially affected by the public’s often unpredictable response to them. In addition, television networks are now producing more programs internally, which may reduce such networks’ demand for programming from other parties.

~~The~~Competitive ~~Company~~risks ~~owns substantially~~affecting ~~all of~~ the ~~Los~~Company’s ~~Angeles~~home ~~Dodgers~~entertainment ~~MLB~~business ~~franchise~~include ~~(the~~competition ~~“Dodgers”)~~among ~~and~~home ~~Dodger~~video ~~Stadium.~~formats, ~~The~~such ~~Dodgers~~as ~~are~~DVDs ~~currently~~and with inother ~~their~~methods ~~113th~~of ~~year~~distribution, insuch ~~the~~as ~~National~~video-on-demand, ~~League~~as ~~and~~well inas ~~each~~risks ofassociated ~~the~~with ~~last~~controlling ~~seven~~unauthorized ~~seasons~~copying ~~have~~and ~~achieved~~distribution ~~attendance~~ of ~~over three~~the ~~million~~Company’s ~~fans at Dodger Stadium~~programs.

~~Canal~~Television ~~Fox~~ Stations and Television Broadcast Network

The ~~Company,~~network ~~through~~television ~~its~~broadcasting ~~subsidiary~~business ~~Fox~~is ~~Latin~~highly ~~American Channel, Inc~~competitive., ~~operates~~FOX ~~Canal~~directly ~~Fox,~~competes afor ~~general~~programming ~~entertainment cable~~ and ~~satellite service~~ for ~~Latin~~viewers ~~America~~with ~~covering~~ABC, ~~Mexico~~NBC, CBS, and ~~Central~~the WB and ~~South~~UPN ~~America~~networks. ~~Canal~~ABC, ~~Fox~~NBC and CBS each broadcasts ina ~~the~~significantly ~~Portuguese~~greater ~~language~~number inof ~~Brazil~~hours of programming than FOX and inaccordingly, ~~the~~may ~~Spanish~~be ~~language~~able to designate or change time periods in ~~the~~which ~~rest~~programming is to be broadcast with greater offlexibility ~~the~~than ~~territory~~FOX. ~~The~~FOX ~~channel’s~~also ~~programming~~competes ~~line~~with other non-upnetwork ~~consists~~sources of ~~motion~~television ~~pictures~~service, ~~series~~including cable television and ~~music~~DBS ~~specials~~services. Other sources of competition may include home video exhibition, the Internet and home computer usage. In addition, future technological developments may affect competition within the television marketplace.

~~LAPTV~~FOX competes for advertising revenues with the other broadcast networks, as well as with all other forms of advertising. Each of ABC, NBC and CBS has a greater number of affiliates with VHF signals, which are generally considered to have greater reach in their markets and, therefore, are more appealing to advertisers.

~~Fox~~12 LAPTV, L.L.C., a subsidiary of the Company, owns a 22.5% equity interest in LAPTV, a partnership which distributes three premium pay television channels (Movie City East and West, Cinecanal East and West and its multiplex channel Cinecanal 2) and one basic television channel (The Film Zone East and West) in Latin America (excluding Brazil). Such channels primarily feature theatrical motion pictures of the Company and three other studio partners in the English language with Spanish subtitles.

~~Telecine~~In addition, each of the Fox Television Stations competes for audiences and advertising revenues with radio and television stations and cable systems in its market area and with other advertising media such as newspapers, magazines, outdoor advertising, direct mail and Internet websites. All of the Fox Television Stations are located in highly competitive markets. Additional elements which are material to the competitive position of television stations include management experience, authorized power and assigned frequency. Competition for sales of broadcast advertising time is based primarily on the anticipated and actually delivered size and demographic characteristics of audiences as determined by rating service, price, the time of day when the advertising is to be broadcast, competition from the other broadcast networks, cable television systems, DBS services and other media and general economic conditions. Competition for audiences is based primarily on the selection of programming, the acceptance of which is dependent on the reaction of the viewing public which is often difficult to predict.

~~The~~Cable ~~Company,~~Network ~~through~~Programming its subsidiary Fox Latin America, Inc., owns a 12.5% equity interest in Telecine, LLC, which distributes five premium pay television channels (Telecine Premium, Telecine Action, Telecine Emotion, Telecine Happy and Telecine Classic) in Brazil. Such channels primarily feature theatrical motion pictures from the Fox Library and three other studio partners in the English language with Portuguese subtitles.

~~Hughes~~General

InThe ~~April~~cable ~~2003,~~network ~~News~~programming ~~Corporation,~~business ~~General~~is ~~Motors~~another ~~Corporation~~highly ~~(“GM”)~~competitive field. Cable ~~and~~programming ~~Hughes~~services ~~Electronics~~compete ~~Corporation~~for ~~(“Hughes”)~~distribution ~~reached~~and, anwhen ~~agreement~~distribution inis ~~which~~obtained, ~~News~~compete ~~Corporation~~for ~~would~~viewers ~~acquire~~and ~~34%~~advertisers ofwith ~~Hughes.~~over-the-air ~~News~~broadcast ~~Corporation~~television, ~~will~~radio, ~~acquire~~print ~~GM’s~~media, ~~approximate~~motion ~~19.9%~~picture ~~interest~~theaters, invideocassettes, ~~Hughes~~DVDs ~~for~~and ~~$3.8~~other ~~billion,~~sources of information ~~which~~and ~~$768~~entertainment. ~~million of~~Important competitive factors are the ~~consideration~~prices ~~may~~charged befor ~~paid~~programming, inthe ~~News~~quantity, ~~Corporation~~quality ~~ADRs.~~and ~~News~~variety ~~Corporation~~of ~~will~~programming ~~acquire~~offered ~~through~~and athe ~~merger~~effectiveness anof ~~additional~~marketing 14efforts.1% ofMore ~~Hughes~~generally, ~~for~~the ~~approximately~~Company’s ~~$2.7~~cable networks ~~billion~~compete ~~that~~with isvarious ~~payable,~~other atleisure-time ~~News~~activities ~~Corporation’s~~such ~~option~~as home videos, inmovie ~~cash~~theaters, personal computers and other alternative sources of entertainment and information.

10Fox News Channel

~~Table~~Fox News Channel’s primary competition comes from the cable networks CNN, MSNBC, CNBC and Headline News. Fox News also competes for viewers and advertisers within a broad spectrum of ~~Contents~~television networks, including other cable networks and free over-the-air broadcast television.

~~News~~Sports ~~Corporation~~Programming ADRs or a combination thereof. Simultaneously with the closing of this transaction, News Corporation will transfer its 34% ownership interest in Hughes to the Company in exchange for promissory notes representing $4.5 billion and approximately 74.2 million shares of the Company’s Class A Common Stock, thereby increasing News Corporation’s ownership interest in the Company from 80.6% to approximately 82%. News Corporation’s voting percentage will remain at 97%. The closing of this transaction is subject to a number of conditions, including approval by GM’s shareholders and regulatory approvals.

~~Hughes~~A isnumber aof ~~provider~~basic ofand ~~digital~~pay television ~~entertainment, broadband~~programming ~~satellite~~services ~~networks~~(such ~~and~~as ~~services,~~ESPN) ~~and~~as ~~global~~well ~~video~~as free over-the-air stations and ~~data~~broadcast ~~broadcasting.~~networks ~~Hughes~~provide programming that targets the Fox Sports RSNs’ ~~businesses~~audience. ~~include:~~Fox ~~DIRECTV,~~Sports anNet ~~all-digital~~is ~~multi-channel~~currently ~~entertainment~~the only programming service indistributing ~~the~~a ~~United~~full ~~States,~~range ~~and~~of ~~DIRECTV~~sports ~~Latin~~programming ~~America,~~on both a ~~digital~~national ~~multi-channel service~~and ~~provider~~regional inlevel. ~~Latin~~On ~~America;~~a ~~Hughes~~national ~~Network Systems~~level, aFox ~~provider~~Sports ofNet’s ~~broadband~~primary ~~satellite~~competitor ~~networks~~is ESPN, and ~~services~~ to ~~both~~a ~~consumers~~lesser ~~and~~extent, ~~enterprises;~~ESPN2. ~~and~~In ~~PanAmSat~~regional ~~Corporation~~markets, athe ~~publicly~~Fox ~~held~~Sports ~~company~~RSNs ofcompete ~~which~~with ~~Hughes~~other ~~owns~~regional ~~approximately 81%~~sports networks, ~~which~~including isthose aoperated ~~provider~~by ofteam ~~commercial~~owners, ~~satellite-based~~local ~~video~~broadcast ~~and~~television ~~data~~stations and ~~broadcast~~other ~~services~~sports programming providers and distributors.

~~Competition~~In addition, the Fox Sports RSNs and Fox Sports Net compete, to varying degrees, for sports programming rights. The Fox Sports RSNs compete for local and regional rights with local broadcast television stations, other local and regional sports networks and the owners of distribution outlets such as cable television systems. Fox Sport Net competes for national rights with the national broadcast television networks, a number of national cable services that specialize in or carry sports programming, and television “superstations,” which distribute sports and other programming to cable television systems by satellite, and with independent syndicators that acquire and resell such rights nationally, regionally and locally. The owners of distribution outlets such as cable television systems may also contract directly with the sports teams in their service area for the right to distribute a number of such teams’ games on their systems.

The ~~Company~~ ~~faces~~owners ~~competition~~of ~~from~~teams ~~companies~~may ~~within~~also ~~the~~launch ~~motion~~their ~~picture~~own RSN and contract with cable television ~~industry~~systems ~~and~~for ~~alternative~~carriage. ~~forms~~In ofcertain ~~leisure~~markets, ~~and~~the ~~entertainment~~owners ~~activities.~~of ~~The~~distribution ~~entertainment~~outlets, ~~industry~~such as iscable television systems, also ~~subject~~own toone ~~rapid~~or ~~developments~~more of the professional teams in ~~technology~~the region, increasing their ability to launch competing networks and ~~shifting consumer~~thereby ~~tastes.~~limiting the professional sports rights available for acquisition by the Fox Sports RSNs.

~~Filmed~~13 ~~Entertainment~~

~~Motion~~FX picture and television production and distribution are highly competitive businesses. The Company competes with other film studios, independent production companies and others for the acquisition of artistic properties, the services of creative and technical personnel, exhibition outlets and the public’s interest in its products. The number of motion pictures released by the Company’s competitors, particularly the other major film studios, in any given period may create an oversupply of product in the market, and that may reduce the Company’s shares of gross box office admissions and may make it more difficult for the Company’s motion pictures to succeed.

~~The~~FX ~~commercial~~faces ~~success~~competition offrom ~~the~~a ~~motion~~number ~~pictures~~of ~~produced~~basic and~~/or~~ ~~distributed~~pay bytelevision programming services (such as the ~~Company~~USA isNetwork, ~~substantially~~Turner ~~affected~~Network byTelevision, ~~the~~HBO ~~public’s~~and ~~often~~Showtime) as well as free ~~unpredictable~~over-the-air ~~response~~broadcast tonetworks ~~them.~~that Inprovide ~~addition,~~programming ~~television~~that ~~networks~~targets ~~are~~the ~~now~~same ~~producing~~viewing ~~more~~audience ~~programs~~as ~~internally,~~FX. ~~which~~FX ~~may~~also ~~reduce~~faces ~~such~~competition ~~networks’~~in ~~demand~~the ~~for~~acquisition ~~programming~~of ~~from~~distribution ~~other~~rights ~~parties~~to programming.

~~Competitive~~Other ~~risks~~Networks affecting the Company’s home entertainment business include competition among home video formats, such as DVDs and with other methods of distribution, such as video-on-demand, as well as risks associated with controlling copying and unauthorized distribution of the Company’s programs.

~~Television~~Generally, ~~Stations~~Fox’s cable networks face competition from other national and ~~Television~~regional ~~Broadcast~~cable ~~Network~~and satellite networks, especially those with programming philosophies directly competitive with those of Fox’s cable networks, such as the Discovery Channel (which competes with National Geographic Channel).

~~The~~Regulation network television broadcasting business is highly competitive. FOX directly competes for programming and for viewers with ABC, NBC, CBS, and the WB and UPN networks. ABC, NBC and CBS each broadcasts a significantly greater number of hours of programming than FOX and accordingly, may be able to designate or change time periods in which programming is to be broadcast with greater flexibility than FOX. FOX also competes with other non-network sources of television service, including cable television and DBS services. Other sources of competition may include home video exhibition, the Internet and home computer usage. In addition, future technological developments may affect competition within the television marketplace.

~~FOX~~Filmed ~~competes~~Entertainment for advertising revenues with the other broadcast networks, as well as with all other forms of advertising. Each of ABC, NBC and CBS has a greater number of affiliates with VHF signals, which are generally considered to have greater reach in their markets and, therefore, are more appealing to advertisers.

InFFE ~~addition,~~is subject ~~each~~to the provisions of so-called “trade practice laws” in effect in 25 states relating to theatrical distribution of motion pictures. These laws substantially restrict the ~~Fox~~licensing ~~Television~~of ~~Stations~~motion ~~competes~~pictures ~~for~~unless theater owners are first ~~audiences~~invited ~~and~~to ~~advertising~~attend ~~revenues~~a ~~with~~screening ~~radio~~of such motion pictures and, ~~television~~in ~~stations~~certain instances, also prohibit payment of advances and ~~cable~~guarantees ~~systems~~to inmotion ~~its~~picture ~~market~~distributors ~~area~~by exhibitors. Further, pursuant to various consent judgments, FFE and ~~with~~certain other motion ~~advertising~~picture ~~media~~companies ~~such~~are assubject ~~newspapers~~to certain restrictions on their trade practices in the U.S., including a requirement to offer motion pictures for exhibition to theaters on a theater-by-theater basis and, in some cases, a prohibition against the ownership of theaters.

11Television Stations and Television Broadcast Network

~~Table~~In general, the television broadcast industry in the U.S. is highly regulated by Federal laws and regulations issued and administered by various Federal agencies, including the FCC. The FCC regulates television broadcast stations pursuant to the Communications Act of ~~Contents~~1934, as amended (the “Communications Act”). The Communications Act permits the operation of television broadcast stations only in accordance with a license issued by the FCC upon a finding that grant of the license would serve the public interest, convenience and necessity. The FCC grants television broadcast station licenses for specific periods of time and, upon application, may renew the licenses for additional terms. Under the Communications Act, television broadcast licenses may be granted for a maximum permitted term of eight years. Generally, the FCC renews broadcast licenses upon finding that (i) the television station has served the public interest, convenience and necessity, (ii) there have been no serious violations by the licensee of the Communications Act or FCC rules and regulations, and (iii) there have been no other violations by the licensee of the Communications Act or FCC rules and regulations which, taken together, indicate a pattern of abuse. After considering these factors, the FCC may grant the license renewal application with or without conditions, including renewal for a term shorter than the maximum otherwise permitted, or hold an evidentiary hearing.

~~magazines,~~In ~~outdoor~~February ~~advertising~~1998, ~~direct~~the ~~mail~~FCC ~~and~~adopted ~~Internet~~a ~~websites.~~final ~~All~~table of ~~the~~digital ~~Fox~~channel ~~Television~~allotments ~~Stations~~and ~~are~~rules ~~located~~for inthe ~~highly~~implementation ~~competitive~~of ~~markets.~~digital ~~Additional~~television ~~elements~~(“DTV”) ~~which~~service ~~are~~(including ~~material~~high-definition totelevision) in the ~~competitive~~United ~~position~~States. The digital table of allotments provides each existing full power television ~~stations~~station ~~include~~licensee ~~management~~or ~~experience~~permittee, ~~authorized~~including ~~power~~the ~~and~~35 ~~assigned~~Fox ~~frequency.~~Television ~~Competition~~Stations, ~~for~~with ~~sales~~a second broadcast channel in order to facilitate a transition from analog to digital transmission, conditioned upon the surrender of ~~broadcast~~one ~~advertising~~of ~~time~~the ischannels ~~based~~at ~~primarily~~the onend of the ~~anticipated~~DTV transition period. The FCC and ~~actually~~ ~~delivered~~Congress ~~size~~are considering several regulatory and ~~demographic~~legislative ~~characteristics~~proposals ofaimed ~~audiences~~at asensuring ~~determined~~a byspeedy ~~various~~transition ~~rating~~to ~~services,~~DTV ~~price,~~and at establishing a firm timeframe for the ~~time~~surrender of ~~day~~one ~~when~~of the ~~advertising~~two ischannels currently allocated to beeach ~~broadcast,~~full ~~competition~~power ~~from~~television station. All 35 of the ~~other~~Fox ~~broadcast~~Television ~~networks,~~Stations have ~~cable~~launched ~~television~~digital ~~systems~~facilities. Under FCC rules, ~~DBS~~ ~~services~~television ~~and~~stations ~~other~~may ~~media~~use ~~and~~their ~~general~~second ~~economic~~channel ~~conditions.~~to ~~Competition~~broadcast ~~for~~either ~~audiences~~one isor ~~based~~two ~~primarily~~streams onof ~~the~~“high ~~selection~~definition” digital programming or to “multicast” several streams of standard definition digital programming, ~~the~~or ~~acceptance~~a mixture of ~~which~~both. isBroadcasters ~~dependent~~may onalso deliver data over these channels, provided that such supplemental services do not derogate the ~~reaction~~mandated, offree over-the-air ~~viewing~~program ~~public~~service. ~~which~~The Company is ~~often~~currently formulating plans for use of its digital channels. It is difficult to ~~predict~~ assess how digital television will affect the Company’s broadcast business with respect to other broadcasters and video program providers.

~~Cable~~14 ~~Network Programming~~

~~General~~Under the Communications Act, a broadcast license may not be granted to or held by any corporation that has more than one-fifth of its capital stock owned or voted by non-U.S. citizens or entities or their representatives, by foreign governments or their representatives, or by non-U.S. corporations. The Communications Act further provides that no FCC broadcast license may be granted to any corporation directly or indirectly controlled by any other corporation of which more than one-fourth of its capital stock is owned of record or voted by non-U.S. citizens if the FCC finds the public interest will be served by the refusal of such license. In 1995, the FCC acknowledged that News Corporation owns the vast preponderance of equity of the corporate parent of the Fox Television Stations. The FCC also concluded that Mr. K. Rupert Murdoch, Chairman and Chief Executive of News Corporation, a U.S. citizen, controls the corporate licensee and thus found the level of alien equity to be consistent with the public interest. Mr. Murdoch has 76% voting control of Fox Television Holdings, Inc., the corporate parent of the Fox Television Stations, and News Corporation will continue to hold indirectly stock representing the majority of equity of the corporate licensee. The Restated Certificate of Incorporation of Fox Television Holdings, Inc. provides that the voting capital stock of the company shall only be owned by persons who are citizens of, or incorporated entities formed in, the United States, or would not otherwise disqualify such company or any subsidiary of such company from being issued a television broadcast license by the FCC.

~~The~~On ~~cable~~June ~~network~~2, ~~programming~~2003, ~~business~~the FCC isconcluded ~~another~~the ~~highly~~2002 ~~competitive~~biennial ~~field. Cable~~review ~~programming~~of ~~services~~its ~~compete~~broadcast ~~for~~ownership ~~distribution~~regulations ~~and,~~required ~~when~~by ~~distribution~~the is1996 ~~obtained,~~Telecom ~~compete~~Act ~~for~~by ~~viewers~~amending ~~and~~its ~~advertisers~~rules ~~with~~governing ~~over-~~the~~-air~~ ~~broadcast~~ownership of television, and radio, ~~print~~stations ~~media,~~and ~~motion~~by ~~picture~~replacing ~~theaters,~~its ~~videocassettes,~~newspaper/broadcast ~~DVDs~~cross-ownership ban and ~~other~~the ~~sources of~~radio/television ~~information~~cross-ownership ~~and~~restriction ~~entertainment.~~with ~~Important~~a ~~competitive~~new ~~factors~~set ~~are~~of ~~the~~cross-media ~~prices~~ownership ~~charged~~limits ~~for~~(the ~~programming,~~“June ~~the~~2003 ~~quantity,~~Order”). ~~quality~~Several ~~and~~parties ~~variety~~appealed ofthe ~~programming~~FCC’s ~~offered~~biennial ~~and~~review ~~the~~decision ~~effectiveness~~and/or ofpetitioned ~~marketing~~the ~~efforts.~~FCC ~~More~~to ~~generally,~~reconsider the new ~~Company’s~~rules. ~~cable networks~~On ~~compete~~September ~~with~~3, ~~various~~2003, ~~other~~the ~~leisure-time~~United ~~activities~~States ~~such~~Court asof ~~home~~Appeals ~~videos,~~for ~~movie~~the ~~theaters,~~Third ~~personal~~Circuit ~~computers~~issued ~~and~~an ~~other~~Order ~~alternative~~staying ~~sources~~the effectiveness of ~~entertainment~~the ~~and~~new ~~information~~rules.

~~Sports~~In ~~Programming~~the Consolidated Appropriations Act of 2004, Congress increased the national television station ownership cap to permit an entity to have an attributable ownership interest in an unlimited number of television stations nationally so long as the audience reach of such stations does not exceed, in the aggregate and after the application of the UHF Discount, 39% of U.S. television households. The revised national cap permits Fox Television Stations to retain its current complement of owned television stations.

AOn ~~number~~June 24, 2004, the U.S. Court of ~~basic~~Appeals ~~and~~for ~~pay~~the ~~television~~Third ~~programming~~Circuit ~~services~~remanded ~~(such~~the asFCC’s ~~ESPN)~~June as2003 ~~well~~Order asfor ~~free~~additional ~~over-~~justification or modification of the~~-air~~ ~~stations~~revisions the FCC had made to its ownership regulations. The Court’s September 3, 2003 stay remains in effect pending the remand, and therefore the FCC broadcast ~~networks~~ownership ~~provide~~rules ~~programming~~ that ~~targets~~were operative prior to the ~~Fox~~June ~~Sports~~2003 ~~RSNs’~~Order ~~audience~~continue to govern station multiple and cross-ownership. ~~Fox~~Those ~~Sports~~rules ~~Net~~(i) permit isthe ~~currently~~ownership of two television stations with overlapping coverage areas if the ~~only~~stations ~~programming~~are ~~service~~in ~~distributing~~separate aDMAs; (ii) permit the ownership of two stations in the same DMA if their Grade B coverage areas do not overlap or if eight independently owned full ~~range~~power television stations will remain in the DMA after the stations that had been independently owned become commonly owned, and one of ~~sports~~the ~~programming~~merged stations is not among the top four-ranked stations in the market, based on ~~both~~audience share; and (iii) prohibit the common ownership of a ~~national~~broadcast station and ~~regional~~a ~~level~~newspaper in the same market. OnFox aTelevision ~~national~~Stations ~~level,~~is in compliance with the rules governing ownership of multiple stations in the same market. Fox ~~Sports~~Television ~~Net’s~~Stations ~~primary~~retains ~~competitor~~an isattributable ~~ESPN,~~interest in the New York Post and two television stations in the New York DMA pursuant to a ~~lesser~~temporary ~~extent,~~waiver ~~ESPN2~~from the FCC. InNotwithstanding ~~regional~~the ~~markets~~Third Circuit decision, legislative measures have been introduced in Congress to repeal or prevent the ~~Fox~~implementation ~~Sports~~of ~~RSNs~~the ~~compete~~June ~~with~~2003 ~~other~~Order. ~~regional~~It ~~sports~~is ~~networks,~~not ~~including~~possible ~~those~~to ~~operated~~predict bythe ~~team~~timing ~~owners~~or ~~and~~outcome ~~other~~of ~~sports~~the ~~programming~~FCC’s ~~providers~~action ~~and~~on ~~distributors~~remand, Congressional action or their effect on the Company.

InFCC ~~addition,~~regulations implementing the ~~Fox~~1992 ~~Sports~~Cable ~~RSNs~~Act ~~and~~require ~~Fox~~each ~~Sports~~television ~~Net~~broadcaster ~~compete,~~ to ~~varying degrees~~elect, at ~~for~~three-year ~~sports programming rights. The Fox Sports RSNs compete for local and regional rights with local broadcast television stations~~intervals, ~~other~~either ~~local~~to ~~and~~(i) ~~regional~~require ~~sports~~carriage ~~networks and the owners~~ of ~~distribution~~its ~~outlets~~signal ~~such~~by as cable ~~television~~ systems. ~~Fox~~in ~~Sport Net competes for national rights with~~ the ~~national~~station’s ~~broadcast~~market ~~television~~(“must ~~networks,~~carry”) aor ~~number~~(ii) ofnegotiate ~~national~~the ~~cable~~terms ~~services~~on ~~that~~which ~~specialize~~such inbroadcast orstation ~~carry~~would ~~sports~~permit ~~programming,~~transmission ~~and~~of ~~television~~its ~~“superstations,”~~signal ~~which~~by ~~distribute~~the ~~sports and other programming to~~ cable ~~television~~ systems bywithin ~~satellite,~~its ~~and~~market ~~with~~(“retransmission ~~independent~~consent”). ~~syndicators~~The ~~that~~FCC ~~acquire~~has ~~and~~initiated ~~resell~~a ~~such~~rulemaking ~~rights~~proceeding ~~nationally,~~to ~~regionally~~determine ~~and~~carriage ~~locally.~~requirements ~~The~~for ~~owners~~digital ofbroadcast ~~distribution~~television ~~outlets~~signals ~~such~~on as cable ~~television~~ systems, ~~may also~~including ~~contract~~carriage ~~directly~~during ~~with~~ the ~~sports~~period ~~teams in their service area for the right to distribute a number~~ of ~~such teams’ games on their systems.~~

~~The~~15 owners of teams may also launch their own RSN and contract with cable television systems for carriage. In certain markets, the owners of distribution outlets, such as cable television systems, also own one or more of the professional teams in the region, increasing their ability to launch competing networks and thereby limiting the professional sports rights available for acquisition by the Fox Sports RSNs.

FXtransition from analog to digital transmission. The Satellite Home Viewer Improvement Act of 1999 (“SHVIA”) requires satellite carriers, as of January 1, 2002, to carry upon request all television stations located in markets in which the satellite carrier retransmits at least one local station pursuant to the statutory copyright license provided by SHVIA. FCC regulations implementing this statutory provision require affected stations to either elect mandatory carriage at the same three year intervals applicable to cable must carry or to negotiate carriage terms with satellite operators.

FXFederal ~~faces~~legislation ~~competition~~enacted ~~from~~in a1990 ~~number~~limits the amount of ~~basic~~commercial matter that may be broadcast during programming designed for children 12 years of age and ~~pay~~younger. In addition, under FCC license renewal processing guidelines, television stations are generally required to broadcast a minimum of three hours per week of programming, ~~services~~which, ~~(such~~among other requirements, must serve, as ~~USA~~a ~~Network~~“significant purpose,” the educational and ~~Turner~~informational ~~Network~~needs ~~Television)~~of aschildren ~~well~~16 asyears ~~free~~of ~~over-the-air~~age ~~broadcast~~and ~~networks~~under. ~~provide~~A ~~programming~~television ~~that~~station ~~targets~~found not to have complied with the ~~same~~programming ~~viewing~~requirements ~~audience~~or commercial aslimitations ~~FX.~~could FXface ~~also~~sanctions, ~~faces~~including ~~competition~~monetary infines and the ~~acquisition~~possible non-renewal of ~~distribution~~its ~~rights to programming~~license.

12In March 2004, the FCC announced a new policy regarding enforcement of the prohibition against the broadcast of indecent programming on television and radio stations. Under the new policy, the single use of a certain expletive, or variations of that expletive, will be deemed “indecent,” regardless of context. The FCC also warned broadcasters that serious multiple violations of the indecency prohibition could lead to license revocation proceedings, and that fines could be imposed for each indecent utterance in a single broadcast. The Company and other broadcasters, among others, have asked the FCC to reconsider this new policy on First Amendment grounds.

~~Table~~Several bills have been introduced in Congress relating to program content, including (i) a bill that would increase the fines for the broadcast of ~~Contents~~obscenity, indecency or profanity to $275,000 per violation up to a maximum of $3 million for a continuing violation; and (ii) a bill that would require the FCC to assess and report to Congress on the effectiveness of the V Chip ratings/blocking technology with respect to televised violence, and, if the V Chip technology is deemed ineffective, to adopt a rule prohibiting the distribution of violent programming on broadcast stations and cable during the hours when children are likely to comprise a substantial portion of the audience. It is not possible to predict the timing or outcome of the FCC’s reconsideration of its new indecency policy, of Congressional action on the pending program content-related legislation or of their effect on the Company.

~~Fox~~The ~~News~~FCC ~~Channel~~continues to enforce strictly its regulations concerning political advertising, children’s television, equal employment opportunities, environmental concerns, technical operating matters and antenna tower maintenance. In addition, every two years beginning in 2000, FCC regulations require increased amounts of closed captioning (the current level is 1,350 hours of programming per channel per quarter). Although not required by FCC regulation, the Company has committed to provide program ratings information for its broadcast network programming for use in conjunction with V Chip technology. FCC regulations governing network affiliation agreements mandate that television broadcast station licensees retain the right to reject or refuse network programming in certain circumstances or to substitute programming that the licensee reasonably believes to be of greater local or national importance. Violation of FCC regulations can result in substantial monetary forfeitures, periodic reporting conditions, short-term license renewals and, in egregious cases, denial of license renewal or revocation of license.

~~Fox~~Cable ~~News~~Network ~~Channel’s~~Programming primary competition comes from the cable networks CNN, MSNBC, CNBC and Headline News. Fox News also competes for viewers and advertisers within a broad spectrum of television networks, including other cable networks and free over-the-air broadcast television.

