<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549

                              -------------------

                                   FORM 10-K

                       FOR ANNUAL AND TRANSITION REPORTS
                    PURSUANT TO SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

(Mark One)
{X}  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended  June 30, 1999
                                       OR
{ }  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _____ to ______

                        Commission file number  1-14595

                         FOX ENTERTAINMENT GROUP, INC.
             (Exact Name of Registrant as Specified in its Charter)

                   DELAWARE                                      95-4066193
         (State or Other Jurisdiction                         (I.R.S. Employer
       of Incorporation or Organization)                     Identification No.)

   1211 Avenue of the Americas, New York, New York                  10036
    (Address of Principal Executive Offices)                     (Zip Code)

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

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


Securities 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 if 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, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. { }

          As of September 1, 1999 the aggregate market value of common stock
held by non-affiliates of the registrant (based on the closing price on such
date as reported on the New York Stock Exchange - Composite Transactions) was
$2,955,668,358.

          As of September 27, 1999, 176,559,834 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 INCORPORATED BY REFERENCE

          Portions of Fox Entertainment Group, Inc.'s Notice of 1999 Annual
Meeting and Proxy Statement to be filed with the Commission pursuant to
Regulation 14A of the Securities Exchange Act of 1934 are incorporated by
reference into Part III of this report.
<PAGE>

                                    PART I

ITEM 1.   BUSINESS

Background

     Fox Entertainment Group, Inc. (together with its direct and indirect
subsidiaries, and their respective predecessors, unless the content otherwise
requires, the "Company") is a vertically integrated entertainment company with
operations in three business segments: (i) Filmed Entertainment; (ii) Television
Broadcasting and Related Businesses; and (iii) Cable Network Programming.

     In November 1998, the Company sold 124,800,000 shares of its Class A Common
Stock in an initial public offering. The News Corporation Limited ("News
Corporation") is the beneficial owner of 51,759,834 shares of Class A Common
Stock and 547,500,000 shares of Class B Common Stock, which in the aggregate
represent approximately 82.7% of the equity and 97.8% of the voting power of the
Company.

    The address of the Company's principal executive offices is 1211 Avenue of
the Americas, New York, New York 10036, and the telephone number is (212) 852-
7111. The Company maintains a 52-53 week fiscal year ending on the Sunday
nearest to June 30 in each year. At June 30, 1999, the Company had approximately
11,000 full-time and part-time employees.

Special Note Regarding Forward-Looking Statements

     This document 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 discussed under the headings "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," in the Company's Registration Statement Form S-1 (SEC file no.
333-61515) as declared effective by the Securities and Exchange Commission on
November 9, 1998, 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. 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 unaudited combined condensed
financial statements of the Company and related notes set forth elsewhere
herein.

                                     Page 1
<PAGE>

Business

     Filmed Entertainment

     The Company engages in feature film and television production and
distribution principally through the following businesses: Fox Filmed
Entertainment ("FFE"), a leading producer and distributor of feature films;
Twentieth Century Fox Television, a leading producer of network television
programming; and Fox Television Studios ("FtvS"), a producer and distributor of
syndicated programming.

     Fox Filmed Entertainment

     One of the world's largest producers and distributors of motion pictures,
FFE produces, finances, acquires and distributes motion pictures throughout the
world under a variety of arrangements. During fiscal 1997, 1998 and 1999, FFE
placed 23, 25 and 21 films, 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 Fox Animation Studios, which produces feature
length animated motion pictures. Successful motion pictures produced and/or
distributed by FFE since the beginning of fiscal 1997 include Hope Floats, The
X-Files, Dr. Dolittle, There's Something About Mary, Ever After, How Stella Got
Her Groove Back, Titanic (together with Paramount Pictures Corporation),
Entrapment, Never Been Kissed and Star Wars, Episode 1: The Phantom Menace. The
Company currently plans to release approximately 24 films in fiscal 2000
including Anna and the King, The Beach, X-Men, Navy Diver, Me, Myself and Irene,
and Titan A.E.

     In addition, pursuant to an agreement that became effective at the end of
May 1998 with Monarchy Enterprises Holdings B.V. ("MEH"), the parent company of
Regency Entertainment, Inc. ("New Regency"), FFE will distribute certain New
Regency films and all films co-financed by FEG and New Regency produced over a
15-year term 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. The Company expects to release
approximately 3-5 New Regency Films during fiscal 2000. In connection with this
distribution arrangement, the Company acquired a 20% interest in MEH. The
parties also agreed to enter into certain motion picture financing arrangements
and have formed Regency Television, a 50/50 joint venture to produce television
programming.

     Due to increased competition and costs associated with film production,
film studios constantly evaluate the risks and rewards of production. Companies
use various strategies to balance this risk with their capital needs, including,
among other methods, co-production, contingent profit participations,
acquisition of distribution rights only, and insurance. Pursuant to a series of
film rights agreements with an independent third party ("New Millenium"), the
Company has agreed to sell completed feature films released during the period
fiscal 1997 through 2001 to New Millennium at amounts which approximate cost.
The Company is the distributor of these films. Additionally, the Company has the
option to reacquire the films after a period when significantly all of the
ultimate revenues have been earned based on a formula which considers the
remaining projected ultimate revenues, net of cost, as defined at the time of
reacquisition. Through this arrangement, New Millennium provides the Company
with an external source of capital willing to share in the risks of motion
picture production. In cases where the Company fully produces, retains and
distributes motion pictures, the Company has the full risk and reward from such
films. Under the arrangement with New Millennium, it participates in certain of
the risks and rewards from the portfolio of films it has acquired.

                                     Page 2
<PAGE>

     Motion picture companies, such as FFE, typically seek to generate revenues
from  various distribution channels. FFE derives its worldwide motion picture
revenues primarily from four basic sources (set forth in general chronology of
exploitation): (i) distribution of motion pictures for theatrical exhibition in
the United States and Canada and markets outside of the United States and Canada
("International" markets); (ii) distribution of motion pictures in various home
media formats; (iii) distribution of motion pictures for exhibition on pay-per-
view and premium pay television programming services; and (iv) distribution of
motion pictures for exhibition on free television networks, other broadcast
program services, independent television stations and basic cable programming
services, including certain services which are affiliates of the Company and
News Corporation. The Company does not always have rights in all media of
exhibition to all motion pictures which it releases, and does not necessarily
distribute a given motion picture in all of the foregoing media in all markets.

     The Company distributes and markets its films worldwide principally through
its own distribution and marketing companies. The Company believes that the pre-
release marketing of a feature film is an integral part of its motion picture
distribution strategy and generally begins marketing efforts three to six months
in advance of a film's release date in any given territory.

     Through Twentieth Century Fox Home Entertainment, Inc., the Company
distributes motion pictures and other 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 rental and sell-through titles.
Approximately 240 produced and acquired titles were released or re-released to
the domestic home entertainment market in fiscal 1999. In International markets,
the Company distributes both directly and through foreign distribution channels
and approximately 110 produced and acquired titles were made available to the
Company for distribution to the international home entertainment market in
fiscal 1999.

     Units of FFE license motion pictures and other programs in the United
States, Canada and International markets to various third-parties and certain
affiliated, premium pay television services pursuant to license agreements
which generally provide for a specified number of exhibitions of the program
during a fixed term in exchange for a license fee which is based on a variety of
factors, including the number of subscribers to the service or system. Among
third-party license agreements that units of FFE have in place in the United
States for pay television exhibition of its motion pictures are exclusive
agreements with Home Box Office ("HBO"), providing for the licensing of films
initially released for theatrical exhibition through the year 2003, as well as
arrangements with Encore and American Movie Classics. Units of FFE also license
motion pictures in the United States to cable pay-per-view services such as
Viewer's Choice and DBS pay-per-view services operated by DirecTV and EchoStar.
In addition, in International markets, units of FFE license motion pictures to
leading third-party pay television operators as well as to programming services
operated by various affiliated entities.

     Units of FFE also license motion pictures to broadcast television networks,
including the Fox Broadcasting Company ("FOX"), independent broadcast television
stations and basic cable networks, pursuant to agreements which generally allow
a fixed number of telecasts of a motion picture over a stated period of time in
exchange for a specified license fee.

                                     Page 3
<PAGE>

     Twentieth Century Fox Television

     During the past three fiscal years, Twentieth Century Fox Television
produced television programs for the Fox, ABC, CBS, NBC and WB broadcast
television networks and the USA cable network. Twentieth Century Fox Television
currently produces or has orders to produce episodes of the following network
television series: Dharma & Greg, Then Came You, Two Guys and a Girl, The
Practice and Snoops for ABC; Judging Amy, Martial Law (each co-produced with CBS
Productions) and Chicago Hope for CBS; Ally McBeal, Family Guy, Futurama, Get
Real, Harsh Realm, King of the Hill, The Simpsons, Titus and The X-Files for
Fox; The Pretender (co-produced with NBC Studios) and Stark Raving Mad for NBC;
and Angel, Buffy the Vampire Slayer and Roswell 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 Twentieth Century Fox
Television.

     Generally, television programs are produced under contracts that provide
for license fees which may cover only a portion of the anticipated production
costs. As these costs have increased in recent years, the resulting deficit
between production costs and license fees for domestic first-run programming has
also increased. Successful network television series are licensed (i) for first-
run exhibition in International and Canadian markets, (ii) for off-network
exhibition in the United States (including in syndication or to cable
programmers) and (iii) for syndication in International markets. Such additional
licensing is often critical to the financial success of a series since the
license fee paid by a network generally does not fully recover production costs.
Generally, a series must be broadcast for at least three to four television
seasons for there to be a sufficient number of episodes to offer the series in
syndication in the United States or to cable and direct broadcast satellite
("DBS") programmers in the United States. The decision of a television network
to continue a series through an entire television season or to renew a series
for another television season depends largely on the series' audience ratings.

     Fox Television Studios

     FtvS is organized as a "co-op" of independent television production units,
grouped under four basic lines of business: (i) network primetime programming
through The Greenblatt Janollari Studio ("TGJS") and Regency Television, (ii)
"alternative," cable and low-cost entertainment programming through FtvS
Productions, (iii) movies and mini-series through FtvS Pictures and (iv) non-
fiction programming through Foxstar and Natural History New Zealand. FtvS
currently produces or has orders to produce the following series, movies and
specials: The Hughleys and Oh Grow Up for ABC; Malcolm in the Middle, The
Badland, Kiss Tomorrow Goodbye, Now or Never, Olive the Other Reindeer, and The
Headless Horseman for FOX; Roswell (co-production with Twentieth Century Fox
Television) for the WB; The X-Show, Fast Food Films and Sons of the Beach for
FX; The Ultimate Fan League for Fox Sports Net; World Gone Wild and Famous
Families for Fox Family Channel; Hollywood Reel to Reel for American Movie
Classics; Biography episodes for A&E; Adventure Central for Travel Channel and
Twisted Tales for Animal Planet.

Motion Picture and Television Libraries
---------------------------------------

     The Company's motion picture and television library (the "Fox Library")
consists of varying rights to over 2,500 previously released films, of which
almost 300 have been

                                     Page 4
<PAGE>

released since 1980, and many well-known television series. The motion pictures
in the Fox Library include many successful, well-known and well-loved titles,
such as The Sound of Music and Miracle on 34th Street, and six of the top 10
domestic box office grossing films of all time, including the Star Wars trilogy
(Star Wars, The Empire Strikes Back, Return of the Jedi), Home Alone,
Independence Day, and most recently, Titanic. The Company earns significant
revenues through the licensing of titles in the Fox Library in many media,
including television and home entertainment formats, and through licensing and
merchandising of films and characters in films.

     In addition, the Fox Library contains varying rights to certain 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. and Daniel Boone, and such recent hits as The Simpsons, The
X-Files, NYPD Blue, Chicago Hope, Ally McBeal, The Practice and King of the
Hill.

Licensing and Merchandising
---------------------------

     The Company capitalizes on its motion picture and television characters and
properties by entering into licensing agreements for merchandising, literary
publishing and commercial tie-ins. Programs and films which have experienced
success throughout the world in licensing and merchandising include The
Simpsons, The X-Files, the Alien series of motion pictures and Anastasia. See
"-- Cable Network Programming--Fox Family Worldwide."

Fox Interactive
---------------

     Fox Interactive develops and markets entertainment computer software and
video game titles. By leveraging the name recognition of Company properties such
as Die Hard, The Simpsons and the Alien series of motion pictures, Fox
Interactive continues to experience significant growth and has created a strong
and diverse line of interactive games. In addition, Fox Interactive has expanded
its line by acquiring new properties that can be leveraged to other divisions of
the Company, such as Croc: The Legend of Gobbos, a game now being considered for
an animated television series. Most recently, Fox Interactive has  launched a
line of Fox Sports Interactive games, including the two titles to be offered
this fall, NHL Championship 2000 and NBA Basketball 2000.

Fox Music and Music Publishing
------------------------------

     Fox Music produces and licenses for distribution through third parties
soundtracks of the Company's film and television productions. The Company's
successful film and television soundtracks include Titanic, Back to Titanic,
Soul Food, Hope Floats, Ally McBeal, The X-Files, Dr. Dolittle and How Stella
Got Her Groove Back. In addition, Fox Music Publishing generally owns the
publishing rights for songs and scores commissioned for the Company's film and
television programming. Fox Music Publishing licenses these rights to third
parties for many uses in different media.

                                     Page 5
<PAGE>

Television Broadcasting and Related Businesses

     The Company is engaged in the distribution of network programming and the
operation of broadcast television stations. Fox Broadcasting Company, the Fox
Television Stations and Twentieth Television, Inc. ("Twentieth Television") are
the principal operating units in this segment.

     Fox Broadcasting Company

     FOX has 203 affiliated stations, including the 22 television stations that
are owned by subsidiaries of the Company (the "Fox Television Stations"), which
reach, during prime time, approximately 99% of all U.S. television households.
Each week, FOX regularly delivers to its affiliates generally 15 hours of prime
time programming and one hour of late-night programming on Saturday. Through the
Fox Kids Network, programmed by FFW, FOX regularly delivers to its affiliates 14
hours of children's daytime programming. FOX's prime time programming features
such series as The Simpsons, The X-Files, Ally McBeal, King of the Hill, Beverly
Hills 90210, Party of Five and various movies and specials. In addition, a
significant component of FOX's programming consists of Fox Sports programming,
with FOX providing live coverage of the National Football Conference of the
National Football League ("NFL") and Major League Baseball ("MLB") to its
affiliates.

     FOX derives its revenues from sales in the national advertising marketplace
of commercial advertising time. FOX's programming line-up is intended to appeal
primarily to target audiences of 18 to 49-year old adults, the demographic group
that advertisers seek to reach most often. Since the creation of FOX, FOX's
ratings have increased substantially. With respect to household ratings and
shares for FOX and ABC, CBS and NBC based on viewership of adults aged 18-49,
FOX improved from fourth place for the 1987-1988 broadcast season (with a 2.8
rating and a 7 share in total prime time for all U.S. television households) to
second place for the 1998-1999 broadcast season (with a 5.0 rating and a 14
share in total prime time for all U.S. television households). The median age of
the FOX viewer is 33 years, as compared to 41 years for ABC, 43 years for NBC
and 53 years for CBS.

     The 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 four seasons.  FOX licenses its film
programming from major film studios and independent film production companies
and licenses made-for-television films from a number of sources. National sports
programming, such as NFL and MLB programming, is obtained under license
agreements with professional sports leagues. The Company's current licenses with
the NFL and MLB extend until 2006 and 2000, respectively.

     FOX provides programming to each of its television station affiliates in
accordance with affiliation agreements of varying durations, which grant to each
affiliate the right to broadcast network television programming on the
affiliated station (the "Fox Affiliates"). Such agreements typically run for
five to ten years and have staggered expiration dates. These affiliation
agreements generally require FOX's full - time television station affiliates to
carry FOX programming in all time periods in which FOX programming is offered to
such affiliates, subject to certain exceptions stated in affiliation agreements.
In 1999, FOX entered into an arrangement with most of its television station
affiliates relating to the amount of commercial advertising time in FOX
programming that FOX provides to each affiliate for the affiliate to sell to
advertisers ("local commercial advertising time").  Under that arrangement,
which

                                     Page 6
<PAGE>

runs until 2002, the affiliate pays FOX for additional local commercial
advertising time.

     Fox Television Stations

     The 22 Fox Television Stations are located in nine of the top 10 largest
designated market areas ("DMAs"), and all are affiliates of FOX. The Fox
Television Stations have the broadest coverage of any television station group
in the United States. Fox Television Stations are located in markets
representing, in the aggregate, approximately 50% of local television market
advertising revenues.

     The following table lists certain information as of September 1999 about
each Fox Television Station.

<TABLE>
<CAPTION>
                                                                  PERCENTAGE OF U.S. TELEVISION
     DMA/RANK                       STATION        CHANNEL/TYPE   HOUSEHOLDS REACHED (4)
     --------                       -------        ------------   ----------------------
     <S>                            <C>           <C>             <C>
     New York, NY          1        WNYW           5  VHF                 6.8%
     Los Angeles, CA       2        KTTV          11  VHF                 5.2%
     Chicago, IL           3        WFLD          32  UHF                 3.2%
     Philadelphia, PA      4        WTXF          29  UHF                 2.7%
     Boston, MA            6        WFXT          25  UHF                 2.2%
     Dallas, TX(1)         7        KDFW           4  VHF                 2.0%
     Washington, DC        8        WTTG           5  VHF                 2.0%
     Detroit, MI           9        WJBK           2  VHF                 1.8%
     Atlanta, GA          10        WAGA           5  VHF                 1.8%
     Houston, TX          11        KRIV          26  UHF                 1.7%
     Tampa, FL            13        WTVT          13  VHF                 1.5%
     Cleveland, OH        15        WJW            8  VHF                 1.5%
     Phoenix, AZ          17        KSAZ          10  VHF                 1.4%
     Denver, CO(2)        18        KDVR          31  UHF                 1.3%
     St. Louis, MO        21        KTVI           2  VHF                 1.1%
     Kansas City, MO      31        WDAF           4  VHF                 0.8%
     Milwaukee, WI        33        WITI           6  VHF                 0.8%
     Salt Lake City, UT   36        KSTU          13  VHF                 0.7%
     Birmingham, AL       39        WBRC           6  VHF                 0.7%
     Memphis, TN          40        WHBQ          13  VHF                 0.6%
     Greensboro, NC       47        WGHP           8  VHF                 0.6%
     Austin, TX(3)        61        KTBC           7  VHF                 0.5%

          Total:                                                        40.69%
</TABLE>


(1)  The Company also has an operating agreement with KDFI, Channel 27, Dallas,
     TX.

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

(3)  The Company also owns and operates KVC, Channel 13, Austin, TX, an LPTV
     (low power television) station.

(4)  VHF stations transmit on Channels 2 through 13 and UHF stations on Channels
     14 through 69. UHF television stations in many cases have a weaker signal
     and therefore do not achieve the same coverage as VHF stations. To address
     this disparity, the Federal Communications Commission's ("FCC") ownership
     rule applies a UHF discount (the "UHF Discount") which attributes only 50%
     of the television households in a local television market to the audience
     reach of a UHF station for purposes of calculating whether that station's
     owner complies with the 35% national audience reach cap imposed by FCC
     regulations. The percentages listed do not take into account the UHF
     Discount. The FCC is currently reviewing whether the

                                     Page 7
<PAGE>

     35% cap should be raised and whether the UHF Discount should be retained,
     modified or eliminated. See "--Regulation."

       The Fox Television Stations derive substantially all of their revenues
from national spot and local advertising. Advertising rates are determined by
each Fox Television Station in response to market conditions in the area which
it serves. In addition to cash sales, the Fox Television Stations enter into
customary barter agreements with syndicators, pursuant to which the Fox
Television Stations acquire programming and 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 to retain a specified amount of
advertising time for sale in the national advertising market in lieu of cash
consideration.

