NEW YORK — News Corp. took the first formal step toward the public offering of stock in its film and TV businesses Friday when it filed a prospectus for Fox Entertainment Group, outlining a more detailed picture of Fox’s businesses than previously revealed.
The prospectus shows that Fox Entertainment Group — which includes 20th Century Fox, Fox’s TV station group and broadcast network and Fox’s cable interests — would have earned a net profit of $176 million on revenue of $7.02 billion in the year to June 30.
That was up from a profit of just $30 million in fiscal 1997, largely because “Titanic” sent the studio’s profit soaring. The studio’s cash flow — earnings before interest, taxes, depreciation and amortization — rose from $138 million in fiscal 1997 to $292 million in fiscal 1998.
TV cash flow
The TV side’s cash flow jumped 48% to $727 million. News breaks down its earnings by division when it reports, as it did last week, but it includes loss-making ventures like Asian sat-TV business Star Television in the TV division, obscuring how well the domestic TV station group and network are doing.
The filing also revealed that Fox News Channel’s losses dropped from $123 million in fiscal 1997, the year it launched, to $96 million in the latest fiscal year, reflecting its increase in subscribers and advertising revenue. Fox’s news revenue remains low, however, at just $72 million.
Details about the offering, including how much money will be raised, were not included in the prospectus. News broadly said the offering would raise $100 million, but Wall Streeters said this was a nominal figure inserted so the filing could be made with the Securities and Exchange Commission.
The real amount expected to be raised in the offering is believed to be in excess of $3 billion. Details of Fox’s value and the offering amount will be inserted in later versions of the prospectus after it has been reviewed by the SEC, knowledgeable persons said. News declined comment on the prospectus.
The filing did reveal, however, that News will retain supervoting stock in Fox and public investors will be offered ordinary voting shares. That arrangement will allow News to sell as much of Fox as it wants while retaining control of the company.
News stock rose 56¢ to $27.43 Friday.