~~Regulation~~FCC regulations adopted pursuant to the 1992 Cable Act (the “Program Access Rules”) prevent a cable operator that has an attributable interest (including voting or non-voting stock ownership of 5% or more or limited partnership equity interests of 5% or more) in a programming vendor from exercising undue or improper influence over the vendor in its dealings with competitors to cable. The Program Access Rules also prohibit a cable programmer in which a cable operator has an attributable interest from entering into exclusive contracts with any cable operator or from discriminating among competing MVPDs in the price, terms and conditions of sale or delivery of

~~Filmed~~16 ~~Entertainment~~

~~FFE~~programming. isAs ~~subject~~a toresult ~~the~~of ~~provisions~~Liberty’s ofownership ~~so-called~~interest ~~“trade~~in ~~practice~~News ~~laws”~~Corporation, inCablevision’s ~~effect~~interest in 25RPP ~~states~~and the ~~relating~~conditions toimposed ~~theatrical~~on ~~distribution~~the ofCompany ~~motion~~by ~~pictures.~~the ~~These~~FCC ~~laws~~in ~~substantially~~connection ~~restrict~~with ~~the~~News ~~licensing~~Corporation’s acquisition of ~~motion~~an ~~pictures~~interest ~~unless~~in ~~theater owners~~Hughes ~~are~~Electronics ~~first~~Corporation, ~~invited~~cable tonetworks ~~attend~~operated aby ~~screening~~the ofFox ~~such~~Cable ~~motion~~Networks ~~pictures~~Group and, inFox ~~certain~~News ~~instances,~~are ~~also~~subject ~~prohibit~~to ~~payment~~the ofProgram Access ~~advances~~Rules. ~~and~~These ~~guarantees~~regulations totherefore ~~motion~~restrict ~~picture~~the ~~distributors~~ability byof ~~exhibitors.~~the ~~Further,~~Company’s ~~pursuant~~cable programming services to ~~various~~enter ~~consent~~into ~~judgments,~~exclusive ~~FFE~~contracts. ~~and certain~~The ~~other~~rules ~~motion~~also ~~picture~~permit ~~companies~~MVPDs ~~are~~(such ~~subject~~as tocable ~~certain~~operators, ~~restrictions~~multi-channel onmulti-point ~~their~~distribution ~~trade~~services (“MMDS”), ~~practices~~satellite inmaster ~~the~~antenna ~~U.S.~~television services (“SMATV”), ~~including~~DBS aand ~~requirement~~direct-to-home operators) to ~~offer~~bring ~~motion~~complaints ~~pictures~~against ~~for~~the ~~exhibition~~Company to ~~theaters~~the onFCC acharging ~~theater-by-theater~~they ~~basis~~are ~~and,~~unable into ~~some~~obtain ~~cases,~~the ~~a prohibition~~affected ~~against~~programming ~~the~~networks ~~ownership~~on nondiscriminatory ofterms ~~theaters~~and conditions.

~~Television~~The ~~Stations~~FCC’s ~~and~~regulations concerning ~~Television~~the ~~Broadcast~~commercial ~~Network~~limits in children’s programs also apply to certain cable television programming services carried by cable system operators. The Company provides V Chip program ratings information for many of its cable programming networks. The Company must provide increased closed captioning of its cable programming services to comply with FCC regulations, which could increase its operating expenses.

InProgram ~~general,~~Access ~~the television~~Conditions broadcast industry in the U.S. is highly regulated by Federal laws and regulations issued and administered by various Federal agencies, including the FCC. The FCC regulates television broadcast stations pursuant to the Communications Act of 1934, as amended (the “Communications Act”). The Communications Act permits the operation of television broadcast stations only in accordance with a license issued by the FCC upon a finding that grant of the license would serve the public interest, convenience and necessity. The FCC grants television broadcast station licenses for specific periods of time and, upon application, may renew the licenses for additional terms. Under the Communications Act, television broadcast licenses may be granted for a maximum permitted term of eight years. Generally, the FCC renews broadcast licenses upon finding that (i) the television station has served the public interest, convenience and necessity, (ii) there have been no serious violations by the licensee of the Communications Act or FCC rules and regulations, and (iii) there have been no other violations by the licensee of the Communications Act or FCC rules and regulations which, taken together, indicate a pattern of abuse. After considering these factors, the FCC may grant the license renewal application with or without conditions, including renewal for a term shorter than the maximum otherwise permitted, or hold an evidentiary hearing.

In ~~February~~connection ~~1998,~~with ~~the~~its ~~FCC~~approval ~~adopted~~of athe ~~final~~transfer ~~table~~ of ~~digital~~licenses ~~channel~~controlled ~~allotments and~~by ~~rules~~Hughes ~~for~~Electronics ~~the~~Corporation ~~implementation~~to ofNews ~~digital~~Corporation, ~~television~~the ~~(“DTV”)~~FCC ~~service~~imposed ~~(including~~the ~~high-definition~~following ~~television)~~conditions in on the ~~United~~Company ~~States.~~relating ~~The~~to ~~digital~~the ~~table~~carriage ofand ~~allotments~~availability ~~provides~~of ~~each~~its ~~existing~~broadcast ~~full~~and ~~power~~cable ~~television~~programming ~~station~~services: ~~licensee~~(i) orextended ~~permittee, including~~ the 35requirements ~~Fox~~of ~~Television~~the ~~Stations,~~Program ~~with~~Access aRules ~~second~~to ~~broadcast~~DIRECTV; ~~channel~~(ii) inextended ~~order~~the tonon-discrimination ~~facilitate~~requirements aof ~~transition~~the ~~from~~Program ~~analog~~Access Rules to ~~digital~~any ~~transmission,~~television ~~conditioned~~station ~~upon~~owned ~~the~~and ~~surrender~~operated ofor ~~one~~represented ofby the ~~channels~~Company atwith ~~the~~respect ~~end~~to ofnegotiations ~~the~~or ~~DTV~~agreements ~~transition~~for ~~period.~~retransmission ~~All~~consent, ~~35 of~~and required the ~~Fox~~Company ~~Television~~to ~~Stations~~negotiate ~~have~~in ~~launched~~“good ~~digital~~faith” ~~facilities.~~over ~~Under~~retransmission ~~FCC~~consent rights ~~rules,~~for ~~television~~as ~~stations~~long ~~may~~as ~~use~~the ~~their~~Program ~~second~~Access ~~channel~~Rules toare ~~broadcast~~in ~~either~~effect; ~~one~~(iii) orrequired ~~two~~the ~~streams~~Company ofto ~~“high~~enter ~~definition”~~into ~~digital~~commercial ~~programming~~arbitration orif tonegotiations ~~“multicast” several~~with ~~streams~~an ofMVPD ~~standard~~over ~~definition~~retransmission ~~digital~~consent ~~programming~~for orits atelevision ~~mixture~~stations’ ofsignals ~~both.~~and/or ~~Broadcasters~~carriage ~~may~~of ~~also~~the regional ~~deliver~~sports ~~data~~networks ~~over~~it ~~these channels~~owns, ~~provided~~controls ~~that~~or ~~such~~manages ~~supplemental~~reach ~~services~~an doimpasse; ~~not~~and ~~derogate~~(iv) prohibited the ~~mandated,~~Company ~~free~~from ~~over-the-air~~unduly ~~program~~or ~~service.~~improperly ~~The Company~~influencing isthe ~~currently~~decision ~~formulating~~of ~~plans~~any ~~for~~affiliated ~~use~~program ofrights ~~its~~holder ~~digital~~(a ~~channels.~~program Itrights isholder ~~difficult~~that toholds ~~assess~~an ~~how~~attributable interest ~~digital~~in ~~television~~the ~~will~~Company ~~affect~~or in which the Company’s ~~broadcast~~holds ~~business~~an ~~with~~attributable ~~respect~~interest) to ~~other~~sell ~~broadcasters~~programming to an unaffiliated MVPD, or the prices, terms and ~~video~~conditions ~~program~~of ~~providers.~~such a sale.

~~Under~~Internet the Communications Act, a broadcast license may not be granted to or held by any corporation that has more than one-fifth of its capital stock owned or voted by non-U.S. citizens or entities or their representatives, by foreign governments or their representatives, or by non-U.S. corporations. The Communications Act further provides that no FCC broadcast license may be granted to any corporation directly or indirectly controlled by any other corporation of which more than one-fourth of its capital stock is owned of record or voted by non-U.S. citizens if the FCC finds the public interest will be served by the refusal of such

The Children’s Online Privacy Protection Act of 1998 (“COPPA”) prohibits web sites from collecting personally identifiable information online from children under age 13 without prior parental consent. The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM”) regulates the distribution of unsolicited commercial emails, or “spam.” Online services provided by the Company may be subject to COPPA and CAN-SPAM requirements. Congress and individual states may also consider online privacy legislation that would apply to personal information collected from teens and adults.

~~Table~~ITEM of2. ~~Contents~~PROPERTIES

~~license. In 1995, the FCC acknowledged that News Corporation owns the vast preponderance of equity of the corporate parent of the Fox Television Stations.~~ The ~~FCC~~Company ~~also~~maintains ~~concluded~~executive ~~that~~offices ~~Mr. K. Rupert Murdoch, Chairman~~ and ~~Chief~~certain ~~Executive~~ of ~~News~~its ~~Corporation,~~operations ain ~~U.S.~~each ~~citizen,~~of ~~controls~~its ~~the~~business ~~corporate~~segments ~~licensee~~at ~~and~~1211 ~~thus~~Avenue ~~found the level~~ of ~~alien equity to be consistent with~~ the ~~public~~Americas, ~~interest. Mr. Murdoch has~~New ~~76% voting control of Fox Television Holdings~~York, ~~Inc.,~~New ~~the corporate parent of the Fox Television Stations, and News Corporation will continue to hold indirectly stock representing the majority of equity of the corporate licensee~~York. ~~The~~These ~~Restated Certificate~~offices ofcover ~~Incorporation~~approximately ~~of Fox Television Holdings~~327,000 ~~Inc.~~square ~~provides~~feet ~~that~~and ~~the~~are ~~voting~~provided ~~capital stock of the company shall only be owned~~ by ~~persons~~News ~~who are citizens of~~Corporation, orwhich ~~incorporated~~maintains ~~entities~~executive ~~formed~~offices ~~in,~~at ~~the United States, or would not otherwise disqualify~~ such ~~company or any subsidiary of such company from being issued a television broadcast license by the FCC~~location.

On June 2, 2003, the FCC concluded the 2002 biennial review of its broadcast ownership regulations required by the 1996 Telecom Act by amending its rules governing the ownership of television and radio stations and by replacing its newspaper/broadcast cross-ownership ban and the radio/television cross-ownership restriction with a new set of cross-media ownership limits. The ~~new~~Company ~~rules~~owns ~~would (i) permit an entity to have an attributable ownership interest in an unlimited number of television stations nationally so long as~~ the ~~audience~~Fox ~~reach~~Studios ofLot ~~such~~at ~~stations~~10201 ~~does~~West ~~not~~Pico ~~exceed~~Boulevard, inLos ~~the~~Angeles, ~~aggregate and after the application of the UHF Discount~~California, ~~45%~~which ofconsists ~~U.S. television households; (ii) permit common ownership~~ of upapproximately to54 ~~three~~acres ~~television~~containing ~~stations~~15 insound ~~DMAs with 18 or more television stations~~stages, production ~~and two television stations in DMAs with between five and 17 television stations~~facilities, ~~provided~~administrative, intechnical ~~both~~and ~~cases,~~dressing ~~that~~room a single entity cannot have an attributable interest in two television stations ranked among the top four (in terms of audience share) in any DMA (the “Local Restriction”); (iii) permit (A) in markets with nine or more television stationsstructures, ~~common~~ ~~ownership~~screening oftheaters ~~daily newspapers~~ and upmachinery toequipment ~~the~~facilities ~~maximum number of television~~ and ~~radio~~three ~~stations~~restaurants. ~~permitted~~The byCompany ~~the~~also ~~Local~~leases ~~Restriction~~approximately ~~and the local radio ownership rule~~300,000 ~~and~~square ~~(B)~~feet inof ~~markets~~office ~~with~~space ~~between~~at ~~four~~Fox ~~and eight television stations~~Plaza, ~~common~~ ~~ownership~~located ofadjacent ato ~~daily~~the ~~newspaper~~Fox ~~and~~Studios upLot. toEach ~~50%~~ of the ~~television~~Company’s ~~and~~business ~~radio~~segments, ~~stations~~other ~~permitted~~than by the ~~Local~~Television ~~Restriction~~Stations ~~and the local radio ownership rule~~segment, orutilizes aspace ~~daily~~at ~~newspaper and up to~~ the ~~maximum~~Fox ~~number~~Studios ofLot ~~radio~~and ~~stations~~Fox ~~permitted by the local radio ownership rule~~Plaza.

~~Several~~17 parties have appealed the FCC’s biennial review decision and/or petitioned the FCC to reconsider the new rules. In addition, several legislative measures have been introduced in Congress to repeal or prevent the implementation of some or all of the new rules. On September 3, 2003 the United States Court of Appeals for the Third Circuit issued an Order staying the effectiveness of the new rules. It is not possible to predict the timing or outcome of the appeals, petitions or Congressional action or their effect on the Company.

~~FCC~~The ~~regulations~~Company ~~implementing~~owns ~~the~~a ~~1992~~studio ~~Cable~~facility ~~Act require~~in ~~each television broadcaster to elect~~Rosarito, ~~at three-year intervals~~Mexico, ~~either to (i) require carriage of its signal by cable systems in the station’s market (“must carry”) or (ii) negotiate the terms on~~ which ~~such~~consists ~~broadcast station would permit transmission~~ of ~~its~~approximately ~~signal~~37 byacres ~~the~~containing ~~cable~~office ~~systems within its market (“retransmission consent”). The FCC has initiated a rulemaking proceeding to determine carriage requirements for digital broadcast television signals on cable systems~~space, production ~~including~~facilities ~~carriage~~and ~~during~~ the ~~period~~largest offresh ~~transition~~and ~~from~~saltwater ~~analog~~tanks toused ~~digital~~in ~~transmission.~~motion ~~The~~picture ~~Satellite~~production ~~Home Viewer Improvement Act of 1999 (“SHVIA”) requires satellite carriers, by January 1, 2002, to carry upon request, all television stations located~~ in ~~markets in which~~ the ~~satellite carrier retransmits at least one local station pursuant to the statutory copyright license provided by SHVIA~~world. FCC regulations implementing this statutory provision require affected stations to either elect mandatory carriage at the same three year intervals applicable to cable must carry or to negotiate carriage terms with satellite operators. Every two years beginning in 2000, FCC regulations also require increased amounts of closed captioning.

~~Federal~~Fox ~~legislation~~Studios ~~enacted~~Australia inhas ~~1990~~a ~~limits the~~lease ~~amount~~expiring ofin ~~commercial~~2036, ~~matter~~with ~~that~~an ~~may~~option beto ~~broadcast~~renew ~~during programming designed~~ for ~~children~~ten 12 years ~~of age and younger. In addition~~, ~~under~~over ~~FCC~~a ~~license~~35-acre ~~renewal~~film ~~processing~~and ~~guidelines,~~ television ~~stations~~production ~~are~~facility ~~generally~~with ~~required~~industry ~~to broadcast a~~related ~~minimum~~commercial ofoffice ~~three~~space ~~hours~~in ~~per week of programming~~Sydney, ~~which,~~Australia. ~~among~~In ~~other~~June ~~requirements~~2004, ~~must~~the ~~have,~~Company assold aits ~~“significant~~50% ~~purpose,”~~interest in the ~~educational~~adjacent cinema and ~~informational~~retail ~~needs~~complex of ~~children~~approximately 1625 ~~years of age and under~~acres. ~~A television station found not to have complied with~~

14The Company also owns and leases office space, broadcast and production facilities and other ancillary support properties in various cities in the United States and several countries around the world for its businesses. The Company considers its properties adequate for its present needs.

~~Table~~ITEM of3. ~~Contents~~LEGAL PROCEEDINGS

~~the~~DIRECTV ~~programming~~Transaction requirements or commercial limitations could face sanctions, including monetary fines and the possible non-renewal of its license. The FCC has indicated its intent to enforce its children’s television rules strictly.

~~The~~News ~~FCC~~Corporation ~~continues~~was tonamed ~~enforce~~as ~~strictly~~a ~~its~~defendant ~~regulations~~in ~~concerning~~a ~~“indecent”~~Revised ~~programming,~~Amended ~~political~~Consolidated ~~advertising,~~Complaint ~~environmental~~filed ~~concerns~~on May 7, ~~technical~~2004 ~~operating~~in ~~matters~~a ~~and~~lawsuit ~~antenna~~captioned ~~tower~~“In ~~maintenance.~~re ~~Although~~General ~~not required~~Motors by(Hughes) ~~FCC~~Shareholders ~~regulation~~Litigation,” filed in the ~~Company~~Court of ~~has~~Chancery ~~committed~~of the State of Delaware, Consolidated Civil Action No. 20269-NC. The lawsuit relates to ~~provide~~News ~~program~~Corporation’s ~~ratings~~acquisition ~~information~~of ~~for~~stock ~~its~~in ~~broadcast~~Hughes ~~network~~Electronics ~~programming.~~Corporation ~~FCC~~on ~~regulations~~December ~~governing~~22, ~~network~~2003 ~~affiliation~~which ~~agreements~~was ~~mandate~~subsequently transferred to the Company. The complaint alleges that ~~television~~News ~~broadcast~~Corporation ~~station~~aided ~~licensees~~and ~~retain~~ abetted an alleged breach of fiduciary duty by the ~~right~~Board toof ~~reject~~Directors orof ~~refuse~~GM ~~network~~allegedly ~~programming~~owed into a class of certain ~~circumstances~~GM orshareholders. The plaintiffs allegedly seek “appropriate equitable relief…including rescissory remedies to ~~substitute~~the ~~programming~~extent feasible… .” News Corporation believes that the ~~licensee~~lawsuit ~~reasonably~~is ~~believes~~without merit and intends to bevigorously ofdefend ~~greater~~against ~~local~~claims orbrought ~~national~~against ~~importance~~News Corporation in the lawsuit. News ~~Violation~~Corporation ofalso ~~FCC~~believes ~~regulations~~it ~~can~~is ~~result~~entitled into ~~substantial monetary~~indemnification ~~forfeitures,~~by ~~periodic~~GM ~~reporting~~under ~~conditions,~~the ~~short-term~~agreements ~~license~~related ~~renewals~~to ~~and,~~the intransaction. ~~egregious~~On ~~cases~~August 30, ~~denial~~2004, ofNews ~~license~~Corporation ~~renewal~~filed ora ~~revocation~~brief in support of ~~license~~its motion to dismiss the complaint.

~~Cable~~Other ~~Network Programming~~

FCC regulations adopted pursuant to the 1992 Cable Act prevent a cable operator that has an attributable interest (including voting or non-voting stock ownership of 5% or more or limited partnership equity interests of 5% or more) in a programming vendor from exercising undue or improper influence over the vendor in its dealings with competitors to cable. The ~~regulations~~Company ~~also~~experiences ~~prohibit~~routine alitigation ~~cable programmer~~ in ~~which a cable operator has an attributable interest from entering into exclusive contracts with any cable operator or from discriminating among competing multi-channel program distributors in~~ the ~~price,~~normal ~~terms~~course ~~and conditions~~ of ~~sale~~its ~~or delivery of programming~~business. ~~With~~The ~~respect~~Company tobelieves ~~cable~~that ~~systems~~none ~~having channel capacity~~ of ~~less~~its ~~than~~pending ~~76 channels, the FCC’s regulations limit to 40% the number of programming channels that may be occupied by video programming services in which the cable~~litigation ~~operator~~will ~~has~~have ~~an attributable interest. As~~ a ~~result~~material ofadverse ~~Liberty’s~~effect ~~ownership~~on ~~interest~~its inconsolidated ~~News~~financial ~~Corporation~~condition, ~~cable~~future ~~networks~~results operated by the Fox Cable Networks Group and Fox News are subject to these requirements. Similarly, Cablevision is deemed to have an attributable interest in RPP. The FCC’s program access and non-discrimination regulations therefore restrict the ability of ~~these~~operations cable programming services to enter into exclusive contracts. The rules also permit multi-channel video programming distributors (such as multi-channel multi-point distribution services (“MMDS”), satellite master antenna televisions (“SMATV”), DBS and DTHoperators) to bring complaints against the Company to the FCC charging they are unable to obtain the affected programming networks on nondiscriminatory terms. While cable systems are expanding their capacity, there may be instances in which a Cablevision cable system with 75 channels or ~~less will not be able to carry an RPP channel or will have to remove another affiliated channel~~liquidity.

~~The FCC’s~~18 regulations concerning the commercial limits in children’s programs and political advertising also apply to certain cable television programming services carried by cable system operators. The Company must provide program ratings information and increased closed captioning of its cable programming services to comply with FCC regulations, which could increase its operating expenses.

~~Internet~~ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

~~The~~Not Children’s Online Privacy Protection Act of 1998 (“COPPA”) prohibits web sites from collecting personally identifiable information online from children under age 13 without prior parental consentapplicable. Online services provided by the Company may be subject to COPPA requirements. Congress and individual states may also consider online privacy legislation that would apply to personal information collected from teens and adults.

~~ITEM 2. PROPERTIES~~Directors and Executive Officers of the Company

~~The~~Set ~~Company maintains~~forth ~~executive~~below ~~offices~~is ~~and~~ certain ofinformation ~~its~~concerning ~~operations~~the indirectors ~~each~~and ofexecutive ~~its~~officers ~~business~~of the ~~segments~~Company atas ~~1211 Avenue~~ of ~~the~~September ~~Americas~~10, ~~New York~~2004, ~~New~~which ~~York.~~information ~~These~~is ~~offices~~hereby ~~cover~~included ~~approximately~~in ~~327,000~~Item ~~square~~1 ~~feet~~of ~~and~~this ~~are provided by News Corporation, which maintains executive offices at such location~~report.

15The Directors and Executive Officers of the Company are as follows:


Name	Age	Position
K. Rupert Murdoch, AC	73	Director, Chairman and Chief Executive Officer
Peter Chernin	53	Director, President, Chief Operating Officer
David F. DeVoe	57	Director, Senior Executive Vice President, Chief Financial Officer
Arthur M. Siskind	65	Director, Senior Executive Vice President, General Counsel
Lachlan K. Murdoch	33	Director, President of Fox Television Stations
Christos M. Cotsakos	56	Director
Thomas W. Jones	55	Director
Peter Powers	60	Director

~~The~~All ~~Company~~of ~~owns~~ the ~~Fox~~Executive ~~Studios~~Officers ~~Lot~~of atthe Company ~~10201~~are ~~West~~also ~~Pico~~executive ~~Boulevard,~~officers ~~Los Angeles, California, which consists~~ of ~~approximately~~News ~~54 acres containing 15 sound stages, production facilities, administrative, technical and dressing room structures, screening theaters and machinery equipment facilities and three restaurants~~Corporation. ~~The~~As ~~Company~~executive ~~also~~officers ~~leases approximately 320,000 square feet~~ of ~~office~~News ~~space at Fox Plaza~~Corporation, ~~located adjacent to~~ the ~~Fox~~Executive ~~Studios~~Officers ~~Lot. Each~~ of the Company’s ~~business~~continue ~~segments,~~to ~~other~~render ~~than~~services ~~the~~to ~~Television~~News ~~Stations segment, utilizes space at the Fox Studios Lot and Fox Plaza~~Corporation.

~~The~~There ~~Company~~is ~~owns~~no afamily ~~studio~~relationship ~~facility~~between inany ~~Rosarito,~~Director ~~Mexico,~~or ~~which consists~~Executive Officer of ~~approximately~~the 37Company ~~acres~~and ~~containing~~any ~~office~~other ~~space,~~Director ~~production~~or ~~facilities~~Executive ~~and~~Officer of the Company ~~largest~~except ~~fresh~~that ~~and~~Lachlan ~~saltwater~~K. ~~tanks~~Murdoch ~~used~~is ina ~~motion~~son ~~picture~~of ~~production~~K. inRupert ~~the world~~Murdoch.

~~Fox Studios Australia has a lease expiring in 2036, with an option to renew for ten years, over a 35-acre film and~~The ~~television~~Senior ~~production~~Executives ~~facility~~of ~~with~~the ~~industry~~Company ~~related commercial office space~~ (in ~~Sydney,~~addition ~~Australia. Adjacent~~ to ~~that~~persons ~~facility~~identified isas aExecutive ~~cinema~~Officers ~~and~~above) ~~retail~~are ~~complex~~as offollows: ~~approximately 25 acres which is leased by a 50/50 joint venture between the Company and Lend Lease Corporation for the same term.~~

The Company owns Dodger Stadium, which is situated on approximately 275 acres in Los Angeles. The Company is a party to a sale-leaseback arrangement with civic authorities for Dodgertown, the Dodgers’ 64 acre spring training facility in Vero Beach, Florida.


Name	Age	Position
Roger Ailes	64	Chairman and Chief Executive Officer of Fox News Channel
James N. Gianopulos	52	Chairman of Fox Filmed Entertainment
David Hill, AM	58	Chairman and Chief Executive Officer of Fox Sports Television Group
Thomas E. Rothman	49	Chairman of Fox Filmed Entertainment
Anthony J. Vinciquerra	50	President and Chief Executive Officer of the Fox Networks Group

~~The~~Backgrounds ~~Company~~of ~~also owns and leases office space~~Directors, ~~broadcast and~~ ~~production~~Executive ~~facilities~~Officers and ~~other~~Senior ~~ancillary~~Executives ~~support properties in various cities in the United States and several countries around the world for its businesses. The Company considers its properties adequate for its present needs.~~

~~ITEM~~K. 3Rupert Murdoch, AC has been a Director of the Company since 1985, Chairman since 1992 and Chief Executive Officer of the Company since 1995. ~~LEGAL~~ ~~PROCEEDINGS~~Mr. Murdoch has been Chairman of the Board of Directors of News Corporation since 1991, and Director and Chief Executive of News Corporation since its formation in 1979. Mr. Murdoch has served as a Director of News Limited, News Corporation’s principal subsidiary in Australia, since 1953, a Director of News International Limited, News Corporation’s principal subsidiary in the United Kingdom, since 1969, and a Director of News America Incorporated (“NAI”), News Corporation’s principal subsidiary in the United States (“NAI”), since 1973. Mr. Murdoch has served as a Director of STAR since 1993 and as Chairman from 1993 to 1998, as a Director of British Sky Broadcasting Group plc (“BSkyB”) since 1990 and Chairman since 1999. Mr. Murdoch is also a member of the board of directors of Gemstar-TV Guide International, Inc. (“Gemstar”) since 2001 and Chairman of DIRECTV since December 2003. Mr. Murdoch is Chairman of the Remuneration Committee.

InPeter ~~April~~Chernin ~~2003,~~has been a ~~putative~~Director ~~derivative~~ and ~~shareholder~~President ~~class~~and ~~action~~Chief ~~(Norman Levin~~Operating v.Officer ~~K. Rupert Murdoch et al., 03 CV 2929) was filed in the United States District Court for the Southern District~~ of ~~New York against~~ the Company’s ~~board~~since ~~members~~1998. ~~(and~~Mr. ~~the~~Chernin ~~Company~~has asbeen ~~nominal~~a ~~defendant)~~Director, ~~alleging~~President ~~among~~and ~~other~~Chief ~~things that in~~Operating ~~approving~~Officer ~~the~~of ~~Hughes~~News ~~transaction~~Corporation ~~(see Hughes), they breached their fiduciary duties to the Company’s public shareholders. The action seeks monetary~~ and ~~unspecified~~a ~~equitable~~Director, ~~relief.~~Chairman ~~The Company~~ and ~~the~~Chief ~~Company’s~~Executive ~~board~~Officer ~~members~~of ~~intend vigorously~~NAI, tosince ~~defend~~1996. ~~this action~~Mr. OnChernin ~~July~~was ~~15,~~Chairman ~~2003,~~and ~~the~~Chief ~~defendants~~Executive ~~moved~~Officer toof ~~dismiss~~FFE ~~the~~from ~~complaint.~~1994 Onuntil ~~September 15~~1996, ~~2003,~~Chairman ~~the~~of ~~plaintiff~~Twentieth ~~agreed~~Century toFox ~~dismiss~~Film ~~the~~Corporation ~~action~~from ~~with~~1992 ~~prejudice~~until 1994 ~~as to himself~~ and ~~without~~President ~~prejudice to putative class members other than himself. On September 19, 2003, the Court entered the agreed order~~ of ~~dismissal.~~

In19 April 2003, six putative shareholder class actions were filed in state courts in Delaware (four actions) and California (two actions) against GM and certain of its board members, alleging that in approving the Hughes transaction, the defendants breached their fiduciary duties to public holders of GM’s Class H shares. Hughes and its board members are defendants in certain of these actions and also are alleged to have breached fiduciary duties to the same shareholders. News Corporation is a defendant in two of the Delaware actions and is alleged to have aided and abetted the other defendants’ purported breaches of fiduciary duties. The actions seek monetary and injunctive relief, including enjoining consummation of the transaction. News Corporation believes it is entitled to indemnification by GM under the agreements related to the transaction. News Corporation has not been served in any of these actions. The Delaware actions were consolidated on May 6, 2003, and a consolidated complaint was filed on August 29, 2003. News Corporation was not named as a defendant in the consolidated complaint.

~~The~~FOX ~~Company~~from ~~experiences~~1989 ~~routine~~until ~~litigation~~1992. inMr. ~~the~~Chernin ~~normal~~served ~~course~~as a Director of ~~its~~TV ~~business~~Guide, Inc. ~~The~~from ~~Company~~1999 ~~believes~~until ~~that~~2000 ~~none~~and ofhas ~~its~~served as a ~~pending~~director ~~litigation~~of ~~will~~Gemstar ~~have~~since 2002. Mr. Chernin has served as a ~~material~~director ~~adverse~~of ~~effect~~DIRECTV onsince ~~its~~December ~~consolidated~~2003. ~~financial~~Mr. ~~condition,~~Chernin ~~future~~is ~~results~~a member of ~~operations~~the orRemuneration ~~liquidity~~Committee.