       Twentieth Television

       The Company is also engaged in television programming, production,
distribution and licensing through Twentieth Television. Twentieth Television
produces and distributes television programs and distributes feature motion
pictures for first-run syndication and on basic cable television in the United
States. Twentieth Television also licenses programming which it, Twentieth
Century Fox Television or third parties have produced and which has previously
been exhibited on network television. Twentieth Television produces and
distributes for first-run syndication Forgive or Forget (in association with
Jonathan Goodson Productions) and Divorce Court.

       FXM: Movies From Fox

       Launched in November 1994 and currently reaching approximately 8 million
U.S. cable and DBS households, FXM, wholly-owned by the Company, is the only
Hollywood-based movie network exclusively featuring the films of the Fox
Library.

       Los Angeles Dodgers

       The Company owns and operates the Los Angeles Dodgers MLB franchise (the
"Dodgers") along with Dodger Stadium and other related real estate including
Dodgertown, the home of the Dodgers' spring training facilities in Vero Beach,
Florida. The Company acquired its interest in the Los Angeles Dodgers, Inc. in
April 1998. The Dodgers are currently in their 109th year in the National League
and in each of the last three seasons have achieved attendance of over three
million fans at Dodger Stadium.


Cable Network Programming

       The Company holds interests in cable network programming businesses in
the areas of news, sports, general entertainment, family entertainment and
movies.

       Fox News Channel ("Fox News")

       Fox News a 24-hour all news cable channel which is currently available
to over 41 million U.S. cable and DBS households.

       Fox News also produces programming, including a news magazine, Fox Files,
and a weekend political commentary show, Fox News Sunday, for broadcast on FOX.
Fox News, through its Fox News Edge service, licenses a news feed to Fox
Affiliates to use as part of their local news broadcasts.

                                     Page 8
<PAGE>

       In addition, as of June 30, 1999 the Company had interests in the
following unconsolidated subsidiaries.

       Fox Sports Networks

       In July 1999, News Corporation acquired from Liberty Media Corporation
("Liberty") substantially all of Liberty's 50 percent interests in Fox/Liberty
Networks, LLC (together with its subsidiaries, "Fox Sports Networks") and
Fox/Liberty Ventures, LLC (together with its subsidiaries, "Fox Sports
Ventures"). News Corporation transferred the acquired interests in Fox Sports
Networks and Fox Sports Ventures to the Company in exchange for $1.425 billion
(51,759,834 shares) of Class A Common Stock. As a result of these transactions
the Company owns substantially all of Fox Sports Networks and Fox Sports
Ventures and has changed the names of these entities to Fox Sports Networks, LLC
and Fox Sports Ventures, LLC.

       Fox Sports Networks operates two principal business units: (i) cable
sports programming and (ii) general entertainment programming.

       Cable Sports Programming. Fox Sports Networks is the largest regional
sports network ("RSN") programmer in the United States, focusing on live
professional and major collegiate home team sports events. Fox Sports Networks'
sports programming business consists of equity interests in 21 RSNs (the "Fox
Sports RSNs") and Fox Sports Net, a national sports programming service, which
is owned in a 50/50 partnership between Fox Sports Networks and Rainbow Media
Sports Holdings, Inc. ("Rainbow"), an indirect subsidiary of Cablevision Systems
Corporation ("Cablevision"). Fox Sports Net provides its affiliated RSNs with
24-hour national sports programming featuring live and replay sporting events
and original programming and a national sports news program, Fox Sports News.

       Fox Sports Networks owns an equity interest in, or through Fox Sports Net
is affiliated with, 25 RSNs. These RSNs reach over 62 million households and
have rights to telecast live games of 73 professional sports teams in the MLB,
National Basketball Association ("NBA") and National Hockey League ("NHL") (out
of a total of 76 such teams in the United States) and numerous collegiate sports
teams. The average term of the Fox Sports RSNs' rights agreements (from
commencement to scheduled termination) is approximately seven years. Because of
their home team programming, RSNs have strong local appeal in their respective
markets, generating high prime time ratings and attractive subscriber fees from
cable operators. Fox Sports Networks' strategy is to utilize its RSNs and Fox
Sports Net to build a national cable sports network under the Fox brand name.

                                     Page 9
<PAGE>

     Fox Sports Net has been structured based on the "broadcast network
affiliate" model, in which each RSN airs a slate of local programming, which is
supplemented by a schedule of network-provided national programming consistent
across all regions. Unlike the typical "broadcast network affiliate" model,
however, Fox Sports Net's programming is anchored by local programming during
prime time, with national Fox Sports Net programming during the balance of the
schedule. All of the Fox Sports RSNs are represented by one national advertising
firm that is owned in a 50/50 joint venture between Fox Sports Networks and
Rainbow.

     RSNs enter into affiliation agreements with multiple system operators
("MSOs") and/or individual cable system operators and DBS distributors. Such
agreements typically run for five to seven years and generally provide for
annual rate increases. The Fox Sports RSNs' affiliation agreements have
staggered expiration dates, with an average maturity of six years (from
commencement to scheduled termination). Under affiliation agreements, cable
system operators must distribute the network service to a certain number of
subscribers and/or maintain a certain subscriber base penetration level. The
same criteria are generally used as the basis for calculating the monthly fees
paid by the cable operator to Fox Sports Networks for its programming.

     Fox Sports Networks owns a 40% interest in Regional Programming Partners
("RPP"), a partnership with Rainbow which owns various interests in RSNs
(including two in which Fox Sports Networks owns 50% interests), the New York
Knickerbockers NBA franchise, the New York Rangers NHL franchise, the Madison
Square Garden entertainment complex, and Radio City Music Hall.

     General Entertainment Programming. Fox Sports Networks owns FX, a leading
general entertainment cable network, that currently reaches approximately 43
million U.S. cable and DBS households.

     Fox Sports Ventures

     Fox Sports Ventures owns approximately 34% of each of the Speedvision
programming service, which  focuses exclusively on the world of racing,
including cars, motorcycles, airplanes and boats, and the Outdoor Life
programming service, which provides information and entertainment on nature, the
environment and outdoor recreation. Speedvision and Outdoor Life currently reach
approximately 16 million and 15 million cable and DBS households, respectively.
Fox Sports Ventures' partners in Speedvision and Outdoor Life are Cox
Communications, Comcast Corporation, Media One, Roger Werner and Daniels
Programming.

     Fox Sports Ventures owns a 40% interest in an entity that is developing the
Staples Center, a new sports and entertainment complex in downtown Los Angeles,
California. The Staples Center is scheduled to be the home of the Los Angeles
Kings NHL franchise and the Los Angeles Lakers and the Los Angeles Clippers NBA
franchises beginning in October 1999.

     International Sports Programming Partners ("ISPP")

     The Company and Liberty Media International, Inc. (formerly known as Tele-
Communications International, Inc. or "TINTA") each own a 50% interest in ISPP.
ISPP

                                    Page 10
<PAGE>

holds interests in the following programming services: Fox Sports Americas (a
Spanish language sports network which airs throughout the Americas), Fox Sports
World (a U.S. sports network featuring 24-hour international sports in the
English language) and Fox Sports World-Middle East (an English-language sports
network which airs in the Middle East).

     Fox Family Worldwide ("FFW")

     FFW is owned 49.5% by the Company and 49.5% by Haim Saban and certain
limited partnerships controlled by Mr. Saban.

     FFW is an integrated family and children's entertainment company that
develops, acquires, produces, broadcasts and distributes live-action and
animated family and children's television programming on a global basis. FFW's
principal operations are comprised of (i) International Family Entertainment,
Inc. ("IFE"), which operates the Fox Family Channel; (ii) Fox Kids International
Networks, a portfolio of Fox Kids branded cable and DTH satellite channels
operating in approximately 39 countries and 13 languages worldwide; (iii) the
Fox Kids Network; and (iv) Saban Entertainment International ("SEI"), which owns
and manages an extensive and growing library of family and children's
programming.

     The Fox Family Channel is a basic cable network that currently provides
family oriented programming reaching approximately 95% of all cable and DBS
households in the United States. The Fox Family Channel is the successor to The
Family Channel, which FFW acquired as part of its acquisition of IFE in 1997. In
August 1998, FFW reintroduced The Family Channel as the Fox Family Channel with
a new programming schedule, marketing campaign and on-air packaging. The Fox
Family Channel's programming format includes daytime programming for children
followed by evening programming targeted towards adults aged 18-49. Evening
programming consists principally of original series, specials and movies
produced or licensed by FFW. The Fox Family Channel earns revenue through the
sale of advertising time and through subscriber fees.

     The Fox Kids Network, one of the leading U.S. children's broadcasting
television networks, broadcasts 14 hours of children's programming each week to
97% of U.S. television households, the broadest reach of any network targeting
children. The Fox Kids Network affords advertisers the opportunity to reach
children in a cost effective manner, in part by ensuring consistent nationwide
placement of their advertisements by generally broadcasting its programming at
the same local time and on the same day ("day and date") in each television
market.

     FFW, through SEI, creates, produces and acquires animated and live-action
children's television programming with brand-name characters and elements which
are either widely known to children, such as the Mighty Morphin Power Rangers
and X-Men, or which are or have been developed or purchased due to their
likelihood of maturing into popular brands. FFW will produce, finance or co-
finance approximately 432 episodes of children's television programming for the
1999/2000 broadcast season. FFW generally retains worldwide rights to its brands
and currently has over 300 licensees worldwide. FFW currently distributes its
children's programming in most major television markets throughout the world.

     Over the past two years, FFW has aggressively pursued a strategy of
launching Fox Kids branded cable and direct to home ("DTH") channels in Europe
and Latin America.  These channels are either fully owned and operated by FFW or
in conjunction with local partners.  The Fox Kids International Networks
currently reach in the aggregate over 22

                                    Page 11
<PAGE>

million subscribers in Europe and Latin America. The Fox Kids International
Networks earn revenue through the sale of advertising time and through
subscriber fees. FFW will be launching two new U.S. digital cable networks, the
boyzChannel and the girlzChannel in fiscal 2000. These two networks will offer
original programming and will be directed at boys and girls, respectively. In
June 1999, FFW launched two web sites catering specifically to boys
(www.bchannel.com) and girls (www.gchannel.com).

     National Geographic Channel

     In May 1999, the Company acquired a 50% interest in National Geographic
Channels Worldwide (the "National Geographic Channel"). After giving effect to
the Company's acquisition, National Broadcasting Company ("NBC") and National
Geographic Television ("NGT") each own 25% interests in the National Geographic
Channel. 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 54 countries
outside of the United States. In addition, the Company, NGT and NBC have the
right to launch the National Geographic Channel in the United States. National
Geographic programming is provided in Australia, certain countries in Europe and
Scandinavia by a partnership in which British Sky Broadcasting, NBC and NGT are
currently partners.

     The Golf Channel

     The Company owns a 33.33% interest in TGC, Inc., which owns and operates
The Golf Channel. The Golf Channel broadcasts studio shows and has rights to
broadcast certain Professional Golf Association ("PGA") tournaments and other
European PGA, Australian PGA, LPGA and Nike Tour events. The Golf Channel
currently reaches approximately 24 million U.S. cable and DBS households. The
Company's partners in The Golf Channel include Comcast Corporation, Times Mirror
Co. and Arnold Palmer.

     The Health Network

     In May 1999, the Company formed a 50/50 joint venture with AHN Partners,
L.P. ("AHN"), to create both a 24-hour cable television network and an Internet
site, each exclusively devoted to health and fitness programming. In connection
with the formation of the joint venture, the Company and AHN each contributed
assets related to health and fitness programming businesses. The cable network,
which operates under the name "The Health Network", launched on July 15, 1999.

Competition

     The Company faces competition from companies within the motion picture and
television industry and alternative forms of leisure and entertainment
activities. The entertainment industry is also subject to rapid developments in
technology and shifting consumer tastes.

Filmed Entertainment

     Motion 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

                                    Page 12
<PAGE>

technical personnel, exhibition outlets and the public's interest in its
products. The number of films 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
films to succeed.

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

Television Broadcasting and Related Businesses

     The 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 and home computer
usage. In addition, future technological developments may affect competition
within the television marketplace.

     FOX also competes with other television networks to secure affiliations
with independently owned television stations in markets across the country,
which are necessary to ensure the effective distribution of network programming
to a nationwide audience. In recent years, competition among the networks for
affiliates has intensified.

     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, more appealing to
advertisers. ABC, NBC and CBS also realize greater advertising revenues than FOX
for most of their programming in various time periods. 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 and
direct mail. 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 various rating services, 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.

                                    Page 13
<PAGE>

Cable Network Programming

General
-------

     The cable network programming business is another highly competitive field.
Cable programming services compete for distribution and, when distribution is
obtained, compete for viewers and advertisers with over-the-air broadcast
television, radio, print media, motion picture theaters, videocassettes and
other sources of information and entertainment. Important competitive factors
are the prices charged for programming, the quantity, quality and variety of
programming offered and the effectiveness of marketing efforts. More generally,
the Company's cable networks compete with various other leisure-time activities
such as home videos, movie theaters, personal computers and other alternative
sources of entertainment and information.

Sports Programming
------------------

     A number of basic and pay television programming services (such as ESPN) as
well as free over-the-air broadcast networks provide programming that targets
the Fox Sports RSNs' audience. Fox Sports Networks is currently the only
programming service distributing a full range of sports programming on both a
national and regional level. On a national level, Fox Sports Networks' primary
competitor is ESPN.

     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 principally 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 owners of teams may also launch their own regional sports
network and contract with cable television systems for carriage.

FX
--

     A number of basic and pay television programming services (such as the USA
cable network and Turner Network Television) as well as free over-the-air
broadcast networks provide programming that targets the same viewing audience as
FX. FX faces competition in the acquisition of distribution rights to
programming produced by other diversified media companies, due to industry
consolidation and the elimination of the financial interest and syndication
rules. With the repeal of certain governmental regulations which formerly
prohibited the broadcast networks from acquiring financial interests in, and
syndication rights to, television programming, competition in the industry is
expected to increase.

Fox Family Worldwide
--------------------

     FFW currently competes and expects to continue to compete, through the Fox
Kids Network and the Fox Family Channel, with the other broadcast television
networks, public television and cable television channels, such as Nickelodeon,
the USA cable network, the

                                    Page 14
<PAGE>

Disney Channel, Turner Network Television and the Cartoon Network, for market
acceptance of its programming and for viewership ratings and advertising
revenues. To the extent that FFW produces original programming for distribution
outlets it does not own, it competes with other producers of children's
programming. Internationally, FFW competes with a large number of U.S.-based and
international distributors of children's programming, including The Walt Disney
Company, Warner Bros. and Nickelodeon, in the development or acquisition of
programming expected to appeal to international audiences. Such programming
often must comply with foreign broadcast rules and regulations, which may
stipulate certain minimum local content requirements.

Regulation


Filmed Entertainment

     FFE is subject 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 licensing of motion pictures unless
theater owners are first invited to attend a screening of such motion pictures
and, in certain instances, also prohibit payment of advances and guarantees to
motion picture distributors by exhibitors. Further, pursuant to various consent
judgments, FFE and certain other motion picture companies are subject 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.

Television Broadcasting and Related Businesses

     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 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 lesser than the maximum otherwise permitted, or hold an evidentiary
hearing.

     In February 1998, the FCC adopted a final table of digital channel
allotments and rules for the implementation of digital television ("DTV")
service (including high-definition television) in the United States. The digital
table of allotments provides each existing full power television station
licensee or permittee, including the 22 Fox Television Stations, with a second
broadcast channel in order to facilitate a transition from analog to digital
transmission, conditioned upon the surrender of one of the channels at the end
of the DTV transition period. Nine of the Fox Television Stations have launched
digital facilities. The FCC will

                                    Page 15
<PAGE>

require completion of digital facilities in six additional Fox Television
Stations by November 1, 1999, and in the seven remaining Fox Television Stations
by May 1, 2002. Under FCC rules, television stations may use their second
channel to broadcast either one or two streams of "high definition" digital
programming or to "multicast" several streams of standard definition digital
programming or mixture of both. Broadcasters may also deliver data over these
channels, provided that such supplemental services do not derogate the mandated,
free over-the-air program service. The Company is currently formulating plans
for use of its digital channels. It is difficult to assess how digital
television will affect the Company's broadcast business with respect to other
broadcasters and video program providers.

     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 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.

     On August 6, 1999 the FCC amended the rules that determine what constitutes
a "cognizable interest" in applying its media cross-ownership restrictions (the
"Attribution Rules"), as well as the rules that govern the ownership of two
television stations, or a television station and a radio station, located in the
same market (the "Local Restriction").  Under the new Attribution Rules, a party
will be deemed to have a cognizable interest in a television or radio station,
cable system or daily newspaper ("Media Outlet") that triggers the FCC's cross-
ownership restrictions if (i) it owns 5% or more of the voting stock in the
Media Outlet; (ii) its interest exceeds 33% of the total asset value (equity
plus debt) of the Media Outlet and it either (x) supplies at least 15% of a
station's weekly broadcast hours or (y) has an interest in another Media Outlet
in the same market.  Under the new Attribution Rules, Local Marketing Agreements
("LMAs") are cognizable interests if the brokering station provides more than
15% of the brokered station's broadcast hours per week.  The FCC also eliminated
its "cross interest" policy, which had prohibited common ownership of a
cognizable interest in one Media Outlet and a "meaningful" non-cognizable
interest in another Media Outlet serving essentially the same market.

     The FCC relaxed the Local Restriction to (i) permit the ownership of two
television stations with overlapping coverage areas if the stations are in
separate markets ("DMAs"); (ii) permit common ownership of two stations in the
same DMA if their Grade B coverage areas do not overlap or if eight
independently owned full power television stations will remain after the
stations which had been independently owned become commonly owned (which is
referred to by the FCC as a "merger"), and one of the stations is not among the
top four-

                                    Page 16
<PAGE>

ranked stations in the market, based on audience share. The remaining Local
Restriction can be waived if one of the stations is "failed" or "failing," or
where the merger would result in the construction and operation of an "unbuilt"
station. The FCC's action has the effect of permitting LMAs located in the same
market as the brokering station (such as the Company's operating agreement with
KDFI, Dallas), even if more than 15% of the station's time is brokered. The FCC
also relaxed its radio-television cross-ownership rule to permit some degree of
same-market radio and television joint ownership. It is difficult to assess how
these changes in the FCC ownership restrictions will affect the Company's
broadcast business.

     FCC rules permit a party to have an attributable interest in an unlimited
number of television stations nationally so long as such stations do not exceed,
in the aggregate and after application of the UHF Discount, the current 35%
national audience reach limit (calculated as 100% of VHF station coverage and
50% of UHF station coverage) (the "National Restriction"). Pursuant to
Congressional directive, the FCC is conducting a formal inquiry of all its
broadcast ownership rules, including the National Restriction, the UHF Discount
and the dual network rule. It is not possible to predict the extent to which the
National Restrictions may be modified or the timing or effect of other changes
in FCC rules or policies pursuant to the 1996 Telecom Act or pending FCC
proceedings.

     The FCC has adopted rules requiring closed captioning of most broadcast and
cable programming on a phased-in basis, beginning in the year 2000. The
broadcast and cable industries have adopted, and the FCC has approved, a
voluntary content ratings system which, when used in conjunction with so-called
"V-Chip" technology, will permit the blocking of programs with a common rating.
The FCC has directed that all television receiver models with picture screens 13
inches or greater be equipped with "V-Chip" technology under a phased
implementation which began July 1, 1999.

     FCC regulations implementing the 1992 Cable Act require each television
broadcaster to elect, at three-year intervals beginning June 17, 1993, 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 broadcast station would
permit transmission of its signal by the cable systems within its market
("retransmission consent"). The constitutionality of the analog must-carry
provisions was upheld by the U.S. Supreme Court. The FCC recently has initiated
a rulemaking proceeding to determine carriage requirements for digital broadcast
television systems on cable systems, including carriage during the period of
transition from analog to digital signals.

