Twenty-First Century Fox 2004 Annual Report Download - page 76

Note 6 Other items (continued)
for the year ended 30 June, 2004. In addition, in December 2003, FEG sold its 50% direct ownership interests in
SportsChannel Chicago Associates (“SportsChannel Chicago”) and SportsChannel Pacific Associates (“SportsChannel Bay
Area”) (collectively the “SportsChannels”) to subsidiaries of Regional Programming Partners (“RPP”) for consideration of
$215 million (US$150 million). This consideration was paid in the form of two three-year promissory notes issued by the
subsidiaries of RPP, which own only the acquired interests in the SportsChannels, in an aggregate principal amount of $215
million (US$150 million) and bearing interest at prime plus 1% per annum. The notes are secured by a pledge of 100% of the
interests in SportsChannel Bay Area. Upon the close of this sale, the SportsChannels are held 100% by RPP and indirectly
60% by Rainbow Media Sports Holdings, Inc. and 40% by FEG. The Group recognised a net gain on the sale of the
SportsChannels of $8 million (US$6 million) for the year ended 30 June 2004. Also during fiscal 2004 the Group sold its 40%
interest in the Staples Center for aggregate consideration of $188 million (US$128 million). The Group has recorded a loss on
the sale of the interest in the Staples Center of approximately $10 million (US$7 million). In connection with the sale of
this interest, the Group was released from several guarantees in the aggregate amount of $32 million (US$22.6 million)
outstanding at the time of the sale.
(c) In October 2001, a subsidiary of the Group, Fox Broadcasting Company, Haim Saban and the other shareholders of Fox
Family Worldwide, Inc (“FFW”), sold FFW to The Walt Disney Company (“Disney”) for total consideration of
approximately $10.3 billion (including the assumption of certain debt), of which approximately $3.2 billion was in
consideration of the Group’s interest in FFW. As a result of this transaction, the Group recognised a gain on sale of
$2,323 million. In addition, the Group sublicensed certain post-season Major League Baseball (“MLB”) games through
the 2006 MLB season to Disney for aggregate consideration of approximately $1.2 billion, payable over the entire period
of the sublicense.
(d) During fiscal 2002, the Group sold its investment in EchoStar Communications Corporation for total consideration of
$1,312 million and recorded a gain on the sale of $468 million.
(e) On 25 July, 2001, as a result of the exercise of rights by existing shareholders, FEG acquired 50.23% of Outdoor Life
Network, LLC (“Outdoor Life”) for approximately $608 million. This acquisition resulted in FEG owning 83.18% of
Outdoor Life. On 23 August, 2001, a shareholder of Outdoor Life exercised its option to acquire FEG’s ownership interest
in Outdoor Life for $977 million in cash. Upon the closing of the sale, the Group recognised a gain of $271 million.
(f) As at 30 June, 2002, the Group owned 175 million shares in Gemstar-TV Guide International Inc. (“Gemstar-TV Guide”)
and recorded a charge to reflect the permanent impairment in carrying value of $11.1 billion. The charge was
determined by reference to Gemstar-TV Guide’s share price at 28 June, 2002 of US$5.39 ($9.56) per share. During fiscal
2003, Gemstar-TV Guide’s market value continued to decline and the Group considered several factors to determine if
an additional charge was required. As a result of this review, the Group recorded a $551 million charge to reduce the
carrying value of the investment in Gemstar-TV Guide to US$3.75 ($6.66) per share to reflect a permanent decline in
value.
(g) In fiscal 2003, the Group recorded an impairment charge of $158 million related to the Group’s carrying value of its
investment in Knowledge Enterprises, Inc. (“Knowledge Enterprises”). The charge was based on Knowledge Enterprises’
recent equity rights offering and reflects the estimated recoverable value of this investment.
(h) On 17 May, 2004, News America Incorporated. (“NAI”), a subsidiary of the Group, terminated its remarketing agreement
with Merrill Lynch, Pierce, Fenner & Smith Incorporated with respect to its US$150 million aggregate principal
amount of the MOPPRSSM due 2034. As a result of the termination, the MOPPRSSM were not remarketed and on 21 May,
2004 NAI purchased the 6.703% MOPPRSSM from the beneficial owners at a price equal to the principal amount plus any
accrued and unpaid interest being $7 million (US$5 million). The Group has recognised a loss of approximately
$18 million (US$13 million) on the early extinguishment of the MOPPRSSM which is included within Other items.
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NEWS CORPORATION CONCISE REPORT 2004
Notes to and forming part of the Concise Financial Report
(continued)
for the year ended 30 June, 2004