16David F. DeVoe has been a Director of the Company since 1991 and Senior Executive Vice President and Chief Financial Officer of the Company since 1998. Mr. DeVoe has been a Director, Chief Financial Officer and Finance Director of News Corporation since 1990 and Senior Executive Vice President of News Corporation since 1996. Mr. DeVoe was an Executive Vice President of News Corporation from 1990 until 1996. Mr. DeVoe has been a Director of NAI since 1991 and a Senior Executive Vice President since 1998. Mr. DeVoe served as Executive Vice President of NAI from 1991 to 1998. Mr. DeVoe has been a Director of Gemstar since 2001, NDS Group plc since 1996, STAR since 1993, BSkyB since 1994 and DIRECTV since December 2003.

~~Table~~Lachlan K. Murdoch has been a Director of ~~Contents~~the Company since 2002. Mr. Murdoch has been a Director and President of Fox Television Stations since 2002. Mr. Murdoch has been an Executive Director of News Corporation since 1996 and Deputy Chief Operating Officer since 2000. Mr. Murdoch served as a Senior Executive Vice President of News Corporation from 1999 until 2000. Mr. Murdoch has been a Director of News Limited since 1995, Chairman since 1997 and served as Chief Executive from 1997 to 2000, Managing Director from 1996 until 1997 and Deputy Chief Executive from 1995 to 1996. Mr. Murdoch has served as Chairman of Queensland Press Limited since 1996 and a Director since 1994. Mr. Murdoch has been Deputy Chairman of STAR since 1995. Mr. Murdoch has been a Director of NDS Group since 2002, a Director of Gemstar since 2001 and a Director of FOXTEL Management since 1998.

~~ITEM~~Arthur 4M. ~~SUBMISSION~~ OFSiskind ~~MATTERS~~has TObeen Aa ~~VOTE~~Director OFand ~~SECURITY~~Senior ~~HOLDERS~~Executive Vice President and General Counsel of the Company since 1998. Mr. Siskind has been a Director and Group General Counsel of News Corporation since 1991 and a Senior Executive Vice President of News Corporation since 1996. Mr. Siskind served as Executive Vice President of News Corporation from 1991 until 1996. Mr. Siskind has been a Director of NAI since 1991 and a Senior Executive Vice President since 1998. Mr. Siskind served as an Executive Vice President of NAI from 1991 to 1998. Mr. Siskind has been a Director of NDS Group plc since 1996, STAR since 1993 and BSkyB since 1992. Mr. Siskind has been a member of the Bar of the State of New York since 1962.

~~Not~~Christos ~~applicable~~M. Cotsakos, Ph.D. has been a Director of the Company since 1999. Dr. Cotsakos has been a Managing Partner of Pennington Ventures, LLC since 1999. Dr. Cotsakos served as President, Chief Executive Officer and a Director of E*TRADE Group, Inc. from 1996 until 2003 and Chairman of its Board of Directors from 1998 until 2003. Prior to joining E*TRADE Group, Inc., he served as President, Co-Chief Executive Officer, Chief Operating Officer and a Director of A.C Nielsen, Inc. from 1995 to 1996, as President and Chief Executive Officer of Nielsen International from 1993 to 1995, and as President and Chief Operating Officer of Nielsen Europe, Middle East and Africa from 1992 to 1993. Dr. Cotsakos is Chairman of the Audit Committee.

~~Directors~~Thomas W. Jones has served as a Director of the Company since 2001. Mr. Jones has been the Chairman and Chief Executive ~~Officers~~Officer of Citigroup Global Investment Management since 1999. He is also Chairman and Chief Executive Officer of Citigroup Asset Management. Mr. Jones served as Executive Vice President of Finance and Planning, and Chief Financial Officer for TIAA-CREF between 1989 and 1993, President and Chief Operating Officer from 1993 to 1997 and Vice Chairman and Director from 1995 to 1997, when he joined Travelers Group as Vice Chairman and Director. He is also a Director of Philip Morris Companies Inc. and a Trustee of Cornell University. Mr. Jones is a member of the ~~Company~~Audit Committee.

~~Set~~Peter ~~forth~~Powers ~~below~~has isserved ~~certain~~as ~~information~~a ~~concerning~~Director of the ~~directors~~Company since 2003. Mr. Powers has been President and Chief Executive Officer of Powers Global Strategies LLC since 1998 and ~~executive~~served ~~officers~~as First Deputy Mayor of the ~~Company~~City of New York from 1994 to 1996. Mr. Powers has also served as a Director of ~~September~~NDS 23Group plc since 2000. Mr. Powers is a Director of Partnership for New York City, ~~2003~~Association for a Better New York, ~~which~~NYC&Co., Central ~~information~~Park isConservancy ~~hereby~~and ~~included~~Safe inHorizons. ~~Item~~Mr. IPowers is a member of ~~this~~the ~~report~~Audit Committee.

~~The~~Roger ~~Directors~~Ailes has served as Chairman and Chief Executive ~~Officers~~Officer of ~~the~~Fox ~~Company~~News ~~are~~Channel since 1996. Prior to joining Fox News in 1996, Mr. Ailes was President of CNBC since 1993 and also served as ~~follows:~~President of America’s Talking, an information talk channel that later became MSNBC.

Name	Age	Position
K. Rupert Murdoch, AC	72	Director, Chairman and Chief Executive Officer
Peter Chernin	52	Director, President, Chief Operating Officer
David F. DeVoe	56	Director, Senior Executive Vice President, Chief Financial Officer
Arthur M. Siskind	64	Director, Senior Executive Vice President, General Counsel
Lachlan K. Murdoch	32	Director
Christos M. Cotsakos	55	Director
Thomas W. Jones	54	Director
Peter Powers	59	Director

~~All~~James N. Gianopulos has been Chairman of FFE since 2000. He shares the ~~Executive~~position with Thomas E. Rothman. Mr. Gianopulos ~~Officers~~was President of Twentieth Century Fox International from 1994 until 2000 overseeing both the ~~Company~~Theatrical ~~are~~and ~~also~~the ~~executive~~Home ~~officers~~Entertainment units. Mr. Gianopulos was President of ~~News~~International ~~Corporation~~and Pay Television for Twentieth Century Fox from 1992 to 1994. Mr. AsGianopulos ~~executive~~serves ~~officers~~on ofthe ~~News~~boards ~~Corporation,~~of the ~~Executive~~USC ~~Officers~~Entertainment ofTechnology Committee, the ~~Company~~Motion ~~continue~~Picture to& ~~render~~Television ~~services~~Fund toFoundation ~~News~~and ~~Corporation~~various charitable organizations.

~~There~~David isHill nohas ~~family~~served ~~relationship~~as ~~between~~Chairman ~~any~~and ~~Director~~Chief or Executive Officer of ~~the~~ ~~Company~~Fox ~~and~~Sports ~~any~~Television ~~other~~Group ~~Director~~since or1999. Mr. Hill served as Chairman and Chief Executive Officer of ~~the~~FOX ~~Company~~from ~~except~~1997 ~~that~~until ~~Lachlan~~1999 K.and ~~Murdoch~~served isas President of Fox Sports, a ~~son~~division of KFox Television, from 1993 to 1999. ~~Rupert~~From ~~Murdoch~~1996 until 1997, Mr. Hill has served as Chief Operating Officer of Fox Television. In addition, Mr. Hill has served as Chairman of Fox Sports Networks since 1996. From 1996 through 1997, Mr. Hill also served as the Chief Executive Officer of Fox Sports Networks.

~~The~~Thomas ~~Senior~~E. ~~Executives~~Rothman has been Chairman of FFE since 2000. He shares the ~~Company~~position ~~(in~~with ~~addition~~James N. Gianopulos. Mr. Rothman previously served as President of Twentieth Century Fox Film Group from January to ~~persons~~August ~~identified~~2000, and was President of Twentieth Century Fox Production from 1995 to 2000. In 1994, he was the founder and first President of Fox Searchlight Pictures. Mr. Rothman also serves as ~~Executive~~a ~~Officers~~member ~~above)~~of ~~are~~the Board of Directors of the American Film Institute and as ~~follows:~~emeritus member of the Board of Directors of the Sundance Institute.

Name	Age	Position
Roger Ailes	63	Chairman and Chief Executive Officer of Fox News Channel
James N. Gianopulos	51	Chairman of Fox Filmed Entertainment
Sandy Grushow	43	Chairman of the Fox Television Entertainment Group
David Hill, AM	57	Chairman and Chief Executive Officer of Fox Sports Television Group
Thomas E. Rothman	48	Chairman of Fox Filmed Entertainment
Mitchell Stern	49	Chairman and Chief Executive Officer of Fox Television Stations
Anthony J. Vinciquerra	49	President and Chief Executive Officer of the Fox Networks Group

Anthony J. Vinciquerra has served as President and Chief Executive Officer of the Fox Networks Group since 2002. Mr. Vinciquerra joined the Company in 2001 as President of the FOX Television Network. Prior to joining the Company, Mr. Vinciquerra served as Executive Vice President and Chief Operating Officer of Hearst-Argyle Television since 1999. Mr. Vinciquerra joined Hearst Corporation’s broadcasting group as Group Executive in 1997 and became Executive Vice President of Hearst-Argyle later that year. Mr. Vinciquerra serves as a member of the Board of Directors of the National Association of Television Program Executives (NATPE) and the Genesis Fund, along with serving as a member of the Board of Trustees of Southern California Public Radio.

~~Backgrounds~~21 ~~of Directors, Executive Officers and Senior Executives~~

K.PART ~~Rupert Murdoch,~~II AC has been a Director of the Company since 1985, Chairman since 1992 and Chief Executive Officer of the Company since 1995. Mr. Murdoch has been Chairman of the Board of Directors of News Corporation since 1991, and Director and Chief Executive of News Corporation since its formation in 1979. Mr. Murdoch has served as a Director of News Limited, News Corporation’s principal subsidiary in Australia, since 1953, a Director of News International plc, News Corporation’s principal subsidiary in the United Kingdom, since 1969, and a Director of News America Incorporated (“NAI”), News Corporation’s principal subsidiary in the United States (“NAI”), since 1973. Mr. Murdoch has served as a Director of STAR since 1993 and as Chairman from 1993 to 1998, as a Director of British Sky Broadcasting Group plc (“BSkyB”) since 1990 and Chairman since 1999. Mr. Murdoch is also a member of the board of directors of Gemstar-TV Guide International, Inc. (“Gemstar”) and China Netcom Corporation (Hong Kong) Limited. Mr. Murdoch is Chairman of the Remuneration Committee.

17ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

~~Table~~The Company’s Class A Common Stock is listed and traded on the New York Stock Exchange under the symbol “FOX”. As of ~~Contents~~August 27, 2004, there were approximately 880 holders of record of the Company’s Class A Common Stock.

~~Peter~~The ~~Chernin~~following ~~has~~table ~~been~~sets aforth, ~~Director~~for ~~and President and Chief Operating Officer of~~ the ~~Company~~periods ~~since 1998. Mr. Chernin has been a Director~~indicated, ~~President~~the ~~and~~high ~~Chief Operating Officer of News Corporation~~ and alow ~~Director,~~closing ~~Chairman~~sale ~~and~~prices ~~Chief~~per ~~Executive~~share ~~Officer~~ of NAI, since 1996. Mr. Chernin was Chairman and Chief Executive Officer of FFE from 1994 until 1996, Chairman of Twentieth Century Fox Film Corporation from 1992 until 1994 and President of FOX from 1989 until 1992. Mr. Chernin served as a Director of TV Guide, Inc. from 1999 until 2000 and has served as a director of Gemstar since 2002. Mr. Chernin has served on the ~~Advisory~~Company’s ~~Board~~Class ofA ~~PUMA~~Common ~~AG since 1999~~Stock. ~~Mr. Chernin is a member of the Remuneration Committee.~~

David F. DeVoe has been a Director of the Company since 1991 and Senior Executive Vice President and Chief Financial Officer of the Company since 1998. Mr. DeVoe has been a Director, Chief Financial Officer and Finance Director of News Corporation since 1990 and Senior Executive Vice President of News Corporation since 1996. Mr. DeVoe was an Executive Vice President of News Corporation from 1990 until 1996. Mr. DeVoe has been a Director of NAI since 1991 and a Senior Executive Vice President since 1998. Mr. DeVoe served as Executive Vice President of NAI from 1991 to 1998. Mr. DeVoe has been a Director of Gemstar since 2001, NDS Group plc since 1996, STAR since 1993 and BSkyB since 1994.


Fiscal 2003	High		Low
First Quarter	$	24.04	$	17.10
Second Quarter	$	27.90	$	20.79
Third Quarter	$	29.12	$	24.66
Fourth Quarter	$	29.82	$	22.60

Fiscal 2004	High		Low
First Quarter	$	32.98	$	27.65
Second Quarter	$	31.07	$	27.08
Third Quarter	$	32.17	$	26.54
Fourth Quarter	$	29.59	$	25.60

Fiscal 2004	High		Low
First Quarter (through August 27, 2004)	$	27.62	$	25.25

~~Arthur~~The ~~M. Siskind has been a Director and Senior Executive Vice President and General Counsel of the~~ Company ~~since 1998. Mr. Siskind~~ has ~~been~~never adeclared ~~Director~~or ~~and Group General Counsel of News Corporation since 1991 and a Senior Executive Vice President of News~~paid ~~Corporation~~cash ~~since~~dividends ~~1996.~~on ~~Mr.~~its ~~Siskind~~Class ~~served~~A asCommon ~~Executive~~Stock ~~Vice President of News Corporation from 1991 until 1996. Mr. Siskind has been a Director of NAI since 1991~~ and ait ~~Senior~~is ~~Executive~~the ~~Vice~~Company’s ~~President~~present ~~since~~intention ~~1998.~~to ~~Mr.~~retain ~~Siskind~~earnings ~~served as an Executive Vice President of NAI from 1991~~ to ~~1998.~~finance ~~Mr. Siskind has been a Director of NDS Group plc since 1996, STAR since 1993 and BSkyB since 1992. Mr. Siskind has been a member of~~ the ~~Bar~~expansion of ~~the~~its ~~State of New York since 1962~~business.

~~Lachlan~~There K.is ~~Murdoch~~no ~~has~~established ~~been~~public atrading ~~Director~~market offor the Company’s ~~since~~Class ~~2002.~~B ~~Mr.~~Common ~~Murdoch has been an Executive Director of News Corporation since 1996 and Deputy Chief Operating Officer since 2000~~Stock. ~~Mr.~~As ~~Murdoch served as a Senior Executive Vice President~~ of ~~News~~August ~~Corporation~~27, ~~from 1999 until 2000. Mr. Murdoch has been a Director of News Limited since 1995~~2004, ~~Chairman~~FEG ~~since 1997 and served as Chief Executive from 1997 to 2000~~Holdings, ~~Managing Director from 1996 until 1997 and Deputy Chief Executive from 1995 to 1996~~Inc., ~~Mr.~~an ~~Murdoch~~indirect ~~has~~wholly-owned ~~served as Chairman of Queensland Press Limited since 1996~~subsidiary ~~and a Director since 1994. Mr. Murdoch has been Deputy Chairman~~ of ~~STAR~~News ~~since~~Corporation, ~~1995.~~owned ~~Mr.~~all ~~Murdoch has been a Director of NDS Group since 2002~~547,500,000 ashares ~~Director~~ of ~~Gemstar~~Class ~~since~~B ~~2001~~Common ~~and~~Stock ~~a Director~~ of ~~FOXTEL~~the ~~Management since 1998~~Company.

~~Christos~~22 M. Cotsakos, Ph.D. has been a Director of the Company since 1999. Dr. Cotsakos served as President, Chief Executive Officer and a Director of E*TRADE Group, Inc. from 1996 until January 2003 and Chairman of its Board of Directors from 1998 until January 2003. Prior to joining E*TRADE Group, Inc., he served as President, Co-Chief Executive Officer, Chief Operating Officer and a Director of A.C Nielsen, Inc. from 1995 to 1996, as President and Chief Executive Officer of Nielsen International from 1993 to 1995, and as President and Chief Operating Officer of Nielsen Europe, Middle East and Africa from 1992 to 1993. Dr. Cotsakos is a Managing Partner of Pennington Ventures, LLC since 1999. Dr. Cotsakos is Chairman of the Audit Committee.

~~Thomas~~ITEM W6. ~~Jones~~SELECTED ~~has~~CONSOLIDATED ~~served~~FINANCIAL asDATA a Director of the Company since 2001. Mr. Jones has been the Chairman and Chief Executive Officer of Citigroup Global Investment Management since 1999. He is also Chairman and Chief Executive Officer of Citigroup Asset Management. Mr. Jones served as Executive Vice President of Finance and Planning, and Chief Financial Officer for TIAA-CREF between 1989 and 1993, President and Chief Operating Officer from 1993 to 1997 and Vice Chairman and Director from 1995 to 1997, when he joined Travelers Group as Vice Chairman and Director. He is also a Director of Federal Home Loan Mortgage Corporation, Philip Morris Companies Inc. and a Trustee of Cornell University. Mr. Jones is a member of the Audit Committee.

~~Peter~~The ~~Powers~~selected ~~was~~consolidated ~~appointed~~financial asdata ashould ~~Director~~be ofread ~~the~~in ~~Company~~conjunction inwith ~~February~~“Item ~~2003.~~7-Management’s ~~Mr.~~Discussion ~~Powers~~and Analysis ~~has~~of ~~been~~Financial ~~President~~Condition and ~~Chief~~Results ~~Executive~~of ~~Officer~~Operations” ofand ~~Powers~~“Item ~~Global Strategies~~8-Financial ~~LLC~~Statements ~~since~~and ~~1998~~Supplementary Data” and ~~served~~the asother ~~First~~financial ~~Deputy~~information ~~Mayor~~included ofelsewhere herein.


	FOR THE YEARS ENDED JUNE 30, ⁽¹⁾
	2004		2003		2002⁽³⁾			2001⁽⁴⁾			2000⁽⁵⁾
	(in millions, except per share data)
STATEMENT OF OPERATIONS DATA:
Revenues ⁽²⁾	$	12,175	$	11,002	$	9,725		$	8,414		$	8,517
Operating income (loss)		2,298		1,783		(103	)		652			656
Income before cumulative effect of accounting change		1,353		1,031		607			206			145
Net income (loss)		1,353		1,031		581			(288	)		145

Basic and diluted earnings per share before cumulative effect of accounting change	$	1.44	$	1.17	$	0.72		$	0.28		$	0.20
Basic and diluted earnings (loss) per share	$	1.44	$	1.17	$	0.69		$	(0.40	)	$	0.20

	AS OF JUNE 30,
	2004		2003		2002			2001			2000
	(in millions)
BALANCE SHEET DATA:
Cash and cash equivalents	$	122	$	72	$	56		$	66		$	114
Total assets		30,048		23,299		22,876			17,856			17,930
Due to affiliates of News Corporation		4,236		704		1,413			2,866			2,739
Borrowings		659		—		942			1,032			974
Shareholders’ equity		17,967		14,303		12,095			7,968			8,246

~~Table~~FOOTNOTES: ~~of Contents~~

~~the~~(1) ~~City~~See offootnotes ~~New~~4 ~~York~~through ~~from~~6 ~~1994~~ to ~~1996.~~the ~~Mr.~~Consolidated ~~Powers~~Financial ~~has~~Statements ~~also served as a Director~~ of ~~NDS~~Fox Entertainment Group, ~~plc since 2000~~Inc. ~~Mr. Powers is a Director of Partnership~~ for ~~New York~~information ~~City,~~with ~~Association~~respect ~~for~~to asignificant ~~Better~~acquisitions ~~New~~and ~~York,~~disposals ~~NYC&Co.,~~during ~~Central~~fiscal ~~Park Conservancy~~2004, ~~Safe~~2003 ~~Horizons~~ and ~~City Center~~2002. ~~Mr. Powers is a member of the Audit Committee.~~

~~Roger~~(2) ~~Ailes~~In ~~has~~January ~~served~~2002, asthe ~~Chairman~~Company ~~and~~adopted ~~Chief~~Emerging ~~Executive~~Issues ~~Officer~~Task ofForce ~~Fox~~(“EITF”) ~~News~~No. ~~Channel~~01-09, ~~since~~“Accounting ~~1996.~~for ~~Prior~~the Consideration Given by a Vendor to ~~joining~~a ~~Fox~~Customer ~~News~~or ~~in 1996~~a Reseller of the Vendor’s Products,” Mrwhich was effective for the Company as of January 1, 2002. ~~Ailes~~As ~~was~~required, ~~President~~the Company has classified the amortization of ~~CNBC~~cable ~~since~~distribution ~~1993~~investments against revenues for all periods presented. Operating income (loss), Net income (loss) and ~~also~~Earnings ~~served~~(loss) asper ~~President~~share ofare ~~America~~not affected by this classification. This classification affects the Company’s ~~Talking,~~and anthe ~~information~~Cable ~~talk~~Network ~~channel~~Programming ~~that~~segment’s ~~later~~revenues. ~~became~~The ~~MSNBC.~~effect of the classification on the Company’s revenues is as follows:

James N. Gianopulos has been Chairman of FFE since 2000. He shares the position with Thomas E. Rothman. Mr. Gianopulos was President of Twentieth Century Fox International from 1994 until 2000 overseeing both the Theatrical and the Home Entertainment units. Mr. Gianopulos was President of International and Pay Television for Twentieth Century Fox from 1992 to 1994. Mr. Gianopulos serves on the boards of the USC Entertainment Technology Committee, the Motion Picture & Television Fund Foundation and various charitable organizations.


	FOR THE YEARS ENDED JUNE 30,
	2004			2003			2002			2001			2000
	(in millions)
Gross revenues	$	12,304		$	11,127		$	9,841		$	8,504		$	8,589
Amortization of cable distribution investments		(129	)		(125	)		(116	)		(90	)		(72	)

Revenues	$	12,175		$	11,002		$	9,725		$	8,414		$	8,517

~~Sandy~~(3) ~~Grushow~~Fiscal ~~has~~2002 ~~served~~also asincludes ~~Chairman of~~ the ~~Fox~~$909 ~~Television~~million ~~Entertainment~~write-down ~~Group,~~of ~~overseeing both~~ the ~~FOX~~Company’s ~~broadcast~~national ~~network~~sports ~~and~~contracts, ~~Twentieth~~the ~~Century~~pre-tax ~~Fox Television~~gain ~~since~~of ~~1999~~$1.4 ~~Mr.~~billion ~~Grushow~~on ~~served~~the assale ~~President~~ of ~~Twentieth~~the ~~Century~~Company’s ~~Fox~~interest ~~Television~~in ~~from~~Fox ~~1997~~Family ~~until~~Worldwide, ~~1999~~Inc. ~~From~~(“FFW”) ~~1995~~and tothe ~~1997,~~Company’s ~~Mr.~~$26 ~~Grushow~~million ~~was~~share ~~President~~ of ~~TELE~~FFW’s after-~~TV,~~tax ancumulative ~~interactive~~effect ~~television~~of ~~and~~accounting ~~broadband~~change ~~programming~~relating ~~service. Prior~~ to ~~joining TELE-TV,~~the ~~Mr.~~adoption ~~Grushow~~of ~~was~~Statement ~~President~~ of ~~the~~Position ~~Fox~~No. ~~Television~~(“SOP”) ~~Network Entertainment Group from 1992 until 1994~~00-2.

~~David~~(4) ~~Hill,~~Fiscal AM2001 ~~has~~Net ~~served~~income as(loss) ~~Chairman~~ and ~~Chief~~Basic ~~Executive Officer of Fox Sports Television Group since 1999. Mr. Hill served as Chairman~~ and ~~Chief Executive~~diluted ~~Officer~~earnings of(loss) ~~FOX~~per ~~from~~share ~~1997~~include ~~until~~the ~~1999~~impact ~~and served as President~~ of ~~Fox~~the ~~Sports,~~after-tax acharge ~~division~~ of ~~Fox~~$494 ~~Television,~~million ~~from~~for ~~1993~~the tocumulative ~~1999.~~effect ~~From 1996 until 1997, Mr. Hill has served as Chief Operating Officer~~ of ~~Fox~~accounting ~~Television.~~change Inrelating ~~addition,~~to ~~Mr. Hill has served as Chairman of Fox Sports Networks since 1996. From 1996 through 1997, Mr. Hill also served as~~ the ~~Chief~~Company’s ~~Executive~~adoption ~~Officer~~ of ~~Fox~~SOP ~~Sports Networks~~00-2.

~~Thomas~~(5) E.Fiscal ~~Rothman has been Chairman of FFE since~~ 2000. Heincludes ~~shares~~ the ~~position~~operating ~~with~~results ~~James N. Gianopulos. Mr. Rothman previously served as President~~ of ~~Twentieth~~ ~~Century~~ Fox ~~Film~~Sports ~~Group from January to August 2000~~Networks, ~~and was President of Twentieth Century Fox Production from 1995 to 2000. In 1994~~LLC, hewhich was ~~the~~fully ~~founder~~acquired ~~and~~in ~~first~~July ~~President of Fox Searchlight Pictures~~1999. ~~Mr. Rothman also serves as a member of the Board of Directors of the Sundance Institute.~~

~~Mitchell Stern~~23 has been Chairman and Chief Executive Officer of Fox Television Stations and Twentieth Television since 1998. Mr. Stern was President and Chief Operating Officer of Fox Television Stations, Inc. from 1993 to 1998.

~~Anthony~~ITEM J7. Vinciquerra has served as President and Chief Executive Officer of the Fox Networks Group since 2002. Mr. Vinciquerra joined the Company in 2001 as President of the FOX Television Network. Prior to joining the Company, Mr. Vinciquerra served as Executive Vice President and Chief Operating Officer of Hearst-Argyle Television since 1999. Mr. Vinciquerra joined Hearst CorporationMANAGEMENT’sS ~~broadcasting~~DISCUSSION ~~group~~AND asANALYSIS ~~Group~~OF ~~Executive~~FINANCIAL inCONDITION ~~1997~~AND ~~and~~RESULTS ~~became~~OF ~~Executive~~OPERATIONS ~~Vice President of Hearst-Argyle later that year.~~

19INTRODUCTION

~~Table~~Management’s discussion and analysis of ~~Contents~~financial condition and results of operations (“MD&A”) is provided as a supplement to the accompanying consolidated financial statements and footnotes to help provide an understanding of the Fox Entertainment Group, Inc.’s (the “Company”) financial condition, changes in financial condition and results of operations. MD&A is organized as follows:

~~PART~~• IIOverview of our Business - This section provides a general description of the Company’s businesses, as well as recent developments that have occurred either during fiscal 2004 or early fiscal 2005 that the Company believes are important in understanding the results of operations and financial condition or to anticipate future trends.

~~ITEM~~• 5.Results ~~MARKET~~of ~~FOR~~Operations ~~REGISTRANT~~- This section provides an analysis of the Company’Ss ~~COMMON~~results ~~EQUITY~~of ~~AND~~operations ~~RELATED~~for ~~STOCKHOLDER~~the ~~MATTERS~~three years ended June 30, 2004. This analysis is presented on both a consolidated and a segment basis. In addition, a brief description is provided of significant transactions and events that impact the comparability of the results being analyzed.

~~The~~• Liquidity and Capital Resources - This section provides an analysis of the Company’s ~~Class~~cash Aflows ~~Common~~for ~~Stock~~the isthree ~~listed~~years ~~and~~ended ~~traded~~June on30, ~~the~~2004, ~~New~~as ~~York~~well ~~Stock~~as ~~Exchange~~a ~~under~~discussion of the ~~symbol “FOX”.~~Company’s Asoutstanding ofdebt ~~September~~and 19commitments, ~~2003~~both firm and contingent, ~~there~~that ~~were~~existed ~~approximately~~as ~~882~~of ~~holders~~June 30, 2004. Included in the discussion of ~~record~~outstanding debt is a discussion of the amount of financial capacity available to fund the Company’s ~~Class~~future Acommitments, ~~Common~~as ~~Stock.~~well as a discussion of other financing arrangements.

~~The~~• ~~following~~Critical ~~table~~Accounting ~~sets~~Policies ~~forth,~~- ~~for~~This ~~the~~section ~~periods~~discusses ~~indicated,~~accounting policies considered important to the ~~high~~Company’s financial condition and ~~low~~results ~~closing~~of ~~sale~~operations, ~~prices~~and ~~per~~which ~~share~~require significant judgment and estimates on the part of management in application. In addition, the Company’s ~~Class~~significant Aaccounting ~~Common~~policies, ~~Stock~~including the critical accounting policies, are summarized in Note 2 to the accompanying consolidated financial statements and footnotes.

Fiscal 2002	High		Low
First Quarter	$	27.95	$	18.00
Second Quarter	$	27.25	$	18.73
Third Quarter	$	26.70	$	20.10
Fourth Quarter	$	26.97	$	20.27
Fiscal 2003	High		Low
First Quarter	$	24.04	$	17.10
Second Quarter	$	27.90	$	20.79
Third Quarter	$	29.12	$	24.66
Fourth Quarter	$	29.82	$	22.60
Fiscal 2004	High		Low
First Quarter (through September 19, 2003)	$	32.98	$	28.18

OVERVIEW OF OUR BUSINESS

The Company ~~has never~~ ~~declared~~is ora ~~paid~~diversified ~~cash~~entertainment ~~dividends~~company, onwhich ~~its~~manages ~~Class A Common Stock~~ and itreports isits ~~the~~businesses ~~Company’s~~in ~~present~~four ~~intention~~segments: ~~to retain earnings to finance the expansion of its business.~~

~~There~~• isFilmed noEntertainment, ~~established~~which ~~public~~principally ~~trading~~consists ~~market~~of ~~for~~ the ~~Company’s~~production ~~Class~~and Bacquisition ~~Common Stock. As~~ of ~~September~~live-action ~~19,~~and ~~2003,~~animated ~~FEG Holdings,~~motion ~~Inc.,~~pictures anfor ~~indirect~~distribution ~~wholly-owned~~and ~~subsidiary~~licensing ofin ~~News~~all ~~Corporation,~~formats ~~owned~~in all ~~547~~entertainment media worldwide,~~500,000~~ ~~shares~~and ofthe ~~Class~~production Bof ~~Common~~original ~~Stock~~television ofprogramming in the ~~Company.~~United States and Canada;

20• Television Stations, which principally consists of the operation of 35 full power broadcast television stations, including nine duopolies, in the United States. Of these stations, 25 are affiliated with the FOX network, nine with the UPN network and one is an independent station;

~~Table~~• Television Broadcast Network, which principally consists of ~~Contents~~the broadcasting of network programming in the United States; and

~~ITEM~~• ~~6. SELECTED~~Cable ~~CONSOLIDATED~~Network ~~FINANCIAL~~Programming, ~~DATA~~which principally consists of the production and licensing of programming distributed through cable television systems and direct broadcast satellite (“DBS”) operators in the United States.