     Legislation enacted in 1990 limits the amount of commercial matter that may
be broadcast during programming designed for children 12 years of age and
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, which, among other requirements, must have, as a
"significant purpose," the educational and informational needs of children 16
years of age and under. A television station found not to have complied with the
programming 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 FCC continues to enforce strictly its regulations concerning
"indecent" programming, political advertising, environmental concerns,
technical operating matters and antenna tower maintenance. The FCC also has
traditionally enforced its equal employment opportunity rules vigorously, with
respect both to compliance with numerical employment

                                    Page 17
<PAGE>

guidelines and recruitment efforts and recordkeeping requirements. The FCC's
employment rules were struck down as unconstitutional by the U.S. Court of
Appeals for the D.C. Circuit in 1998. In addition, 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.

Cable Network Programming

     The 1992 Cable Act subjected all cable television operators not subject to
"effective competition" to rate regulation. Rate regulation under the 1992 Cable
Act resulted in a reduction of rates to some subscribers in some markets. The
1996 Telecom Act completely eliminated cable rate regulation, except with
respect to the "basic" tier (which must include all local broadcast stations and
public, educational and governmental access channels, and must be provided to
all subscribers) as of March 31, 1999. In response to the 1992 Cable Act and the
FCC's implementing regulations, many cable systems retiered channels to create
an attractively priced "basic" tier, while offering satellite-delivered
programming services such as the Company's on a different service tier or on an
a la carte basis. To the extent such retiering or repricing of the Company's
cable networks induced customers to discontinue their subscriptions, the
Company's financial performance might have been adversely affected. Deregulation
of rates pursuant to the 1996 Telecom Act may reverse such tiering and pricing
decisions by cable system operators and, correspondingly, reverse or ameliorate
any adverse effects of the 1992 Cable Act. On the other hand, to the extent that
rate deregulation causes a material increase in cable rates, the individual
subscriber base of the Company's could be decreased, potentially affecting the
Company's subscriber revenues.

     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 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 multichannel program distributors in the price, terms and
conditions of sale or delivery of programming. With respect to cable systems
having channel capacity of less than 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 operator has an attributable interest.  As a result
of Liberty Media's ownership interest in The News Corporation Limited, the Fox
Family Channel,  cable networks owned by Fox Sports Networks and Fox Sports
Ventures, Fox News Channel, The Health Network, FXM and The Golf Channel 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 cable programming services
to enter into exclusive contracts.  The rules also permit multichannel video
programming distributors (such as multi-channel multi-point distribution
services ("MMDS"), satellite master antenna televisions ("SMATV"), DBS and DTH
operators) 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 AT&T Cable Services or a Cablevision system with 75 channels or less will
not be able to

                                    Page 18
<PAGE>

carry one or more of the Company's cable channels (or in the case of
Cablevision, an RPP channel) or will have to remove another affiliated channel.

     The FCC's 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.

     The Children's Online Privacy Protection Act ("COPPA") prohibits web sites
from collecting personally identifiable information online from children under
age 13 without prior parental consent.  The Federal Trade Commission is expected
to adopt final rules implementing COPPA by late 1999.  Online services provided
by FFW may be subject to COPPA requirements.  Congress may also consider online
privacy legislation that would apply to personal information collected from
teens and adults.

ITEM 2.   PROPERTIES

     The Company maintains executive offices and certain of its operations, as
well as the Fox News studios at 1211 Avenue of the Americas, New York, New York.
These offices cover approximately 115,000 square feet and are provided by News
Corporation, which maintains executive offices at such location.

     The Company owns the Fox Studios Lot at 10201 West Pico Boulevard, Los
Angeles, California, which consists of approximately 53 acres containing sound
stages, production facilities, administrative, technical and dressing room
structures, screening theaters and machinery and equipment facilities. The
company also leases approximately 320,000 square feet of office space at Fox
Plaza, located adjacent to the Fox Studios Lot. The Company owns a studio
facility in Rosarito, Mexico, which consists of approximately 37 acres
containing office space, production facilities and the largest fresh and
saltwater tanks used in motion picture production in the world. Fox Studios
Australia, a 50/50 joint venture between the Company and Lend Lease Corporation,
has entered into a 40-year lease, with a 10-year renewal option, with respect to
integrated film and television production and public entertainment facilities in
Sydney, Australia, which consists of approximately 60 acres.

     The Company owns Dodger Stadium which is situated on approximately 275
acres of property in Los Angeles and Dodgertown, the Dodger's Spring training
facility, which is located on 467 acres of property in Vero Beach, Florida.

     The 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.

ITEM 3.   LEGAL PROCEEDINGS

     The Company experiences routine litigation in the normal course of its
business. The Company believes that none of its pending litigation will have a
material adverse effect on its consolidated financial condition, future results
of operations or liquidity.

                                    Page 19
<PAGE>

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

          Not applicable.

                       Executive Officers of the Company

     Set forth below is certain information concerning the executive officers of
the Company as of September 1, 1999, which information is hereby included in
Part I of this report.

The Executive Officers of the Company are as follows:

     NAME              AGE                  POSITION
     ----              ---                  --------

K. Rupert Murdoch      68     Chairman and Chief Executive Officer

Peter Chernin          48     President, Chief Operating Officer

Chase Carey            45     Co-Chief Operating Officer

David F. DeVoe         52     Senior Executive Vice President, Chief
                                   Financial Officer

Arthur M. Siskind      60     Senior Executive Vice President, General
                                   Counsel

     All of the Executive Officers of the Company are also executive officers of
News Corporation. As executive officers of News Corporation, the Executive
Officers of the Company continue to render services to News Corporation.

     The Senior Executives of the Company (in addition to persons identified as
Executive Officers above) are as follows:

     NAME              AGE                  POSITION
     ----              ---                  --------

David Hill             53          Chairman and Chief Executive Officer of Fox
                                        Sports Television Group

William Mechanic       49          Chairman and Chief Executive Officer of Fox
                                        Filmed Entertainment

Mitchell Stern         45          Chairman and Chief Executive Officer of Fox
                                        Television Stations


Backgrounds of Executive Officers and Senior Executives
-------------------------------------------------------

     K. Rupert Murdoch 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
an Executive

                                    Page 20
<PAGE>

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, News Corporation's principal
subsidiary in the United States, since 1973. Mr. Murdoch has served as a
Director of STAR TV since 1993 and served as Chairman from 1993 to 1998, and has
served as a Director of BSkyB since 1990 and Chairman since June 1999, and as a
Director of FFW since 1996. Mr. Murdoch is also a member of the board of
directors of Philip Morris Companies, Inc.

     Peter Chernin has been a Director and President and Chief Operating Officer
of the Company since August 1998. Mr. Chernin has been an Executive Director,
President and Chief Operating Officer of News Corporation and a Director,
Chairman and Chief Executive 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 has served as a Director of TV Guide, Inc.
since March 1999 and has served on the Advisory Board of PUMA AG since May 1999,
and as a Director of Tickets.com, Inc. since September 1999.

     Chase Carey has been a Director of the Company since 1992 and Co-Chief
Operating Officer of the Company since August 1998. Mr. Carey was President of
the Company from 1995 to 1998, Executive Vice President and Chief Operating
Officer from 1991 to 1995 and Senior Vice President from 1988 to 1991. Mr. Carey
is an Executive Director and has been the Co-Chief Operating Officer of News
Corporation and a Director and Executive Vice President of News America
Incorporated since 1996. Mr. Carey has served as the Chairman and Chief
Executive Officer of Fox Television since July 1994. Mr. Carey joined Fox, Inc.
(predecessor of the Company) in 1988 as Executive Vice President, served as
Chief Financial Officer, and assumed the title of Chief Operating Officer in
February 1992. Mr. Carey has been a Director of STAR TV since 1993.  Mr. Carey
is a member of the Boards of Directors of FFW, TV Guide, Inc. Gateway 2000 and
Colgate University.

     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 August
1998. Mr. DeVoe has been an Executive 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, and has been a Director of
News America Incorporated since July 1991 and a Senior Executive Vice President
since January 1998. Mr. DeVoe served as Executive Vice President of News America
Incorporated from 1991 to 1997. Mr. DeVoe has also been a Director of STAR TV
since 1993 and a Director of BSkyB since 1994.

     Arthur M. Siskind has been a Director and Senior Executive Vice President
and General Counsel of the Company since August 1998. Mr. Siskind has been an
Executive 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 News America Incorporated since 1991 and a Senior
Executive Vice President since January 1998. Mr. Siskind served as an Executive
Vice President of News America Incorporated from 1991 to 1997. Mr. Siskind has
been a Director of BSkyB since 1992 and a Director of STAR TV since 1993. Mr.
Siskind has been a member of the Bar of the State of New York since 1962.

                                    Page 21
<PAGE>

     David Hill has served as Chairman and Chief Executive Officer of Fox Sports
Television Group since June 1999. Mr. Hill served as Chairman and Chief
Executive Officer of FOX from October 1997 until June 1999 and served as
President of Fox Sports, a division of Fox Television, from December 1993 to
June 1999. From July 1996 until October 1997, Mr. Hill served as Chief Operating
Officer of Fox Television. In addition, Mr. Hill served as Chairman of Fox
Sports Networks from April 1996 until June 1999. From April 1996 through October
1997, Mr. Hill also served as Fox Sports Networks' Chief Executive Officer.

     William Mechanic has been Chairman and Chief Executive Officer of FFE since
December 1996. Mr. Mechanic was President and Chief Operating Officer of FFE
from 1994 until 1996 and President and Chief Operating Officer of Twentieth
Century Fox from 1993 until 1994.

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

                                    PART II

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

     The Company's Class A Common Stock is listed and traded on the New York
Stock Exchange under the symbol "FOX". Public trading of the Class A Common
Stock commenced on November 11, 1998. Prior to that, there was no public market
for the Company's Common Stock. As of September 1, 1999, there were
approximately 745 holders of record of the Company's Class A Common Stock.

     The following table sets forth, for the periods indicated, the high and low
closing sale prices per share of the Company's Class A Common Stock.

<TABLE>
<CAPTION>
1998                                            High        Low
----                                           --------   --------
<S>                                            <C>        <C>
Fourth Quarter (from November 11, 1998)        $25 3/16   $19 11/16

1999                                            High        Low
----                                           --------   --------
First Quarter                                  $29 11/16  $22 1/2
Second Quarter                                 $29 5/8    $24 1/2
Third Quarter (through September 1, 1999)      $26 13/16  $21 9/16
</TABLE>

     The Company has never declared or paid cash dividends on its Class A Common
Stock and it is the Company's present intention to retain earnings to finance
the expansion of its business.

ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA

     The selected historical consolidated financial data of the Company
presented below for the years ended June 30, 1999, 1998 and 1997 and at June 30,
1999 and 1998, have been derived from, and are qualified by reference to, the
audited consolidated financial statements of the Company included elsewhere
herein. The selected historical consolidated

                                    Page 22
<PAGE>

financial data of the Company presented below for the years ended June 30, 1996
and 1995 and at June 30, 1996 and 1995 have been derived from unaudited
consolidated financial statements of the Company. The financial statements prior
to November 11, 1998 were presented on a combined basis. The financial
statements presented subsequent to November 11, 1998 are consolidated to reflect
the Reorganization (as defined in Note 1 of the consolidated financial
statements included elsewhere herein). For reporting purposes, the financial
statements for all periods are collectively referred to as consolidated
financial statements. The selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and the
related Notes thereto and the other financial information included elsewhere
herein.

     The historical financial information may not be indicative of the Company's
future performance and does not necessarily reflect what the financial position
and results of operations of the Company would have been had the Company
operated as a separate, stand-alone entity during the periods covered.

                                    Page 23
<PAGE>

<TABLE>
<CAPTION>
                                                                    FISCAL YEAR ENDED JUNE 30,
                                           ---------------------------------------------------------------------------
                                                1999             1998         1997(3)        1996            1995
                                                ----             ----         -------        ----            ----
                                                           (Dollars in Millions, except for Per Share Data)
<S>                                          <C>             <C>             <C>           <C>               <C>
STATEMENT OF OPERATIONS DATA:
----------------------------
Filmed Entertainment                          $ 4,416         $   3,876       $ 3,112       $  2,324         $2,215
Television Broadcasting and
   Related Businesses                           3,512             3,075         2,698          2,224          1,700
Cable Network Programming                         129                72            37             --             --
                                             --------        ----------      --------      ---------         ------
           Total revenues                       8,057             7,023         5,847          4,548          3,915
Operating expenses                              6,220             5,351         4,667          3,442          2,945
Selling, general and administrative
  Expenses                                        806               749           675            528            498
Depreciation and amortization                     315               243           180             97             81
Other charges                                      --                17             5             --             --
                                             --------        ----------      --------       --------         ------
           Operating income                       716               663           320            481            391
Interest expense, net                            (223)             (271)         (191)           (97)           (77)
Equity in earnings (losses) of
affiliates                                       (146)              (81)          (50)            18             --
Other income (expense)                             --                --            --            183 (2)       (353) (1)
                                             --------        ----------      --------       --------         -------
Income (loss) before income taxes                 347               311            79            585            (39)
Income tax benefit (expense)                     (142)             (135)          (49)          (174)            16
                                             --------        ----------      --------       --------         -------
           Net income (loss)                  $   205         $     176       $    30        $   411         $  (23)
                                             ========        ==========      ========       ========         =======
Basic and diluted earnings (loss)
per share                                     $  0.33         $    0.32       $  0.05        $  0.75         $(0.04)
                                             ========        ==========      ========       ========         =======

OTHER OPERATING DATA:
--------------------
Segment Operating Income:
Filmed Entertainment                          $   355         $     266       $  113         $  118          $  117
Television Broadcasting and
   Related Businesses                             490               555          360            363             274
Cable Network Programming                        (129)             (141)        (148)            --              --
Other charges                                      --               (17)          (5)            --              --
                                             --------        ----------      -------        -------         -------
           Total operating income             $   716         $     663       $  320         $  481          $  391
                                             ========        ==========      =======        =======         =======

Cash flows provided by operating activities   $   753         $     306       $  117         $  321          $  183
Cash flows used in investing
activities                                       (615)             (876)        (278)          (838)           (372)
Cash flows (used in) provided by
   financing activities                          (118)              415          362            548             201

Capital expenditures                          $   307         $     208       $  338         $   85          $  108
</TABLE>

<TABLE>
<CAPTION>
                                                                    AT JUNE 30,
                                       ---------------------------------------------------------------------
                                          1999          1998           1997          1996           1995
                                          ----          ----           ----          ----           ----
                                                               (Dollars In Millions)
BALANCE SHEET DATA:
------------------
<S>                                    <C>            <C>            <C>           <C>            <C>
Cash and cash equivalents              $   121        $   101        $   256       $    55        $    24
Total assets                            13,163         12,630         11,697         6,207          5,008
Due to intercompany affiliates           1,389          3,702          2,581         2,587          1,955
Senior Secured Discount Notes and
11% Secured Notes                           --            206            714            --             --
Film production financing and other         53            169            351           141            172
Shareholders' equity                     6,668          3,941          3,767         1,358            942
</TABLE>

                                    Page 24
<PAGE>

<TABLE>
<CAPTION>
                                                                 FISCAL YEAR ENDED JUNE 30,
                                             ---------------------------------------------------------------------
                                                 1999           1998          1997(3)        1996         1995
                                                 ----           ----          ----           ----         ----
                                                                   (Dollars In Millions)
OTHER DATA:
-----------
<S>                                          <C>            <C>            <C>           <C>           <C>
Segment Operating Income Before
    Depreciation and Amortization(4):
Filmed Entertainment                         $       396    $       292    $       138   $       142   $       139
Television Broadcasting and
    Related Businesses                               707            727            490           436           333
Cable Network Programming                            (72)           (96)          (123)           --            --
Other charges                                         --            (17)            (5)           --            --
                                             -----------    -----------    -----------   -----------   -----------
Total Operating Income
    Before Depreciation
    and Amortization(4)                      $     1,031    $       906    $       500   $       578   $       472
                                             ===========    ===========    ===========   ===========   ===========
</TABLE>

FOOTNOTES:
---------
(1) Effective at the beginning of fiscal 1995, the Company changed its method of
accounting for multi-year programming contracts resulting in a charge of $590
million related to FOX's NFL broadcast contract. Additionally, during fiscal
1995, the Company changed its estimate of the performance of this contract,
resulting in a reversal of the charge of approximately $237 million. The net
effect in fiscal 1995 of these two accounting changes was approximately $353
million and has been presented as other expense to allow for comparable analyses
of the results of operations and trends.

(2) The Company sold its television stations in Dallas and Atlanta in July and
December 1995, respectively, resulting in a $183 million gain in fiscal 1996.

(3) Fiscal 1997 includes the operating performance of the ten television
stations acquired as part of the January 1997 acquisition of New World
Communications Group, Inc.

(4) Operating Income Before Depreciation and Amortization is defined as
operating income (loss) before depreciation and amortization. Operating Income
Before Depreciation and Amortization is presented supplementally as management
believes it allows for the most appropriate measure for evaluating operating
performance. The Company believes Operating Income Before Depreciation and
Amortization is a standard measure commonly reported and widely used by
analysts, investors and others associated with the media and entertainment
industry. Operating Income Before Depreciation and Amortization eliminates the
uneven effect across business segments of considerable amounts of depreciation
and amortization primarily resulting from the value of intangible assets
acquired in business combinations accounted for by the purchase method of
accounting. While many in the financial community consider Operating Income
Before Depreciation and Amortization to be an important measure of comparative
operating performance, it should be considered in addition to, but not as a
substitute for, operating income, net income, cash flow and other measures of
financial performance prepared in accordance with GAAP which are presented in
the audited financial statements included elsewhere in this filing.
Additionally, the Company's calculation of Operating Income Before Depreciation
and Amortization may be different than the calculation used by other companies
and therefore, comparability may be affected.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


General

     The following discussion and analysis of the Fox Entertainment Group's (the
"Company") financial condition and results of operations should be read in
conjunction with the Consolidated Financial Statements and the related Notes
thereto included elsewhere in this filing.

     The Company manages and reports its businesses in three segments: Filmed
Entertainment, which principally consists of the production and acquisition of
live-action and animated motion pictures for distribution and licensing in all
formats in all entertainment media worldwide and the production of original
television programming; Television Broadcasting and Related Businesses, which
principally consists of the broadcasting of network programming, the operation
of broadcast television stations, the production and distribution of certain
syndicated television programming to broadcast television stations and
professional sports team ownership; and Cable Network Programming, which
principally consists of the production and licensing of programming distributed
through cable television systems and direct broadcast satellite ("DBS")
operators. The Company's interests in certain

                                    Page 25
<PAGE>

cable network programming and related ventures, including Fox/Liberty Networks,
LLC ("Fox/Liberty"), Fox Family Worldwide, Inc. ("FFW"), Fox/Liberty Ventures,
LLC and International Sports Programming Partners ("ISPP"), are included in
equity in losses of affiliates and, accordingly, are not reported in the
segments set forth above.

 Sources of Revenue

     Filmed Entertainment. The Filmed Entertainment segment derives revenue from
theatrical distribution, home video sales, and distribution through
pay-per-view, pay television services, broadcast and cable television. The
revenues and operating results of the Filmed Entertainment segment are
significantly impacted by the timing of the Company's theatrical and home video
releases, the number of its original and returning television series that are
aired by television networks ("Networks") and the number of its television
series licensed in off-network syndication. Theatrical release dates are
determined by several factors, including timing of vacation and holiday periods
and competition in the marketplace. Each motion picture is a separate and
distinct product with its financial success dependent upon many factors,
including audience acceptance.

