Fox IPO Filing Shows Group Is Profitable

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New York -- Fox Entertainment Group, the News Corp. film
and TV unit, helped to pave the way toward a huge public-stock offering with a prospectus
showing that it's a $7 billion company in annual revenue, with growing profits and
cash flow.

Bolstered by Fox' share of Titanic, the group,
which also includes News Corp.'s cable holdings, earned $176 million in net income
during the year that ended June 30. That's up from $30 million the year before. The
unit's cash flow grew to $906 million from $500 million the prior year, according to
the S-1 registration statement filed Aug. 14.

News hasn't spelled out how many Fox Entertainment
shares it plans to sell, nor what percentage of the unit will be sold. Previously, it said
up to 20 percent of the unit would be sold through the initial public offering, and News
chairman Rupert Murdoch has said that he thinks that the unit would have a market value of
about $20 billion.

News only plans to sell one-vote-per-share class A stock,
while retaining all class B shares, which have 10 votes per share. The IPO proceeds will
go toward paying down News' debt.

Fox News Channel, according to the prospectus, had a
cash-flow loss of $96 million over the past year, compared with $123 million in negative
cash flow the year before.

Revenue nearly doubled, to $72 million, during the
network's first full year of operation. Fox Entertainment said its equity in
affiliates' losses rose 62 percent, to $81 million, mainly because of expansion at
Fox/Liberty Networks and interest expense from Fox Family Worldwide Inc.'s
acquisition of International Family Entertainment Inc., parent of The Family Channel,
which relaunched Aug. 15 as Fox Family Channel

Fox's film studio's revenue rose 25 percent
during the year, to $3.9 billion, largely due to Titanic and other hits, such as The
Full Monty
. The studio's cash flow rose to $292 million from $138 million in
fiscal-year 1997.

Fox's broadcast-television operations' revenue
rose 14 percent, to $3.1 billion, and cash flow rose 48 percent, to $727 million, largely
due to the acquisition of 10 television stations from New World Communications Group Inc.
in January 1997.

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