~~The~~Filmed ~~selected~~Entertainment consolidated financial data should be read in conjunction with “Item 7-Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8-Financial Statements and Supplementary Data” and the other financial information included elsewhere herein.

	For the year ended June 30,
	2003		2002(2)			2001(3)			2000(4)		1999(5)
	(in millions, except per share data)
STATEMENT OF OPERATIONS DATA:
Revenues(1)	$	11,002	$	9,725		$	8,414		$	8,517	$	8,013
Operating income (loss)		1,783		(103	)		652			656		716
Income before cumulative effect of accounting change		1,031		607			206			145		205
Net income (loss)		1,031		581			(288	)		145		205
Basic and diluted earnings per share before cumulative effect of accounting change	$	1.17	$	0.72		$	0.28		$	0.20	$	0.33
Basic and diluted earnings (loss) per share	$	1.17	$	0.69		$	(0.40	)	$	0.20	$	0.33
	As of June 30,
	2003		2002			2001			2000		1999
	(in millions)
BALANCE SHEET DATA:
Cash and cash equivalents	$	72	$	56		$	66		$	114	$	121
Total assets		23,299		22,876			17,856			17,930		13,163
Due to affiliates of News Corporation		704		1,413			2,866			2,739		1,389
Borrowings		—		942			1,032			974		53
Shareholders’ equity		14,303		12,095			7,968			8,246		6,668

The Filmed Entertainment segment derives revenue from theatrical distribution, home entertainment sales and distribution through pay-per-view, pay television services and broadcast television. The revenues and operating results of the Filmed Entertainment segment are significantly affected by the timing of the Company’s theatrical and home entertainment releases, the number of its original and returning television series that are aired by television networks, and the number of its television series in off-network syndication. Theatrical release dates are determined by several factors, including timing of vacation and holiday periods and competition in the marketplace.

~~FOOTNOTES:~~The home entertainment market, more specifically DVDs, has emerged as the fastest growing revenue stream in the filmed entertainment industry. Industry analysts expect this growth to continue over the next several years. Consistent with industry trends, the Company’s DVD revenues rose approximately 58% for the year ended June 30, 2004 over the prior year, with 78% and 22% of DVD revenues generated from the sale and distribution of film titles and television titles, respectively.

~~(1)~~24 In January 2002, the Company adopted Emerging Issues Task Force No. 01-09, “Accounting for the Consideration Given by a Vendor to a Customer or a Reseller of the Vendor’s Products,” which was effective for the Company as of January 1, 2002. As required, the Company has classified the amortization of cable distribution investments against revenues for all periods presented. Operating income (loss), Net income (loss) and Earnings (loss) per share are not affected by this classification. This classification affects the Company’s and the Cable Network Programming segment’s revenues. The effect of the classification on the Company’s revenues is as follows:

	For the year ended June 30,
	2003			2002			2001			2000			1999
	(in millions)
Gross Revenues	$	11,127		$	9,841		$	8,504		$	8,589		$	8,057
Amortization of cable distribution investments		(125	)		(116	)		(90	)		(72	)		(44	)
Revenues	$	11,002		$	9,725		$	8,414		$	8,517		$	8,013

Operating costs incurred by the Filmed Entertainment segment include exploitation costs, primarily prints and advertising; the amortization of capitalized production, overhead and interest costs; and participations and talent residuals. Selling, general and administrative expenses include salaries, employee benefits, rent and other routine overhead.

~~(2)~~Feature ~~Fiscal~~film ~~2002~~and ~~includes~~television production and distribution are speculative businesses since the ~~operating~~revenues ~~results~~derived from the production and distribution of ~~Chris-Craft~~a ~~Industries,~~feature ~~Inc.~~film or television series depend primarily upon their acceptance by the public, which ~~was~~is ~~acquired~~difficult into ~~July~~predict. ~~2001,~~The ~~and~~commercial success of a feature film or television series also depends upon the ~~$909~~quality ~~million~~and ~~write-down~~acceptance of other competing films and television series released into the ~~Company’s~~marketplace ~~national~~at ~~sports~~or ~~contracts.~~near ~~Also~~the ~~included~~same intime, ~~Fiscal~~the ~~2002~~availability ~~Net~~of ~~income~~alternative ~~(loss)~~forms ~~and~~of ~~Basic~~entertainment and ~~diluted~~leisure ~~earnings~~time ~~(loss)~~activities, general ~~per~~economic ~~share~~conditions isand ~~the~~other ~~pre-tax~~tangible ~~gain~~and intangible factors, all of ~~$1.4~~which ~~billion~~can onchange and cannot be predicted with certainty. Further, the ~~sale~~theatrical success of a feature film and the ~~Company’s~~audience ~~interest~~ratings infor ~~Fox~~a ~~Family~~television ~~Worldwide,~~series ~~Inc.~~are ~~(“FFW”)~~generally key ~~and~~factors ~~the~~in ~~Company’s~~generating ~~$26~~revenues ~~million~~from ~~share~~other ofdistribution ~~FFW’s~~channels, ~~after-tax~~such ~~cumulative~~as ~~effect~~home ofentertainment ~~accounting~~and ~~change~~premium ~~relating~~pay television, with respect to ~~the~~feature ~~adoption~~films, ofand ~~Statement~~syndication, ofwith ~~Position~~respect ~~No.~~to ~~(“SOP”)~~television ~~00-2~~series.

~~(3)~~Piracy ~~Fiscal~~continues ~~2001~~to ~~Net~~be ~~income~~a ~~(loss)~~significant ~~and~~issue ~~Basic~~for ~~and~~the ~~diluted~~filmed ~~earnings~~entertainment ~~(loss)~~industry, ~~per~~especially from ~~share~~online ~~include~~file ~~the~~sharing, ~~impact~~which ofhas ~~the~~expanded ~~after-tax~~from ~~charge~~music ofto ~~$494~~movies ~~million~~and ~~for~~television ~~the~~programming ~~cumulative~~due ~~effect~~to ofchanges ~~accounting~~in ~~change~~technology. ~~relating~~The Company has taken, and will continue to ~~the~~take, ~~Company’s~~a ~~adoption~~variety of ~~SOP~~actions ~~00-2~~to combat piracy, both individually and together with industry associations.

~~(4)~~Television ~~Fiscal 2000 includes the operating results of Fox Sports Networks~~Stations, ~~LLC,~~Television ~~which~~Broadcast ~~was~~Network and ~~fully~~Cable ~~acquired~~Network inProgramming ~~July 1999.~~

~~(5)~~ The ~~financial~~two ~~statements~~reportable ~~prior~~television tosegments derive ~~November~~revenues ~~11,~~principally ~~1998~~from ~~were~~the ~~presented~~sale onof aadvertising ~~combined basis~~time. ~~The~~Generally, ~~financial~~advertising ~~statements~~time ~~presented~~is ~~subsequent~~sold to ~~November~~national ~~11,~~advertisers ~~1998~~by ~~are~~the ~~consolidated~~Fox toBroadcasting ~~reflect~~Company a(“FOX”) ~~reorganization~~and ~~through~~to ~~which~~national ~~News~~“spot” ~~Corporation~~and ~~contributed~~local toadvertisers by the Company,’s group atof ~~book~~35 ~~value,~~owned ~~certain~~and operated full power television broadcast stations (“O&Os”) in their respective markets. The Cable Network Programming segment also derives a portion of its ~~assets~~revenues from national and ~~subsidiaries~~local ~~engaged~~advertising sales. The sale of advertising time is affected by viewer demographics, program ratings, major sporting events, major political elections and general market conditions. Adverse changes in the ~~production~~general market conditions for advertising may affect revenues and operating ~~distribution~~results. ofExpenditures ~~feature~~by ~~films~~advertisers tend to be cyclical, reflecting overall economic conditions, as well as budgeting and ~~television~~buying ~~programming~~patterns. ~~For~~A ~~reporting~~decline ~~purposes,~~in the ~~financial~~economic ~~statements~~prospects ~~for~~of ~~all~~advertisers ~~periods~~or ~~are~~the ~~collectively~~economy ~~referred~~in general could alter current or prospective advertisers’ spending priorities. This could cause our revenues and operating results to asdecline ~~Consolidated~~significantly ~~Financial~~in ~~Statements~~any given period.

21Rating points for the two reportable television segments and Cable Network Programming segment are factors that are weighed when deciding on the advertising rates and the renegotiation of affiliate rates that the Company receives. Poor ratings can lead to a reduction in pricing and advertising spending. Excluding sports, FOX’s ratings were lower in fiscal 2004 as compared to fiscal 2003. The Company is focused on improving its programming lineup to maintain its share of the advertising market. In June 2004, the Company launched its new programming schedule as part of the Company’s strategy to provide year-round programming on FOX. The Company launched new programming in June, in an effort to improve ratings, since the other networks do not usually launch new programming during the summer months and because the fall launch of FOX programming is delayed due to the completion of the Major League Baseball (“MLB”) season and post-season. At the Cable Network Programming segment, we continue to launch new and original programming and continue to examine opportunities to launch new Fox channels. The Company has announced the launch of a new reality cable channel to begin broadcast in fiscal 2005.

~~Table~~In April 2004, Nielsen Media Research (“Nielsen”) began to transition the existing local television ratings system to the use of ~~Contents~~Local People Meters (“LPMs”) in certain large markets. This transition to LPMs has adversely impacted the ratings of the O&Os in the markets where the transition has occurred.

~~ITEM~~The 7Cable Network Programming segment derives most of its revenues from monthly affiliate fees received from cable television systems and DBS operators based on the number of its subscribers, net of the amortization of cable distribution investments (capitalized fees paid to a cable operator or DBS operator to facilitate the launch of a cable network). ~~MANAGEMENT~~Monthly affiliate fees are dependent on maintenance of the cable networks’S ~~DISCUSSION~~multi-year ~~AND~~carriage ~~ANALYSIS~~arrangements OFwith ~~FINANCIAL~~cable television ~~CONDITION~~systems ~~AND~~and ~~RESULTS~~DBS OFoperators. ~~OPERATIONS~~The loss of a significant number of these arrangements or the loss of carriage on basic programming tiers could reduce the distribution of our cable networks, which may also adversely affect such networks’ revenues from subscriber fees and our ability to sell national and local advertising time.

~~General~~The most significant operating expenses of the two reportable television segments and the Cable Network Programming segment are expenses related to acquiring programming and the production and technical expenses related to operating the technical facilities of the broadcaster or cable network. Other expenses include promotional expenses related to improving the market visibility and awareness of the broadcaster or cable network and sales commissions paid to the in-house advertising sales force as well as salaries, employee benefits, rent and other routine overhead.

The ~~following~~sports ~~discussion~~rights ~~and~~contracts ~~analysis~~between ofthe Company, on the ~~Fox~~one ~~Entertainment~~hand, ~~Group~~and various professional sports leagues and teams, ~~Inc.’s~~on (the ~~“Company”)~~other, ~~financial~~have ~~condition~~varying duration and ~~results~~renewal ofterms. ~~operations should~~As bethese ~~read~~contracts inexpire, ~~conjunction~~we ~~with~~may ~~the~~seek renewals ~~Consolidated~~on ~~Financial~~commercial ~~Statements~~terms. ~~and~~However, third parties may outbid the ~~related~~current ~~Notes~~rights ~~thereto~~holders ~~included~~for ~~elsewhere~~such ~~herein~~rights contracts. In addition, professional sports leagues or teams may create

~~The~~25 ~~Company manages and reports its businesses in four segments:~~

•their ~~Filmed~~own ~~Entertainment,~~networks ~~which~~or ~~principally~~the ~~consists~~renewal ofcosts could substantially exceed the ~~production~~original ~~and~~contract ~~acquisition~~cost. The loss of ~~live-action~~rights ~~and~~could impact ~~animated~~the ~~motion~~extent ~~pictures~~of ~~for~~the ~~distribution~~sports coverage offered by FOX, its affiliates, and ~~licensing~~our inregional ~~all~~sports ~~formats~~networks in(“RSNs”), ~~all~~and ~~entertainment~~could ~~media~~adversely ~~primarily~~affect inour ~~the~~advertising ~~United~~and ~~States~~affiliate revenues. Conversely, ~~Canada~~if ~~and~~we ~~Europe~~are able to renew these contracts, ~~and~~our results ~~the~~could ~~production~~be ofadversely ~~original~~affected ~~television~~if escalations in sports programming rights costs are unmatched by increases in advertising rates and, in the ~~United~~case ~~States~~of ~~and~~cable ~~Canada;~~networks, subscriber fees.

•The ~~Television~~Company ~~Stations~~has several multi-year sports rights agreements, ~~which~~including ~~principally~~a ~~consists~~contract ofwith the ~~operation~~National Football League (“NFL”) through fiscal 2006, contracts with the National Association of Stock Car Auto Racing (“NASCAR”) through fiscal 2013 and a contract with MLB through fiscal 2007. These contracts provide the Company with the broadcast ~~television~~rights ~~stations~~to incertain national sporting events during their respective terms. The NASCAR contract contains certain early termination clauses that are exercisable by NASCAR. The costs of these sports contracts are charged to expense based on the ~~United~~ratio ~~States;~~of each period’s operating profits to estimated total remaining operating profit of the contract.

•The ~~Television~~Company ~~Broadcast~~continually ~~Network~~evaluates the recoverability of the rights costs against the revenues directly associated with the program material and related direct expenses over the expected contract lives. At December 31, 2001, the Company recorded an Other operating charge of $909 million. This charge related to a change in accounting estimate on the Company’s national sports rights agreements caused by the downturn in the advertising market, which ~~principally~~caused ~~consists~~the Company to write off programming cost inventory and to provide for estimated losses on these contracts over their estimated terms. This evaluation considered the severe downturn in sports-related advertising, the lack of any sustained advertising rebound subsequent to September 11, 2001 and the ~~broadcasting~~industry-wide reduction of ~~network~~projected ~~programming~~long-term advertising growth rates, all of which resulted in the ~~United~~Company’s ~~States;~~estimate of future directly attributable revenues associated with these contracts being lower than previously anticipated. Because the vast majority of costs incurred under these contracts are fixed, such as the rights costs and production costs, the results of these lower revenue estimates indicated that the Company would generate a loss over the estimated remaining term of the sports contracts. The charge by contract was as follows: NFL for $387 million, MLB for $225 million and NASCAR for $297 million.

•In ~~Cable~~accordance ~~Network~~with ~~Programming~~Accounting Principles Board (“APB”) Opinion No. 20, ~~which~~“Accounting ~~principally~~Changes,” ~~consists~~the Company determined that the impact of the ~~production~~charge ~~and~~on ~~licensing~~Basic ofand ~~programming~~diluted ~~distributed~~earnings ~~through~~(loss) ~~cable~~per ~~television~~share, ~~systems~~net ~~and~~of ~~direct~~tax ~~broadcast~~benefit ~~satellite~~of ~~(“DBS”)~~$346 ~~operators~~million, infor the ~~United~~year ~~States~~ended ~~and~~June ~~professional~~30, ~~sports~~2002 ~~team~~was ~~ownership~~a inloss ~~the~~per ~~United~~share ~~States~~of $0.67.

~~Sources~~The profitability of ~~Revenue~~these long-term national sports contracts as discussed above is based on the Company’s best estimates at June 30, 2004 of directly attributable revenues and costs; such estimates may change in the future, and such changes may be significant. Should revenues decline from estimates applied at June 30, 2004, an additional loss will be recorded. Should revenues improve as compared to estimated revenues, none of the recorded loss will be restored, but the Company will have a positive operating profit, which will be recognized over the estimated remaining contract term.

~~Filmed~~While ~~Entertainment. The~~the ~~Filmed~~Company ~~Entertainment~~seeks ~~segment~~to ~~derives~~ensure ~~revenue~~compliance ~~from~~with ~~theatrical~~federal ~~distribution,~~indecency ~~home~~laws ~~video~~ and ~~DVD~~related Federal ~~sales~~Communications ~~and~~Commission ~~distribution~~(“FCC”) ~~through pay-per-view~~regulations, ~~pay~~the ~~television~~definition ~~services~~of ~~and~~“indecency” ~~broadcast~~is ~~television.~~subject ~~The~~to ~~revenues~~interpretation and ~~operating~~there ~~results~~can ofbe ~~the~~no ~~Filmed~~assurance ~~Entertainment~~that ~~segment are significantly affected by~~ the ~~timing of the~~ Company’s ~~theatrical,~~will ~~home video~~not ~~and~~broadcast ~~DVD~~programming ~~releases, the number of its original and returning television series~~ that ~~are~~is ~~aired~~ultimately determined by ~~television~~the ~~networks~~FCC ~~and~~to violate the ~~number~~prohibition ofagainst ~~its television series in off-network syndication~~indecency. ~~Theatrical~~Such ~~release~~programming ~~dates~~could ~~are~~subject ~~determined by several factors, including timing of vacation and holiday periods and competition in~~ the ~~marketplace.~~Company ~~Each~~to ~~motion~~regulatory ~~picture~~review isor ainvestigation, ~~separate and distinct product~~fines, ~~and~~adverse ~~its~~publicity ~~financial~~or ~~success~~other ~~depends~~sanctions ~~upon~~including ~~many~~the ~~factors,~~loss ~~including~~of ~~public~~station ~~acceptance~~licenses.

~~Television~~RESULTS ~~Stations~~OF ~~and Television Broadcast~~OPERATIONS Network. The two reportable television segments derive their revenues principally from the sale of advertising time. Generally, advertising time is sold to national advertisers by the Fox Broadcasting Company (“FOX”) and to national “spot” and local advertisers by the Company’s group of 35 owned and operated full power television broadcast stations (“O&Os”) in their respective markets. The sale of advertising time is affected by viewer demographics, program ratings and general market conditions. Adverse changes in the general market conditions for advertising may affect revenues.

~~Cable~~Use ~~Network~~of ~~Programming. The~~Operating ~~Cable~~income ~~Network~~before ~~Programming~~depreciation ~~segment derives revenues from monthly affiliate fees received from cable television systems~~ and ~~DBS operators based on the number of subscribers, net of the~~ amortization ~~of cable distribution investments, as well as from the sale of advertising time. Monthly affiliate fees are dependent~~ on maintenance of carriage arrangements with cable television systems and DBS operators. The sale of advertising time is affected by viewer demographics, program ratings and general market conditions. Adverse changes in general market conditions for advertising may affect revenues.

InOperating ~~November~~income ~~2001,~~before ~~the Financial~~depreciation ~~Accounting~~and ~~Standards~~amortization, ~~Board~~defined as operating income (~~“FASB”~~loss) ~~issued~~plus ~~Emerging~~depreciation ~~Issues~~and ~~Task~~amortization ~~Force~~and ~~No.~~the ~~(“EITF”)~~amortization ~~01-09,~~of ~~“Accounting~~cable ~~for~~distribution investments, eliminates the ~~Consideration~~variable ~~Given~~effect byacross aall ~~Vendor~~business tosegments aof ~~Customer~~non-cash ordepreciation aand ~~Reseller~~amortization. ofDepreciation and amortization expense includes the ~~Vendor’s~~depreciation ~~Products,”~~of ~~which was~~property ~~effective~~and ~~for~~equipment, ~~the~~as ~~Company~~well as amortization of ~~January~~finite-lived 1,intangible ~~2002~~assets. ~~This~~Through ~~EITF~~fiscal 2002, ~~among~~depreciation ~~other~~and ~~things,~~amortization ~~codified~~expense also included the ~~issues~~amortization of goodwill and ~~examples~~indefinite-lived intangible assets. Amortization of ~~EITF~~cable ~~00-25,~~distribution ~~“Vendor~~investments ~~Income~~represents ~~Statement~~a ~~Characterization~~reduction against revenues over the term of ~~Consideration~~a ~~Paid~~carriage arrangement and as such it is excluded from Operating income before depreciation and amortization. Operating income before depreciation and amortization is a non-GAAP measure and it should be considered in addition to, not as a ~~Reseller~~substitute for, operating income (loss), net income (loss), cash flow and other measures of ~~the~~financial ~~Vendor’s~~performance reported in accordance ~~Products.~~with generally accepted accounting principles (“GAAP”). ~~EITF~~Operating ~~00-25~~income ~~states~~before ~~that~~depreciation ~~customer~~and ~~incentives~~amortization does not reflect cash available to fund requirements, ~~which~~and the items excluded from Operating income before depreciation and amortization, such as depreciation and amortization, are significant components in assessing the Company’s financial performance.

22Management believes that Operating income before depreciation and amortization is an appropriate measure for evaluating the operating performance of the Company’s business segments. Operating income before depreciation and amortization, which is the information reported to and used by the Company’s chief decision maker for the purpose of making decisions about the allocation of resources to segments and assessing their performance, provides management, investors and equity analysts a measure to analyze

~~Table~~26 ~~of Contents~~

~~consist~~operating ofperformance ~~the amortization~~ of ~~cable~~each ~~distribution~~business ~~investments~~segment ~~(capitalized~~and ~~fees~~enterprise ~~paid~~value toagainst ahistorical ~~cable~~and orcompetitors’ ~~DBS operator to facilitate the launch of a cable network)~~data, ~~should~~although behistorical ~~presented as a reduction in revenue in the consolidated statement of operations. As required~~results, ~~the~~including ~~Company has classified the amortization of cable distribution investments against revenues for all periods presented.~~ Operating income ~~(loss),~~ ~~Net~~before ~~income~~depreciation ~~(loss)~~ and ~~Earnings~~amortization, ~~(loss)~~may ~~per share are~~ not ~~affected~~be byindicative ~~this~~of ~~classification.~~future ~~This~~results ~~classification~~as ~~affects~~operating ~~the~~performance ~~Company’s~~is ~~and~~highly ~~the~~contingent ~~Cable~~on ~~Network~~many ~~Programming~~factors ~~segment’s~~including ~~revenues.~~customer ~~The~~tastes ~~effect~~and ~~of the classification on the~~preferences. ~~Company’s revenues is as follows:~~

	For the year ended June 30,
	2003			2002			2001
	(in millions)
Gross Revenues	$	11,127		$	9,841		$	8,504
Amortization of cable distribution investments		(125	)		(116	)		(90	)
Revenues	$	11,002		$	9,725		$	8,414

The following comparative discussion of the results of operations of the Company includes, among other factors, an analysis of changes in business segment Operating income before depreciation and amortization.

~~Components~~Results of ~~Expenses~~ Operations—Fiscal 2004 versus Fiscal 2003

~~Filmed Entertainment. Operating~~The ~~costs~~following ~~incurred~~table bysets ~~the~~forth ~~Filmed Entertainment segment include exploitation costs, primarily prints and advertising;~~ the ~~amortization~~Company’s ofoperating ~~capitalized production~~results, ~~overhead~~by ~~and interest costs; and participations and talent residuals. Selling~~segment, ~~general~~for ~~and~~fiscal ~~administrative~~2004 ~~expenses~~as ~~include~~compared ~~salaries,~~to ~~employee~~fiscal ~~benefits, rent and other routine overhead~~2003.

Television Stations, Television Broadcast Network and Cable Network Programming. Operating expenses of the two reportable television segments and the Cable Network Programming segment include expenses related to acquiring programming and rights to programming. Operating expenses also typically include production and technical expenses related to operating the technical facilities of the broadcaster or cable network. Selling, general and administrative expenses include all promotional expenses related to improving the market visibility and awareness of the broadcaster or cable network and sales commissions paid to the in-house sales force involved in the sale of advertising as well as salaries, employee benefits, rent and other routine overhead.


	For the years ended June 30,
	2004			2003			Change			% Change
	(in millions)
Revenues: ⁽¹⁾
Filmed Entertainment	$	5,210		$	4,498		$	712		16	%
Television Stations		2,166			2,115			51		2	%
Television Broadcast Network		2,390			2,244			146		7	%
Cable Network Programming		2,409			2,145			264		12	%

Total revenues	$	12,175		$	11,002		$	1,173		11	%

Operating income (loss):
Filmed Entertainment	$	913		$	662		$	251		38	%
Television Stations		977			921			56		6	%
Television Broadcast Network		(80	)		(100	)		20		20	%
Cable Network Programming		488			300			188		63	%

Total operating income		2,298			1,783			515		29	%

Interest expense, net		(166	)		(136	)		(30	)	(22	)%
Equity earnings (losses) of affiliates, net		(5	)		(1	)		(4	)		**
Minority interest in subsidiaries		(6	)		(29	)		23		79	%
Other, net		60			—			60			**

Income before provision for income taxes		2,181			1,617			564		35	%
Provision for income tax expense on a stand-alone basis		(828	)		(586	)		(242	)	(41	)%

Net income	$	1,353		$	1,031		$	322		31	%

Other data:
Operating income before depreciation and amortization: ⁽²⁾
Filmed Entertainment	$	967		$	717		$	250		35	%
Television Stations		1,032			983			49		5	%
Television Broadcast Network		(55	)		(81	)		26		32	%
Cable Network Programming		658			472			186		39	%

Total operating income before depreciation and amortization	$	2,602		$	2,091		$	511		24	%

Depreciation and amortization:
Filmed Entertainment	$	54		$	55		$	(1	)	(2	)%
Television Stations		55			62			(7	)	(11	)%
Television Broadcast Network		25			19			6		32	%
Cable Network Programming		41			47			(6	)	(13	)%

Total depreciation and amortization	$	175		$	183		$	(8	)	(4	)%

~~Depreciation~~** ~~and~~not Amortization Expense. Depreciation and amortization expense includes the depreciation of property and equipment, as well as amortization of finite-lived intangible assets. Through fiscal 2002, depreciation and amortization expense also included the amortization of goodwill and indefinite-lived intangible assets. On July 1, 2002, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” In accordance with SFAS No. 142, goodwill and indefinite-lived intangible assets are no longer amortized, resulting in a reduction of Depreciation and amortization expense beginning in fiscal 2003. meaningful

~~Other~~27 Operating Charge. The Company has several multi-year sports rights agreements, including a contract with the National Football League (“NFL”) through fiscal year 2006, contracts with the National Association of Stock Car Auto Racing (“NASCAR”) through fiscal year 2013 and a contract with Major League Baseball (“MLB”) through fiscal year 2007. These contracts provide the Company with the broadcast rights to certain national sporting events during their respective terms. The NASCAR contract contains certain early termination clauses that are exercisable by NASCAR.

~~The~~FOOTNOTES: Company continually evaluates the recoverability of the rights costs against the revenues directly associated with the program material and related direct expenses over the expected contract lives. At December 31, 2001, the Company recorded an Other operating charge of $909 million. This charge related to a change in accounting estimate on the Company’s national sports rights agreements caused by the downturn in the advertising market, which caused the Company to write off programming costs inventory and to provide for estimated losses on these contracts over their estimated terms. This evaluation considered the severe downturn in sports-related advertising, the lack of any sustained advertising rebound subsequent to September 11th and the

23(1) In January 2002, the Company adopted Emerging Issues Task Force No. (“EITF”) 01-09, “Accounting for the Consideration Given by a Vendor to a Customer or a Reseller of the Vendor’s Products,” which was effective for the Company as of January 1, 2002. As required, the Company has classified the amortization of cable distribution investments against revenues for all periods presented. Operating income, Net income and Earnings per share are not affected by this classification. This classification affects the Company’s and the Cable Network Programming segment’s revenues. The effect of the classification on the Company’s revenues is as follows:


	For the years ended June 30,
	2004			2003
	(in millions)
Gross revenues	$	12,304		$	11,127
Amortization of cable distribution investments		(129	)		(125	)

Revenues	$	12,175		$	11,002

~~industry-wide~~(2) ~~reduction~~Operating ofincome ~~projected~~before ~~long-term~~depreciation ~~advertising~~and ~~growth~~amortization, ~~rates~~defined as operating income (loss) plus depreciation and amortization and the amortization of cable distribution investments, eliminates the variable effect across all business segments of ~~which~~non-cash ~~resulted~~depreciation inand amortization. Depreciation and amortization expense includes depreciation of property and equipment, as well as the ~~Company’s~~amortization ~~estimate~~of finite-lived intangible assets. Amortization of ~~future~~cable ~~directly~~distribution ~~attributable~~ investments represents a reduction against revenues ~~associated~~over ~~with~~the ~~these~~term ~~contracts~~of ~~being~~a ~~lower~~carriage ~~than~~arrangement ~~previously~~and ~~anticipated~~as such it is excluded from Operating income before depreciation and amortization. ~~Because~~Since ~~the~~Operating ~~vast~~income ~~majority~~before ofdepreciation ~~costs~~and ~~incurred~~amortization ~~under~~is ~~these~~a ~~contracts~~non-GAAP ~~are~~measure, ~~fixed~~it should be considered in addition to, ~~such~~not as ~~the~~a ~~rights~~substitute ~~costs~~for, ~~and~~operating ~~production~~income ~~costs~~(loss), ~~the~~net ~~results~~income (loss), cash flow and other measures of ~~these~~financial ~~lower~~performance ~~revenue estimates~~prepared ~~indicated~~in ~~that~~accordance with GAAP and presented in the ~~Company~~consolidated ~~would~~financial ~~generate~~statements aincluded ~~loss~~elsewhere ~~over~~in ~~the~~this ~~estimated~~filing. ~~remaining~~The ~~term~~following is a reconciliation of ~~the~~Operating ~~sports~~income ~~contracts.~~before depreciation and amortization to Operating income (loss) by segment:

In accordance with Accounting Principles Board (“APB”) Opinion No. 20, “Accounting Changes,” the Company has determined that the impact of the charge on Basic and diluted earnings (loss) per share, net of tax benefit of $346 million, for the year ended June 30, 2002 was $0.67 loss per share.