     Television Broadcasting and Related Businesses. The Television Broadcasting
and Related Businesses segment derives revenues principally from the sale of
advertising time. Generally, advertising time is sold to national advertisers by
Fox Broadcasting Company ("FOX") and to national "spot" and local advertisers by
its group of 22 owned and operated television broadcast stations (the "Fox
Television Stations") in their respective markets. The sale of advertising time
is affected by viewer demographics, program ratings and market conditions.
Adverse changes in general market conditions for advertising may also affect
revenues.

     Cable Network Programming. The Cable Network Programming segment derives
revenues from monthly subscriber fees as well as from the sale of advertising
time. Monthly subscriber 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.

Components of Expenses

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

     Television Broadcasting and Related Businesses and Cable Network
Programming. Expenses of the Television Broadcasting and Related Businesses
segment and the Cable Network Programming segment include operating expenses
related to acquiring programming and rights to programming, as well as selling,
general and administrative expenses. Operating expenses 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.

                                    Page 26
<PAGE>

Industry Accounting Practices

     Revenue Recognition. Revenues from theatrical distribution of feature films
are recognized on the dates of exhibition. Revenues from home video
distribution, together with related costs, are recognized in the period in which
the product is made widely available for sale by retailers. Revenues from
television distribution are recognized when the motion picture or television
program is available to the licensee for broadcast. Television advertising
revenue is recognized as the commercials are aired. Subscriber fees received
from cable system and DBS operators are recognized as revenue when services are
provided.

     Filmed Entertainment and Television Programming Costs. In accordance with
generally accepted accounting principles ("GAAP") and industry practice, the
Company amortizes filmed entertainment and television programming costs using
the individual-film-forecast method under which such costs are amortized for
each film or television program in the ratio that revenue earned in the current
period for such title bears to management's estimate of the total revenues or
operating profits to be realized from all media and markets for such title. The
costs of sports contracts are charged to expense based on the ratio of each
period's operating profits to estimated total operating profit of the contract.
Program rights for entertainment programs and sporting events are amortized over
the license period. 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 write-down of the film
or television asset to net realizable value.

Use of Operating Income Before Depreciation and Amortization

     Management believes that an appropriate measure for evaluating the
operating performance of the Company's business segments is Operating Income
Before Depreciation and Amortization of primarily intangible assets. Operating
Income Before Depreciation and Amortization provides a basis to measure
liquidity and operating performance of each business segment. 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 consumer tastes and preferences),
Operating Income Before Depreciation and Amortization provides management a
measure to analyze operating performance against historical and competitors'
data. Operating Income Before Depreciation and Amortization eliminates the
uneven effect across business segments of considerable amounts of depreciation
and amortization primarily resulting from the value of intangible assets
acquired in business combinations accounted for by the purchase method of
accounting, including the Company's January 1997 acquisition (the "New World
Acquisition") of New World Communications Group, Inc. ("New World"). The
exclusion of amortization charges is consistent with management's belief that
the Company's intangible assets, such as broadcast television licenses, film and
television libraries, franchises and the goodwill associated with its brands,
are generally increasing in value as the Company implements its business
strategies of creating, extending and distributing recognizable brands and
copyrights throughout the world. As such, 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. However, Operating Income Before Depreciation and Amortization
should be considered in addition to, not as a substitute for, operating income,
net income and other measures of financial performance reported in accordance
with GAAP.

                                    Page 27
<PAGE>

<TABLE>
<CAPTION>
                                                                                            Year Ended June 30,
                                    ------------------------------------------------------------------------------------
                                                                                           (Dollars in Millions)

                                                      Revenues                               Operating Income
                                    ------------------------------------------------------------------------------------
                                        1999          1998          1997             1999          1998          1997
                                    -----------   -----------   -----------      -----------   -----------   -----------
<S>                                 <C>           <C>           <C>              <C>           <C>           <C>
Filmed Entertainment                $     4,416   $     3,876   $     3,112      $       355   $       266   $       113
Television Broadcasting and
    Related Businesses                    3,512         3,075         2,698              490           555           360
Cable Network Programming                   129            72            37             (129)         (141)         (148)
                                    -----------   -----------   -----------      -----------   -----------   -----------
                                          8,057         7,023         5,847              716           680           325
Other charges                                 -             -             -                -           (17)           (5)
                                    -----------   -----------   -----------      -----------   -----------   -----------
    Total                           $     8,057   $     7,023   $     5,847      $       716   $       663   $       320
                                    ===========   ===========   ===========      ===========   ===========   ===========

<CAPTION>
                                 ---------------------------------------
                                            Other Data
                                 ---------------------------------------
                                       Operating Income Before
                                   Depreciation and Amortization (1)
                                 ---------------------------------------
                                     1999         1998          1997
                                 -----------   -----------   -----------
<S>                              <C>           <C>           <C>
Filmed Entertainment             $       396   $       292   $       138
Television Broadcasting and
    Related Businesses                   707           727           490
Cable Network Programming                (72)          (96)         (123)
                                 -----------   -----------   -----------
                                       1,031           923           505
Other charges                              -           (17)           (5)
                                 -----------   -----------   -----------
    Total                        $     1,031   $       906   $       500
                                 ===========   ===========   ===========
</TABLE>

______________________________
  (1)   Operating Income Before Depreciation and Amortization should be
        considered in addition to, but not as a substitute for, other measures
        of financial performance reported in accordance with GAAP in the
        Company's audited consolidated financial statements included elsewhere
        in this filing. See "Selected Consolidated Financial Data" for
        definition of Operating Income Before Depreciation and Amortization.





                 [Remainder of page intentionally left blank]

                                    Page 28
<PAGE>

Results of Operations - Fiscal 1999 vs. Fiscal 1998

     The following table sets forth the Company's operating results, by segment,
     for fiscal 1999 as compared to fiscal 1998:

<TABLE>
<CAPTION>
                                                                                      Year Ended June 30,
                                                                                   -------------------------
                                                                                      1999           1998         Change
                                                                                   ----------     ----------     ----------
                                                                                             (Dollars in Millions)
<S>                                                                                <C>            <C>            <C>
Revenues:
     Filmed Entertainment                                                          $    4,416     $    3,876     $      540
     Television Broadcasting and Related Businesses                                     3,512          3,075            437
     Cable Network Programming                                                            129             72             57
                                                                                   ----------     ----------     ----------
          Total revenues                                                           $    8,057     $    7,023     $    1,034
                                                                                   ==========     ==========     ==========

Operating Income (loss):
     Filmed Entertainment                                                          $      355     $      266     $       89
     Television Broadcasting and Related Businesses                                       490            555            (65)
     Cable Network Programming                                                           (129)          (141)            12
                                                                                   ----------     ----------     ----------
                                                                                          716            680             36
     Other charges                                                                          -            (17)            17
                                                                                   ----------      ----------    ----------
          Total operating income                                                          716             663            53
Interest expense, net                                                                    (223)           (271)           48
Equity in losses of affiliates                                                           (146)            (81)          (65)
                                                                                   ----------      ----------    ----------

Income before income taxes                                                                347             311            36
Income tax expense                                                                       (142)           (135)           (7)
                                                                                   ----------      ----------    ----------
Net income                                                                         $      205      $      176    $       29
                                                                                   ==========      ==========    ==========

Other Data:
Operating Income (Loss) Before Depreciation and Amortization
     Filmed Entertainment                                                          $      396      $      292    $      104
     Television Broadcasting and Related Businesses                                       707             727           (20)
     Cable Network Programming                                                            (72)            (96)           24
                                                                                   ----------      ----------    ----------
                                                                                        1,031             923           108
     Other charges                                                                          -             (17)          (17)
                                                                                   ----------      ----------    ----------
          Total Operating Income Before Depreciation and Amortization              $    1,031      $      906    $       91
                                                                                   ==========      ==========    ==========

Depreciation and Amortization:
     Filmed Entertainment                                                                  41              26            15
     Television Broadcasting and Related Businesses                                       217             172            45
     Cable Network Programming                                                             57              45            12
                                                                                   ----------      ----------    ----------
          Total depreciation and amortization                                      $      315      $      243    $       72
                                                                                   ==========      ==========    ==========
</TABLE>

                                    Page 29
<PAGE>

Filmed Entertainment. For fiscal 1999, revenues increased approximately 14% to
$4.4 billion. During fiscal 1999, the Company released 22 new feature films as
compared to 25 films released during fiscal 1998. The increase in revenues can
be attributed to the strong theatrical releases of Never Been Kissed, Entrapment
and the much anticipated Star Wars Episode I: The Phantom Menace, which, with
its accumulated domestic box office receipts of $416 million, ranks as the third
highest grossing film in history behind two other FOX releases, Titanic and the
original Star Wars. Also contributing were the worldwide theatrical and video
releases of the highly successful There's Something About Mary and Dr. Dolittle
as well as Titanic's worldwide video release.

    For fiscal 1999, operating expenses increased primarily as a result of the
increase in the amortization of film costs and in the number of full season
series produced by Twentieth Century Fox Television ("TCFTV") and related
entities for the Networks.

    For fiscal 1999, operating income increased approximately 33% to $355
million. Operating results from the successful films mentioned above were
partially offset by the lower than expected results of The Siege, The Thin Red
Line, Ravenous, Office Space and Pushing Tin, for which ultimate losses were
recognized during fiscal 1999 in accordance with GAAP. TCFTV also contributed to
the increase in operating income as a result of its syndication of network
series to cable networks. Partially offsetting these factors was the increase in
production costs of three new dramas as compared to two in the prior fiscal
year.

    For fiscal 1999, Operating Income Before Depreciation and Amortization
increased approximately 36% to $396 million representing significantly improved
operating performance primarily as a result of the factors described above.

    Television Broadcasting and Related Businesses. For fiscal 1999, revenues
increased approximately 14% to $3.5 billion. The Fox Television Stations
experienced continued revenue growth due to increases in market share, up 1.1
percentage points to 19.4%, and advertising sales, up 4.7%. At FOX, revenue was
positively affected by its programming lineup, resulting in strong ratings in
the key targeted audience, adults aged 18-49 years old. As a result of FOX's
ratings, advertising revenues increased as FOX was able to obtain higher rates
for advertising targeted at adults aged 18-49 years old.

    For fiscal 1999, operating expenses of the Fox Television Stations increased
primarily as a result of the costs associated with the investment in local
programming and news expansion. At FOX, increased programming costs related to
FOX's National Football League ("NFL") contract combined with a loss on FOX's
Major League Baseball contract due to the New York Yankees' four game sweep of
the 1998 World Series, resulting in a higher average cost per game, also
contributed to the rise in operating expenses.

    For fiscal 1999, operating income decreased approximately 12% to $490
million primarily as a result of the factors described above. FOX recently
implemented a new agreement with its affiliate stations to increase FOX's share
of future advertising revenue.

    For fiscal 1999, Operating Income Before Depreciation and Amortization
decreased approximately 3% to $707 million primarily as a result of the factors
described above.

    Cable Network Programming. For fiscal 1999, this segment's revenues
increased approximately 79% to $129 million, primarily due to the addition of 9
million new subscribers

                                    Page 30
<PAGE>

to the Fox News Channel ("Fox News") and a 200% increase in ratings from the
prior fiscal year yielding higher affiliate and advertising revenues.

    For fiscal 1999, operating expenses increased as a result of increased
marketing, newsgathering and launch support expenses.

    For fiscal 1999, operating losses decreased approximately 9%, or $12
million, to a loss of $129 million from a loss of $141 million in fiscal 1998.
Fox News continues to experience losses but has increased subscriber revenues as
a result of its strengthened distribution base.

    For fiscal 1999, Operating Loss Before Depreciation and Amortization
narrowed by approximately 25%, or $24 million, to a loss of $72 million from a
loss of $96 million in fiscal 1998. These results represent an improvement in
operating performance as described above.

    Interest Expense. For fiscal 1999, interest expense decreased approximately
18% to $223 million from $271 million in fiscal 1998, principally reflecting the
repayment of external debt and the decrease in average balances due to The News
Corporation Limited and its affiliates ("News Corporation").

    Equity in Losses of Affiliates. For fiscal 1999, equity in losses of
affiliates increased approximately 80% to $146 million as compared to a loss of
affiliates of $81 million in fiscal 1998. These losses resulted primarily from
additional interest expense related to a full year of financing costs associated
with the acquisitions of Regional Programming Partners ("RPP") and International
Family Entertainment, Inc. ("IFE").

    Income Tax Expense. Income tax expense represents the federal, state and
foreign taxes on earnings before income taxes. The increase in income tax
expense is attributable to the increase in income before income taxes. The
effective income tax rate for fiscal 1999 was 41% compared with 43% in the prior
year. The lower effective tax rate resulted primarily from reduced state and
local taxes provided partially offset by higher non-deductible amortization and
expense compared to fiscal 1998.

                                    Page 31
<PAGE>

Results of Operations - Fiscal 1998 vs. Fiscal 1997

     The following table sets forth the Company's operating results, by segment,
     for fiscal 1998 as compared to fiscal 1997:

<TABLE>
<CAPTION>
                                                                                       Year Ended June 30,
                                                                              ---------------------------------
                                                                                   1998               1997             Change
                                                                              --------------      -------------    ------------
                                                                                           (Dollars in Millions)
<S>                                                                           <C>                 <C>              <C>
Revenues:
     Filmed Entertainment                                                     $         3,876     $        3,112   $         764
     Television Broadcasting and Related Businesses                                     3,075              2,698             377
     Cable Network Programming                                                             72                 37              35
                                                                                --------------      -------------    ------------
                 Total revenues                                               $         7,023     $        5,847   $       1,176
                                                                                ==============      =============    ============

Operating Income (Loss):
     Filmed Entertainment                                                     $           266     $          113   $         153
     Television Broadcasting and Related Businesses                                       555                360             195
     Cable Network Programming                                                           (141)              (148)              7
                                                                                --------------      -------------    ------------
                                                                                          680                325             355
     Other charges                                                                        (17)                (5)            (12)
                                                                                --------------      -------------    ------------
          Total operating income                                                          663                320             343
Interest expense, net                                                                    (271)              (191)            (80)
Equity in losses of affiliates                                                            (81)               (50)            (31)
                                                                                --------------      -------------    ------------

Income before income taxes                                                                311                 79             232
Income tax expense                                                                       (135)               (49)            (86)
                                                                                --------------      -------------    ------------

Net income                                                                    $           176     $           30   $         146
                                                                                ==============      =============    ============

Other Data:
Operating Income (Loss) Before Depreciation and Amortization
     Filmed Entertainment                                                     $           292     $          138   $         154
     Television Broadcasting and Related Businesses                                       727                490             237
     Cable Network Programming                                                            (96)              (123)             27
                                                                                --------------      -------------    ------------
                                                                                          923                505             418
     Other charges                                                                        (17)                (5)            (12)
                                                                                --------------      -------------    ------------
          Total Operating Income Before Depreciation and Amortization         $           906     $          500   $         406
                                                                                ==============      =============    ============

Depreciation and Amortization:
     Filmed Entertainment                                                     $            26     $           25   $           1
     Television Broadcasting and Related Businesses                                       172                130              42
     Cable Network Programming                                                             45                 25              20
                                                                                --------------      -------------    ------------
          Total depreciation and amortization                                 $           243     $          180   $          63
                                                                                ==============      =============    ============
</TABLE>

                                    Page 32
<PAGE>

         Filmed Entertainment. For fiscal 1998, revenues increased approximately
25% to $3.9 billion. During fiscal 1998, the Company released 25 new feature
films as compared to 23 films released during fiscal 1997. The increase in
revenues was primarily attributable to the international box office success of
Titanic, the highest grossing motion picture of all time, the successful
worldwide theatrical release of The Full Monty and the successful home video
releases of The Star Wars Trilogy Special Edition and William Shakespeare's
Romeo + Juliet. The late fiscal 1998 domestic theatrical releases of The X-Files
and Dr. Dolittle have also contributed to these revenues, although a substantial
percentage of these films' successes will be reflected in fiscal 1999 results.

         For fiscal 1998, operating expenses increased primarily as a result of
the increased amortization of filmed entertainment costs related to the
production of Titanic. Operating expenses also increased due to the increase in
the number of full season series produced by TCFTV for FOX and the other
Networks to 11.5 hours in fiscal 1998 from 5.5 hours in fiscal 1997. In
addition, operating expenses increased in fiscal 1998 due to increased costs
relating to marketing and distribution initiatives for home video sales in
certain targeted international markets.

         For fiscal 1998, operating income increased approximately 135% to $266
million. Operating results from the successful films mentioned above were
partially offset by the disappointing results of Out to Sea, Home Alone 3,
Bulworth and The Newton Boys, for which ultimate losses were recognized during
fiscal 1998 in accordance with GAAP and industry practice. The growth in
operating income was partially offset by the increase in the number of full
season series produced by TCFTV for FOX and the other Networks because original
series license fees paid by broadcast networks generally do not fully recover
production costs. Generally, a series must be broadcast for at least three to
four television seasons for there to be a sufficient number of episodes to offer
the series in syndication where additional revenues will be generated.

         For fiscal 1998, Operating Income Before Depreciation and Amortization
increased approximately 112% to $292 million representing significantly improved
operating performance primarily as a result of the factors described above.

         Television Broadcasting and Related Businesses. For fiscal 1998,
revenues increased approximately 14% to $3.1 billion. The segment experienced
revenue growth as a result of a full-year's contribution from the 10 television
stations acquired as part of the New World Acquisition, as well as revenue
growth at both the group's 12 base owned and operated television stations and
the New World stations. This revenue growth was attributed to increases in
market share and advertising rates. At FOX, revenue increased due to a strong
programming line-up, resulting in strong ratings in the key targeted audience,
adults aged 18-49 years old. FOX's ratings were supported by its new hit series
Ally McBeal, as well as the continued success of The Simpsons, The X-Files and
King of the Hill. As a result of FOX's strong ratings, advertising revenues
increased as FOX was able to obtain higher rates for advertising targeted at
adults aged 18-49 years old.

         For fiscal 1998, operating expenses of the Fox Television Stations
increased primarily as a result of operating the New World stations for a full
year in fiscal 1998, as well as the costs associated with the investment in
local programming. This increase was partially offset by a decrease of operating
expenses of FOX, which resulted from a reduction of general advertising and
promotion costs, coupled with the absence of the development and

                                    Page 33
<PAGE>

production costs associated with the series 13 Bourbon Street, which was
abandoned during fiscal 1997.

         For fiscal 1998, operating income increased approximately 54% to $555
million. Despite increased costs, operating margins at the Fox Television
Stations improved under the Company's management. In addition, the operating
performance of FOX in fiscal 1998 did not reflect the contribution from the
broadcast of the Super Bowl, which was broadcast by FOX in fiscal 1997.

         For fiscal 1998, Operating Income Before Depreciation and Amortization
increased approximately 48% to $727 million representing significantly improved
operating performance primarily as a result of the factors described above, as
well as the increase in depreciation and amortization. Depreciation and
amortization reflects a full year's amortization of intangible assets relating
to the New World Acquisition versus five months in fiscal 1997.

         Cable Network Programming. For fiscal 1998, Fox News' revenues
increased approximately 95% to $72 million, reflecting a full year of operations
as well as a larger subscriber base. Fox News was launched on October 7, 1996.

         For fiscal 1998, operating expenses increased as a result of the
increased costs of news gathering and the operation of Fox News for a full year
as compared to only nine months in fiscal 1997.

         For fiscal 1998, operating losses decreased approximately 5%, or $7
million, to a loss of $141 million from a loss of $148 million in fiscal 1997.
Fox News continues to experience losses but has increased subscriber revenues as
a result of its strengthened distribution base. Current subscribers now
constitute approximately 34 million with future commitments above 41 million
subscribers.

         For fiscal 1998, Operating Income Before Depreciation and Amortization
increased approximately 22% or $27 million, to a loss of $96 million from a loss
of $123 million in fiscal 1997 primarily as a result of the factors described
above, as well as the increase in depreciation and amortization. These results
represent an increase in operating performance. Depreciation and amortization
principally represents a full year depreciation of Fox News' studio facilities
and additional amortization of cable carriage fees.

         Other Charges. In fiscal 1998, the Company closed one of its film
divisions resulting in a non-recurring charge.

         Interest Expense. For fiscal 1998, intercompany interest expense
increased approximately 21% to $174 million from $144 million in fiscal 1997,
principally reflecting the increase in average balances due to News Corporation
and its affiliates.

         The increase in external interest expense reflects increases in the
full year average balances of New World debt and production financing associated
with feature films.

         Equity in Losses of Affiliates. For fiscal 1998, equity in losses of
affiliates increased approximately 62% to $81 million as compared to equity in
losses of affiliates of $50 million in fiscal 1997. These losses resulted
primarily from additional interest expenses related to the expansion of
Fox/Liberty including its acquisition of a 40% interest in RPP and expanded

                                    Page 34
<PAGE>

services at ISPP. FFW also reported losses resulting primarily from interest
expense incurred in connection with its acquisition of IFE in fiscal 1998.

         Income Tax Expense. The Company has not provided for or paid current
income taxes due to its net taxable losses. Deferred income tax expense
represents the federal, state and foreign taxes on earnings before income taxes.
The effective income tax rate for fiscal 1998 was 43% compared with 62% in the
prior year. The lower effective tax rate resulted from the relationship of non-
deductible items to lower taxable income in fiscal 1997.

Liquidity and Capital Resources

         The Company's principal sources of cash flow are from internally
generated funds and borrowings from News Corporation.

         Net cash flows from operating activities in fiscal 1999 increased to
$745 million from $306 million in fiscal 1998. This increase was primarily
attributable to improvements in operating income and a decrease in other
elements of working capital.

         Net cash flows used in investing activities were $607 million and $876
million in fiscal 1999 and 1998, respectively. Capital expenditures during this
period were principally for construction of facilities and renovations at the
Company's Los Angeles Fox Studios lot and for digital technology equipment at
the Fox Television Stations. During fiscal 1999, the Company's major investments
included additional investments in Fox Studios Australia and the Company's joint
ventures with Liberty Media Corporation ("Liberty").

         Future minimum payments under the Company's eight-year contract for
program rights to broadcast certain NFL games aggregated approximately $4.2
billion at June 30, 1999, and are payable over the remaining seven-year term.
The Company's minimum commitments and guarantees under certain programming,
production, licensing, artists, athletes, franchise and other agreements
aggregated approximately $2.2 billion at June 30, 1999, which are payable
principally over a five-year period. The NFL contract's impact on the Company's
results over the remaining contract term is dependent upon a number of factors,
including the strength of advertising markets, effectiveness of marketing
efforts and the size of viewer audiences.

         Financing activities reflect advances received from News Corporation
and the repayments of outstanding indebtedness. The net proceeds of
approximately $2.7 billion from the consummation of the Company's initial public
offering were used to repay intercompany indebtedness. The cash provided by News
Corporation was primarily used to fund capital expenditures and to repay
external debt.

         On July 15, 1999, News Corporation acquired substantially all of
Liberty's 50% interest in Fox/Liberty. In exchange for its interest, Liberty
received approximately 51.8 million ADRs (representing 207.1 million preferred
limited voting ordinary shares of News Corporation) valued at $1.425 billion.

         Upon consummation of this transaction, News Corporation transferred the
acquired interests to the Company in exchange for 51,759,834 shares of the
Company's Class A Common shares valued at $1.425 billion. This transfer to the
Company increased News Corporation's equity interest to 82.67% from 81.44% while
its voting interest remained at 97.8%. Concurrent with this transaction, the
Company repaid approximately $678 million of

                                    Page 35
<PAGE>

Fox/Liberty's bank debt. The repayment of this bank debt was funded through
additional advances from its affiliates.

         Due to increased competition and costs associated with film production,
film studios constantly evaluate the risks and rewards of production. Companies
use various strategies to balance this risk with their capital needs, including,
among other methods, co-production, contingent profit participations,
acquisition of distribution rights only, and insurance. Pursuant to a series of
film rights agreements with New Millennium, the Company has agreed to sell
completed feature films produced over the period 1997 through 2001 to New
Millennium at amounts, which approximate cost. The Company is the distributor of
these films. Additionally, the Company has the option to reacquire the films
after a period when significantly all of the ultimate revenues have been earned
based on a formula which considers the remaining projected ultimate revenues,
net of cost, as defined at the time of reacquisition. Through this arrangement,
New Millennium provides the Company with an external source of capital willing
to share in the risks of motion picture production. In cases where the Company
fully produces, retains and distributes motion pictures, the Company has the
full risk and reward from such films. Under the arrangement with New Millennium,
it participates in certain of the risks and rewards from the portfolio of films
it has acquired. Although following the expiration of the New Millennium
arrangement in 2001 the Company expects to be able to extend the existing
arrangements or enter into alternative arrangements, there can be no assurance
that such extension or alternative arrangements will be effected or, if
effected, will be effected on similar terms to the existing arrangements. Unless
this arrangement is extended or an alternate arrangement is entered into prior
to the expiration of the film rights agreements in 2001, the Company expects
that the funding of its film production activities will be met through
internally generated funds or from other external sources of funds, which could
include funds made available to the Company from News Corporation or its
affiliates.

         The Company does not record any revenue or expense from the sale of the
films, at cost, to New Millennium. Thereafter, the Company accrues
participations due to New Millennium in the same manner that the Company has
historically amortized film costs under Statement of Financial Accounting
Standards ("SFAS") No. 53, "Financial Reporting by Producers and Distributors of
Motion Picture Films". As the participation payments due to New Millennium are
payable over a two-to-three year period, amounts included in interest expense
primarily reflect the direct pass through cost that New Millennium charges the
Company for interest and related costs on its credit facility. Cumulatively,
through June 30, 1999 and 1998, 63 and 45 films had been sold, respectively. No
films have been reacquired as of June 30, 1999. As of June 30, 1999 and 1998,
$432 million and $455 million of amounts due under these agreements were
included in participations, residuals and royalties payable, respectively.

         The Company is funded primarily by loans from other subsidiaries and
affiliates of News Corporation. The Company used the entire net proceeds from
its initial public offering to repay a portion of the amounts due to
intercompany affiliates. Immediately following consummation of the initial
public offering and the application of the net proceeds therefrom, the aggregate
amount outstanding due to intercompany affiliates was approximately $1.8
billion. From November 11, 1998, 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. At
June 30, 1999, the intercompany interest rate approximated 8%. The Company
anticipates that cash provided by future operations will be sufficient to meet
its working capital requirements.

                                    Page 36
<PAGE>

Year 2000

         The Company, like most large companies, depends on many different
computer systems and other chip-based devices for the continuing conduct of its
business. Many of the computer systems and chip-based devices in use today may
be unable to correctly process data or may not operate at all after December 31,
1999 because those systems recognize the year within a date only by the last two
digits. Some programs may interpret the year "00" as 1900, instead of 2000,
causing errors in calculations or the value "00" may be considered invalid by
the computer program, causing the system to fail.

         The Company's exposure to potential Year 2000 ("Y2K") problems exists
in two general areas: technological operations within the Company's sole control
and technological operations dependent in some way on one or more third parties.
These technological operations include information technology ("IT") systems and
non-IT systems, including those with embedded technology, hardware and software.

         The Company has substantially completed the process of identifying and
assessing potential Y2K difficulties in its technological operations, including
IT applications, IT technology and support, desktop hardware and software,
non-IT systems and important third party operations, and distinguishing those
that may affect business continuity from those that may not. An item is
considered to have a business continuity impact on the Company if its
Y2K-related failure would significantly impair the ability of one of its major
business units to (1) produce, market and distribute the products or services
that generate significant revenues for that business, (2) meet its obligations
to pay its employees, artists, vendors and other obligations or (3) meet its
obligations under regulatory requirements. Based upon its efforts to date, the
Company believes that all IT and non-IT systems will remain up and running after
January 1, 2000. The Company has substantially completed the assessment and
remediation phases for these potential exposures and expects that testing with
respect to technological operations in its sole control will be substantially
completed in all material respects by the end of the third quarter of calendar
1999.

         Most of the Company's potential Y2K exposures, however, are in the area
of technological operations dependent on one or more third parties. The
financial impact on the Company of such third parties not achieving high levels
of Y2K readiness cannot be estimated with any degree of accuracy. In the area of
business continuity, technological operations dependent in some way on one or
more third parties, the situation is much less in the Company's ability to
predict or control. In addition, many of the Company's businesses are dependent
on third parties that are themselves heavily dependent on technology. In some
cases, third party dependence is on vendors of technology who are themselves
working towards solutions to Y2K problems. In other cases, third party
dependence is on suppliers of products or services that are themselves computer-
intensive. The Company has included in its "mission critical" inventory
significant service providers, vendors, suppliers and customers that are
believed to be critical to business operations. The Company is in various stages
of attempting to ascertain the state of Y2K readiness of significant third
parties through questionnaires, interviews, on-site visits, industry group
participation and other available means. The ability to continue to deliver
services to customers is dependent, like all large companies, on the continued
functioning, domestically and internationally, of basic, heavily computerized
services such as banking, telephony, power, and various distribution mechanisms
ranging from the mail, railroads and trucking to high-speed data and broadcast
transmissions. The Company is taking steps to attempt to ensure that the third
parties on

                                    Page 37
<PAGE>

which it is heavily reliant are Y2K ready, but cannot predict the likelihood of
such readiness nor the direct or indirect costs of non-compliance by those third
parties or of securing such services from alternate third parties.

         Structure of Year 2000 Program. The Company has been focused on the Y2K
issue for several years since its capital spending policy required that
significant investments made in technology in the periods prior to December 31,
1999, would be for systems which would be operational after December 31, 1999.

    Operating Division Project Teams are the focal point for ensuring that each
division maintains business and technical stability in all Y2K areas, and that
all major issues are communicated to the Audit Committee. The Boards of
Directors of the Company and News Corporation are made aware of the actions
being taken to address Y2K issues.

    Definition of Readiness. An item is defined as "Year 2000 Ready" when, after
having undergone an internal review process and having been tested using a set
of representative dates, the risk of material failure due to a date processing
problem is assessed as insignificant.

    Area of Focus and Progress. The Company will continue to proceed through its
various phases of assessment, strategy, detailed planning, implementation,
testing and management. The Company expects to be Y2K ready in respect of
substantially all "mission critical" technology systems during the third quarter
of calendar 1999.

    The Company recognizes that system failures resulting from the Y2K problem
could adversely affect operations and financial resources in all of its business
segments. For example:

    In the Filmed Entertainment segment, Y2K failures could interfere with
critical systems in such areas as the production, duplication and distribution
of motion picture and home video product.

    In the Television Broadcasting and Related Businesses and Cable Network
Programming segments, at-risk operations include satellite transmission and
communication systems. Y2K failures in such systems could adversely affect
television networks including cable services and owned and operated television
stations.

    The Project Teams are focusing their attention in the areas described above
as well as in the following major areas:

    Core Computer Systems. Information technology systems account for much of
the Y2K work and include all computer systems and technology managed by the
Company's divisions. All core systems have been assessed, plans are in place,
and work is being undertaken to rectify, test and implement changes where
required. Major IT vendors and suppliers have been contacted as to their Y2K
readiness and their deliverables factored into our plans.

    Office and Desktop Computer Systems. Work is in progress to assess and
remediate all office and desktop computer systems, some of which are stand-alone
business unit systems. This includes personal computers, LAN server hardware,
software, and operating and data systems.

                                    Page 38
<PAGE>

    Premises. An inventory of all-critical broadcast equipment, office equipment
and building infrastructure has been completed for all major sites.

    Goods and Services Providers. The Company recognizes the importance of the
supply chain to its operations. Key suppliers, including technology providers,
are being contacted to assess their Y2K readiness.

    Customers. The Company is communicating with many of its customers to assist
them in understanding Y2K risks and how they might prepare themselves to manage
those risks.

    Contingency Planning. The Company believes that it has established an
effective program to resolve all significant Y2K issues in its sole control in a
timely manner. However, the Company has not yet completed all phases of its
program and is depending on third parties whose progress is not within its
control. Therefore, the Y2K projects include procedures to identify and assess
the business interruption that might occur as a result of the dependence on
third parties. Vendors, suppliers, service suppliers, customers and governmental
bodies have been identified and significant progress has been made to ascertain
their stage of Y2K readiness. In the event we do not complete any of the planned
additional remediation prior to the Year 2000 or if third parties on which our
businesses rely experience significant issues related to Y2K, we could
experience significant difficulty in producing and delivering products and
services and conducting our business in the Year 2000 as we have in the past.
The amount of potential liability and lost revenue that might result because of
such difficulty cannot be reasonably estimated at this time.

    The Company has been focusing its efforts on identifying and remediating its
Y2K exposures and is developing and will have tested where practical contingency
plans in the event it does not successfully complete all phases of its Y2K
program. These contingency plans include, but are not limited to identification
of alternative suppliers, vendors and service providers.

    Potential Costs. The Company has been focused on the Y2K issue for several
years since its capital spending policy required that significant investments
made in technology in the periods prior to December 31, 1999 would be for
systems which would be operational after December 31, 1999. To date, the Company
has incurred approximately $13 million in costs related to its Y2K readiness
program which has been funded from its operating cash flow. The Company
currently estimates that the total costs of its Y2K readiness program will not
exceed $20 million. The total cost estimate is based on the current assessment
of the Company's Y2K readiness needs and is subject to change as the program
progresses. These costs have not all been incremental, but rather reflect
redeployment of internal resources from other activities. The Company does not
expect the activities of the Y2K readiness program to have a material adverse
effect on the ongoing business operations of the Company, although it is
possible that certain maintenance and upgrading processes will be delayed as the
result of the priority being given to the Y2K readiness.

    The Company has made forward-looking statements regarding its Y2K Program.
Those statements include: the Company's expectations about when it will be Year
2000 Ready; the Company's expectations about the impact of the Y2K problem on
its ability to continue to operate on and after January 1, 2000; the readiness
of its suppliers and the costs associated with the Y2K program. The Company has
described many of the risks associated with those forward-looking statements
above. However, the Company wishes to caution the reader that there are many
factors that could cause its actual results to differ materially from those
stated

                                    Page 39
<PAGE>

in the forward-looking statements. This is especially the case because many
aspects of its Y2K program are outside its control such as the performance of
third-party suppliers. All of these factors make it impossible for the Company
to ensure that it will be able to resolve all Y2K problems in a timely manner to
avoid materially adversely affecting its operations or business or exposing the
Company to third-party liability.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

           Not applicable.

                                   PART III

ITEM 8.    FINANCIAL STATEMEMENTS AND SUPPLEMENTARY DATA



           INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                      PAGE
                                                                      ----
FOX ENTERTAINMENT GROUP, INC.

Report of Independent Public Accountants...............................41
Consolidated Balance Sheets as of June 30, 1999 and 1998 ..............42
Consolidated Statements of Operations for the years ended
   June 30, 1999, 1998 and 1997........................................43
Consolidated Statements of Cash Flows for the years ended
   June 30, 1999, 1998 and 1997........................................44
Consolidated Statements of Shareholders' Equity for the
   years ended June 30, 1999, 1998 and 1997............................45
Notes to Consolidated Financial Statements.............................46

                                    Page 40
<PAGE>

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of
Fox Entertainment Group, Inc.

 We have audited the accompanying consolidated balance sheets of Fox
Entertainment Group, Inc., a Delaware corporation, and Subsidiaries (the
"Company"), as of June 30, 1999 and 1998, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended June 30, 1999. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

 We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

 In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Fox Entertainment
Group, Inc. and Subsidiaries as of June 30, 1999 and 1998, and the results of
its operations and its cash flows for each of the three years in the period
ended June 30, 1999, in conformity with generally accepted accounting
principles.



                                            Arthur Andersen LLP


Los Angeles, California
August 18, 1999

                                    Page 41
<PAGE>

                         FOX ENTERTAINMENT GROUP, INC.
                          CONSOLIDATED BALANCE SHEETS
                                AS OF JUNE 30,
                 (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                                         1999           1998
                                                                                         ----           ----

<S>                                                                                      <C>            <C>
ASSETS
      Cash and cash equivalents....................................................      $   121        $   101
      Accounts receivable, net.....................................................        1,756          1,949
      Filmed entertainment and television programming costs, net...................        2,621          2,071
      Investments in equity affiliates.............................................          785            791
      Property and equipment, net..................................................        1,321          1,111
      Intangible assets, net.......................................................        5,818          5,941
      Other assets and investments.................................................          741            666
                                                                                         -------        -------
         Total assets..............................................................      $13,163        $12,630
                                                                                         =======        =======

LIABILITIES
      Accounts payable and accrued liabilities. ...................................      $ 1,682        $ 1,613
      Participations, residuals and royalties payable..............................        1,321          1,153
      Television programming rights payable........................................          566            513
      Deferred revenue.............................................................          293            238
      Borrowings...................................................................           53            375
      Deferred income taxes........................................................          975            874
      Other liabilities............................................................          216            221
                                                                                         -------        -------
                                                                                           5,106          4,987
      Due to intercompany affiliates...............................................        1,389          3,702
                                                                                         -------        -------
         Total liabilities.........................................................        6,495          8,689

      Commitments and contingencies

SHAREHOLDERS' EQUITY
      Preferred stock, $100 par value per share; 0 and 10,000 shares
      authorized; 0 and  7,600 shares issued and outstanding at June
      30, 1999 and 1998, respectively..............................................           --              1
      Class A Common stock, $.01 par value per share; 1,000,000,000 and
      0 shares authorized; 124,800,000 and 0 shares issued and
      outstanding at June 30, 1999 and 1998, respectively..........................            1             --
      Class B Common stock, $.01 par value per share; 650,000,000 and 0
      shares authorized; 547,500,000 and 0 shares issued and
      outstanding at June 30, 1999 and 1998, respectively .........................            6             --
      Paid-in capital..................... ......... ..............................        6,599          3,132
      Retained earnings and other comprehensive income.............................           62            808
                                                                                         -------        -------
          Total shareholders' equity...............................................        6,668          3,941
                                                                                         =======        =======
          Total liabilities and shareholders' equity...............................      $13,163        $12,630
                                                                                         =======        =======
</TABLE>
  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                    Page 42
<PAGE>

                         FOX ENTERTAINMENT GROUP, INC
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                             YEARS ENDED JUNE 30,
                 (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                 1999               1998             1997
                                                                 ----               ----             ----
<S>                                                       <C>                <C>               <C>
Revenues...........................................       $      8,057       $      7,023      $      5,847
Expenses:
  Operating........................................              6,220              5,332             4,667
  Selling, general and administrative..............                806                768               675
  Depreciation and amortization....................                315                243               180
  Other charges....................................                 --                 17                 5
                                                          ------------       ------------      ------------
Operating income...................................                716                663               320

Other expense:
  Interest expense, net............................               (223)              (271)             (191)
  Equity in losses of affiliates...................               (146)               (81)              (50)
                                                          ------------       ------------      ------------
Income before income taxes.........................                347                311                79
Income tax expense.................................               (142)              (135)              (49)
                                                          ------------       ------------      ------------
Net income.........................................       $        205       $        176      $         30
                                                          ============       ============      ============

Basic and diluted earnings per share...............       $       0.33       $       0.32      $       0.05
                                                          ============       ============      ============

Basic and diluted weighted average
number of  common equivalent shares
outstanding (in millions)..........................                626                548               548
                                                          ============       ============      ============
</TABLE>





  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                    Page 43
<PAGE>