	For the year ended June 30, 2004
	Operating income before depreciation and amortization			Depreciation and amortization		Amortization of cable distribution investments		Operating income (loss)
	(in millions)
Filmed Entertainment	$	967		$	54	$	—	$	913
Television Stations		1,032			55		—		977
Television Broadcast Network		(55	)		25		—		(80	)
Cable Network Programming		658			41		129		488

Total	$	2,602		$	175	$	129	$	2,298


	For the year ended June 30, 2003
	Operating income before depreciation and amortization			Depreciation and amortization		Amortization of cable distribution investments		Operating income (loss)
	(in millions)
Filmed Entertainment	$	717		$	55	$	—	$	662
Television Stations		983			62		—		921
Television Broadcast Network		(81	)		19		—		(100	)
Cable Network Programming		472			47		125		300

Total	$	2,091		$	183	$	125	$	1,783

~~The~~Overview ~~costs~~For ofthe ~~these~~year ended ~~sports~~June ~~contracts~~30, ~~are~~2004, ~~charged~~the Company’s revenues increased $1,173 million from $11,002 million for the year ended June 30, 2003 to ~~expense~~$12,175 ~~based~~million. onThis 11% increase was primarily due to revenue increases at the ~~ratio~~Filmed ofEntertainment ~~each~~and ~~period’s~~Cable Network ~~operating~~Programming ~~profits~~segments. Operating expenses increased approximately 9% for the year ended June 30, 2004 due to higher film amortization and increased home entertainment manufacturing and marketing costs at the Filmed Entertainment segment and ~~estimated~~increased ~~total~~sports ~~remaining~~programming ~~operating~~costs ~~profit~~for ofMLB at the ~~contract~~Television Broadcast Network segment. ~~Considering~~Selling, general and administrative expenses decreased approximately $37 million or 3% from fiscal 2003 primarily due to the ~~provision~~impact of the sale of the Los Angeles Dodgers (“Dodgers”) in February 2004 and the recovery of approximately $~~909~~15 million ~~for~~of ~~estimated~~certain ~~losses~~receivable ~~and~~claims ~~absent~~against Adelphia Communications Corporation (“Adelphia”). As a ~~difference~~result ~~between~~of the ~~actual~~bankruptcy ~~future~~of ~~revenues~~Adelphia, these receivables were written off in the fourth quarter of fiscal 2002. Depreciation and ~~costs~~amortization asexpense ~~compared~~decreased 4% from fiscal 2003 primarily due to the ~~estimated~~sale ~~future~~of ~~revenues~~the ~~and~~Dodgers. ~~costs~~For the year ended June 30, 2004, Operating income and Operating income nobefore ~~operating~~depreciation ~~profit~~and oramortization ~~loss~~increased ~~will~~$515 bemillion ~~recognized~~to by$2,298 ~~the~~million ~~Company~~and ~~over~~$511 ~~the~~million ~~estimated~~to ~~remaining~~$2,602 ~~term~~million, ofrespectively, from fiscal 2003. These increases were due to improved results at the ~~sports~~Filmed ~~contracts~~Entertainment and Cable Network Programming segments.

~~The~~28 profitability of these long-term national sports contracts as discussed above is based on the Company’s best estimates at June 30, 2003 of directly attributable revenues and costs; such estimates may change in the future, and such changes may be significant. Should revenues decline from estimates applied at June 30, 2003, an additional loss will be recorded. Should revenues improve as compared to estimated revenues, none of the recorded loss will be restored, but the Company will have a positive operating profit, which will be recognized over the estimated remaining contract term.

~~Critical~~Equity ~~Accounting~~losses ~~Policies~~of affiliates of $5 million for the year ended June 30, 2004 increased $4 million from a loss of $1 million for fiscal 2003. This increase was primarily due to losses from the first time inclusion of the Company’s share of the results of The DIRECTV Group, Inc. (“DTV”), which was acquired on December 22, 2003, which was partially offset by improved results at Regional Programming Partners (“RPP”).

~~Our discussion and analysis of our financial condition and results of~~Net ~~operations~~income ~~are~~for ~~based~~the ~~upon~~year ~~our~~ended ~~consolidated~~June ~~financial statements~~30, ~~which~~2004 ~~have~~was ~~been~~$1,353 ~~prepared~~million in($1.44 ~~accordance~~per ~~with~~share), ~~accounting~~an ~~principles~~improvement ~~generally~~of ~~accepted~~$322 inmillion ~~the~~from ~~United~~$1,031 ~~States~~million (~~“GAAP”)~~$1.17 ~~The~~per ~~preparation~~share) offor ~~these~~fiscal ~~financial~~2003. ~~statements~~This ~~require~~improvement us was due to ~~make~~the ~~estimates~~increased ~~and~~operating ~~judgments~~results ~~that~~noted ~~affect~~above for the ~~reported~~year ended ~~amounts~~June ~~of assets~~30, ~~liabilities,~~2004 ~~revenues~~as ~~and~~compared ~~expenses~~to ~~and~~fiscal ~~the~~2003. ~~disclosures~~As of ~~commitments~~June ~~and~~30, ~~contingencies. On an ongoing basis~~2004, the Company ~~evaluates~~had ~~its~~938 ~~estimates,~~million ~~which~~weighted ~~are~~average ~~based~~shares ~~on historical~~outstanding ~~experience~~as ~~and~~compared onto ~~various~~881 ~~other~~million ~~assumptions~~weighted ~~that~~average ~~are~~shares ~~believed~~outstanding toas beof ~~reasonable~~June ~~under~~30, ~~the circumstances~~2003. The ~~result~~increase ofin ~~these~~weighted ~~evaluations~~average shares ~~forms~~outstanding ~~the~~was ~~basis~~due ~~for~~to ~~making~~50 ~~judgments~~million ~~about~~shares ~~the~~that ~~carrying~~were ~~values~~issued ofin ~~assets~~November ~~and~~2002 ~~liabilities~~related ~~and~~to ~~the reported~~a ~~amount~~stock ofoffering ~~revenue~~by ~~and~~the ~~expenses~~Company ~~that~~and ~~are~~75 ~~not~~million ~~readily~~shares ~~apparent~~that ~~from~~were ~~other~~issued ~~sources.~~to ~~Actual~~The ~~results~~News ~~may~~Corporation ~~differ~~Limited ~~from~~(“News ~~these~~Corporation”) ~~estimates~~in ~~under~~connection ~~different~~with ~~assumptions.~~the acquisition ~~The~~of ~~following~~DTV ~~accounting~~on ~~policies~~December ~~require~~22, ~~significant management judgments and estimates~~2003.

Filmed ~~entertainment~~Entertainment ~~and~~- For ~~television~~the ~~programming costs. Accounting~~year ~~for~~ended ~~the~~June ~~production~~30, ~~and~~2004, ~~distribution~~revenues ofat ~~motion~~the ~~pictures~~Filmed ~~and~~Entertainment ~~television~~segment ~~programming~~increased isfrom in$4,498 ~~accordance~~million ~~with~~to ~~Statement~~$5,210 ofmillion, ~~Position~~or No16%. ~~00-2,~~This ~~“Accounting~~increase bywas ~~Producers~~primarily ordue ~~Distributors~~to ofhigher ~~Films”~~worldwide home entertainment revenues reflecting the strong worldwide ~~(“SOP~~performances 00of previously successful theatrical releases, X-2”): X-Men United, ~~which~~Daredevil, ~~requires~~League ~~management’s~~of ~~judgment~~Extraordinary asGentlemen, itand ~~relates~~Cheaper toby ~~total~~the ~~revenues~~Dozen, toand beimproved ~~received~~performance ~~and~~from ~~costs~~various library titles on DVD as compared to befiscal 2003. ~~incurred~~Television ~~throughout~~titles, ~~the~~including ~~life~~The ofSimpsons, ~~each~~24, ~~program~~Buffy orthe ~~its~~Vampire ~~license~~Slayer, ~~period.~~Dharma ~~These~~& ~~judgments~~Greg, ~~are~~and ~~used~~Family toGuy, ~~determine~~also contributed to the ~~amortization~~ ofincrease ~~capitalized~~in ~~filmed~~home entertainment revenue. In addition, a stronger film lineup and ~~television~~more ~~programming~~feature ~~costs~~films ~~associated~~available ~~with~~during fiscal 2004 contributed higher revenues ~~earned~~from ~~and~~worldwide ~~any~~pay ~~fair~~and ~~value~~free ~~adjustments~~television. Fiscal 2003 home entertainment titles included the successes of Ice Age, Minority Report, and Shallow Hal.

~~Filmed~~The ~~Entertainment~~year ~~and~~ended ~~television~~June ~~programming~~30, ~~costs~~2004 ~~are~~also ~~amortized~~included inseveral ~~the~~strong ~~statement~~theatrical ofreleases, including ~~operations~~Day inAfter ~~the~~Tomorrow, ~~direct~~Dodgeball, ~~proportion~~Man ~~that~~On ~~revenues~~Fire, ~~currently recognized~~Garfield, ~~bears~~and toMaster ~~management’s~~and ~~estimate~~Commander: ofThe ~~total~~Far ~~future~~Side ~~revenues~~of ~~to be received throughout~~ the ~~life~~World. ofFiscal ~~each~~2003 ~~motion~~theatrical ~~picture~~releases orincluded ~~television~~X-2: ~~program.~~X-Men ~~Estimates~~United, ofDaredevil, ~~revenues~~Minority ~~are~~Report, ~~reviewed~~Road To Perdition, and ~~reassessed periodically on a title-by-title basis~~Drumline.

InFor the ~~Television~~year ~~Broadcast~~ended ~~Network~~June ~~segment~~30, we2004, ~~amortize~~ the ~~costs~~Filmed ofEntertainment ~~multi-year~~segment ~~sports~~reported ~~contracts~~Operating ~~based~~income onof ~~the~~$913 ~~ratio~~million ofas ~~each~~compared ~~period’s~~to ~~operating~~$662 ~~profit~~million ~~earned~~in onfiscal ~~the~~2003. ~~contract~~Operating toincome ~~the~~before ~~estimated~~depreciation ~~total~~and ~~operating~~amortization ~~profit~~increased ~~expected~~ to be$967 ~~earned~~million ~~over~~as ~~the~~compared ~~remaining~~to ~~life~~$717 ofmillion ~~the~~in ~~contract~~fiscal ~~from all segments~~2003. ~~Estimates~~These ofimprovements ~~total~~were ~~operating~~due ~~profit~~ to ~~be earned over~~ the ~~life~~revenue ofincreases ~~the~~noted ~~contract~~above, ~~are~~partially ~~reviewed~~offset ~~periodically~~by ~~and~~increased ~~amortization~~home isentertainment ~~adjusted~~marketing asand ~~necessary.~~manufacturing ~~Management’s~~costs ~~estimates~~directly ofassociated ~~total~~with ~~operating profit over~~ the ~~life~~increase ofin ~~the~~worldwide ~~contract~~home ~~are~~entertainment ~~primarily~~revenues. ~~dependent upon their~~

24Television Stations - For the year ended June 30, 2004, the Television Stations segment’s revenues increased to $2,166 million from $2,115 million in fiscal 2003. Advertising revenues in the 26 markets of the Company’s stations were consistent with the fiscal 2003. The Television Stations segment’s $51 million or 2% increase in revenues was primarily due to increased advertisements from the automotive and financial institutions categories, partially offset by fewer political advertisements. The decrease in political advertising in fiscal 2004 contributed to the Company’s O&Os 0.5% increase in market share, as the O&O’s proportional share of political advertising has historically been lower than other major networks. These share gains were also driven by strong sales for the Emmy Awards, American Idol, local morning newscasts and the NFL on FOX, which were partially offset by the non-renewal of the Boston Red Sox broadcasts in the Boston market. For the year ended June 30, 2004, the Television Stations segment generated Operating income of $977 million, an increase of $56 million, or 6% over fiscal 2003. Expenses decreased primarily due to lower program amortization and depreciation. Operating income before depreciation and amortization increased $49 million to $1,032 million from $983 million in fiscal 2003 due to revenue increases.

~~Table~~Television Broadcast Network - For the year ended June 30, 2004, the Television Broadcast Network segment’s revenues increased $146 million to $2,390 million from $2,244 million in fiscal 2003. This 7% increase was primarily due to an increased number of ~~Contents~~MLB games televised and improved ratings and pricing for the MLB 2003 post season. Also contributing to the increase in advertising revenue were pricing increases for prime time programming, the Emmy Awards, which were not telecast on FOX in fiscal 2003, and higher pricing for NFL broadcasts. These increases were partially offset by ratings declines of 14% due to fewer episodes of American Idol being broadcast in fiscal 2004, the success in fiscal 2003 of Joe Millionaire and decreased Sunday night ratings. Operating losses for the Television Broadcast Network segment decreased $20 million to a loss of $80 million and Operating income before depreciation and amortization decreased $26 million to a loss of $55 million over fiscal 2003. Increased MLB, NFL and prime time programming costs partially offset the revenue increases.

~~projections~~Cable ofNetwork ~~the~~Programming ~~revenue~~- toTotal berevenues ~~derived~~for ~~from~~the ~~selling~~Cable ~~advertising~~Network ~~spots~~Programming insegment ~~the~~increased ~~games~~by ~~and~~$264 ~~other~~million ~~directly~~or ~~attributed~~approximately ~~revenue~~12% ~~sources~~from as$2,145 ~~well~~million ~~as direct selling~~to ~~costs~~$2,409 ~~and~~million for the ~~direct~~year ~~costs~~ended ~~associated~~June ~~with~~30, ~~broadcasting~~2004. ~~the~~This ~~games~~increase orreflected ~~events.~~improved Atresults ~~the~~across ~~inception~~all of ~~these~~the ~~contracts~~Cable ~~and~~Network ~~periodically~~Programming ~~thereafter,~~channels. ~~the~~Fox ~~Company~~News ~~evaluates~~Channel’s ~~the~~(“Fox ~~recoverability~~News”), of the ~~costs~~FX ~~associated~~Network’s ~~therewith~~(“FX”) ~~against~~and the RSNs’ revenues ~~directly associated~~increased ~~with~~24%, ~~the~~10%, ~~program~~and ~~material~~14%, ~~and~~respectively, ~~related~~over ~~expenses~~fiscal 2003.

~~Sales~~29 Returns. At the time of sale of home entertainment product, the Company records as a reduction of revenue the estimated impact of returns, rebates and other incentives. In determining the estimate of home entertainment product sales that will be returned, management analyzes historical returns, current economic trends and changes in customer demand and acceptance of the Company’s product. Based on this information, management reserves a percentage of each dollar of product sales that provide the customer with the right of return.

~~Accounts~~At ~~Receivable. The~~Fox ~~Company~~News, ~~continuously~~advertising ~~monitors~~revenues ~~its~~increased ~~customers’~~34% ~~payment~~from ~~profile~~fiscal 2003 primarily due to improved pricing and ~~maintains~~volume. aAffiliate revenue ~~provision~~increased ~~for~~5%, ~~estimated~~which ~~losses~~can ~~based~~be onattributed ~~its~~to ~~historical~~an ~~experience~~increase ~~and~~in ~~any specific~~subscribers ~~customer~~from ~~issues~~fiscal ~~that~~2003. ~~have~~As ~~been~~of ~~identified~~June 30, 2004, Fox News reached 85 million Nielsen households, a 3% increase over fiscal 2003.

~~Property,~~At ~~Plant and Equipment. Land~~FX, ~~buildings~~advertising ~~and~~revenues ~~equipment~~increased ~~are~~14% ~~recorded at cost and are depreciated on a straight-line method~~ over ~~the~~fiscal ~~estimated~~2003 ~~useful~~due ~~lives~~to ofhigher ~~such~~ratings ~~assets.~~and ~~Changes in circumstances such as~~improved ~~technological~~pricing. ~~advances,~~Affiliate ~~changes~~revenues toincreased ~~the~~6% ~~Company’s~~over ~~business~~fiscal ~~model~~2003, orreflecting ~~changes~~an inincrease ~~the Company’s capital strategy could result~~ in ~~the~~subscribers ~~actual~~and ~~useful~~average ~~lives~~rates ~~differing~~per ~~from the Company’s estimates~~subscriber. InAs ~~those~~of ~~cases~~June ~~where~~30, ~~the~~2004, ~~Company~~FX ~~determines that~~reached ~~the~~approximately ~~useful~~84 ~~life~~million ofNielsen ~~buildings and equipment should be shortened~~households, ~~the~~a ~~Company~~5% ~~would~~increase ~~depreciate the asset~~ over ~~its~~fiscal ~~revised remaining useful life thereby increasing depreciation expense~~2003.

~~Intangible~~At ~~Assets. The~~the ~~Company has a significant amount of intangible assets~~RSNs, ~~including goodwill,~~affiliate ~~Federal~~revenues ~~Communications~~increased ~~Commission~~14% ~~(“FCC”)~~over ~~licenses,~~fiscal ~~sports~~2003 ~~franchises,~~primarily ~~and~~due to ~~other~~an ~~copyright~~increase ~~products and trademarks. Intangible assets acquired~~ in ~~business~~DBS ~~combinations~~subscribers ~~are~~and ~~recorded~~higher ataverage ~~their~~rates ~~estimated~~per ~~fair market value at the date of acquisition~~subscriber. ~~Goodwill~~Advertising isrevenues ~~recorded~~increased as11% ~~the~~primarily ~~difference~~due ~~between the cost of acquiring an entity as compared~~ to ~~estimated~~higher ~~amounts~~pricing ~~assigned~~per togame ~~their~~for ~~tangible~~MLB ~~and~~telecasts ~~identifiable~~resulting ~~intangible~~from ~~net~~an ~~assets.~~improved ~~The~~sports ~~judgments~~advertising ~~made~~market, inmore ~~determining~~National ~~the estimated fair~~Hockey ~~value~~League ~~assigned~~(“NHL”) toand ~~each~~National ~~class~~Basketball ofAssociation ~~intangible~~(“NBA”) ~~assets~~events ~~acquired~~and asimproved ~~well~~news asand ~~their~~collegiate ~~useful~~advertising ~~lives can significantly impact net income~~sales.

The ~~Company~~Cable ~~accounts~~Network ~~for~~Programming ~~its~~segment ~~business~~reported ~~acquisitions~~Operating ~~under~~income ~~the~~of ~~purchase~~$488 ~~method~~million, an increase of ~~accounting.~~$188 ~~The~~million ~~total~~from ~~cost~~fiscal of2003. ~~acquisitions~~These isimprovements ~~allocated~~were toprimarily ~~the~~driven ~~underlying~~by ~~net~~the ~~assets,~~revenue ~~based~~increases onnoted ~~their~~above ~~respective~~as ~~estimated~~well ~~fair~~as ~~values.~~decreased ~~The~~losses ~~excess~~resulting offrom the ~~purchase~~sale ~~price~~of ~~over~~ the ~~estimated~~Dodgers ~~fair~~in ~~values~~February of2004 and the ~~tangible~~recovery ~~net~~of ~~assets~~approximately ~~acquired~~$15 ismillion ~~recorded~~of ascertain ~~intangibles.~~receivable ~~Determining~~claims ~~the~~against ~~fair~~Adelphia ~~value~~in ofNovember ~~assets~~2003. ~~acquired~~Partially ~~and~~offsetting ~~liabilities~~these ~~assumed~~improvements ~~requires~~were ~~management’s~~higher ~~judgment~~expenses ~~and~~for ~~often~~programming ~~involves~~enhancements ~~the~~at ~~use~~Fox ofNews, ~~significant~~higher ~~estimates~~average ~~and~~sports ~~assumptions,~~rights ~~including~~fees ~~assumptions~~and ~~with~~higher ~~respect~~entertainment toprogramming ~~future~~costs. ~~cash~~Operating ~~inflows~~income ~~and~~before ~~outflows,~~depreciation ~~discount~~and ~~rates,~~amortization ~~asset~~increased ~~lives,~~$186 ~~and~~million ~~market~~to ~~multiples,~~$658 ~~among~~million ~~other~~from ~~items~~$472 million in fiscal 2003.

~~Carrying~~Interest ~~values~~expense, ~~of goodwill and intangible~~net ~~assets~~- ~~with~~Interest ~~indefinite~~expense, ~~lives~~net ~~are~~increased ~~reviewed~~$30 ~~periodically~~million for ~~possible~~the ~~impairment~~year inended ~~accordance~~June ~~with SFAS No. 142~~30, ~~“Goodwill~~2004 ~~and~~from ~~Other~~$136 ~~Intangible~~million ~~Assets”.~~to ~~The~~$166 ~~Company’s~~million ~~impairment~~due ~~review~~to isan ~~based~~increase onin aaverage ~~discounted~~amounts ~~cash~~Due ~~flow~~to ~~approach~~affiliates ~~that requires significant management judgments. Impairment occurs when the carrying value~~ of ~~the~~News ~~reporting~~Corporation ~~unit~~resulting ~~exceeds~~from the ~~discounted~~acquisition ~~present value~~ of ~~the~~DTV ~~cash~~and ~~flows~~interest ~~for that reporting unit. An impairment charge is recorded for the difference between~~expense ~~the~~from ~~carrying~~New ~~value~~Millennium ~~and the net present value of estimated future cash flows, which represents the estimated fair value of the asset~~II. ~~The~~(See ~~Company~~Liquidity uses its judgment in assessing whether assets may have become impaired between annual valuations. Indicators such as unexpected adverse economic factors, unanticipated technological change or competitive activities, loss of key personnel, and ~~acts~~Capital ~~by governments and courts, may signal that an asset has become impaired~~Resources).

~~Income~~Equity earnings ~~Taxes. The~~(losses) ~~Company~~of ~~has~~affiliates, ~~not~~net ~~recorded~~- ~~a valuation~~Equity ~~allowance~~losses toof ~~reduce~~affiliates of $5 million for the ~~amount~~year ended June 30, 2004 increased $4 million from a loss of ~~its~~$1 ~~deferred~~million ~~tax~~for ~~assets,~~fiscal as2003. ~~the~~This ~~Company~~increase ~~believes~~was ~~that~~primarily itdue isto ~~more~~losses ~~likely~~from ~~than~~the ~~not~~first ~~that~~time inclusion ~~such~~of ~~assets~~the ~~will~~Company’s beshare ~~realized.~~of Inthe ~~making~~results ~~this~~of ~~estimate~~DTV, ~~management~~which ~~has~~was ~~considered~~acquired inon ~~accordance~~December ~~with~~22, ~~the~~2003, ~~Tax~~which ~~Sharing Agreement~~was ~~(as~~partially ~~defined~~offset ~~below)~~by ~~future~~improved results at RPP.


	Ownership Percentage	For the years ended June 30,
	Ownership Percentage	2004			2003			Change
		(in millions)
RPP	40%	$	71		$	23		$	48
DTV(a)	34%		(54	)		—			(54	)
National Geographic Channel - Domestic	67%		(14	)		(19	)		5
National Geographic Channel - International	50%		(1	)		(2	)		1
National Sports Partners	50%		(25	)		(20	)		(5	)
Other	Various		18			17			1

Total equity earnings (losses) of affiliates, net		$	(5	)	$	(1	)	$	(4	)

~~Table~~FOOTNOTES: ~~of Contents~~

~~taxable~~(a) ~~income~~The ~~and~~Company ~~ongoing~~purchased ~~tax~~its ~~planning~~34% ~~strategies~~interest in ~~assessing~~DTV ~~the need for the valuation allowance. In the event that management determines that it would not be able to realize all or part of the net deferred tax asset~~ in ~~the~~December ~~future, a valuation allowance would be recorded against the deferred tax asset with a corresponding charge to Provision for income tax expense recognized in the period such determination was made~~2003.

~~Employee Costs. Pension~~The ~~and~~Company’s ~~other~~share ~~postretirement~~of ~~benefits~~RPP’s ~~costs~~income ~~and~~was ~~obligations~~$71 ~~are~~million ~~dependent~~for onthe ~~assumptions~~twelve ~~used~~months inended ~~calculating~~June ~~such amounts. These assumptions include discount rates~~30, ~~health care cost trend rates~~2004, ~~benefits~~as ~~earned, interest~~compared ~~cost,~~to ~~expected~~$23 ~~return~~million onin ~~plan~~fiscal ~~assets, mortality rates and other factors~~2003. InThis ~~accordance~~improvement ~~with GAAP, differences between actual results and assumptions are accumulated and amortized as part of net periodic pension costs over future periods~~is ~~and,~~primarily ~~therefore,~~due ~~generally~~to ~~affect~~income recognized ~~expense~~by ~~and~~RPP ~~the~~from ~~recorded obligation in future periods. While management believes that~~ the ~~assumptions~~termination ~~used~~of ~~are~~certain ~~appropriate,~~MLB ~~differences~~rights ~~in actual experience or changes in assumptions may affect the Company’s pension and other postretirement obligations and future expense~~agreements.

~~Industry~~The ~~Accounting~~Company’s ~~Practices~~share of DTV’s results has been adjusted to reflect the Company’s initial determination of the fair value of DTV’s assets and liabilities as of December 22, 2003 and, as required, excludes certain transactions that were recognized by DTV as income and expense within its earnings during the six months ended June 30, 2004. Such adjustments, including DTV’s gains on the sale of securities, charges related to the sale of its PanAmSat business and write-off of deferred costs in connection with DTV’s change of accounting, were recognized in fiscal 2004 through the Company’s purchase price allocation. The Company’s resulting share of DTV’s losses was $54 million during the year ended June 30, 2004, which included $29 million from amortization of certain finite-lived intangibles.

~~Revenue~~Other, ~~Recognition. Revenues~~net ~~from theatrical distribution of feature films are recognized in accordance with SOP 00~~-2 ~~paragraph .07. Specifically~~Other, ~~revenues~~net ~~from~~was ~~the~~a ~~theatrical~~gain ~~distribution~~ of ~~motion~~$60 ~~pictures are~~million ~~recognized~~for asthe ~~they~~year ~~are~~ended ~~exhibited~~June ~~and revenues from home video and DVD sales~~30, ~~net~~2004. ofDuring afiscal ~~reserve for estimated returns~~2004, ~~together with related costs, are recognized on~~ the ~~date~~Company ~~that~~received ~~video~~a ~~and~~special ~~DVD~~dividend ~~units~~from Monarchy ~~are~~Enterprises ~~made~~Holdings ~~widely~~B.V., ~~available~~a ~~for~~cost ~~sale~~based byinvestment. ~~retailers and~~The ~~all~~portion ~~Company-imposed~~of ~~restrictions on~~ the ~~sale~~dividend ofrepresenting ~~video~~a ~~and DVD units have expired. Revenues from television~~ distribution ~~are~~of ~~recognized when~~ the ~~motion~~Company’s ~~picture~~share orof ~~television~~cumulative ~~program~~earnings isof ~~made available to~~ the ~~licensee~~investee ~~for~~of ~~broadcast.~~$52 ~~Television advertising~~million ~~revenue~~ is ~~recognized~~reflected as ~~the commercials are aired~~Other, net ofwhile ~~agency commissions. Subscriber fees received from cable systems and DBS operators are recognized as revenue in~~ the ~~period that services are provided, net of amortization of cable~~balance ~~distribution investments. Revenues from professional team ownership are recognized on a game-by-game basis.~~

~~Operating~~30 Expenses. In accordance with GAAP, the Company amortizes filmed entertainment and television programming costs using the individual-film-forecast method. Under the individual-film-forecast method, such programming costs are amortized for each film or television program in the ratio that current period actual revenue for such title bears to management’s estimated remaining unrecognized ultimate revenue as of the beginning of the current fiscal year to be recognized over approximately a six year period or operating profits to be realized from all media and markets for such title. The costs of multi-year national sports contracts for the Television Broadcast Network segment are charged to expense based on the ratio of each period’s operating profit to estimated total remaining operating profit of the contract. The costs of sports contracts for the Cable Network Programming segment and program rights for entertainment programs for the Television Stations and Television Broadcast Network segments are amortized primarily on a straight-line basis, generally based on the usage of the program or term of the license. Original cable programming is amortized on an accelerated basis. Management regularly reviews, and revises when necessary, its total revenue estimates on a title-by-title and contract basis, which may result in a change in the rate of amortization and/or a writedown of the film or television asset to fair value.

Atwas ~~the~~a ~~beginning~~return of ~~fiscal~~capital. ~~2001,~~For the ~~Company~~year ~~adopted~~ended ~~SOP~~June ~~00-2~~30, ~~which~~2004, ~~established~~Other, ~~new~~net ~~accounting~~also ~~standards~~included ~~for~~a ~~producers~~gain ~~and distributors~~ of ~~films~~$26 ~~and supersedes~~million ~~SFAS~~related ~~No.~~to ~~53.~~the settlement ~~SOP~~of ~~00-2~~the ~~establishes~~Company’s ~~new~~insurance ~~accounting~~claim ~~standards~~primarily for, ~~among~~its ~~other~~broadcast ~~things,~~tower ~~marketing~~at ~~and~~the ~~development~~World ~~costs.~~Trade ~~The~~Center ~~Company~~in ~~recorded~~New ~~a one-time~~York, ~~non-cash~~New ~~charge~~York ofand ~~$494~~a ~~million,~~gain ~~net~~ of $~~302~~9 million ~~tax,~~on asthe asale ~~cumulative effect~~ of ~~accounting~~ ~~change~~the asCompany’s ofinterest ~~July~~in ~~1, 2000. This charge primarily reflects~~ the ~~elimination~~SportsChannel ofChicago ~~marketing~~Associates and SportsChannel ~~certain~~Pacific ~~development~~Associates. ~~costs,~~These ~~which~~gains were ~~previously~~partially ~~capitalized~~offset ~~under~~by ~~SFAS~~a ~~No.~~loss 53of ~~and~~$19 ~~are~~million, nopending ~~longer~~the ~~capitalizable~~final ~~under~~determination ~~SOP~~of ~~00-2.~~contractual ~~Subsequent~~adjustments, toon the ~~adoption~~ sale of ~~SOP~~the ~~00-2,~~Dodgers ~~the~~and ~~Company’s~~a ~~accounting~~$7 ~~policy~~million isloss toon ~~expense~~the ~~marketing~~Company’s ~~and~~sale ~~certain~~of ~~development~~its ~~costs~~investment in asthe ~~incurred~~Staples Center.