                         FOX ENTERTAINMENT GROUP, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             YEARS ENDED JUNE 30,
                             (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
                                                                         1999               1998                1997
                                                                         ----               ----                ----
<S>                                                                   <C>                <C>                 <C>
OPERATING ACTIVITIES
Net income.......................................................     $   205            $   176             $    30
  Adjustments to reconcile net income to net cash provided
       by operating activities
  Depreciation and amortization..................................         315                243                 180
  Equity in losses of affiliates.................................         146                 81                  50
Changes in operating assets and liabilities:
   Accounts receivable and other assets..........................         161               (458)               (280)
   Filmed entertainment and television programming costs.........        (513)               (30)               (176)
   Accounts payable and accrued liabilities......................         252                236                 291
   Participations, residuals and royalties payables..............         187                 58                  22
                                                                      -------            -------             -------
           Net cash provided by operating activities.............         753                306                 117

INVESTING ACTIVITIES
Acquisitions, net of cash acquired...............................           -               (328)                306
Investments in equity affiliates.................................        (140)              (141)                 (2)
Other investments................................................        (168)              (199)               (244)
Purchases of property and equipment..............................        (307)              (208)               (338)
                                                                      -------            -------             -------
           Net cash used in investing activities.................        (615)              (876)               (278)

FINANCING ACTIVITIES
Borrowings.......................................................         110                282                 623
Repayment of borrowings..........................................        (432)              (972)               (959)
Proceeds from Initial Public Offering............................       2,689                  -                   -
(Repayments to) advances from affiliates, net....................      (2,485)             1,105                 698
                                                                      -------            -------             -------
           Net cash (used in) provided by financing activities...        (118)               415                 362


Net increase (decrease) in Cash and Cash Equivalents.............          20               (155)                201
Cash and Cash Equivalents, Beginning of Year.....................         101                256                  55
                                                                      -------            -------             -------
Cash and Cash Equivalents, End of Year...........................     $   121            $   101             $   256
                                                                      =======            =======             =======
</TABLE>



  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                    Page 44
<PAGE>

                         FOX ENTERTAINMENT GROUP, INC.
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                             YEARS ENDED JUNE 30,
                             (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
                                                                                                 RETAINED
                                                                                             EARNINGS AND OTHER
                                                    PREFERRED      COMMON       PAID-IN         COMPREHENSIVE
                                                    STOCK          STOCK        CAPITAL           INCOME     TOTAL
                                                    -----          -----        -------           ------     -----
<S>                                                 <C>            <C>          <C>               <C>        <C>
BALANCE AT JUNE 30, 1996                            $   1          $   --       $   756           $  601     $ 1,358
Net income ....................................        --              --            --               30          30
Foreign currency
translation adjustments .......................        --              --            --                3           3
Capital contributions, net.....................        --              --         2,376               --       2,376
                                                    -----          ------       -------           ------     -------
BALANCE AT JUNE 30, 1997                                1              --         3,132              634       3,767

Net income ....................................        --              --            --              176         176
Foreign currency
translation adjustments .......................        --              --            --               (2)         (2)
                                                    -----          ------       -------           ------      ------
BALANCE AT JUNE 30, 1998                                1              --         3,132              808       3,941

Redemption of preferred stock in
connection with reorganization.................        (1)             --            --               --          (1)
Issuance of Class A Common Stock...............        --               1         2,688               --       2,689
Conversion of Class B Common Stock in
connection with recapitalization...............        --               6            (6)              --          --
Elimination  of certain Intercompany debt
and payment of dividends.......................        --              --           785             (948)       (163)

Net Income ....................................        --              --            --              205         205
Foreign currency
translation adjustments .......................        --              --            --               (3)         (3)
                                                    -----          ------       -------           ------     -------
BALANCE AT JUNE 30, 1999                            $  --          $    7       $ 6,599           $   62     $ 6,668
                                                    =====          ======       =======           ======     =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                    Page 45
<PAGE>

                         FOX ENTERTAINMENT GROUP, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN MILLIONS)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Fox Entertainment Group, Inc. and its subsidiaries (the "Company") is a
diversified entertainment company with operations in three business segments.
These business segments are: Filmed Entertainment, which principally consists of
the production and acquisition of live-action and animated motion pictures for
distribution and licensing in all formats in all entertainment media worldwide
and the production of original television programming; Television Broadcasting
and Related Businesses, which principally consists of the operation of broadcast
television stations and the production and distribution of certain television
programming; and Cable Network Programming, which principally consists of the
distribution of network and cable television programming. The Company was
incorporated in Delaware in May 1985 as Twentieth Holdings Corporation. In 1998,
the Company changed its corporate name to Fox Entertainment Group, Inc.

Prior to the transactions referred to in Note 3, The News Corporation Limited
and its subsidiaries ("News Corporation") effected a reorganization (the
"Reorganization") by contributing to the Company at book value certain of its
assets and subsidiaries engaged in the production and distribution of feature
films and television programming. Included in this contribution was Twentieth
Century Fox Film Corporation, which was acquired by News Corporation in 1985,
News Corporation's interest in Fox Family Worldwide, Inc. and Fox/Liberty
Networks, LLC, International Sports Programming Partners, Fox/Liberty Ventures,
LLC and other cable network programming and related interests.

The financial statements prior to November 11, 1998 were presented on a combined
basis. The financial statements presented subsequent to November 11, 1998 are
consolidated to reflect the Reorganization. For reporting purposes, the
financial statements for all periods are collectively referred to as
consolidated financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
consolidated with the accounts of its majority-owned and controlled subsidiaries
(See Note 1). For financial reporting purposes, control generally means
ownership of a majority interest in an entity but may, in certain instances,
result from other considerations, including a company's capacity to dominate
decision making in relation to the financial and operating policies of the
consolidated entity. Fox Television Holdings, Inc. ("FTH") a subsidiary of the
Company has 7,600 shares of voting preferred stock issued and outstanding with a
liquidation value of $760,000 and cumulative dividends at the rate of 12% per
annum. Such shares are held by an executive of the Company and represent 76% of
the voting power of FTH.

                                    Page 46
<PAGE>

FTH is included in these consolidated financial statements because the Company
is deemed to control FTH for financial reporting purposes. Among the reasons why
the Company has a controlling financial interest in FTH are (i) the Company has
the ability to redeem the voting preferred stock, at any time, at the
liquidation value of $760,000 plus accrued dividends, (ii) the dividends on, and
amounts to be paid on redemption of, the voting preferred stock are fixed, and
not related to the performance of FTH, and, (iii) senior management of FTH,
including its Board of Directors, consists solely of persons employed by the
Company. As a result, the controlling financial interest in FTH rests with the
Company through its common stock ownership of FTH.

The Company uses the equity basis of accounting for investments in affiliates
where it exercises significant influence but not control.

All material intercompany accounts and transactions have been eliminated in the
consolidated financial statements of the Company.

FISCAL YEAR

The Company maintains a 52-53 week fiscal year ending on the Sunday nearest to
June 30 in each year. Each of the periods presented is a 52 week year.

BALANCE SHEET PRESENTATION

As an entertainment company which complies with the provisions of the Financial
Accounting Standards Board ("FASB") Statement of Financial Accounting Standards
("SFAS") No. 53, "Financial Reporting by Producers and Distributors of Motion
Picture Films", the Company has elected to present unclassified balance sheets.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand and marketable securities with
original maturities of three months or less.

REVENUE RECOGNITION

Filmed Entertainment

In accordance with SFAS No. 53, revenues from the theatrical distribution of
motion pictures are recognized when motion pictures are exhibited. Revenues from
video sales, net of a reserve for returns, are recognized on the date that video
units are made widely available for sale by retailers. Revenues from the
licensing of feature films and television programming are recorded when the
material is available for telecasting by the licensee and when certain other
conditions are met.

License agreements for the telecast of theatrical and television product in the
broadcast network, syndicated television and cable television markets are
routinely entered into in advance of their available date for telecast. Cash
received in connection with such contractual rights for which revenue is not yet
recognizable is classified as deferred revenue. Because deferred revenue
generally relates to contracts for the licensing of theatrical and television
product which have already been

                                    Page 47
<PAGE>

produced, the recognition of revenue for such completed product is principally
only dependent upon the commencement of the availability period for telecast
under the terms of the related licensing agreement.

Television Broadcasting and Related Businesses and Cable Network Programming

In accordance with SFAS No. 63, "Financial Reporting by Broadcasters",
television advertising revenue is recognized as the commercials are aired.
Subscriber fees received from cable system operators and direct broadcast
satellite are recognized as revenue when services are provided.

FILMED ENTERTAINMENT AND TELEVISION PROGRAMMING COSTS

Filmed Entertainment Costs

In accordance with SFAS No. 53, filmed entertainment costs include production,
certain exploitation costs expected to benefit future periods and capitalized
overhead and interest costs, net of any allocated amounts received from outside
investors. These costs, as well as participations and talent residuals, are
charged as operating expenses on an individual film basis in the ratio that the
current year's gross revenues bear to management's estimate of total ultimate
gross revenues from all sources.

Film costs are stated at the lower of unamortized cost or estimated net
realizable value on an individual film or television series basis. Revenue
forecasts for both motion picture and television products are continually
reviewed by management and revised when warranted by changing conditions. When
estimates of total revenues indicate that a motion picture or television
production will result in an ultimate loss, additional amortization is provided
to currently recognize such loss.

Pursuant to a series of film rights agreements with an independent third party,
the Company has agreed to sell completed feature films produced over the period
1997-2001 to the third party at amounts which approximate cost. The Company is
the distributor of these films. Additionally, the Company has the option to re-
acquire the films after a period when significantly all of the ultimate revenues
have been earned, based on a formula which considers the remaining projected
ultimate revenues net of costs, as defined, at the time of re-acquisition.
Cumulatively, through June 30, 1999 and 1998, sixty-three and forty-five films
had been sold, respectively. No films have been re-acquired as of June 30, 1999.
As a distributor, the Company has recorded, in its statements of operations, the
revenues received from and operating expenses related to the exploitation of the
films in all markets, and, in interest expense, net, certain other costs
relating to the agreements of $64 million and $67 million in 1999 and 1998,
respectively. As of June 30, 1999 and 1998, $432 million and $455 million,
respectively, of amounts due under these agreements were included in
participations, residuals and royalties payable.

Television Programming Costs

In accordance with SFAS No. 63, program rights for entertainment programs and
sporting events are amortized over their license periods. The Company has single
and multi-year contracts for broadcast rights of programs and sporting events.
At the inception of these contracts and periodically thereafter, the Company
evaluates the

                                    Page 48
<PAGE>

recoverability of the costs associated therewith against the revenues directly
associated with the program material and related expenses. Where an evaluation
indicates that a programming contract will result in an ultimate loss,
additional amortization is provided to currently recognize that loss. The costs
of sports contracts are charged to expense based on the ratio of each period's
operating profits to estimated total operating profit of the contract. Estimates
of total operating profit can change significantly and accordingly, are reviewed
periodically and amortization is adjusted as necessary.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Depreciation and amortization for
financial statement purposes is provided using the straight-line method over an
estimated useful life of three to forty years. Leasehold improvements are
depreciated using the straight-line method over the shorter of their useful
lives or the life of the lease. Costs associated with the repair and maintenance
of property are expensed as incurred.

INTANGIBLE ASSETS

As a creator and distributor of branded information and entertainment
copyrights, the Company has a significant and growing amount of intangible
assets, including goodwill, free and cable television networks and stations,
film and television libraries, sports franchises, entertainment franchises, and
other copyright products and trademarks. In accordance with generally accepted
accounting principles, the Company does not record the fair value of these
internally generated intangible assets. However, intangible assets acquired in
business combinations are recorded as the difference between the cost of
acquiring entities and amounts assigned to their tangible net assets. Such
amounts are amortized on a straight-line basis over periods up to forty years.

The Company periodically reviews the propriety of the carrying amount of
long-lived assets and the related intangible assets as well as the related
amortization period to determine whether current events or circumstances warrant
adjustments to the carrying value and/or the estimates of useful lives. This
evaluation consists of the Company's projection of undiscounted operating income
before depreciation, amortization and interest over the remaining lives of the
intangible assets, in accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of."
Based on its review, the Company believes that no significant impairment of its
long-lived assets or related intangible assets has occurred.

FINANCIAL INSTRUMENTS

The fair value of financial instruments, including cash and cash equivalents,
investments and long-term borrowings, is generally determined by reference to
market values resulting from trading on national securities exchanges. In cases
where quoted market prices are not available, fair value is based on estimates
using present value or other valuation techniques.

INCOME TAXES

The Company accounts for income taxes using SFAS No. 109, "Accounting for Income
Taxes". SFAS No. 109 requires an asset and liability approach for financial
accounting and reporting for income taxes and allows recognition and measurement
of deferred

                                    Page 49
<PAGE>

tax assets based upon the likelihood of realization of tax benefits in future
years. Under the asset and liability approach, deferred taxes are provided for
the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
income tax purposes. Deferred taxes have not been provided on the cumulative
undistributed earnings of foreign subsidiaries since amounts are expected to be
reinvested indefinitely.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements, and the reported amounts of revenues and expenses during
the reporting period. The Company uses significant estimates in determining the
amortization of film costs and programming contracts. Because of the use of
estimates inherent in the financial reporting process, especially for
entertainment companies, actual results could differ from those estimates. These
differences could be material.

RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform with fiscal 1999
presentation.

3. INITIAL PUBLIC OFFERING

On November 11, 1998, the Company consummated an initial public offering through
the issuance and sale of 124,800,000 shares of Class A Common Stock. The newly
issued shares of Class A Common Stock represent approximately 18.6% of the
Company's outstanding common stock. The net proceeds from the public offering
were approximately $2.7 billion and were used to reduce intercompany
indebtedness. Prior to the initial public offering, News Corporation effected a
Reorganization and a recapitalization that gave effect to the following
transactions: (i) contributing to the Company at book value certain of its
assets and subsidiaries engaged in the production and distribution of feature
films, television programming and cable network programming, (ii) the
elimination of certain outstanding intercompany debt against Paid-in capital,
(iii) the concurrent payment of dividends to a subsidiary of News Corporation
(which reduced Retained earnings and Paid-in capital) such that after (ii) and
(iii), $4.5 billion of intercompany debt was outstanding, (iv) the authorization
of the new Class A and Class B Common Stock and the conversion of the Company's
outstanding common stock into 547,500,000 shares of Class B Common Stock, and
(v) the adjustment to increase the interest rate from 5% to 8% under the terms
of the intercompany indebtedness that was outstanding after the Reorganization.
For the year ended June 30, 1999, after giving effect to the initial public
offering, Reorganization and recapitalization, as if they had occurred on July
1, 1998 rather than on November 11, 1998, the pro forma net income and earnings
per share would have been $246 million and $0.37, respectively, as a result of a
decrease in intercompany interest expense of $69 million, an increase in income
taxes of $28 million and an increase of 46 million shares in the weighted
average number of shares outstanding.

                                    Page 50
<PAGE>

In November 1998, for purposes of governing certain on-going relationships
between the Company and News Corporation and to facilitate the Reorganization,
the Company and News Corporation entered into a Master Intercompany Agreement
which includes various agreements relating to cash management and financing,
executive officer services, the provision of services of certain Company
employees to News Corporation and its subsidiaries, facility arrangements,
employee matters, insurance, administrative services, trademarks and indemnities
by the Company and News Corporation. The Company and a subsidiary of News
Corporation also entered into a Tax Sharing Agreement (See Note 8). These
agreements were negotiated in the context of a parent-subsidiary relationship
and, therefore, are not the result of arm's length negotiations between
independent parties. There can be no assurance, therefore, that each of such
agreements, or the transactions provided for therein, or any amendments thereof,
will be effected on terms at least as favorable to the Company as could have
been obtained from unaffiliated third parties.

4. FILMED ENTERTAINMENT AND TELEVISION PROGRAMMING COSTS

  Filmed entertainment and television programming costs consisted of the
following at June 30:

<TABLE>
<CAPTION>
                                                                                1999       1998
                                                                                ----       ----
<S>                                                                           <C>         <C>
Filmed entertainment costs:
   Released, less accumulated amortization...............................     $ 1,030     $  788
   Completed, not released...............................................         169        141
   In process............................................................         696        564
Television programming costs, less accumulated amortization..............         726        578
                                                                              -------     ------
                                                                              $ 2,621     $2,071
                                                                              =======     ======
</TABLE>

As of June 30, 1999, the Company estimated that approximately 87% of released
unamortized filmed entertainment costs will be amortized within the next three
years.

5. INVESTMENTS

INVESTMENTS IN EQUITY AFFILIATES
FOX FAMILY WORLDWIDE, INC.

In November 1995, the Company and Saban Entertainment Inc. formed a joint
venture, Fox Kids Worldwide, LLC, to jointly develop and acquire appealing
family programming that can be commercially exploited worldwide. In connection
with the acquisition of International Family Entertainment, Inc., in August
1997, this venture was reorganized pursuant to which it became a wholly owned
subsidiary of Fox Family Worldwide, Inc. The Company has a 49.5% interest in
this venture.

FOX/LIBERTY JOINT VENTURES (FOX/LIBERTY NETWORKS, LLC, INTERNATIONAL SPORTS
PROGRAMMING PARTNERS AND FOX/LIBERTY VENTURES, LLC)

Beginning in April 1996, the Company and Liberty Media Corporation and its
related companies ("Liberty"), formed various 50/50 joint ventures to own and
operate programming services featuring predominantly sports and sports-related
programming for distribution in the United States and internationally. Liberty
primarily contributed its

                                    Page 51
<PAGE>

regional and national sports programming services and the Company contributed
cash, its FX cable programming service and certain other assets. In July 1999,
the Company acquired Liberty's interest in Fox/Liberty Networks, LLC. (see Note
16).

OTHER

In addition, the Company has an investment in Regency Television.

SUMMARIZED FINANCIAL DATA

Summarized financial data for equity affiliates at June 30 is presented below:

<TABLE>
<CAPTION>
                                                                 1999         1998         1997
                                                                 ----         ----         ----
<S>                                                           <C>          <C>          <C>
Total assets                                                  $ 4,641      $ 4,702      $ 1,568
Total liabilities                                               4,324        4,070        1,071
Revenues                                                        1,404        1,317          661
Operating income (loss)                                            38           63          (55)
Net Income (loss)                                                (291)        (162)        (101)
</TABLE>

6. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at June 30:

<TABLE>
<CAPTION>
                                                                                1999                1998
                                                                                ----                ----
<S>                                                                        <C>                  <C>
Machinery and equipment...............................................     $         718        $         570
Buildings and leaseholds..............................................               821                  681
Land..................................................................               168                  143
                                                                           -------------        -------------
                                                                                   1,707                1,394
Less accumulated depreciation.........................................              (386)                (283)
                                                                           -------------        -------------
                                                                           $       1,321        $       1,111
                                                                           =============        =============
</TABLE>

Included in buildings and leaseholds were cumulative capital expenditures for
construction in progress of approximately $171 million and $314 million, as of
June 30, 1999 and 1998, respectively, principally relating to the construction
of new office buildings and improvements at the Company's Los Angeles Fox
Studios lot.

7. BORROWINGS

Borrowings consisted of the following at June 30:

<TABLE>
<CAPTION>
                                                                                          1999                     1998
                                                                                          ----                     ----
<S>                                                                                  <C>                      <C>
New World Senior Secured Discount Notes..................................            $           --           $          206
Film production financing................................................                        53                      147
Other....................................................................                        --                       22
                                                                                     ---------------          --------------
                                                                                     $           53           $          375
                                                                                     ===============          ==============
</TABLE>

During June 1999, the Company redeemed the outstanding balance of the New World
Senior Secured Discount Notes.

                                    Page 52
<PAGE>

The Company has various single-film production financing arrangements which are
secured by the film assets and bear interest at approximately 6% in each of the
fiscal years presented. The film production financing is due to mature in fiscal
2000.

External interest paid, net of amounts capitalized, was $60 million, $100
million and $41 million for the years ended June 30, 1999, 1998 and 1997,
respectively.

The Company capitalizes interest on filmed entertainment and television
productions in process. The total interest capitalized was $19 million, $26
million and $34 million in fiscal 1999, 1998 and 1997, respectively.

8. INCOME TAXES

Although, during the periods presented, the Company and certain of its
subsidiaries filed a separate tax return and other subsidiaries of the Company
were included in the consolidated tax returns of another News Corporation
entity, the Company has provided for income taxes as if it were a stand-alone
taxpayer, in accordance with SFAS No. 109.

Income before income taxes was attributable to the following jurisdictions for
the year ended June 30:

<TABLE>
<CAPTION>
                                                                                 1999          1998            1997
                                                                                 ----          ----            ----
<S>                                                                          <C>            <C>             <C>
United States (including exports).....................................       $       271    $       225     $        60
International.........................................................                76             86              19
                                                                             -----------    -----------     -----------
                                                                             $       347    $       311     $        79
                                                                             ===========    ===========     ===========
</TABLE>

Components of the provision for income taxes on income before income taxes for
the year ended June 30 were as follows:

<TABLE>
<CAPTION>
                                                                                 1999          1998            1997
                                                                                 ----          ----            ----
<S>                                                                          <C>            <C>             <C>
Current -
        Federal - pursuant to the Tax Sharing Agreement...............       $        60    $         -     $         -
        Foreign.......................................................                22             11               -
                                                                             -----------    -----------     -----------
                                                                             $        82    $        11     $         -
                                                                             ===========    ===========     ===========
Deferred -
        Federal.......................................................       $        56    $       100     $        38
        State and local...............................................                 4             18               6
        Foreign.......................................................                 -              6               5
                                                                             -----------    -----------     -----------
                                                                             $        60    $       124     $        49
                                                                             ===========    ===========     ===========
</TABLE>

A reconciliation of the U.S. Federal statutory tax rate on income to the
Company's effective tax rate on earnings before income taxes for the year ended
June 30 is summarized as follows:

<TABLE>
<CAPTION>
                                                                                 1999          1998           1997
                                                                                 ----          ----           ----
<S>                                                                              <C>           <C>            <C>
U.S. Federal income tax rate..........................................            35%           35%            35%
State and local taxes (net of federal tax benefit)....................             1             5              6
Effect of foreign operations..........................................            (1)            1             17
Non-deductible amortization and expenses..............................             4             2              5
Other.................................................................             2            --             (1)
                                                                             -----------     ----------     ----------
Effective tax rate....................................................            41%           43%            62%
                                                                             ===========     ==========     ==========
</TABLE>

                                    Page 53
<PAGE>

The following is a summary of the components of the deferred tax accounts at
June 30:

<TABLE>
<CAPTION>
                                                             1999                 1998
                                                             ----                 ----
<S>                                                       <C>                 <C>
Deferred tax assets (liabilities):
Amortization and basis difference on intangible assets..   $   (1,575)        $   (1,539)
Revenue recognition.....................................          163                166
Accrued liabilities.....................................          201                195
Other...................................................          (98)               (63)
Net operating loss carryforwards........................          402                367
                                                          -----------         ----------
Net deferred tax liability..............................         (907)              (874)
Income tax payable......................................          (68)                --
                                                          -----------         ----------
                                                          $      (975)        $     (874)
                                                          ===========         ==========
</TABLE>

As of June 30, 1999, the Company had approximately $1 billion of combined unused
tax net operating loss carryforwards, expiring between 2001 and 2012.
Realization of these net operating losses is dependent on generating sufficient
taxable income prior to the expiration of the loss carryforwards, subject to any
limitations on their use. Although realization is not assured, management
believes it is more likely than not that the deferred tax assets relating to
these loss carryforwards will be realized; accordingly, no valuation allowance
has been provided. The amount of the deferred tax assets could be reduced
through a charge to income, however, if estimates of future taxable income
during the carryforward period are reduced.

As noted above, certain subsidiaries of the Company are included in the
consolidated group of News Publishing Australia Limited ("NPAL"), the principal
U.S. subsidiary of News Corporation, for U.S. federal income tax purposes (the
"Consolidated Group") as well as in certain consolidated, combined or unitary
groups which include NPAL and/or certain of its subsidiaries (the "Combined
Group") for state and local income tax purposes. The Company and NPAL have
entered into a tax sharing agreement (the "Tax Sharing Agreement"). Pursuant to
the Tax Sharing Agreement (See Note 3), the Company and NPAL generally will make
payments between them such that, with respect to tax returns for any taxable
period in which the Company or any of its subsidiaries are included in the
Consolidated Group or any Combined Group, the amount of such consolidated or
combined taxes to be paid by the Company will be determined, subject to certain
adjustments, as if the Company and each of its subsidiaries included in the
Consolidated Group or Combined Group filed their own consolidated, combined or
unitary tax return. Net operating losses and other future tax benefits actually
availed of to reduce the tax liabilities of the Consolidated Group or Combined
Group and any taxes actually paid by the Company's subsidiaries included in such
groups will be taken into account for this purpose. The Company will be
responsible for any taxes with respect to tax returns that include only the
Company and its subsidiaries.

Income taxes paid for the years ended June 30, 1999, 1998 and 1997 were not
significant.

                                    Page 54
<PAGE>

9. SHARE OPTION PLAN

The Company does not have a share option plan.

Certain of the Company's employees have been granted News Corporation stock
options under News Corporation's Share Option Plan (the "Plan"). The price of
options granted under the Plan is the weighted average market price of the
shares sold on the Australian Stock Exchange during the five trading days
immediately prior to the date of the option being granted. Stock options are
exercisable at a ratio of four options per American Depositary Receipt (ADR).

Options issued under the Plan have a term of ten years, but are exercisable only
after they have been vested in the option holder. The options granted vest and
become exercisable as to one quarter on each anniversary of the grant until all
options have vested.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock Based
Compensation," which requires certain disclosures for those companies that will
continue to use an intrinsic value based method for measuring compensation cost
in connection with employee stock compensation plans in accordance with
Accounting Principles Board ("APB") No. 25, "Accounting for Stock Issued to
Employees." The Company will continue to use such method, under which no
compensation cost has been recognized.

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model, with the following assumptions used for
grants in fiscal years 1999, 1998 and 1997, respectively: risk free interest
rates in the range from 4.81% to 8.44%; expected dividend yields of
approximately 1.5%; expected lives of 7 years; expected volatility in the range
from 24% to 35%.

On a pro forma basis, compensation cost determined in accordance with SFAS No.
123 would have reduced net income by approximately $10 million, $6 million and
$2 million for the years ended June 30, 1999, 1998 and 1997, respectively, with
a decrease of $0.02, $0.01 and $0.0 in basic and diluted earnings per share for
the years ended June 30, 1999, 1998 and 1997, respectively.

A summary of the option scheme activity for the years ended June 30, was as
follows (in thousands of shares and Australian dollars):

<TABLE>
<CAPTION>
                                                         1999                   1998                  1997
                                                         ----                   ----                  ----

                                                           WTD.                  WTD.                   WTD
                                                           ---                   ---                    ---
                                                         AVG. EX.               AVG. EX.              AVG. EX.
                                                         -------                -------               -------
                                              OPTIONS    PRICE      OPTIONS     PRICE       OPTIONS   PRICE
                                              -------    -----      -------     -----       -------   -----
<S>                                           <C>        <C>        <C>         <C>        <C>        <C>
Outstanding at beginning of year.......        31,481    A$5.22     15,627      A$5.63      3,500     A$7.06
    Granted............................        14,567    A$8.28     16,915      A$4.79     12,739     A$5.21
    Exercised..........................        (2,849)   A$5.62       (529)     A$5.31       (300)    A$7.05
    Cancelled..........................          (921)   A$4.96       (532)     A$5.02       (312)    A$5.17
                                              -------    ------     ------      ------     ------     ------
    Outstanding at the end of the year         42,278    A$6.32     31,481      A$5.22     15,627     A$5.63
                                              =======               ======                 ======

    Exercisable at end of year.........        11,204                5,494                  2,038
    Weighted average fair value of options
      granted..........................                  A$3.25                 A$1.99                A$2.08
</TABLE>

                                    Page 55
<PAGE>

At June 30, 1999, 25,881 of the outstanding options have exercise prices between
A$2.31 and A$6.96, a weighted average exercise price of A$4.99 and a weighted
average remaining contractual life of 6.24 years. Of these, 9,374 are
exercisable with a weighted average exercise price of A$5.09. The remaining
outstanding options, 16,397 have exercise prices between A$7.22 and A$10.97,
with a weighted average exercise price of A$8.43 and a weighted average
remaining contractual life of 6.07 years. Of these, 1,830 were exercisable, with
a weighted average exercise price of A$9.44.

10. PENSION PLANS, OTHER POSTRETIREMENT BENEFITS AND
    POSTEMPLOYMENT BENEFITS

PENSION PLANS

The Company has non-contributory pension plans covering specific groups of
employees. The benefits for these plans are based primarily on an employee's
years of service and pay near retirement. Participant employees are vested in
the plans after five years of service. The Company's policy for all pension
plans is to fund amounts in accordance with the Employee Retirement Income
Security Act of 1974. Plan assets consist principally of common stocks,
marketable bonds and government securities.

The Company adopted SFAS No. 132, "Employers' Disclosures about Pensions and
Other Postretirement Benefits - an amendment of FASB Statements No. 87, 88 and
106" in fiscal 1999.

The following table sets forth the change in benefit obligation for the
Company's benefit plans for the year ended June 30:

<TABLE>
<CAPTION>
                                                                   1999       1998
                                                                   ----       ----
<S>                                                            <C>          <C>
Benefit obligation, beginning of year.......................    $  222      $  120
Service cost................................................        15          10
Interest cost...............................................        16          14
Benefits paid...............................................        (8)         (6)
Actuarial (gain) / loss.....................................        (3)         14
Business Comb...............................................        --          70
Benefit obligation, end of year.............................   -------      ------
                                                                $  242      $  222
                                                               =======      ======
</TABLE>

The following table sets forth the change in the fair value of plan assets for
the Company's benefit plans for the year ended:

<TABLE>
<CAPTION>
                                                                   1999     1998
                                                                   ----     ----
<S>                                                             <C>         <C>
Fair value of plan assets, beginning of year...............     $   204     $ 126
Actual return on plan assets...............................          24        18
Employer   contributions...................................           1         3
Benefits paid..............................................          (8)       (6)
Business Combinations......................................          --        63
                                                               --------     -----
Fair value of plan assets, end of year.....................     $   221     $ 204
                                                               ========     =====
</TABLE>

                                    Page 56
<PAGE>

The components of net periodic pension costs for the years ended June 30, were
as follows:

<TABLE>
<CAPTION>
                                                                           1999               1998             1997
                                                                           ----               ----             ----
<S>                                                                   <C>                  <C>               <C>
  Service cost-benefits earned during the period.................     $         15         $      10         $       8
  Interest cost on projected benefit obligation..................               16                14                10
  Expected return on plan assets.................................              (20)              (18)              (10)
  Net amortization and deferral..................................               --                --                (2)
                                                                      ------------         ---------         ---------
Net periodic pension cost........................................     $         11         $       6         $       6
                                                                      ============         =========         =========
</TABLE>

The funded status of the pension plans as of June 30 was as follows:

<TABLE>
<CAPTION>
                                                                           1999               1998
                                                                           ----               ----
<S>                                                                   <C>                  <C>
Funded status....................................................     $        (21)        $     (18)
Unrecognized net loss............................................                3                 9
Unrecognized prior service cost..................................               (4)               (3)
                                                                      ------------         ---------
Accrued pension liability at year end............................     $        (22)        $     (12)
                                                                      ============         =========
</TABLE>

The following assumptions were used in accounting for the pension plans for the
year ended June 30:

<TABLE>
<CAPTION>
                                                                             1999               1998             1997
                                                                             -----              ----             ----
<S>                                                                          <C>                <C>              <C>
Discount rate....................................................             7.25%             7.25%            7.75%
Expected return on plan assets...................................               10%               10%              10%
Rate of increase in future compensation..........................             4%-6%                6%            4%-6%
</TABLE>

11. RELATED PARTY TRANSACTIONS

As a subsidiary of News Corporation, the Company has used and expects that it
will continue to use, pursuant to the Master Intercompany Agreement with News
Corporation (see Note 3), various cash management, financial, tax, legal and
other services provided by News Corporation or its subsidiaries. All costs
relating to direct intercompany services have been reflected in the accompanying
consolidated financial statements.

The Company and its subsidiaries sell broadcast rights to certain of its filmed
entertainment products to other subsidiaries of News Corporation. Management
believes that the pricing of these transactions results from arms length
negotiations between the parties and are reflective of the market value for
these rights. The revenues associated with these sales were not significant in
the periods presented.

The Company is funded primarily by loans from other subsidiaries and affiliates
of News Corporation. Intercompany interest expense of $164 million, $174 million
and $144 million for the years ended June 30, 1999, 1998 and 1997, respectively,
is included in interest expense, net in the consolidated statements of
operations and reflects the net interest expense associated with the aggregate
borrowings from subsidiaries or affiliates of News Corporation. From November
11, 1998, interest on outstanding intercompany balances has been charged at
commercial market rates not to exceed News Corporation's average cost of
borrowings as set forth in the Master Intercompany Agreement. At June 30, 1999,
the intercompany interest rate approximated 8%.

                                    Page 57
<PAGE>

The Company, through the normal course of business, is involved in transactions
with its equity affiliates that have not been significant in any of the periods
presented.

12. COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases transponders, office facilities, equipment and microwave
channels used to carry its broadcast signals. These leases, which are classified
as operating leases, expire at various dates through 2006. Future minimum
payments under non-cancelable long-term operating leases aggregate $234 million,
of which $188 million is payable over the next five years.

Total operating lease expense was approximately $67 million, $54 million and $50
million for the years ended June 1999, 1998 and 1997, respectively.

COMMITMENTS AND CONTINGENCIES

Under the Company's eight year contract with the National Football League, which
contains certain termination clauses, future minimum payments for program rights
to broadcast certain football games aggregated approximately $4 billion at June
30, 1999, and are payable over the eight year term.

The Company's minimum commitments and guarantees under certain other
programming, production, licensing, artists, athletes, franchise and other
agreements aggregated approximately $2 billion at June 30, 1999, which are
payable principally over a five year period.

In the ordinary course of business, the Company has become involved in disputes
or litigation. While the result of such disputes cannot be predicted with
certainty, in management's opinion, based in part on the advice of counsel, the
ultimate resolution of these disputes will not have a material adverse effect on
the Company's financial position or the results of its operations.

GUARANTEES OF NEWS CORPORATION DEBT

News Corporation and certain of its subsidiaries, including certain subsidiaries
of the Company (the "Fox Guarantors") are guarantors of various debt obligations
of News Corporation and certain of its subsidiaries. The principal amount of
indebtedness outstanding under such debt instruments at June 30, 1999 was
approximately $9.2 billion, which amount includes approximately $1 billion of
obligations under Exchangeable Trust Originated Preferred Securities SM due
2016. The debt instruments limit the ability of News Corporation and the Fox
Guarantors, to subject their properties to liens, and certain of the debt
instruments impose limitations on the ability of News Corporation and its
subsidiaries, including the Fox Guarantors, to incur indebtedness in certain
circumstances. Such debt instruments mature at various times between 2000 and
2096, with a weighted average maturity of over 20 years. Additional subsidiaries
of the Company may from time to time be required to become guarantors of certain
debt obligations.

                                    Page 58
<PAGE>

In the case of any event of default under such debt obligations, the Fox
Guarantors will be directly liable to the creditors or debtholders. News
Corporation has agreed to indemnify the Fox Guarantors from and against any
obligations they may incur by reason of their guarantees of such debt
obligations.

13. SEGMENT INFORMATION

The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information". SFAS No. 131 established revised standards
for public companies relating to the reporting of financial and descriptive
information about their operating segments in financial statements.

The Company operates in three business segments: Filmed Entertainment, which
principally consists of the production and acquisition of live-action and
animated motion pictures for distribution and licensing in all formats in
entertainment media, primarily in the United States and Canada and Europe, and
the production of original television programming, in the United States and
Canada; Television Broadcasting and Related Businesses, which principally
consists of the distribution of network programming, the operation of broadcast
television stations, production and distribution of certain television
programming and professional sports team ownership in the United States and
Canada; and Cable Network Programming, which principally consists of the
production and licensing of programming distributed through cable television
systems and DBS operators in the United States and Canada.

The Company's reportable operating segments have been determined in accordance
with the Company's internal management structure, which is organized based on
operating activities. The accounting policies of the operating segments are the
same as those described in the summary of significant accounting policies (see
Note 2). The Company evaluates performance based upon several factors, of which
the primary financial measure is segment operating income.

<TABLE>
<CAPTION>
 BUSINESS SEGMENTS                                                  1999                1998                1997
 -----------------                                                  ----                ----                ----
<S>                                                               <C>                  <C>             <C>
REVENUES
  Filmed Entertainment.....................................        $  4,416             $   3,876       $   3,112
  Television Broadcasting and Related Businesses...........           3,512                 3,075           2,698
  Cable Network Programming................................             129                    72              37
                                                                  ---------            ----------      ----------
                                                                   $  8,057             $   7,023       $   5,847
                                                                  =========            ==========      ==========

OPERATING INCOME
  Filmed Entertainment.....................................        $    355             $     266       $     113
  Television Broadcasting and Related Business.............             490                   555             360
  Cable Network Programming................................            (129)                 (141)           (148)
                                                                  ---------            ----------      ----------
                                                                   $    716             $     680       $     325
                                                                  =========            ==========      ==========

DEPRECIATION AND AMORTIZATION
 Filmed Entertainment......................................        $     41             $      26       $      25
 Television Broadcasting and Related Business..............             217                   172             130
 Cable Network Programming.................................              57                    45              25
                                                                  ---------            ----------      ----------
                                                                   $    315             $     243       $     180
                                                                  =========            ==========      ==========
</TABLE>

                                    Page 59
<PAGE>

<TABLE>
<S>                                                                             <C>                  <C>               <C>
CAPITAL EXPENDITURES
  Filmed Entertainment                                                          $       116           $     120         $      88
  Television Broadcasting and Related Businesses                                        188                  77               184
  Cable Network Programming                                                               3                  11                66
                                                                                -----------          ----------        ----------
                                                                                $       307           $     208         $     338
                                                                                ===========          ==========        ==========

TOTAL ASSETS
  Filmed Entertainment...............................................           $     3,355           $   3,969         $   3,345
  Television Broadcasting and Related Businesses.....................                 8,599               7,484             7,282
  Cable Network Programming..........................................                   424                 386               330
  Investments in equity affiliates...................................                   785                 791               740
                                                                                -----------          ----------        ----------
                                                                                $    13,163           $  12,630         $  11,697
                                                                                ===========          ==========        ==========
</TABLE>

Equity in losses of affiliates are principally Cable Network Programming
entities. Other expenses and income tax expense are not allocated to segments as
they are not under the control of the segment management.

<TABLE>
<CAPTION>
GEOGRAPHIC SEGMENTS                                                           1999                   1998                1997
                                                                              ----                   ----                ----
<S>                                                                     <C>                      <C>                <C>
REVENUES
  United States and Canada......................................           $  6,150                $  5,657            $ 4,940
  Europe........................................................              1,173                     830                549
  Other.........................................................                734                     536                358
                                                                         ----------               ---------          ---------
                                                                           $  8,057                $  7,023            $ 5,847
                                                                         ==========               =========          =========

LONG-LIVED ASSETS
 United States and Canada.......................................           $ 10,488                $  9,981            $ 9,535
 Europe.........................................................                 13                      15                 11
 Other..........................................................                187                      95                 49
                                                                         ----------               ---------          ---------
                                                                           $ 10,688                $ 10,091            $ 9,595
                                                                         ==========               =========          =========
</TABLE>

     Revenues are attributed to geographic segment based on the origin of the
sale. There is no material reliance on any single customer. Revenues from any
individual foreign country were not material in the periods presented.