~~Use~~Minority interest in subsidiaries - Minority interest in subsidiaries decreased $23 million from an expense of ~~Operating~~$29 ~~Income~~million ~~Before~~for ~~Depreciation~~the year ended June 30, 2003 to an expense of $6 million for the year ended June 30, 2004 due to the Company’s acquisition of substantially all of the outstanding equity of New Millennium II held by third parties. (See Liquidity and ~~Amortization~~Capital Resources).

~~Operating~~Provision ~~Income~~for ~~Before~~income ~~Depreciation~~tax ~~and~~on ~~Amortization~~a stand-alone basis - The effective tax rate for the year ended June 30, ~~defined~~2004 was 38.0% as ~~operating~~compared ~~income~~to ~~(loss)~~the ~~plus~~fiscal ~~depreciation~~2003 ~~and~~effective ~~amortization~~tax ~~and~~rate of 36.2%. The effective tax rate for fiscal 2004 was affected by both non-deductible goodwill expense in connection with the ~~amortization~~sale of ~~cable distribution~~the ~~investments~~Dodgers as well as an increase in state income tax provisions, ~~eliminates~~which increased the ~~variable~~effective tax rate above statutory rate levels.

2631

~~Table~~Results of ~~Contents~~Operations—Fiscal 2003 versus Fiscal 2002

~~effect~~The ~~across~~following ~~all~~table ~~business~~sets ~~segments~~forth ~~of non-cash depreciation and amortization. Depreciation and amortization expense includes~~ the ~~depreciation~~Company’s ofoperating ~~property and equipment~~results, asby ~~well as amortization of finite-lived intangible assets. In fiscal 2002 and 2001~~segment, ~~depreciation~~for ~~and amortization expense also included the amortization of goodwill and indefinite-lived intangible assets. Amortization of cable~~fiscal ~~distribution~~2003 ~~investments represents a reduction against revenues over the term of a carriage arrangement and~~ as ~~such~~compared ~~it is excluded from Operating Income Before Depreciation and Amortization. Since Operating Income Before Depreciation and Amortization is a non-GAAP measure, it should be considered in addition~~ to, ~~not~~fiscal ~~as a substitute for, operating income (loss), net income (loss), cash flow and other measures of financial performance reported in accordance with GAAP~~2002. Operating Income Before Depreciation and Amortization does not reflect cash available to fund requirements, and the items excluded from Operating Income Before Depreciation and Amortization, such as depreciation and amortization, are significant components in assessing the Company’s financial performance.

Management believes that Operating Income Before Depreciation and Amortization is an appropriate measure for evaluating the operating performance of the Company’s business segments. Operating Income Before Depreciation and Amortization, which is the information reported to and used by the Company’s chief decision maker for the purpose of making decisions about the allocation of resources to segments and assessing their performance, provides management, investors and equity analysts a measure to analyze operating performance of each business segment and enterprise value against historical and competitors’ data, although historical results, including Operating Income Before Depreciation and Amortization, may not be indicative of future results (as operating performance is highly contingent on many factors including customer tastes and preferences).


	For the years ended June 30,
	2003			2002			Change			% Change
	(in millions)
Revenues: ⁽¹⁾
Filmed Entertainment	$	4,498		$	4,048		$	450		11	%
Television Stations		2,115			1,875			240		13	%
Television Broadcast Network		2,244			2,048			196		10	%
Cable Network Programming		2,145			1,754			391		22	%

Total revenues	$	11,002		$	9,725		$	1,277		13	%

Operating income (loss):
Filmed Entertainment	$	662		$	485		$	177		36	%
Television Stations		921			598			323		54	%
Television Broadcast Network		(100	)		(283	)		183		65	%
Cable Network Programming		300			6			294			**
Other operating charge		—			(909	)		909			**

Total operating income		1,783			(103	)		1,886			**

Interest expense, net		(136	)		(241	)		105		44	%
Equity earnings (losses) of affiliates, net		(1	)		(144	)		143		99	%
Minority interest in subsidiaries		(29	)		(37	)		8		22	%
Other, net		—			1,540			(1,540	)		**

Income before provision for income taxes and cumulative effect of accounting change		1,617			1,015			602		59	%
Provision for income tax expense on a stand-alone basis		(586	)		(408	)		(178	)	(44	)%

Income before cumulative effect of accounting change		1,031			607			424		70	%
Cumulative effect of accounting change, net of tax		—			(26	)		26			**

Net income	$	1,031		$	581		$	450		77	%

Other data:
Operating income before depreciation and amortization: ⁽²⁾
Filmed Entertainment	$	717		$	544		$	173		32	%
Television Stations		983			798			185		23	%
Television Broadcast Network		(81	)		(263	)		182		69	%
Cable Network Programming		472			243			229		94	%
Other operating charge		—			(909	)		909			**

Total operating income before depreciation and amortization	$	2,091		$	413		$	1,678			**

Depreciation and amortization:
Filmed Entertainment	$	55		$	59		$	(4	)	(7	)%
Television Stations		62			200			(138	)	(69	)%
Television Broadcast Network		19			20			(1	)	(5	)%
Cable Network Programming		47			121			(74	)	(61	)%

Total depreciation and amortization	$	183		$	400		$	(217	)	(54	)%

~~The~~** ~~following~~not ~~comparative discussion of the results of operations of the Company includes, among other factors, an analysis of changes in business segment Operating Income Before Depreciation and Amortization.~~ meaningful

2732

~~Table~~FOOTNOTES: ~~of Contents~~

~~Results~~(1) ofIn ~~Operations—Fiscal~~January ~~2003~~2002, ~~versus~~the ~~Fiscal~~Company adopted EITF 01-09, which was effective for the Company as of January 1, 2002. As required, the Company has classified the amortization of cable distribution investments against revenues for all periods presented. Operating income, Net income and Earnings per share are not affected by this classification. This classification affects the Company’s and the Cable Network Programming segment’s revenues. The effect of the classification on the Company’s revenues is as follows:

The following table sets forth the Company’s operating results, by segment, for fiscal 2003 as compared to fiscal 2002.


	For the years ended June 30,
	2003			2002
	(in millions)
Gross revenues	$	11,127		$	9,841
Amortization of cable distribution investments		(125	)		(116	)

Revenues	$	11,002		$	9,725

	For the year ended June 30,
	2003			2002			Change			% Change
	(in millions)
Revenues(1):
Filmed Entertainment	$	4,498		$	4,048		$	450		11	%
Television Stations		2,115			1,875			240		13	%
Television Broadcast Network		2,244			2,048			196		10	%
Cable Network Programming		2,145			1,754			391		22	%
Total revenues	$	11,002		$	9,725		$	1,277		13	%
Operating income (loss):
Filmed Entertainment	$	662		$	485		$	177		36	%
Television Stations		921			598			323		54	%
Television Broadcast Network		(100	)		(283	)		183		65	%
Cable Network Programming		300			6			294		4,900	%
Other operating charge		—			(909	)		909		100	%
Total operating income (loss)		1,783			(103	)		1,886		1,831	%
Interest expense, net		(136	)		(241	)		105		44	%
Equity earnings (losses) of affiliates		(1	)		(144	)		143		99	%
Minority interest in subsidiaries		(29	)		(37	)		8		22	%
Other, net		—			1,540			(1,540	)	100	%
Income before provision for income taxes and cumulative effect of accounting change		1,617			1,015			602		59	%
Provision for income tax expense on a stand-alone basis		(586	)		(408	)		(178	)	(44	)%
Income before cumulative effect of accounting change		1,031			607			424		70	%
Cumulative effect of accounting change, net of tax		—			(26	)		26		100	%
Net income	$	1,031		$	581		$	450		77	%
Other data:
Operating Income Before Depreciation and Amortization(2):
Filmed Entertainment	$	717		$	544		$	173		32	%
Television Stations		983			798			185		23	%
Television Broadcast Network		(81	)		(263	)		182		69	%
Cable Network Programming		472			243			229		94	%
Other operating charge		—			(909	)		909		100	%
Total Operating Income Before Depreciation and Amortization	$	2,091		$	413		$	1,678		406	%
Depreciation and amortization:
Filmed Entertainment	$	55		$	59		$	(4	)	(7	)%
Television Stations		62			200			(138	)	(69	)%
Television Broadcast Network		19			20			(1	)	(5	)%
Cable Network Programming		47			121			(74	)	(61	)%
Total Depreciation and amortization	$	183		$	400		$	(217	)	(54	)%

(2)

Operating income before depreciation and amortization, defined as operating income (loss) plus depreciation and amortization and the amortization of cable distribution investments, eliminates the variable effect across all business segments of non-cash depreciation and amortization. Depreciation and amortization expense includes depreciation of property and equipment, as well as the 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 Operating income before depreciation and amortization. Since Operating income before depreciation and amortization is a non-GAAP measure, it should be considered in addition to, not as a substitute for, operating income (loss), net income (loss), cash flow and other measures of financial performance prepared in accordance with GAAP and presented in the consolidated financial statements included elsewhere in this filing. The following is a reconciliation of Operating income before depreciation and amortization to Operating income (loss) by segment:


	For the year ended June 30, 2003
	Operating income before depreciation and amortization			Depreciation and amortization		Amortization of cable distribution investments		Operating income (loss)
	(in millions)
Filmed Entertainment	$	717		$	55	$	—	$	662
Television Stations		983			62		—		921
Television Broadcast Network		(81	)		19		—		(100	)
Cable Network Programming		472			47		125		300

Total	$	2,091		$	183	$	125	$	1,783


	For the year ended June 30, 2002
	Operating income before depreciation and amortization			Depreciation and amortization		Amortization of cable distribution investments		Operating income (loss)
	(in millions)
Filmed Entertainment	$	544		$	59	$	—	$	485
Television Stations		798			200		—		598
Television Broadcast Network		(263	)		20		—		(283	)
Cable Network Programming		243			121		116		6
Other operating charge		(909	)		—		—		(909	)

Total	$	413		$	400	$	116	$	(103	)

~~Table~~33 ~~of Contents~~

~~FOOTNOTES:~~Overview - For the year ended June 30, 2003, the Company’s revenues increased $1,277 million from $9,725 million for the year ended June 30, 2002 to $11,002 million. This 13% increase was primarily due to revenue increases at the Filmed Entertainment and Cable Network Programming segments. Operating expenses increased approximately 6% for the year ended June 30, 2003 due to increased theatrical and home entertainment marketing costs and home entertainment production costs at the Filmed Entertainment segment. Selling, general and administrative expenses increased approximately 4% as compared to the year ended June 30, 2002 due to the consolidation of the Acquired Stations (as defined below) and the WPWR television station. Depreciation and amortization expenses decreased approximately 54% due to the Company’s adoption of SFAS No. 142 resulting in the elimination of the amortization of goodwill and indefinite-lived intangible assets, which impacted primarily the Television Stations and Cable Network Programming segments. For the year ended June 30, 2003, Operating income and Operating income before depreciation and amortization increased $1,886 million to $1,783 million and $1,678 million to $2,091 million, respectively, from the fiscal 2002. These increases were in part due to the Company’s $909 million Other operating charge during the year ended June 30, 2002 for the write down of the Company’s national sports contracts without a comparative charge in fiscal 2003. In addition, increased results at the Television Stations and Cable Network Programming segments contributed to the increases in Operating income and Operating income before depreciation and amortization.

~~(1)~~Effective InJuly ~~January~~1, 2002, the Company adopted ~~EITF~~Statement 01of Financial Accounting Standard (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 eliminates the requirement to amortize goodwill, indefinite-09lived intangible assets and the excess cost over the Company’s share of equity investees’ assets and supersedes APB Opinion No. 17, ~~which~~“Intangible ~~was~~Assets,” ~~effective~~and replaces it with requirements to assess goodwill and indefinite-lived intangible assets annually for ~~the~~impairment. Intangible assets that are deemed to have a finite life will continue to be amortized over their useful lives. SFAS No. 142 required the Company to perform an initial impairment assessment of its goodwill and indefinite-lived intangible assets as of ~~January~~the 1,date ~~2002~~of adoption. This impairment assessment compared the fair value of these intangible assets to their carrying value. As ~~required~~a result of the tests performed, the Company has ~~classified~~determined ~~the~~that ~~amortization~~none of ~~cable~~its ~~distribution~~goodwill ~~investments~~and ~~against~~indefinite-lived ~~revenues~~intangible ~~for~~assets ~~all~~are ~~periods~~impaired. ~~presented~~Had the Company adopted SFAS No. 142 on July 1, 2001, Depreciation and amortization expense, Operating income (loss), Equity ~~Net~~earnings ~~income~~ (~~loss~~losses) ~~and~~of ~~Earnings~~affiliates, ~~(loss)~~net, ~~per~~Income ~~share~~before ~~are~~cumulative ~~not~~effect ~~affected~~of byaccounting ~~this~~change ~~classification.~~and ~~This~~Earnings ~~classification~~(loss) ~~affects~~per ~~the~~share ~~Company’s~~before ~~and~~cumulative ~~the~~effect ~~Cable~~of ~~Network~~accounting ~~Programming~~change ~~segment’s~~would ~~revenues.~~have ~~The~~been ~~effect~~$187 ofmillion, ~~the~~$110 ~~classification~~million, on$(115) ~~the~~million, ~~Company’s~~$790 ~~revenues~~million, and is$0.94 asper ~~follows:~~share, respectively.

	For the year ended June 30,
	2003			2002
	(in millions)
Gross Revenues	$	11,127		$	9,841
Amortization of cable distribution investments		(125	)		(116	)
Revenues	$	11,002		$	9,725

Equity losses of affiliates of $1 million for the year ended June 30, 2003 improved $143 million from losses of $144 million from fiscal 2002. This improvement was primarily related to improved results at RPP and the National Geographic Channel – Domestic as well as the absence of losses from Fox Family Worldwide (“FFW”) since its sale in October 2001. Also contributing to this improvement was decreased amortization expense due to the adoption of SFAS No. 142. Had the Company adopted SFAS No. 142 on July 1, 2001, Equity losses of affiliates would have improved by $29 million for the year ended June 30, 2002.

~~(2)~~Net ~~Operating Income Before Depreciation and Amortization, defined as operating~~ income ~~(loss)~~for ~~plus depreciation and amortization and~~ the ~~amortization~~year ofended ~~cable~~June ~~distribution investments~~30, ~~eliminates~~2003 ~~the~~was ~~variable~~$1,031 ~~effect~~million ~~across all business segments of non-cash depreciation and amortization~~($1.17 ~~Depreciation~~per ~~and~~share), ~~amortization~~an ~~expense~~improvement ~~includes depreciation~~ of ~~property~~$450 ~~and~~million ~~equipment,~~from as$581 ~~well~~million as($0.69 ~~the~~per ~~amortization~~share) offor ~~finite-lived~~fiscal ~~intangible assets~~2002. ~~Amortization~~This ofimprovement ~~cable~~is ~~distribution~~due ~~investments~~to ~~represents~~the aincreased ~~reduction~~operating results ~~against~~noted ~~revenues~~above ~~over~~for the ~~term~~year ofended aJune ~~carriage~~30, ~~arrangement~~2003 ~~and~~ as ~~such~~compared itto isfiscal ~~excluded~~2002 ~~from Operating Income Before Depreciation~~ and ~~Amortization.~~the ~~Since~~Company’s ~~Operating~~$909 ~~Income~~million ~~Before~~Other ~~Depreciation~~operating ~~and~~charge ~~Amortization~~during isthe ayear ~~non-GAAP~~ended ~~measure,~~June ~~it should be considered in addition to~~30, ~~not~~2002 ~~as a substitute~~ for, ~~operating~~the ~~income~~write ~~(loss),~~down ~~net~~of ~~income~~the ~~(loss),~~Company’s ~~cash~~national ~~flow~~sports ~~and~~contracts ~~other~~without a ~~measures~~comparative ofcharge ~~financial~~in ~~performance~~fiscal ~~prepared~~2003. inThese ~~accordance~~improvements ~~with~~were ~~GAAP~~partially ~~and~~offset ~~presented~~by in the ~~consolidated~~non-recurring ~~financial~~gains ~~statements~~recognized ~~included~~on ~~elsewhere~~the insales ~~this~~of ~~filing.~~FFW ~~The~~and ~~following~~Outdoor isLife aNetwork ~~reconciliation~~in offiscal ~~Operating~~2002 ~~income~~without ~~(loss)~~comparative togains ~~Operating~~in ~~Income~~fiscal ~~Before~~2003. ~~Depreciation and Amortization by segment:~~

	For the year ended June 30, 2003
	Operating income(loss)			Depreciation andamortization		Amortization of cabledistribution investments		Operating IncomeBefore Depreciationand Amortization
	(in millions)
Filmed Entertainment	$	662		$	55	$	—	$	717
Television Stations		921			62		—		983
Television Broadcast Network		(100	)		19		—		(81	)
Cable Network Programming		300			47		125		472
Total	$	1,783		$	183	$	125	$	2,091
	For the year ended June 30, 2002
	Operating income(loss)			Depreciation andamortization		Amortization of cabledistribution investments		Operating IncomeBefore Depreciationand Amortization
	(in millions)
Filmed Entertainment	$	485		$	59	$	—	$	544
Television Stations		598			200		—		798
Television Broadcast Network		(283	)		20		—		(263	)
Cable Network Programming		6			121		116		243
Other operating charge		(909	)		—		—		(909	)
Total	$	(103	)	$	400	$	116	$	413

Filmed Entertainment - Revenue at the Filmed Entertainment segment increased from $4,048 million for the year ended June 30, 2002 to $4,498 million, or 11%. This increase was primarily due to increased worldwide home entertainment revenues, most notably from the strong worldwide performance of Ice Age and Shallow Hal, and increased worldwide theatrical revenues due to the strong releases of X-2: X-Men United and Daredevil. During fiscal 2003, the Company had several additional successful theatrical releases, including the domestic theatrical launches and subsequent strong home entertainment performances of Like Mike and Drumline and the international theatrical launches and subsequent strong home entertainment performances of Minority Report and Road to Perdition. Fiscal 2002 results included the strong worldwide theatrical, worldwide home entertainment and domestic pay-television performances of Planet of the Apes and Dr. Dolittle 2, worldwide theatrical performance of Ice Age and the international theatrical and worldwide home entertainment performance of Moulin Rouge. For the year ended June 30, 2003, the Filmed Entertainment segment reported Operating income of $662 million as compared to $485 million for fiscal 2002. Operating income before depreciation and amortization increased to $717 million as compared to $544 million for fiscal 2002. These increases were primarily due to the revenue increases noted above, most notably from Ice Age, and improved margins on DVD product due to increased volume, which were partially offset by increased home entertainment marketing costs. At Twentieth Century Fox Television (“TCFTV”), for the year ended June 30, 2003, contributions increased due to increased worldwide home entertainment revenues for 24, Angel, Buffy the Vampire Slayer and The Simpsons, higher network revenues for The Practice and the domestic syndication of The X-Files and King of the Hill. Improved profit rates on series due to DVD products and lower series production costs due to fewer episodes being produced also contributed to TCFTV’s increased results.

~~Overview. For~~Television ~~the~~Stations ~~year~~- ~~ended~~On ~~June~~July 3031, ~~2003~~2001, the Company’s ~~revenues~~acquired ~~increased~~the ~~$1,277~~television broadcasting ~~million~~business ~~from~~of $9Chris-Craft Industries,~~725~~ ~~million~~Inc., ~~for~~(“Chris-Craft”) ~~the~~consisting ~~year~~of ~~ended~~ten ~~June~~television ~~30,~~stations ~~2002~~and tosubsequently ~~$11,002~~exchanged ~~million.~~four ~~This~~former ~~13%~~Chris-Craft ~~increase~~stations ~~was~~with ~~primarily due~~Viacom, toInc., ~~revenue~~Clear ~~increases~~Channel atCommunications, ~~the~~Inc. ~~Filmed~~and ~~Entertainment~~Meredith Corporation ~~and~~for ~~Cable~~five ~~Network~~other ~~Programming~~television ~~segments.~~stations ~~Operating~~(after ~~expenses~~giving effect to these

2934

~~Table~~transactions the acquired television stations are referred to as the “Acquired Stations”). In addition, in August 2002, the Company acquired WPWR in the Chicago designated market area (“DMA”) from Newsweb Corporation. These acquisitions increased the number of ~~Contents~~the Company’s O&Os to 35 full power stations, including nine duopolies.

~~increased~~For ~~approximately 6% for~~ the year ended June 30, 2003, ~~due~~the toTelevision Stations segment’s revenues increased ~~theatrical~~to ~~and~~$2,115 ~~home~~million ~~entertainment~~from ~~marketing~~$1,875 ~~costs~~million ~~and~~in ~~home~~fiscal ~~entertainment production~~2002. ~~costs~~This at$240 ~~the~~million, ~~Filmed~~or ~~Entertainment~~13% ~~segment.~~increase ~~Selling~~primarily resulted from higher advertising revenues, ~~general~~the impact of the Acquired Stations and ~~administrative~~the ~~expenses~~acquisition ~~increased~~of ~~approximately~~WPWR. 4%Advertising asrevenues ~~compared~~in the to26 markets of the ~~year~~Company’s ~~ended~~O&O’s ~~June~~continued ~~30,~~to improve versus the fiscal 2002, up approximately 9%. This increase is primarily due to the ~~consolidation~~market ofrebounding ~~the~~and ~~Acquired~~heavy ~~Stations~~political ~~(as~~spending. ~~defined~~Automotive, ~~below)~~movies, ~~and~~telecommunications ~~the~~and ~~WPWR~~political ~~television~~spending ~~station.~~are ~~Depreciation~~all ~~and~~stronger ~~amortization~~than ~~expenses~~they ~~decreased~~were ~~approximately~~in ~~54%~~fiscal ~~due~~2002. The revenue increases noted above contributed to the Company’s ~~adoption~~O&Os market share increase of ~~SFAS~~1.4 Nopercentage points from fiscal 2002. ~~142~~This ~~resulting~~market share gain was partially offset by heavy political spending on competitor stations in fiscal 2003, the ~~elimination~~loss of the ~~amortization~~New ofYork ~~goodwill~~Yankee ~~and~~broadcasts ~~indefinite-lived~~in ~~intangible~~the ~~assets,~~New ~~which impacted~~York ~~primarily~~market and the ~~Television~~loss ~~Stations~~of ~~and~~the ~~Cable~~Boston ~~Network~~Red ~~Programming~~Sox ~~segments~~broadcasts in the Boston market. For the year ended June 30, 2003, ~~Operating~~the Television ~~income~~Stations ~~and~~segment generated Operating ~~Income~~income ~~Before~~of ~~Depreciation~~$921 ~~and~~million, ~~Amortization~~which ~~increased~~was $~~1,886~~323 million, toor ~~$1,783~~54% ~~million~~higher ~~and~~than ~~$1,678 million~~fiscal to2002. ~~$2,091~~This ~~million,~~increase ~~respectively,~~was ~~from~~due to the ~~corresponding~~revenue ~~period~~increases ofnoted ~~the~~above ~~prior~~and ~~year.~~lower ~~These~~local ~~increases~~program ~~were~~production incosts ~~part~~as ~~due~~a toresult of the non-renewal ~~Company’s~~of ~~$909~~New ~~million~~York ~~Other~~Yankee ~~operating~~and ~~charge~~Boston ~~during~~Red ~~the~~Sox ~~year~~baseball ~~ended~~game ~~June~~broadcasts. ~~30,~~This ~~2002~~increase ~~for~~was ~~the~~partially ~~write~~offset ~~down~~by ofhigher ~~the Company’s~~fringe ~~national~~benefits ~~sports~~expenses, ~~contracts without~~ a ~~comparative~~full ~~charge~~year inof the ~~current~~Acquired ~~year.~~Stations’ Inoperating ~~addition,~~expenses ~~increased~~in ~~results~~fiscal at2003, ~~the~~higher ~~Television~~marketing ~~Stations~~costs to ~~and~~promote ~~Cable~~the ~~Network~~FOX ~~Programming~~prime ~~segments~~time ~~contributed~~schedule toand ~~the~~operating ~~increases~~expenses inof WPWR. Operating income before depreciation and ~~Operating~~ ~~Income~~amortization ~~Before~~increased ~~Depreciation~~$185 ~~and~~million ~~Amortization~~to $983 million from $798 million.

~~Effective~~Television ~~July~~Broadcast 1,Network ~~2002,~~- For the ~~Company~~year ~~adopted~~ended ~~SFAS~~June ~~No.~~30, ~~142.~~2003, ~~SFAS~~the ~~No.~~Television ~~142~~Broadcast ~~eliminates~~Network ~~the~~segment’s ~~requirement~~revenues increased to$196 ~~amortize~~million ~~goodwill~~to $2,244 ~~indefinite-lived~~million ~~intangible~~from ~~assets~~$2,048 ~~and~~million ~~the~~in ~~excess~~fiscal ~~cost~~2002. ~~over~~This ~~the~~10% ~~Company’s~~increase ~~share~~is ofdue ~~equity~~to ~~investees’~~higher ~~assets~~ ratings and ~~supersedes~~pricing ~~APB~~increases ~~Opinion~~for ~~No.~~prime 17time ~~and~~programming, ~~replaces~~most itnotably ~~with~~from ~~requirements~~American toIdol ~~assess goodwill~~ and ~~indefinite-lived~~Joe ~~intangible~~Millionaire, ~~assets~~higher ratings ~~annually~~ for ~~impairment.~~the ~~Intangible~~NFL, ~~assets~~and ~~that~~the ~~are~~DAYTONA ~~deemed~~500, towhich ~~have~~was anot ~~finite~~telecast ~~life~~on ~~will~~FOX ~~continue~~in tofiscal be2002. ~~amortized~~These ~~over~~increases ~~their useful~~were ~~lives.~~partially ~~SFAS~~offset ~~No.~~by ~~142~~the ~~required~~non-recurring ~~the~~telecast ~~Company~~of tothe ~~perform~~Super anBowl ~~initial~~on ~~impairment~~FOX ~~assessment~~in offiscal ~~its~~2002. ~~goodwill~~Operating ~~and~~losses ~~indefinite-lived~~for ~~intangible~~the ~~assets~~Television asBroadcast Network ofsegment ~~the~~improved ~~date~~$183 ofmillion ~~adoption.~~to ~~This~~a ~~impairment~~loss ~~assessment~~of ~~compared~~$100 ~~the~~million ~~fair~~and ~~value~~Operating ofincome ~~these~~before ~~intangible assets~~depreciation toand ~~their~~amortization ~~carrying~~improved ~~value.~~$182 Asmillion to a ~~result~~loss of ~~the~~$81 ~~tests~~million ~~performed,~~compared ~~the~~to ~~Company~~fiscal ~~has~~2002. ~~determined~~These ~~that~~operating ~~none~~improvements ofwere ~~its~~driven ~~goodwill~~by ~~and~~the ~~indefinite-lived~~revenue increases ~~intangible~~noted ~~assets~~above ~~are~~and ~~impaired.~~lower ~~Had~~programming ~~the~~rights ~~Company~~costs ~~adopted~~due ~~SFAS~~to ~~No.~~the ~~142~~non-recurring ontelecast ~~July~~of 1,the ~~2001,~~Super ~~Depreciation~~Bowl ~~and amortization~~on ~~expense,~~FOX ~~Operating~~in ~~income~~fiscal ~~(loss),~~2002. ~~Equity~~These ~~earnings~~improvements ~~(losses)~~are ofpartially ~~affiliates,~~offset ~~Income~~by ~~before~~higher ~~cumulative~~prime ~~effect~~time oflicense ~~accounting~~fees ~~change~~for ~~and~~returning ~~Earnings~~series, ~~(loss)~~increased ~~per~~costs ~~share~~for series ~~before~~cancellations, ~~cumulative~~higher ~~effect~~programming ofcosts ~~accounting~~related ~~change~~to ~~would~~the ~~have~~Company’s ~~been~~national ~~$187~~sports ~~million~~contracts, ~~$110~~ ~~million,~~and ~~$(115)~~increases ~~million,~~in ~~$790~~advertising ~~million,~~expenses ~~and~~for ~~$0.94~~prime ~~per~~time ~~share, respectively~~series.

~~Equity~~Cable ~~losses~~Network ofProgramming ~~affiliates~~- ofTotal $1revenues ~~million~~ for the ~~year~~Cable ~~ended~~Network ~~June~~Programming ~~30,~~segment ~~2003~~increased ~~improved~~by $~~143~~391 million or approximately 22% from ~~losses~~$1,754 ofmillion to $~~144~~2,145 million ~~from~~for the ~~corresponding~~year ~~period~~ended ofJune ~~the~~30, ~~prior year~~2003. This ~~improvement~~increase ~~was~~reflects ~~primarily related to~~ improved results atacross ~~Regional~~all ~~Programming~~of ~~Partners~~the ~~(“RPP”)~~Cable ~~and~~Network ~~the~~Programming ~~National~~channels. ~~Geographic~~Also ~~Channel~~contributing –to ~~Domestic~~this asincrease ~~well~~was as the ~~absence~~full year consolidation of ~~losses~~the ~~from~~Sunshine ~~Fox~~Network ~~Family Worldwide, Inc.~~ (“~~FFW~~Sunshine”) ~~since~~and ~~its~~Fox ~~sale~~Sports ~~in October 2001~~International. ~~Also contributing~~Fox toNews’, ~~this~~FX’s ~~improvement~~and ~~was decreased amortization expense due to~~ the ~~adoption~~RSNs’ ofrevenues ~~SFAS~~increased ~~No.~~49%, ~~142.~~15%, ~~Had~~and ~~the Company adopted SFAS No. 142 on July 1~~16%, ~~2001~~respectively, ~~Equity~~from ~~losses~~fiscal ~~of affiliates would have improved by $29 million for the year ended June 30,~~ 2002.

~~Net~~At ~~income~~Fox ~~for the year ended June 30~~News, ~~2003~~advertising ~~was~~revenues ~~$1,031 million~~increased ~~($1.17~~85% ~~per share), an improvement of $450 million~~ from ~~$581~~fiscal ~~million~~2002 ~~($0.69~~due ~~per~~to ~~share)~~improved ~~for~~ratings ~~the~~and increased ~~corresponding~~pricing, ~~period~~partially ofoffset ~~the~~by ~~prior~~higher ~~year~~pre-emptions. ~~This~~Affiliate ~~improvement~~revenues ~~is due to the~~ increased ~~operating~~by ~~results noted above for the year ended June 30~~12%, ~~2003~~attributed ~~as compared~~ to ~~the~~an ~~corresponding~~increase ~~period~~in ofsubscribers ~~the~~versus ~~prior~~fiscal ~~year and the Company’s $909 million Other operating charge during the year ended June 30~~2002, ~~2002~~partially ~~for~~offset ~~the~~by ~~write down of the Company’s national sports contracts without~~ a ~~comparative~~4% ~~charge~~increase in ~~the~~ ~~current~~amortization ~~year.~~of ~~These~~cable ~~improvements~~distribution ~~were~~investments. ~~partially~~As ~~offset by the non-recurring gains recognized on the sales~~ of June ~~FFW~~30, ~~and~~2003, ~~Outdoor~~Fox ~~Life~~News ~~Network~~reached inapproximately ~~the~~83 ~~prior~~million ~~year~~Nielsen ~~without~~households, ~~comparative~~a ~~gains~~3% inincrease ~~the~~over ~~current~~fiscal ~~year~~2002.

~~Filmed~~At ~~Entertainment. Revenue~~FX, atadvertising ~~the Filmed~~revenues ~~Entertainment segment~~ increased ~~from~~25% ~~$4,048~~over ~~million~~fiscal ~~for~~2002 ~~the~~as ~~year~~a ~~ended~~result ~~June~~of ~~30,~~increased ~~2002~~subscribers toand ~~$4,498~~higher ~~million, or 11%~~pricing. ~~This~~FX ~~increase~~affiliate ~~was~~revenues ~~primarily due to~~ increased ~~worldwide~~8% ~~home~~from ~~entertainment~~fiscal ~~revenues~~2002, ~~most~~reflecting ~~notably~~an ~~from~~increase ~~the~~in ~~strong~~subscribers, ~~worldwide~~partially ~~performance~~offset ofby ~~Ice~~a ~~Age~~15% ~~and~~increase ~~Shallow~~in ~~Hal,~~amortization ~~and~~of ~~increased~~cable ~~worldwide~~distribution ~~theatrical~~investments. ~~revenues~~As ~~due to the strong releases~~ of ~~X-2:~~June ~~X-Men~~30, ~~United and Daredevil. During fiscal~~ 2003, ~~the~~FX ~~Company~~reached ~~had~~over ~~several~~80 ~~additional~~million ~~successful theatrical~~Nielsen ~~releases~~households, ~~including~~a ~~the~~3% ~~domestic~~increase ~~theatrical~~over ~~launches~~fiscal and subsequent strong home entertainment performances of Like Mike and Drumline and the international theatrical launches and subsequent strong home entertainment performances of Minority Report and Road to Perdition2002. ~~Prior year results included the strong worldwide theatrical, worldwide home entertainment~~

30At the RSNs, affiliate revenues increased 20% over fiscal 2002 primarily from an increase in DBS subscribers and the consolidation of Sunshine. Advertising revenues increased 12% primarily due to the telecast of more MLB and collegiate games and the higher pricing per game for MLB, NBA and NHL telecasts resulting from an improved sports advertising market, partially offset by a reduced number of NBA games.

~~Table~~The Cable Network Programming segment reported Operating income of ~~Contents~~$300 million, an increase of $294 million from fiscal 2002. These improvements were primarily driven by the revenue increases noted above, lower amortization expense due to the Company’s adoption of SFAS No. 142 on July 1, 2002, the fiscal 2002 bad debt provision related to Adelphia receivables and the consolidation of Sunshine for the full year. Partially offsetting these improvements were higher expenses for programming enhancements and consumer marketing at Fox News, higher programming costs at FX and SPEED Channel, higher average rights fees for professional events at the RSNs and the consolidation of expenses from Sunshine and Fox Sports International for the full year. Operating income before depreciation and amortization increased $229 million to $472 million from $243 million from fiscal 2002.

~~and~~Interest ~~domestic~~expense, ~~pay~~net -~~television~~ ~~performances~~Interest ~~of Planet of the Apes and Dr. Dolittle 2~~expense, ~~worldwide~~net ~~theatrical~~decreased ~~performance~~$105 ofmillion ~~Ice~~for ~~Age and~~ the ~~international~~ ~~theatrical and worldwide home entertainment performance of Moulin Rouge. For the~~ year ended June 30, 2003, ~~the~~from ~~Filmed Entertainment segment reported Operating income of~~ $~~662~~241 million ~~as compared~~ to $~~485~~136 million ~~for the prior year. Operating Income Before Depreciation and Amortization increased to $717 million as compared to $544 million for the prior year. These increases were primarily~~ due to the ~~revenue~~decreased ~~increases~~interest ~~noted~~expense ~~above,~~resulting ~~most notably~~ from Ice Age, and improved margins on DVD product due to increased volume, which were partially offset by increased home entertainment marketing costs. At Twentieth Century Fox Television (“TCFTV”), for the ~~year ended June 30, 2003, contributions increased~~redemption ~~due~~of ~~to increased worldwide home entertainment revenues for 24, Angel, Buffy~~ the ~~Vampire~~Notes ~~Slayer~~(as ~~and~~defined ~~The~~below ~~Simpsons,~~in ~~higher~~Liquidity ~~network revenues for The Practice~~ and ~~the~~Capital ~~domestic~~Resources) ~~syndication of The X-Files~~ and ~~King~~from ofreduced ~~the Hill.~~amounts ~~Improved~~Due ~~profit rates on series due~~ to ~~DVD~~affiliates ~~products~~of ~~and~~News ~~lower~~Corporation ~~series~~resulting ~~production~~from ~~costs due to fewer episodes being produced also contributed to TCFTV’s increased results~~repayments.

Television Stations. On July 31, 2001, The Company acquired the television broadcasting business of Chris-Craft (as defined below), consisting of ten television stations and subsequently exchanged four former Chris-Craft stations with Viacom, Inc., Clear Channel Communications, Inc. and Meredith Corporation for five other television stations (after giving effect to these transactions the acquired television stations are referred to as the “Acquired Stations”). In addition, in August 2002, the Company acquired WPWR in the Chicago designated market area (“DMA”) from Newsweb Corporation. These acquisitions increased the number of the Company’s O&Os to 35 ~~full power stations, including nine duopolies.~~

~~For~~Equity ~~the~~earnings ~~year~~(losses) ~~ended~~of ~~June 30~~affiliates, ~~2003,~~net ~~the~~- ~~Television~~Equity ~~Stations~~losses ~~segment’s~~of ~~revenues~~affiliates ~~increased~~of to $~~2,115~~1 million ~~from~~for ~~$1,875 million in~~ the ~~corresponding~~year ~~period~~ended June of30, ~~the~~2003 ~~prior~~improved ~~year. This~~ $~~240~~143 million, ~~or 13% increase primarily resulted~~ from ~~higher~~losses ~~advertising revenues, the impact~~ of ~~the~~$144 ~~Acquired~~million ~~Stations~~from ~~and~~fiscal ~~the acquisition of WPWR~~2002. ~~Advertising revenues in the 26 markets of the Company’s O&O’s continued to improve versus the prior year, up approximately 9%.~~ This ~~increase~~improvement iswas primarily ~~due~~related to ~~the~~improved ~~market~~earnings ~~rebounding~~at ~~and~~RPP ~~heavy political spending. Automotive, movies, telecommunications~~ and ~~political spending are all stronger than~~ the ~~prior~~National ~~year.~~Geographic ~~The~~Channel—Domestic ~~revenue~~as ~~increases~~well ~~noted~~as ~~above contributed to~~ the ~~Company’s~~absence ~~O&Os market share increase~~ of ~~1.4~~losses ~~percentage points~~ from ~~the~~FFW ~~prior year. This market share gain was partially offset by heavy political~~since ~~spending~~its onsale ~~competitor stations this year, the loss of the New York Yankee broadcasts~~ in ~~the~~October ~~New York market and the loss of the Boston Red Sox broadcasts in the Boston market~~2001. ~~For~~Also ~~the~~contributing ~~year~~to ~~ended~~this ~~June~~improvement ~~30, 2003, the Television Stations segment generated Operating income of $921 million, which~~ was ~~$323~~decreased ~~million,~~amortization orexpense ~~54% higher than the prior year. This increase was~~ due to the ~~revenue~~adoption ~~increases~~of ~~noted~~SFAS ~~above~~No. ~~and~~142. ~~lower~~Had ~~local program production costs as a result of~~ the ~~non-renewal~~Company ofadopted ~~New~~SFAS ~~York Yankee and Boston Red Sox baseball game broadcasts~~No. ~~This~~142 ~~increase~~on ~~was~~July ~~partially offset by higher fringe benefits expenses~~1, ~~a full year of the Acquired Stations’ operating expenses in the current year~~2001, ~~higher~~Equity ~~marketing~~losses ~~costs to promote the FOX prime time schedule and operating expenses~~ of ~~WPWR.~~affiliates ~~Operating~~would ~~Income~~have ~~Before~~improved ~~Depreciation~~by ~~and Amortization increased~~ $~~185~~ 29 million tofor ~~$983~~the ~~million~~year ~~from~~ended ~~$798~~June ~~million~~30, 2002.

Television Broadcast Network. For the year ended June 30, 2003, the Television Broadcast Network segment’s revenues increased $196 million to $2,244 million from $2,048 million in the prior year. This 10% increase is due to higher ratings and pricing increases for prime time programming, most notably from American Idol and Joe Millionaire, higher ratings for the NFL, and the DAYTONA 500, which was not telecast on FOX in the prior year. These increases were partially offset by the non-recurring telecast of the Super Bowl on FOX in the prior year. Operating losses for the Television Broadcast Network segment improved $183 million to a loss of $100 million and Operating Income Before Depreciation and Amortization improved $182 million to a loss of $81 million compared to the corresponding period of the preceding year. These operating improvements were driven by the revenue increases noted above and lower programming rights costs due to the non-recurring telecast of the Super Bowl on FOX in the prior year. These improvements are partially offset by higher prime time license fees for returning series, increased costs for series cancellations, higher programming costs related to the Company’s national sports contracts, and increases in advertising expenses for prime time series.


	Ownership Percentage	For the years ended June 30,
	Ownership Percentage	2003			2002			Change
		(in millions)
Fox Family Worldwide (a)	50%	$	—		$	(51	)	$	51
Fox Sports International (b)	50%		—			(9	)		9
National Geographic Channel - Domestic	67%		(19	)		(42	)		23
National Geographic Channel - International	50%		(2	)		(3	)		1
National Sports Partners	50%		(20	)		(25	)		5
Regional Programming Partners	40%		23			(9	)		32
Ventures Arena	40%		7			4			3
Other	Various		10			(9	)		19

Total equity earnings (losses) of affiliates, net		$	(1	)	$	(144	)	$	143

31FOOTNOTES:

~~Table~~(a) ofThe ~~Contents~~Company sold its interests in FFW in October 2001.

~~Cable~~(b) ~~Network~~Subsequent ~~Programming. Total~~to ~~revenues for~~ the ~~Cable~~acquisition ~~Network Programming~~of ~~segment~~the ~~increased~~remaining ~~by $391 million or approximately 22~~50% ~~from~~interest ~~$1,754~~in ~~million~~December ~~to $2~~2001,~~145~~ ~~million for~~ the ~~year ended June 30, 2003. This increase reflects improved~~ results ~~across all~~ of ~~the Cable Network Programming channels. Also contributing to this increase was the full year consolidation of the Sunshine Network (“Sunshine”) and~~ Fox Sports International. ~~Fox~~have ~~News~~been ~~Channel’s~~consolidated ~~(“Fox~~in ~~News”),~~the FXCable Network’s ~~(“FX”)~~Programming ~~and the majority-owned regional sports networks’ (“RSNs”) revenues increased 49%, 15%, and 16%, respectively, from the prior year~~segment.

AtThe ~~Fox~~Company’s ~~News,~~share ~~advertising~~of ~~revenues~~RPP’s ~~increased~~income ~~85%~~was ~~from~~$23 million for the ~~prior~~ year ~~due~~ended toJune ~~improved~~30, ~~ratings~~2003, ~~and~~as ~~increased~~compared ~~pricing,~~to ~~partially~~losses ~~offset~~of by$9 ~~higher pre-emptions.~~million ~~Affiliate~~in ~~revenues~~fiscal ~~increased~~2002. byThis ~~12%,~~improvement ~~attributed~~is primarily due to anthe ~~increase~~prior inyear ~~subscribers~~charges ~~versus~~from Madison Square Garden associated with the ~~prior~~termination ~~year~~of two professional player contracts, ~~partially~~significant ~~offset~~cost bysavings aat 4%the ~~increase~~Metro inChannels, and lower amortization of ~~cable~~intangible ~~distribution~~assets ~~investments.~~resulting Asfrom RPP’s implementation of ~~June~~SFAS ~~30,~~No. ~~2003,~~142 ~~Fox~~effective ~~News~~January ~~reached approximately~~1, 832002. ~~million~~Partially ~~Nielsen~~offsetting ~~households,~~the improvement is a 3%player ~~increase~~compensation charge ~~over~~and lower earnings from the ~~prior~~professional ~~year~~teams in fiscal 2003.

AtThe Company’s ~~FX,~~share ~~advertising~~of ~~revenues~~National ~~increased~~Geographic ~~25%~~Channel-Domestic’s ~~over~~loss ~~the~~was ~~prior~~$19 million for the year ended June 30, 2003, as compared to a ~~result~~loss of ~~increased~~$42 ~~subscribers~~million ~~and~~in ~~higher~~fiscal ~~pricing~~2002. FXAffiliate ~~affiliate~~and advertising revenues increased 8%due ~~from~~to ~~the~~a ~~prior~~significant ~~year,~~growth in ~~reflecting~~distribution. anPartially offsetting the increase in ~~subscribers, partially~~revenues ~~offset~~was byhigher aprogramming ~~15%~~amortization ~~increase~~supporting inan ~~amortization~~increased ofinvestment ~~cable~~in ~~distribution~~quality ~~investments~~programming. As of June 30, 2003, FXNational Geographic Channel—Domestic reached over 8043 million Nielsen households~~, a 3% increase over the prior year~~.

AtMinority ~~the~~interest ~~RSNs,~~in ~~affiliate~~subsidiaries ~~revenues~~- ~~increased 20% over the prior year primarily~~Minority ~~from~~interest anin ~~increase~~subsidiaries indecreased ~~direct~~$8 million to ~~home~~$29 ~~(“DTH”)~~million ~~subscribers~~for ~~and~~ the ~~consolidation~~year ofended ~~Sunshine.~~June ~~Advertising~~30, ~~revenues~~2003 ~~increased 12% primarily~~ due to ~~the~~a ~~telecast~~decrease ofin ~~more MLB and collegiate games and~~ the ~~higher~~average ~~pricing~~amount ~~per~~of ~~game~~Preferred ~~for~~Interests ~~MLB,~~outstanding ~~National Basketball Association (“NBA”)~~ and ~~National~~the ~~Hockey~~corresponding ~~League~~decrease ~~(“NHL”)~~in ~~telecasts~~Preferred ~~resulting from an improved sports advertising market, partially offset by a reduced number of NBA games~~Payments.

~~The~~Other, ~~Cable~~net ~~Network~~- ~~Programming~~Other, ~~segment~~net ~~reported~~was ~~Operating income of~~ $~~300 million~~1,540 ~~an increase of $294~~ million ~~from~~for the ~~prior~~ year. ~~These~~ended ~~improvements~~June ~~were primarily driven by the revenue increases noted above~~30, ~~lower amortization expense due to the Company’s adoption of SFAS No. 142 on July 1,~~ 2002, including the ~~prior~~gains ~~year bad~~recognized ~~debt~~on ~~provision related to Adelphia Communications Corporation (“Adelphia”) receivables and~~ the ~~consolidation~~sales of ~~Sunshine~~FFW ~~for~~in the ~~full~~amount ~~year.~~of ~~Partially offsetting these improvements were higher expenses for programming enhancements and consumer marketing at Fox News~~$1,439 ~~higher~~million ~~programming costs at FX~~ and ~~Speed~~Outdoor ~~Channel,~~Life ~~Inc.~~Network ~~(“SPEED~~LLC ~~Channel”),~~in ~~higher average rights fees for professional events at~~ the ~~RSNs~~amount ~~and the consolidation~~ of ~~expenses from Sunshine and Fox Sports International for the full year. Operating Income Before Depreciation and Amortization increased~~ $~~229~~147 million ~~to $472 million from $243 million from the prior year~~.

~~Other~~Income ~~operating~~tax ~~charge. The~~on ~~Company~~a ~~continually~~stand-alone ~~evaluates~~basis ~~the~~- ~~recoverability~~The ofeffective ~~the rights~~tax ~~costs~~rate ~~against~~for the ~~revenues~~year ~~directly~~ended ~~associated~~June ~~with~~30, ~~the~~2003 ~~program~~was ~~material and related direct expenses over the expected contract lives~~36.2% Atas ~~December~~compared ~~31,~~to ~~2001,~~ the ~~Company~~fiscal ~~recorded~~2002 aneffective ~~Other~~tax ~~operating~~rate ~~charge~~ of ~~$909 million in its consolidated~~ ~~statement of operations~~40.2%. ~~This~~The ~~charge~~effective ~~related~~tax torate afor ~~change~~fiscal in2002 ~~accounting~~was ~~estimate~~affected ~~on the Company’s national sports rights agreements caused~~ by the ~~downturn~~amortization in the advertising market, which caused the Company to write off programming costs inventory and to provide for estimated losses on these contracts. This evaluation considered the severe downturn in sports-related advertising, the lack of ~~any sustained advertising rebound subsequent to September 11th and the industry~~non-~~wide~~deductible ~~reduction of projected long-term advertising growth rates~~goodwill, ~~all of~~ which ~~resulted~~increased in the ~~Company’s estimate~~effective oftax ~~future~~rate ~~directly~~above ~~attributable~~statutory ~~revenues~~rate ~~associated with these contracts being lower than previously anticipated~~levels. Because the vast majority of costs incurred under these contracts are fixed, such as the rights costs and production costs, the results of these lower revenue estimates indicated that the Company would generate a loss over the remaining term of the sports contracts. The charge, by contract was as follows: NFL for $387 million, MLB for $225 million and NASCAR for $297 million.

~~Interest~~36 expense, net. Interest expense, net decreased $105 million for the year ended June 30, 2003 from $241 million to $136 million due to the decreased interest expense resulting from the redemption of the Notes (as defined below in Liquidity and Capital Resources) and from reduced amounts Due to affiliates of News Corporation resulting from repayments.

32LIQUIDITY AND CAPITAL RESOURCES

~~Table~~Current ofFinancial ~~Contents~~Condition

~~Equity~~At ~~earnings~~June ~~(losses)~~30, of2004, ~~affiliates. Equity~~the ~~losses~~Company ofhad ~~affiliates of~~$4,236 million and $1659 million ~~for~~of ~~the~~amounts ~~year~~due ~~ended~~to ~~June~~affiliates ~~30,~~of ~~2003~~News ~~improved~~Corporation ~~$143~~and ~~million~~borrowings from ~~losses~~New ofMillennium II, respectively, $~~144~~122 million ~~from~~of ~~the~~cash ~~prior~~and ~~year.~~cash ~~This~~equivalents ~~improvement~~and ~~was~~$18 ~~primarily~~billion ~~related~~of toshareholders’ ~~improved~~equity. ~~earnings~~At atJune ~~RPP~~30, ~~and~~2003, the ~~National~~Company ~~Geographic~~had ~~Channel—Domestic~~$704 asmillion ~~well~~and as$762 ~~the absence~~million of ~~losses~~amounts ~~from~~due ~~FFW since its sale in October 2001. Also contributing~~ to ~~this~~affiliates ~~improvement~~of ~~was~~News ~~decreased~~Corporation ~~amortization~~and ~~expense~~borrowings ~~due~~from toNew ~~the~~Millennium ~~adoption~~II of(presented in ~~SFAS~~Minority ~~No.~~interest ~~142.~~in ~~Had~~subsidiaries ~~the~~in ~~Company~~fiscal ~~adopted~~2003 ~~SFAS~~– ~~No.~~See ~~142~~New onMillennium ~~July 1~~II), ~~2001~~respectively, ~~Equity~~$72 ~~losses~~million of ~~affiliates~~ ~~would~~cash ~~have~~and ~~improved~~cash byequivalents and $2914 ~~million~~billion ~~for~~of ~~the~~shareholders’ ~~year ended June 30, 2002~~equity.

	Ownership Percentage		For the year ended June 30,
			2003			2002			Change
			(in millions)
Fox Family Worldwide(a)	49.5	%	$	—		$	(51	)	$	51
Fox Sports International(b)	50.0	%		—			(9	)		9
National Geographic Channel—Domestic	66.7	%		(19	)		(42	)		23
National Geographic Channel—International	50.0	%		(2	)		(3	)		1
National Sports Partners	50.0	%		(20	)		(25	)		5
Regional Programming Partners	40.0	%		23			(9	)		32
Ventures Arena	40.0	%		7			4			3
Other	Various			10			(9	)		19
Total equity earnings (losses) of affiliates			$	(1	)	$	(144	)	$	143

The Company’s principal sources of cash are internally generated funds, borrowings from News Corporation and its subsidiaries and various film financing alternatives. As of June 30, 2004, News Corporation had consolidated cash and cash equivalents of $3.9 billion, excluding the cash of the Company, and a revolving credit facility of $1.75 billion. We believe that cash from operations, proceeds from the sale of certain assets and the funds available from News Corporation will be adequate for the Company to conduct its operations. The Company’s internally generated funds are highly dependent upon the state of the advertising market and public acceptance of film and television products. Any significant decline in the advertising market or the performance of its films could adversely impact its cash flows from operations.

~~FOOTNOTES~~The principal uses of cash that affect the Company’s liquidity position include the following: investments in the production and distribution of new feature films and television programs, the acquisition of and payments under programming rights for entertainment programming and sporting events, operational expenditures, interest and income tax payments.

~~(a)~~Sources ~~The~~and ~~Company~~Uses ~~sold~~of ~~its~~Cash ~~interests in FFW in October 2001.~~

~~(b)~~Net ~~Subsequent~~cash toprovided ~~the~~by ~~acquisition~~operating ofactivities for the ~~remaining~~years ~~50%~~ended ~~interest~~June on30, ~~December~~2004 and 2003 was $1.2 billion and $1.3 billion, ~~2001~~respectively. This decrease is primarily due to increased filmed entertainment and television programming costs due to higher contractual sports rights payments and increased production spending related to the new summer television primetime line-up. During the year ended June 30, 2004, the ~~results~~Company ofmade ~~Fox~~higher ~~Sports~~scheduled ~~International~~NFL ~~have~~rights ~~been~~payments, ~~consolidated~~increased inproduction spending related to the ~~Cable~~new ~~Network~~summer ~~Programming~~television ~~segment~~primetime line-up, increased pension contributions and made higher income tax payments (see below) as compared to fiscal 2003. These uses of cash were partially offset by higher net income (adjusted for non-cash items) during fiscal 2004.

~~The~~Net ~~Company’s~~cash ~~share~~used ofin ~~RPP’s income~~investing ~~was~~activities ~~$23 million~~ for the ~~year~~years ended June 30, ~~2003,~~2004 asand ~~compared~~2003 towas ~~losses~~$19 ofmillion and $9752 million, inrespectively. ~~the~~The ~~prior~~higher use ~~year.~~of ~~This~~cash ~~improvement~~in fiscal 2003 is primarily due to ~~the~~fiscal ~~prior~~2003’s ~~year~~use ~~charges~~of ~~from~~cash ~~Madison~~in ~~Square~~the ~~Garden~~acquisition ~~associated~~of ~~with~~WPWR for the ~~termination~~purchase price of ~~two professional~~$425 ~~player~~million ~~contracts~~with no comparable transaction in fiscal 2004. In addition, ~~significant~~in ~~cost~~fiscal ~~savings~~2004, atthe Company sold its investment in the ~~Metro~~Staples ~~Channels,~~Center for $128 million and ~~lower~~sold ~~amortization~~the Dodgers. Cash received on the sale of ~~intangible~~the ~~assets~~Dodgers ~~resulting~~was ~~from~~$155 ~~RPP’s~~million, ~~implementation~~which was net of ~~SFAS~~$70 ~~No.~~million ~~142~~in ~~effective~~contractual ~~January~~closing 1,adjustments ~~2002.~~and ~~Partially~~payments ~~offsetting~~to the ~~improvement~~minority isshareholder. aThe Company ~~player~~has ~~compensation~~agreed ~~charge~~to ~~and~~remit ~~lower~~$50 ~~earnings~~million ~~from~~during the ~~professional~~first ~~teams~~two years following the closing of the sale of the Dodgers to reimburse the buyer for certain pre-existing commitments of which $23 million was paid in fiscal ~~2003~~2004, $22 million will be paid in fiscal 2005 and $5 million will be paid in fiscal 2006.

~~The~~Net ~~Company’s~~cash ~~share~~used ofin ~~National~~financing activities ~~Geographic~~during ~~Channel-Domestic’s~~the ~~loss~~years ended June 30, 2004 and 2003 was $191.1 billion and $539 million, ~~for~~respectively. ~~the~~The ~~year~~increase ~~ended~~in ~~June~~cash ~~30,~~used ~~2003,~~in asfinancing ~~compared~~activities is primarily attributable to a ~~loss~~net increase in repayments to affiliates of ~~$42~~News ~~million~~Corporation. In infiscal 2003, the ~~prior~~Company ~~year.~~redeemed ~~Affiliate~~all ~~and~~of ~~advertising~~the ~~revenues increased~~outstanding 9 3/4% Senior Discount Notes due to2007 aand ~~significant~~8 7/8% ~~growth~~Senior Notes due 2007 in ~~distribution~~the aggregate amount of $947 million. ~~Partially~~In ~~offsetting~~addition, in December 2002, the ~~increase~~Company insold ~~revenues~~50 million ~~was~~shares ~~higher~~of ~~programming~~Class ~~amortization~~A ~~supporting~~Common anStock ~~increased~~for ~~investment~~$1.2 billion in ~~quality~~proceeds, ~~programming.~~which Asthe Company then used to reduce obligations due to affiliates of ~~June~~News ~~30,~~Corporation. ~~2003~~In a non-cash transaction, ~~National~~the ~~Geographic Channel—Domestic~~Company ~~reached~~issued ~~over~~two 43promissory ~~million~~notes ~~Nielsen~~to ~~households~~News Corporation in connection with the DTV transaction.

~~Minority~~Under ~~interest~~a tax sharing agreement between the Company and News Corporation (“Tax Sharing Agreement”), the Company is included in ~~subsidiaries~~the consolidated tax return of News Corporation. ~~Minority~~ ~~interest~~Amounts paid in ~~subsidiaries~~accordance ~~decreased~~with the Tax Sharing Agreement, which were included in Due to affiliates of News Corporation, were $8635 million, to$282 million and $29370 million ~~for~~during the ~~year~~years ended June 30, 2004, 2003 ~~due~~and to2002, arespectively. ~~decrease~~The indifference between June 30, 2004 and 2003 primarily relates to the ~~average~~capital ~~amount~~gain ofon ~~Preferred~~the ~~Interests~~sale of ~~outstanding~~the Company’s interest in the Dodgers and the ~~corresponding~~SportsChannels, ~~decrease~~an increase in ~~Preferred~~taxable ~~Payments~~income and an increase in state tax payments.

~~Other,~~During ~~net. Other~~fiscal 2004, ~~net~~the ~~was~~Company made cash contributions to its pension plans in the amount of $~~1,540~~128 million ~~for~~as compared to cash contributions of $51 million during fiscal 2003. As a result of these cash contributions and improved asset returns, the ~~year~~Company ~~ended~~reduced its minimum pension liability by approximately $31 million at June 30, ~~2002~~2004 as compared to increasing its minimum pension liability by approximately $109 million at June 30, ~~including~~2003. Almost all of the ~~gains~~fiscal ~~recognized~~2004 oncontributions were voluntary to enhance the ~~sales~~funded status of ~~FFW~~the inCompany’s ~~the~~plans. ~~amount~~The ofCompany ~~$1,439~~does ~~million~~not ~~and~~expect ~~Outdoor~~mandatory ~~Life~~pension ~~Network~~funding ~~LLC~~requirements ~~(“Outdoor Life”)~~to be significant in fiscal 2005. However, the ~~amount~~Company ofdoes ~~$147~~expect ~~million~~to ~~(See~~continue ~~Liquidity~~making ~~and~~discretionary ~~Capital~~contributions ~~Resources~~to –the ~~FFW~~plans ~~and~~during ~~Outdoor~~fiscal ~~Life)~~2005.

~~Income~~37 tax on a stand-alone basis. The effective tax rate for the year ended June 30, 2003 was 36.2% as compared to the prior year effective tax rate of 40.2%. The effective tax rate for the prior year was affected by the amortization of non-deductible goodwill, which increased the effective tax rate above statutory rate levels.