14.  DETAIL OF OTHER FINANCIAL STATEMENT ACCOUNTS

<TABLE>
<CAPTION>
                                                                            1999                1998           1997
                                                                            ----                ----           ----
<S>                                                                     <C>                   <C>              <C>
ALLOWANCE FOR RETURNS AND DOUBTFUL ACCOUNTS
   Beginning balance............................................        $    204              $    106          $   104
   Charged to costs and expenses................................             185                   243              158
   Actual returns/write-offs/recoveries/other...................            (264)                 (145)            (156)
                                                                        --------             ---------         --------
 Ending Balance.................................................        $    125              $    204          $   106
                                                                        ========             =========         ========
</TABLE>

                                    Page 60
<PAGE>

<TABLE>
<CAPTION>
                                                                               1999                  1998
                                                                               ----                  ----
<S>                                                                        <C>                      <C>
INTANGIBLE ASSETS
   Goodwill.....................................................           $     1,011              $   906
   FCC licenses, franchises & other.............................                 5,717                5,770
                                                                           -----------              -------
                                                                                 6,728                6,676
   Accumulated amortization.....................................                  (910)                (735)
                                                                           -----------              -------
                                                                           $     5,818              $ 5,941
                                                                           ===========              =======
</TABLE>

15.  QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                              --------------------------------------------------------------
                                               September 30       December 31       March 31        June 30
                                              -------------     --------------     ----------     ----------
<S>                                           <C>               <C>                <C>            <C>
Fiscal 1999
------------------------------------
Revenues                                      $       1,802     $        2,555     $    1,733     $    1,967

Operating Income                              $         202     $          258     $      100     $      156

Net Income                                    $          57     $          105     $        8     $       35
                                              =============     ==============     ==========     ==========

Basic and diluted
    earnings per share                        $        0.10     $         0.17     $     0.01     $     0.05
                                              =============     ==============     ==========     ==========

Fiscal 1998
------------------------------------
Revenues                                      $       1,478     $        1,977     $    1,814     $    1,754

Operating Income                              $         123     $          205     $      206     $      129

Net Income                                    $          28     $           69     $       76     $        3
                                              =============     ==============     ==========     ==========

Basic and diluted
    earnings per share(1)                     $        0.05     $         0.13     $     0.14     $     0.01
                                              =============     ==============     ==========     ==========
</TABLE>

/(1)/- The earnings per share for the year ended June 30, 1998 does not equal
the sum of the quarters as it is calculated independently each quarter.

16.  SUBSEQUENT EVENTS

On July 15, 1999, News Corporation acquired substantially all of Liberty's 50%
interest in Fox/Liberty Networks, LLC. In exchange for its interest, Liberty
received approximately 51.8 million ADRs (representing 207.1 million preferred
limited voting ordinary shares of News Corporation) valued at $1.425 billion.

Upon consummation of this transaction, News Corporation transferred the acquired
interests to the Company in exchange for 51,759,834 shares of the Company 's
Class A Common shares valued at $1.425 billion. This transfer to the Company
increased News Corporation's equity interest to 82.76% from 81.44% while its
voting interest remained at 97.8%. Concurrent with this transaction, the Company
repaid approximately $678 million of Fox/Liberty Networks, LLC's bank debt. The
repayment of this bank debt was funded through additional advances from its
affiliates.

                                    Page 61
<PAGE>

ITEM 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None.

ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

     The information contained in the Company's Proxy Statement for the 1999
Annual Meeting of Stockholders (the "1999 Proxy Statement") under the caption
"Executive Officers of the Company" is incorporated herein by reference.

ITEM 11.      EXECUTIVE COMPENSATION

     The information contained in the 1999 Proxy Statement under the captions
"Executive Compensation" and "Compensation of Directors" is incorporated herein
by reference.

ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information contained in the 1999 Proxy Statement under the
caption "Compliance with Section 16(A) of the Exchange Act" is incorporated
herein by reference.

ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information contained in the 1999 Proxy Statement under the captions
"Remuneration Committee Interlocks and Insider Participation" and "Certain
Relationships and Related Transactions" is incorporated herein by reference.

                                    PART IV

ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) and (d) Financial Statements and Schedules (see Index on Page 40)

     (b) Reports on Form 8-K

         (i)  Current Report on Form 8-K of the registrant with a report date of
              April 5, 1999 relating to the acquisition by News Corporation of
              substantially all of Liberty Media Corporation's 50% interest in
              Fox/Liberty Networks and other related businesses and the transfer
              to the Company by News Corporation of such acquired interests in
              exchange for 51,759,834 shares of the Company's Class A Common
              Stock (valued at approximately $1.425 billion).

         (ii) Current Report on Form 8-K of the registrant with a report date of
              May 20, 1999 relating to the election to the Company's Board of
              Directors of Mr. Christos M. Cotsakos and Dr. Laura D'Andrea
              Tyson.

     (c) Exhibits (see index on Page 65)

                                    Page 62
<PAGE>

                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized.

                         By /s/ K. RUPERT MURDOCH
                         ------------------------
                         K. Rupert Murdoch,
                         Chairman and
                         Chief Executive Officer (Principal Executive Officer)

                         By /s/ DAVID F. DeVOE
                         ------------------------
                         David F. DeVoe,
                         Senior Executive Vice President,
                         Chief Financial Officer
                         (Principal Financial and Accounting Officer)

Date: September 27, 1999

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:

                                    Page 63
<PAGE>

        Signature                   Title                     Date
        ---------                   -----                     ----

/s/  K. RUPERT MURDOCH              Director                  September 27, 1999
----------------------
K. Rupert Murdoch

/s/  DAVID DeVOE                    Director                  September 27, 1999
----------------------
David F. DeVoe

/s/ ARTHUR M. SISKIND               Director                  September 27, 1999
----------------------
Arthur M. Siskind

/s/ PETER CHERNIN                   Director                  September 27, 1999
----------------------
Peter Chernin

/s/  CHASE CAREY                    Director                  September 27, 1999
----------------------
Chase Carey

                                    Director                  September __, 1999
------------------------
Christos M. Cotsakos

                                    Director                  September __, 1999
------------------------
Laura D'Andrea Tyson


                                    Page 64
<PAGE>

                                 EXHIBIT INDEX


                                                                EXHIBIT NO.
                                                                IN DOCUMENT
     EXHIBIT                                                    INCORPORATED
     NO.          DESCRIPTION                                   BY REFERENCE
     -------      -----------                                   ------------

     3.1          Restated Certificate of
                  Incorporation of the Company                    3.1(/1/)
     3.2          Form of By-Laws of the Company                  3.2(/1/)
     4.1          Specimen Certificate for Shares of
                  Class A Common Stock of the Company             4.1(/2/)
     10.1         Indenture, dated as of January 28,
                  1993, by and among News America
                  Holdings Incorporated, the guarantors
                  named therein and State Street Bank
                  and Trust Company (as successor to
                  The First National Bank of Boston),
                  as Trustee, with respect to senior
                  debt securities                                   2(/3/)
     10.2         First Supplemental Indenture, dated
                  as of March 24, 1993, by and among
                  News America Holdings Incorporated,
                  the guarantors named therein and
                  State Street Bank and Trust Company
                  (as successor to The First National
                  Bank of Boston), as Trustee, with
                  respect to senior debt securities                 2(/4/)
     10.3         Second Supplemental Indenture, dated
                  as of April 8, 1993, by and among
                  News America Holdings Incorporated,
                  the guarantors named therein and
                  State Street Bank and Trust Company
                  (as successor to The First National
                  Bank of Boston), as Trustee, with
                  respect to senior debt securities                 3(/4/)
     10.4         Third Supplemental Indenture, dated
                  as of May 20, 1993, by and among News
                  America Holdings Incorporated, the
                  guarantors named therein and State
                  Street Bank and Trust Company (as
                  successor to The First National Bank
                  of Boston), as Trustee, with respect
                  to senior debt securities                       4.7(/5/)
     10.5         Fourth Supplemental Indenture, dated
                  as of May 28, 1993, by and among News
                  America Holdings Incorporated, the
                  guarantors named therein and State
                  Street Bank and Trust Company (as
                  successor to The First National Bank
                  of Boston), as Trustee, with respect
                  to senior debt securities                       4.8(/5/)
     10.6         Fifth Supplemental Indenture, dated
                  as of July 21, 1993, by and among
                  News America Holdings Incorporated,
                  the guarantors named therein and
                  State Street Bank and Trust Company
                  (as successor to The First National
                  Bank of Boston), as Trustee, with
                  respect to senior debt securities               4.6(/6/)



                                    Page 65
<PAGE>

                                                                EXHIBIT NO.
                                                                IN DOCUMENT
     EXHIBIT                                                    INCORPORATED
     NO.          DESCRIPTION                                   BY REFERENCE
     -------      -----------                                   ------------

     10.7         Form of Sixth Supplemental Indenture,
                  dated as of January 25, 1994, by and
                  among News America Holdings
                  Incorporated, the guarantors named
                  therein and State Street Bank and Trust
                  Company (as successor to The First
                  National Bank of Boston), as Trustee,
                  with respect to senior debt securities          4.7(/7/)
     10.8         Form of Seventh Supplemental
                  Indenture, dated as of February 4,
                  1994, by and among News America
                  Holdings Incorporated, the guarantors
                  named therein and State Street Bank
                  and Trust Company (as successor to
                  The First National Bank of Boston),
                  as Trustee, with respect to senior
                  debt securities                                 4.8(/8/)
     10.9         Form of Eight Supplemental Indenture,
                  dated as of May 12, 1994, by and
                  among News America Holdings
                  Incorporated, the guarantors named
                  therein and State Street Bank and
                  Trust Company (as successor to The
                  First National Bank of Boston), as
                  Trustee, with respect to senior debt
                  securities                                      4.9(/8/)
     10.11        Form of Ninth Supplemental Indenture,
                  dated as of July 27, 1995 by and
                  among News America Holdings
                  Incorporated, the guarantors named
                  therein and State Street Bank and
                  Trust Company (as successor to The
                  First National Bank of Boston), as
                  Trustee, with respect to senior debt
                  securities                                      4.10(/9/)
     10.12        Form of Indenture, dated as of March
                  11, 1993 by and among News America
                  Holdings Incorporated, the Guarantors
                  named therein and The Bank of New
                  York, as Trustee with respect to the
                  Liquid Yield Option(TM) Notes
                  ("LYONs") due March 11, 2013                    4.1(/10/)
     10.13        First Supplemental Indenture, dated
                  as of May 20, 1993, among News
                  America Holdings Incorporated, the
                  guarantors named therein and The Bank
                  of New York, as Trustee, with respect
                  to the LYONs                                    4.2(/11/)




                                    Page 66
<PAGE>

<TABLE>
<CAPTION>
                                                                 EXHIBIT NO.
                                                                 IN DOCUMENT
     EXHIBIT                                                     INCORPORATED
     NO.          DESCRIPTION                                    BY REFERENCE
     -------      -----------                                    ------------
     <S>          <C>                                            <C>
     10.14        Second Supplemental Indenture, dated as of
                  July 21, 1993, among News America Holdings,
                  the guarantors named therein and The Bank of
                  New York, as Trustee, with respect to the
                  LYONs                                          4.3(/11/)
     10.15        Form of Amended and Restated Indenture,
                  dated as of March 24, 1993, by and among
                  News America Holdings Incorporated, the
                  guarantors named therein and The Bank of New
                  York, as Trustee, with respect to senior
                  debt securities                                4.1(/12/)
     10.16        First Supplemental Indenture, dated as of
                  May 20, 1993, by and among News America
                  Holdings Incorporated, the guarantors named
                  therein and The Bank of New York, as
                  Trustee, with respect to senior debt
                  securities                                     4.2(/5/)
     10.17        Second Supplemental Indenture, dated as of
                  May 28, 1993, by and among News America
                  Holdings Incorporated, the guarantors named
                  therein and The Bank of New York, as
                  Trustee, with respect to senior debt
                  securities                                     4.3(/5/)
     10.18        Third Supplemental Indenture, dated as of
                  July 21, 1993, by and among News America
                  Holdings Incorporated, the guarantors named
                  therein and The Bank of New York, as
                  Trustee, with respect to senior debt
                  securities                                     4.14(/13/)
     10.19        Fourth Supplemental Indenture, dated as of
                  October 20, 1995, by and among News America
                  Holdings Incorporated, the guarantors named
                  therein and The Bank of New York, as
                  Trustee, with respect to the senior debt
                  securities                                     4.15(/13/)
     10.20        Fifth Supplemental Indenture, dated as of
                  January 8, 1998, by and among News America
                  Incorporated, the guarantors named therein
                  and The Bank of New York, as Trustee, with
                  respect to the senior debt securities          4.6(/14/)
     10.21        Composite Revolving Credit Agreement, dated
                  as of May 19, 1993 (including amendments
                  dated August 9, 1993, September 14, 1993,
                  May 12, 1994, March 30, 1995, February 29,
                  1996 and December 20, 1996) among News
                  America Incorporated et al, several agents,
                  managers and banks                             10.21(/2/)
     10.22        Indenture for the 5% Subordinated Discount
                  Debentures, dated as of November 12, 1996,
                  among News America Holdings Incorporated,
                  The News Corporation Limited, each of the
                  Subsidiary Guarantors named therein and The
                  Bank of New York, as Trustee                   4(i)(/15/)
</TABLE>



                                    Page 67
<PAGE>

<TABLE>
<CAPTION>
                                                                 EXHIBIT NO.
                                                                 IN DOCUMENT
     EXHIBIT                                                     INCORPORATED
     NO.          DESCRIPTION                                    BY REFERENCE
     -------      -----------                                    ------------
     <S>          <C>                                            <C>
     10.23        Funding Agreement, dated as of June 11, 1997
                  by and among The News Corporation Limited,
                  News Publishing Australia Limited and Fox
                  Kids Worldwide, Inc.                           10.33(/16/)
     10.24        Amended and Restated Strategic Stockholders
                  Agreement, dated as of August 1, 1997, by
                  and among Haim Saban, certain entities
                  listed on Schedule A thereto, Fox
                  Broadcasting Company, Fox Broadcasting Sub,
                  Inc. and Allen & Company Incorporated          10.1(/16/)
     10.29        Form of Master Intercompany Agreement
                  between the Company and The News Corporation
                  Limited                                        10.29(/2/)
     10.30(a)     Form of Intercompany Note of Twentieth
                  Century Fox Film Corporation to FEG
                  Holdings, Inc.                                 10.30(a)(/17/)
     10.30(b)     Form of Intercompany Note of the Company to
                  News America Incorporated                      10.30(b)(/17/)
     10.30(c)     Form of Intercompany Note of Fox Television
                  Stations, Inc. to News America Incorporated    10.30(c)(/17/)
     10.31        Form of Tax Sharing Agreement between the
                  Company and News Publishing Australia
                  Limited                                        10.31(/2/)
     10.32        Amendment No. 7, dated as of June 8, 1998,
                  to the Revolving Credit Agreement dated as
                  of May 19, 1993 (as amended on August 9,
                  1993, September 14, 1993, May 12, 1994,
                  March 30, 1995, February 29, 1996 and
                  December 20, 1996) among News America
                  Incorporated et al, several agents, managers
                  and banks                                      10.32(/2/)
     10.33        Amended and Restated Indenture, as amended
                  and restated as of September 30, 1994,
                  between NWCG Holdings Corporation and
                  Nationsbank of Georgia, National
                  Association, as Trustee, with respect to the
                  Senior Secured Discount Notes Due 1999         4.1A(/18/)
     21.1         List of Principal Subsidiaries of the
                  Company
     27           Financial Data Schedule
</TABLE>

------------------------


(1)  Incorporated by reference to the Report on Form 10-Q of Fox Entertainment
     Group, Inc., dated December 22, 1998.
(2)  Incorporated by reference to Amendment No. 4 to the Registration Statement
     on Form S-1 of Fox Entertainment Group, Inc. (Registration No. 333-61515)
     filed with the Securities and Exchange Commission on November 4, 1998.
(3)  Incorporated by reference to the Report on Form 6-K of The News Corporation
     Limited, dated January 28, 1993.
(4)  Incorporated by reference to the Report on Form 6-K of The News Corporation
     Limited, dated April 26, 1993.



                                    Page 68
<PAGE>

(5)  Incorporated by reference to the Registration Statement on Form F-3 of News
     America Holdings Incorporated (Registration No. 33-63604) and Post-
     Effective Amendment No. 1 to the Registration Statement on Form F-3 of the
     News America Holdings Incorporated (Registration No. 33-59688) filed with
     the Securities and Exchange Commission on May 28, 1993.
(6)  Incorporated by reference to the Registration Statement on Form F-3 of News
     America Holdings Incorporated (Registration No. 33-74574) filed with the
     Securities and Exchange Commission on January 28, 1994.
(7)  Incorporated by reference to Amendment No. 1 to the Registration Statement
     on Form F-3 of News America Holdings Incorporated (Registration No. 33-
     74574) filed with the Securities and Exchange Commission on February 4,
     1994.
(8)  Incorporated by reference to Amendment No. 1 to the Registration Statement
     on Form F-3 of News America Holdings Incorporated (Registration No. 33-
     79334) filed with the Securities and Exchange Commission on June 14, 1994.
(9)  Incorporated by reference to the Registration Statement on Form F-3 of News
     America Holdings Incorporated (Registration No. 33-94868) filed with the
     Securities and Exchange Commission on July 24, 1995.
(10) Incorporated by reference to Pre-Effective Amendment No. 2 to the
     Registration Statement on Form F-3 of News America Holdings Incorporated
     (Registration No. 33-62008) filed with the Securities and Exchange
     Commission on August 18, 1993.
(11) Incorporated by reference to Pre-Effective Amendment No. 1 to the
     Registration Statement on Form F-3 of News America Holdings Incorporated
     (Registration No. 33-62008) and Post-Effective Amendment No. 2 to the
     Registration Statement on Form F-3 of News America Holdings Incorporated
     (Registration No. 33-81272) filed with the Securities and Exchange
     Commission on July 21, 1994.
(12) Incorporated by reference to the Registration Statement of The News
     Corporation Limited on Form F-3 (Registration No. 33-67008) filed with the
     Securities and Exchange Commission on May 4, 1993.
(13) Incorporated by reference to Amendment No. 1 to the Registration
     Statement of News America Holdings Incorporated on Form F-3 (Registration
     No. 33-98238) filed with the Securities and Exchange Commission on October
     23, 1995.
(14) Incorporated by reference to the Registration Statement of News America
     Incorporated on Form F-4 (Registration No. 333-8744) filed with the
     Securities and Exchange Commission on May 12, 1998.
(15) Incorporated by reference to the Registration Statement on Form F-3 of The
     News Corporation Limited (Registration No. 333-6896) filed with the
     Securities and Exchange Commission on January 26, 1998.
(16) Incorporated by reference to Amendment No. 1 to the Registration Statement
     on Form S-1 of Fox Kids Worldwide, Inc. (Registration No. 333-12995) filed
     with the Securities and Exchange Commission on January 26, 1998.
(17) Incorporated by reference to Amendment No. 5 to the Registration Statement
     of Fox Entertainment Group, Inc. on Form S-1 (Registration No. 333-61515)
     filed with the Securities and Exchange Commission on November 9, 1998.
(18) Incorporated by reference to Amendment No. 1 to the Registration Statement
     of NWCG Holdings Corporation on Form S-1 (Registration No. 33-82274) filed
     with the Securities and Exchange Commission on October 18, 1994.



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