33Issuances of Stock


Transaction	Amount of issuance		Number of Shares	Footnote reference
	(in millions)
Fiscal year 2004
DTV transaction	$	2,302	75	5

Fiscal year 2003
Common stock offering	$	1,212	50	3

Fiscal year 2002
Chris-Craft transaction	$	3,432	122	4
Fox Sports International transaction		115	4	6

~~Results~~Debt ofInstruments, ~~Operations—Fiscal~~Guarantees ~~2002~~and Related ~~versus~~covenants ~~Fiscal 2001~~

Intercompany Financing - The ~~following~~Company is ~~table~~funded ~~sets~~primarily by cash generated from operations and by loans from other affiliates of News Corporation. Interest on outstanding intercompany balances has been charged at commercial market rates not to exceed News Corporation’s average cost of borrowing as set forth in the Master Intercompany Agreement between the Company’s and News Corporation. For the year ended June 30, 2004, the weighted average intercompany interest rate was 8%. The Company anticipates that operating ~~results~~cash flows and borrowings from News Corporation will be sufficient to meet its working capital requirements. In addition to the agreed upon intercompany interest rate and in connection with the DTV acquisition, bythe Company issued to News Corporation two ~~segment~~promissory notes totaling $4.5 billion. One promissory note is in the amount of $2 billion and bears interest at a rate of LIBOR plus 1% per annum at June 30, ~~for~~2004. ~~fiscal~~The ~~2002~~other aspromissory ~~compared~~note tois ~~fiscal~~in ~~2001~~the amount of $2.5 billion and bears interest at 8% per annum.

	For the year ended June 30,
	2002			2001			Change			%Change
	(in millions)
Revenues(1):
Filmed Entertainment	$	4,048		$	3,676		$	372		10	%
Television Stations		1,875			1,550			325		21	%
Television Broadcast Network		2,048			1,823			225		12	%
Cable Network Programming		1,754			1,365			389		28	%
Total revenues	$	9,725		$	8,414		$	1,311		16	%
Operating income (loss):
Filmed Entertainment	$	485		$	277		$	208		75	%
Television Stations		598			499			99		20	%
Television Broadcast Network		(283	)		(65	)		(218	)	(335	)%
Cable Network Programming		6			(59	)		65		110	%
Other operating charge		(909	)		—			(909	)	—
Total operating (loss) income		(103	)		652			(755	)	(116	)%
Interest expense, net		(241	)		(345	)		104		30	%
Equity earnings (losses) of affiliates		(144	)		(92	)		(52	)	(57	)%
Minority interest in subsidiaries		(37	)		(14	)		(23	)	(164	)%
Other, net		1,540			190			1,350		711	%
Income before provision for income taxes and cumulative effect of accounting change		1,015			391			624		160	%
Provision for income tax expense on a stand-alone basis		(408	)		(185	)		(223	)	(121	)%
Income before cumulative effect of accounting change		607			206			401		195	%
Cumulative effect of accounting change, net of tax		(26	)		(494	)		468		95	%
Net income (loss)	$	581		$	(288	)	$	869		302	%
Other data:
Operating Income Before Depreciation and Amortization(2):
Filmed Entertainment	$	544		$	342		$	202		59	%
Television Stations		798			683			115		17	%
Television Broadcast Network		(263	)		(45	)		(218	)	(484	)%
Cable Network Programming		243			149			94		63	%
Other operating charge		(909	)		—			(909	)	—
Total Operating Income Before Depreciation and Amortization	$	413		$	1,129		$	(716	)	(63	)%
Depreciation and amortization:
Filmed Entertainment	$	59		$	65		$	(6	)	(9	)%
Television Stations		200			184			16		9	%
Television Broadcast Network		20			20			—		—
Cable Network Programming		121			118			3		3	%
Total Depreciation and amortization	$	400		$	387		$	13		3	%

Public Debt Redemptions - In August 2002, the Company and its subsidiary, Fox Sports Networks, LLC redeemed all of the outstanding 9³/4 % Senior Discount Notes due 2007 and 8⁷/8% Senior Notes due 2007 (collectively, the “Notes”) in the aggregate amount of $947 million.

34Single-Film Production Financing - In fiscal 2003, the Company had a single-film production financing arrangement for approximately $95 million, which was secured by the film assets and bore interest at approximately 1.9%. In April 2003, the Company repaid it in full.

~~Table~~New Millennium II – Considering the competitive environment and costs associated with film production, film studios, including the Company, constantly evaluate the risks and rewards of ~~Contents~~film production. Various strategies are used to balance risk with capital needs, including, among other methods, co-production, contingent profit participations, acquisition of distribution rights only and insurance. Historically, the Company has funded its film production by borrowing under a commercial paper facility (the “Facility”) but is presently funding film production through operating cash flows or through borrowings from News Corporation.

~~FOOTNOTES:~~During fiscal 2002 and 2003, the Company was party to a series of film rights agreements whereby a controlled consolidated subsidiary of the Company funded the production or acquisition costs of all eligible films, as defined, to be produced or acquired by Twentieth Century Fox Film Corporation, a subsidiary of the Company, (these film rights agreements, as amended, are collectively referred to as the “New Millennium II Agreement”). Under the New Millennium II Agreement, a preferred limited liability membership interest (“Preferred Interest”) was issued to Tintagel Investors L.L.C. (“Tintagel”) to fund the film financing, which was presented on the consolidated balance sheets as Minority interest in subsidiaries, and the corresponding return on the Preferred Interests (the “Preferred Payments”) were presented as an expense in Minority interest in subsidiaries on the consolidated statements of operations.

~~(1)~~During Infiscal ~~January 2002~~2004, the Company ~~adopted~~purchased ~~EITF~~substantially ~~01-09~~all of the outstanding equity of Tintagel, ~~which~~the ~~was~~entity ~~effective~~that ~~for~~held the ~~Company~~Preferred asInterest of(discussed ~~January~~above) 1for $25.5 million, ~~2002~~plus accrued and unpaid Preferred Payments of $106,000. As ~~required,~~a result of the ~~Company~~acquisition ~~has~~of ~~classified~~this equity interest, the ~~amortization~~Company ofconsolidated ~~cable~~the ~~distribution~~assets and ~~investments~~liabilities ~~against~~of ~~revenues~~Tintagel for accounting purposes and all ~~periods~~Preferred ~~presented~~Interests and Preferred Payments have been eliminated. ~~Operating~~Tintagel’s ~~income~~outstanding ~~(loss)~~indebtedness of $659 million at June 30, ~~Net~~2004 ~~income~~was ~~(loss)~~included in Borrowings on the consolidated balance sheet and ~~Earnings~~the ~~(loss)~~corresponding ~~per~~interest ~~share~~expense ~~are~~was ~~not~~included ~~affected~~in byInterest ~~this~~expense, ~~classification~~net in the consolidated statement of operations. ~~This~~As ~~classification~~of ~~affects~~June ~~the~~30, ~~Company’s~~2003, ~~and~~there was $762 million of Preferred Interests outstanding, which was presented on the consolidated ~~Cable~~balance ~~Network~~sheets ~~Programming~~as ~~segment’s~~Minority ~~revenues~~interest in subsidiaries. ~~The~~Tintagel ~~effect~~continues ofto be a separate legal entity from the ~~classification~~Company onwith separate assets and liabilities. For the three years ended June 30, 2004, the Company’s ~~revenues~~borrowed is$479 asmillion, $520 ~~follows:~~million and $657 million and repaid $556 million, $608 million and $649 million, respectively, under the Facility.

	For the year ended June 30,
	2002			2001
	(in millions)
Gross Revenues	$	9,841		$	8,504
Amortization of cable distribution investments		(116	)		(90	)
Revenues	$	9,725		$	8,414

~~(2)~~In ~~Operating~~May ~~Income~~2004, ~~Before~~the ~~Depreciation~~Company ~~and~~ended ~~Amortization,~~the ~~defined~~transfer asterm ~~operating~~under ~~income~~the ~~(loss)~~New ~~plus~~Millennium ~~depreciation~~II ~~and~~Agreement ~~amortization~~ and ~~the~~will ~~amortization~~no oflonger ~~cable~~draw ~~distribution~~any borrowings ~~investments,~~under ~~eliminates~~ the ~~variable effect across all business segments of non-cash depreciation and amortization~~Facility. ~~Depreciation~~In ~~and~~accordance ~~amortization~~with ~~expense~~the ~~includes~~terms ~~depreciation~~ of ~~property~~the ~~and equipment~~termination, ~~as well as~~ the ~~amortization~~Company ofwill ~~finite-lived~~repay ~~intangible~~$636 ~~assets.~~million ~~Amortization~~ of ~~cable distribution investments represents a reduction against revenues over~~ the ~~term~~Facility ofin afiscal ~~carriage~~2005 ~~arrangement~~ and as$23 ~~such~~million itin isfiscal ~~excluded from Operating Income Before Depreciation and Amortization~~2006. ~~Since~~In ~~Operating~~July ~~Income Before Depreciation and Amortization is a non-GAAP measure~~2004, itthe ~~should~~Company berepaid ~~considered~~$375 inmillion ~~addition to, not as a substitute for, operating income (loss), net income (loss), cash flow and other measures~~ of ~~financial~~the ~~performance~~amount ~~prepared~~due in fiscal ~~accordance~~2005, with ~~GAAP~~$261 ~~and~~million ~~presented~~remaining into ~~the~~be ~~consolidated~~repaid ~~financial statements included elsewhere~~ in ~~this~~fiscal ~~filing~~2005. ~~The following is a reconciliation of Operating income (loss) to Operating Income Before Depreciation and Amortization by segment:~~

	For the year ended June 30, 2002
	Operating income(loss)			Depreciation andamortization		Amortization of cabledistribution investments		Operating IncomeBefore Depreciationand Amortization
	(in millions)
Filmed Entertainment	$	485		$	59	$	—	$	544
Television Stations		598			200		—		798
Television Broadcast Network		(283	)		20		—		(263	)
Cable Network Programming		6			121		116		243
Other operating charge		(909	)		—		—		(909	)
Total	$	(103	)	$	400	$	116	$	413
	For the year ended June 30, 2001
	Operating income(loss)			Depreciation andamortization		Amortization of cabledistribution investments		Operating IncomeBefore Depreciationand Amortization
	(in millions)
Filmed Entertainment	$	277		$	65	$	—	$	342
Television Stations		499			184		—		683
Television Broadcast Network		(65	)		20		—		(45	)
Cable Network Programming		(59	)		118		90		149
Total	$	652		$	387	$	90	$	1,129

Ratings of News Corporation Public Debt

35The table below summarizes News Corporation’s credit ratings as of June 30, 2004.


Rating Agency	Senior Debt	Outlook
Moody’s	Baa 3	Positive
S&P	BBB-	Positive

~~Pro~~39 ~~Forma Results~~

InCommitments ~~order to enhance comparability between fiscal 2002~~ and ~~fiscal~~Guarantees 2001 results, the following discussion of the Company’s results of operations is supplemented by pro forma financial information that assumes the acquisition of the Acquired Stations (as defined below) and Midwest Sports Channel (“RSN North”) and the acquisition of the controlling interest in SPEED Channel, formerly Speedvision Networks, LLC, Fox Sports International and Sunshine had occurred July 1, 2000. The pro forma results are presented for informational purposes only and are not indicative of the operating results that would have occurred had the transactions actually occurred at July 1, 2000, nor are they necessarily indicative of future operating results.

~~Overview~~The of Company ~~Results. For~~has ~~the~~commitments ~~year~~under ~~ended~~certain ~~June~~firm ~~30,~~contractual ~~2002,~~arrangements ~~Revenues~~(“firm ~~increased~~commitments”) ~~approximately 16% from $8,414 million~~ to ~~$9,725~~make ~~million.~~future ~~Increased~~payments ~~revenues~~for atgoods ~~the Filmed Entertainment~~ and ~~Cable Network Programming segments principally contributed to this increase. In aggregate, Operating, Selling, general and administrative and Depreciation and amortization~~ ~~expenses increased approximately 15% from fiscal 2001~~services. ~~Operating~~These ~~expenses~~firm ~~increased~~commitments ~~approximately~~secure ~~15% for~~ the ~~year~~future ~~ended June 30, 2002 due primarily to increased programming~~ rights ~~costs at the Television Broadcast Network primarily due~~ to ~~the telecast~~various ofassets ~~the Super Bowl, the new MLB contract,~~ and ~~license~~services ~~fees for Star Wars Episode I: Phantom Menace. Selling, general and administrative expenses increased approximately 18% due~~ to ~~the~~be ~~$30~~used ~~million~~in ~~write-off of Adelphia receivables at~~ the ~~Cable~~normal ~~Network~~course ~~Programming segment as well as the acquisition~~ of ~~RSN~~operations. ~~North~~The ~~and~~following ~~the~~table ~~consolidation~~summarizes ~~of SPEED Channel and Sunshine at~~ the ~~Cable~~Company’s ~~Network~~material ~~Programming~~firm ~~segment.~~commitments ~~During fiscal 2002, Depreciation~~ and ~~amortization~~borrowings ~~increased~~as ~~approximately 3% due to the acquisition~~ of ~~the Acquired Stations (as defined below) at the Television Stations segment. For the year ended~~ June 30, ~~2002, the Company reported an operating loss of $103 million declining from income of $652 million in fiscal 2001.~~2004 ~~Operating Income Before Depreciation~~ and ~~Amortization decreased to $413 million from $1,129 million for~~ the ~~year~~timing ~~ended~~and ~~June~~effect ~~30,~~that ~~2001.~~such ~~These~~obligations ~~decreases~~are ~~were~~expected ~~primarily due~~ to ~~the~~have ~~Other operating charge of $909 million related to losses~~ on the Company’s ~~sports~~liquidity ~~contracts~~and ~~caused~~cash byflow ~~changes~~ in ~~accounting~~future ~~estimates~~periods. ~~primarily~~The ~~with~~Company ~~respect~~expects to ~~reductions~~fund ofthese ~~projected~~commitments ~~advertising~~primarily ~~revenue on national sports rights agreements~~ with ~~the NFL, MLB and NASCAR. Partially offsetting the Other~~ operating ~~charge~~cash ~~were~~flow ~~improved~~generated ~~results~~in at the ~~Filmed~~normal ~~Entertainment~~course ~~and Television Stations segments~~of business.

Equity losses of affiliates of $144 million increased $52 million from $92 million for the year ended June 30, 2001. These increased losses relate primarily to a non-cash compensation charge of which the Company’s share is $30 million recorded at FFW prior to the sale of the Company’s interests in FFW to The Walt Disney Company (“Disney”). In addition, the absence of earnings from The Golf Channel (sold in June 2001) and increased losses at RPP and National Geographic Channel-Domestic, after its launch in January 2001 contributed to increased losses.


	As of June 30, 2004
	Payments Due by Period
	Total		1 year		2-3 years		4-5 years		After 5 years
	(in millions)
Contractual Obligations and Commitments
Due to affiliates of News Corporation ^(a)	$	4,236	$	—	$	—	$	4,236	$	—
New Millennium II Preferred Interest ^(b)		659		636		23		—		—
Major League Baseball ^(c)		1,308		412		896		—		—
National Football League ^(d)		1,580		765		815		—		—
National Association of Stock Car Auto Racing ^(e)		1,226		301		536		285		104
Capital expenditures		80		60		20		—		—
Operating leases ^(f)		975		119		198		148		510
Other programming commitments and obligations ^(g)		5,643		1,495		1,528		1,056		1,564

Total Contractual Obligations and Commitments	$	15,707	$	3,788	$	4,016	$	5,725	$	2,178

~~For~~The ~~the~~Company ~~year~~also ~~ended~~has ~~June~~certain contractual ~~30,~~arrangements ~~2002,~~that would require the Company ~~recognized~~to ~~its~~make ~~share~~payments ofor ~~FFW’s~~provide ~~one-time,~~funding ~~non-cash~~if ~~charge~~certain ~~for~~circumstances aoccur ~~cumulative effect~~(“contingent ofguarantees”). ~~accounting~~The ~~change~~Company indoes ~~the~~not ~~amount~~expect ofthat ~~$26~~these ~~million~~contingent ~~for~~guarantees ~~the~~will ~~change~~result in ~~FFW’s~~any ~~film~~amounts being ~~accounting~~paid inby ~~accordance~~the ~~with~~Company ~~SOP~~in ~~00-2.~~the ~~This~~foreseeable isfuture. ~~compared~~The totiming of the ~~Company’s~~amounts ~~adoption~~presented ofin ~~SOP~~the ~~00-2~~table ~~beginning~~reflect ~~July~~when 1,the ~~2000.~~maximum ~~The~~contingent ~~Company’s~~guarantees ~~non-cash~~will ~~charge of~~expire ~~$494~~and ~~million,~~does ~~net~~not ofindicate ~~tax~~that ~~benefit~~the ofCompany ~~$302~~expects ~~million,~~to ~~was~~incur ~~recorded~~an ~~during~~obligation ~~the~~to ~~year~~make ~~ended~~payments during ~~June~~that ~~30, 2001~~timeframe.

Net income for the year ended June 30, 2002 was $581 million ($0.69 per share), an improvement from losses of $288 million ($0.40 loss per share) for the year ended June 30, 2001. This improvement was primarily the result of the Company’s gains on the sales of FFW and Outdoor Life, which were partially offset by the charge for the change in accounting estimate on the Company’s national sports rights agreements.


	As of June 30, 2004
	Total Amounts Committed		Amount of Guarantees Expiration Per Period
	Total Amounts Committed		1 year		2-3 years		4-5 years		After 5 years
	(in millions)
Contingent Guarantees
Guarantees ^(h)	$	9,748	$	—	$	—	$	—	$	9,748
Guarantees of equity affiliates ⁽ⁱ⁾		11		11		—		—		—

~~Filmed Entertainment. Revenues~~FOOTNOTES: at the Filmed Entertainment segment increased from $3,676 million for the year ended June 30, 2001 to $4,048 million for the year ended June 30, 2002. This increase is due to the worldwide theatrical, worldwide home entertainment and domestic pay-television performance of Planet of the Apes, domestic theatrical and home entertainment performance of Kiss of the Dragon, the worldwide theatrical performance of Ice Age, the worldwide home entertainment performances of Moulin Rouge and Dr. Dolittle 2

36(a) The Company is funded primarily by cash from operations and by loans from other subsidiaries and affiliates of News Corporation. The Company had approximately $4.2 billion of indebtedness to affiliates of News Corporation as of June 30, 2004, which extends through June 30, 2008.

~~Table~~(b) See discussion of ~~Contents~~New Millennium II above.

~~and~~(c) ~~library~~The ~~titles~~Company’s oncontract ~~DVD.~~with ~~Fiscal~~MLB ~~2001~~grants ~~results~~the ~~included~~Company ~~the~~rights ~~worldwide~~to ~~theatrical,~~telecast ~~worldwide~~certain ~~home~~regular ~~entertainment~~season and ~~domestic~~all ~~pay~~post-~~television~~season ~~performance~~MLB ~~of X-Men,~~games. ~~the~~The ~~international~~contract ~~television~~began ~~sales~~with ~~of Titanic and~~ the ~~worldwide~~2001 ~~home~~MLB ~~entertainment~~season ~~performance of library titles. Additionally, at TCFTV, increased syndication revenues for NYPD Blue~~ and ~~King~~ends ofwith the ~~Hill,~~2006 ~~higher license~~MLB ~~fees~~season. ~~for Buffy the Vampire Slayer, Dharma and Greg and~~ The ~~Practice~~remaining ~~and~~future ~~increased~~scheduled ~~worldwide~~payments ~~home entertainment and international free-television revenues~~ for ~~The~~telecast ~~Simpsons~~rights ~~contributed~~ to ~~the~~such ~~increase~~MLB ingames ~~revenues. The~~aggregated ~~Filmed~~approximately ~~Entertainment~~$1.3 ~~segment’s~~billion ~~operating~~as ~~income~~of ~~for the year ended~~ June 30, ~~2002~~2004. ~~increased~~For ~~75%~~the orduration ~~$208~~of ~~million~~the toterm ~~$485~~of ~~million~~its ~~from~~contract ~~$277~~with ~~million~~MLB, ~~for~~ the ~~year~~Company ~~ended~~has ~~June~~sublicensed ~~30,~~telecast ~~2001.~~rights ~~Operating~~to ~~Income~~certain ~~Before~~MLB ~~Depreciation~~post-season ~~and~~games ~~Amortization increased~~to ~~$202~~The ~~million~~Walt toDisney ~~$544~~Company, ~~million~~and ~~for~~is ~~the~~entitled ~~year~~to ~~ended~~be ~~June~~paid ~~30,~~a ~~2002~~sublicense ~~from~~fee aggregating $~~342~~385 million ~~for~~over the ~~year~~remaining ~~ended June 30, 2001~~term. ~~These~~The ~~increases~~amounts ~~are~~reflected ~~due~~on to the ~~revenue increases noted~~ above, ~~compared~~schedule tohave ~~fiscal~~not ~~2001~~been ~~results~~reduced ~~which were partially offset~~ by the ~~disappointing results of Monkeybone, Say It Isn’t So and The Legend of Bagger Vance~~sublicense.

~~Television~~40 Stations. On July 31, 2001, the Company acquired the television broadcasting business of Chris-Craft (as defined below), consisting of ten television stations and subsequently exchanged three former Chris-Craft stations with Viacom, Inc., Clear Channel Communications, Inc. and Meredith Corporation for five other television stations (after giving effect to these transactions the acquired television stations are referred to as the “Acquired Stations”). This acquisition increased the number of the Company’s O&Os to 34 full power stations.

~~The~~(d) ~~table~~Under ~~below~~the ~~reflects~~Company’s contract with the ~~unaudited~~NFL ~~pro~~through ~~forma~~fiscal ~~combined~~2006, ~~results~~remaining offuture ~~the Television~~minimum ~~Stations~~payments ~~segment~~for asprogram ifrights ~~the~~to ~~acquisition~~broadcast ofcertain ~~the~~football ~~Acquired~~games ~~Stations~~aggregated ~~had~~approximately ~~taken~~$1.6 ~~place~~billion as of ~~July~~June 130, ~~2000.~~2004, and are payable over the remaining term of the contract.

	For the years ended June 30,
	2002		2001		Change
	(in millions)
Revenues	$	1,913	$	2,018	$	(105	)
Operating income		618		600		18
Operating Income Before Depreciation and Amortization		821		809		12

(e)

The Company’s contracts with NASCAR, which contain certain termination clauses, give the Company rights to broadcast certain NASCAR races through fiscal 2009 and exclusive NASCAR content rights as well as the NASCAR brand to be exploited with a new NASCAR cable channel or the existing SPEED Channel through fiscal 2013. The remaining future minimum payments aggregated approximately $1.2 billion as of June 30, 2004 and are payable over the remaining terms assuming no early terminations.

On a pro forma basis, for the year ended June 30, 2002, Revenues at the Television Stations segment decreased $105 million to $1,913 million from $2,018 million for the year ended June 30, 2001. This decrease is primarily due to the adverse impact of the September 11th terrorist attacks, which further weakened the advertising markets, partially offset by an estimated 1.4 percentage point gain in market share over fiscal 2001. This market share gain resulted from the positive impact of non-returning political advertising and the 2000 Summer Olympics (~~broadcast during fiscal 2001~~f), ~~syndicated~~The ~~programming~~Company ofleases ~~Seinfeld~~transponders, ~~the~~ ~~replacement~~office ~~of Fox Kids programming with better rated programming and the telecast of major sporting events including the post-season MLB~~facilities, ~~especially the seven game MLB World Series~~equipment, and ~~the~~microwave ~~Super~~transmitters ~~Bowl.~~used ~~For the year ended June 30, 2002, Operating income at the Television Stations segment increased by $18 million~~ to ~~$618~~carry ~~million~~its ~~from~~broadcast ~~$600 million for the year ended June 30, 2001~~signals. ~~This~~These ~~increase is due to savings from the use of an in-house advertising sales representative~~leases, ~~the non-renewal~~which ofare ~~local~~classified ~~rights~~as tooperating ~~broadcast the New York Yankees games for the 2002 season~~leases, ~~and~~expire ~~improved performance~~ at ~~the~~various ~~Acquired~~dates ~~Stations.~~through For the year ended June 30, 2002, Operating Income Before Depreciation and Amortization for the Television Stations segment increased $12 million to $821 million for fiscal 2002 compared to $809 million in fiscal year 2001 due to the reasons noted above2036.

~~Television~~(g) ~~Broadcast~~The ~~Network. For the year ended June 30, 2002, the Television Broadcast Network~~Company’s ~~Revenues increased~~minimum ~~$225~~commitments ~~million~~and toguarantees ~~$2,048~~under ~~million~~certain ~~from~~other $1programming,~~823~~ ~~million~~local ~~for~~sports ~~the~~broadcast year ended June 30, 2001. This 12% increase is due primarily to advertising revenues from the Super Bowl, which was not telecast on FOX in fiscal 2001, $85 million of revenue recognized from the sale of MLB divisional series rights ~~to ABC Family,~~ and ~~increased~~other ~~advertising~~agreements ~~revenue~~aggregated ~~for~~approximately ~~MLB due to additional postseason games compared to fiscal 2001~~$5.6 ~~These~~billion ~~results~~as ~~were~~of ~~partially~~June offset by lower prime time advertising revenue resulting from a ratings decline in entertainment programming and lower NFL advertising revenue due to a decrease in regular season pricing and ratings. For fiscal 200230, ~~operating losses for the Television Broadcast Network segment increased $218 million~~ 2004.

37(h) See discussion of Guarantees below.

~~Table~~(i) The Company guaranteed sports rights agreements for SportsChannel Chicago Associates (“SportsChannel Chicago”). SportsChannel Chicago has been notified by the team owners of ~~Contents~~the termination, effective September 30, 2004, of these sports rights agreements and as a result, as of June 30, 2004, the remaining guarantees have been reduced to approximately $11 million and will expire on September 30, 2004.

toExcept aas ~~loss~~otherwise ofdiscussed $283 million and Operating Income Before Depreciation and Amortization decreased $218 million to a loss of $263 million compared to fiscal 2001. Increased MLB programming rights associated with more games shown than in fiscal 2001above, the ~~Super~~Company ~~Bowl,~~does not guarantee ~~telecast~~the ondebt ~~FOX~~of inany ~~fiscal~~of ~~2001,~~its ~~license~~affiliates ~~fees~~accounted for ~~Star~~using ~~Wars~~the ~~Episode~~equity I:method ~~Phantom~~of ~~Menace and higher prime time license fees for returning series contributed to the increased losses~~accounting.

~~Cable Network~~Guarantees Programming. On a reported basis, Revenues for the Cable Network Programming segment increased by $389 million from $1,365 million to $1,754 million for the year ended June 30, 2002. Improved ratings and increased subscribers at Fox News and FX contributed to this 28% increase in revenues. Operating income improved $65 million from a loss of $59 million for the year ended June 30, 2001 to income of $6 million for the year ended June 30, 2002, primarily due to improved results across all channels and the inclusion of results from the acquisitions, most notably SPEED Channel which contributed $17 million of operating income since its acquisition in fiscal 2002. These improvements were partially offset by the $30 million write-off of Adelphia receivables. Operating Income Before Depreciation and Amortization increased $94 million to $243 million from $149 million for the year ended June 30, 2001.

~~Fox~~The ~~Cable~~Company, ~~Networks~~News Corporation ~~Group~~and ~~consists~~certain of ~~the~~News ~~results~~Corporation’s other subsidiaries are guarantors of ~~FX,~~various ~~the~~debt ~~RSNs,~~obligations ~~SPEED Channel~~of News Corporation and ~~Fox~~certain ~~Sports~~of ~~International~~its subsidiaries. InThe ~~February~~principal ~~2001,~~amount ~~Fox~~of ~~Cable~~indebtedness ~~Networks~~outstanding ~~Group~~under ~~acquired~~such ~~RSN~~debt ~~North~~instruments ~~and~~as inof June ~~January 2002~~30, a2004 ~~controlling~~and ~~interest~~2003 inwas ~~Sunshine~~approximately ~~was~~$10 ~~acquired~~billion. ~~Both~~The ~~RSN~~debt ~~North~~instruments ~~and~~limit ~~Sunshine~~the ~~are~~ability ~~consolidated~~of inguarantors, including the ~~results~~Company, ofto ~~the~~subject ~~RSNs.~~their ~~During fiscal~~properties ~~2002~~to liens, ~~Fox~~and ~~Cable~~certain ~~Networks~~of ~~Group~~the ~~acquired~~debt ~~the~~instruments ~~remaining~~impose ~~ownership~~limitations ~~interest~~on inthe ~~SPEED~~ability ~~Channel~~of News Corporation and ~~has~~certain ~~consolidated~~of its ~~results~~subsidiaries, ~~since~~including ~~July~~the 25Company, ~~2001.~~to Inincur ~~December~~indebtedness ~~2001,~~in ~~Fox~~certain ~~Cable~~circumstances. ~~Networks~~Such ~~Group~~debt ~~acquired~~instruments ~~the~~mature ~~remaining~~at ~~50%~~various ~~interest~~times inbetween ~~Fox~~2005 ~~Sports International~~ and ~~has~~2096, ~~consolidated~~with ~~its~~a ~~results~~weighted ~~since~~average ~~the~~maturity ~~date~~ of ~~acquisition~~19 years.

~~The~~In ~~table~~the ~~below~~case ~~reflects~~of ~~the~~any ~~unaudited~~event ~~pro~~of ~~forma~~default ~~combined~~under ~~results~~such ofdebt obligations, the ~~Cable~~Company ~~Network~~will ~~Programming~~be ~~segment~~directly liable asto ifthe creditors or debtholders. News Corporation has agreed to indemnify the ~~acquisitions~~Company ~~discussed~~from ~~above~~and ~~had~~against ~~taken~~any ~~place~~obligations asit may incur by reason of ~~July~~its 1guarantees of such debt obligations. As of June 30, ~~2000~~2004, News Corporation was in compliance with all of its debt covenants and had satisfied all financial ratios and tests and expects to remain in compliance and satisfy all such ratios and tests.

		For the years ended June 30,

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