Twenty-First Century Fox 2005 Annual Report Download - page 102

NEWS CORPORATION
Notes to the Consolidated Financial Statements (continued)
Approximately 17 purported class action complaints were filed in January 2005 at the Court of Chancery of the State of Delaware
challenging the FEG Offer. The Delaware complaints are captioned: Allen v. News Corp., et al. , No. 979-N; Mascarenhas v. Fox Entm’t. Group,
et al.
, No. 980-N; Shemesh v. Fox Entm’t. Group, et al. , No. 981-N; Striffler v. FEG Holdings, et al. , No. 982-N; Howard Vogel Ret. Plan v.
Powers, et al.
, No. 984-N; Doniger v. News Corp., et al. , No. 985-N; Engle v. Murdoch, et al. , No. 986-N; Shrank v. Murdoch, et al. , No. 988-N;
Blackman v. Fox Entm’t. Group, et al. , No. 991-N; Fishbone v. News Corp., et al. , No. 994-N; Kennel v. News Corp., et al. , No. 995-N; Millner v.
News Corp., et al.
, No. 996-N; Pipefitters Locals v. Fox Entm’t. Group, et al. , No. 1003-N; Molinari v. News Corp., et al. , C.A. No. 1018-N;
Seaview Services v. Fox Entertainment, et al. , C.A. No. 1026-N; Teachers’ Retirement System of Louisiana v. Powers, et al. , C.A. No. 1033-N;
and New Jersey Building Laborers’ Pension Fund v. Powers, et al. , C.A. No. 1034. The Shrank action, No. 988-N, was voluntarily dismissed on
January 19, 2005. News Corporation is also currently aware of two purported class action complaints raising substantially similar claims that
have been filed in the Supreme Court of the State of New York, County of New York, and one that has been filed in the United States District
Court for the Southern District of New York (the “Southern District of New York Complaint”), which were filed in January 2005. The New York
complaints are captioned: Shrank v. Murdoch, et al. , Index No. 600114/2005; and Green Meadows Ptr. v. Fox Entertainment, et al. , No.
100706/2005. The Southern District of New York Complaint is captioned Gary Kosseff v. Fox Entertainment Group, Inc., et. al. , No. 05 Civ.
1942 (LLS). On January 21, 2005, certain plaintiffs in the Delaware lawsuits filed a motion that seeks to consolidate the Delaware actions. In
addition, the Company filed motions to dismiss and to stay discovery, and the plaintiffs have filed a motion for expedited proceedings. On
February 3, 2005, the Court of Chancery denied News Corporation’s motion to stay discovery, and granted the plaintiffs’ motion for expedited
discovery and motion to consolidate. The consolidated Delaware complaint was styled In re Fox Entertainment Group, Inc. Shareholders
Litigation
, Consol. C.A. No. 1033-N.
Each of the consolidated Delaware complaints and the New York Supreme Court complaints generally alleges, among other things, that
News Corporation and the members of the FEG Board of Directors purportedly breached fiduciary duties owed to the public stockholders of
FEG in connection with the FEG Offer by: (1) offering to acquire their shares at an unfair price; (2) offering to acquire their shares at a time that
disadvantages the public stockholders; (3) having FEG appoint directors who are neither independent nor disinterested to a special committee
created to consider the FEG Offer; and (4) failing to adequately disclose information material to the FEG Offer, including disclosure with respect
to the FEG 2005 budget. The Southern District of New York Complaint also generally alleges, among other things, some of the foregoing
matters. The plaintiffs filed an amended complaint on February 24, 2005 in the US Southern District of New York alleging violations of the federal
securities laws in addition to the foregoing matters. On February 24, 2005, the US Southern District of New York denied the plaintiffs’ motion for
expedited proceedings.
As for relief, the plaintiffs sought, among other things: (1) an order that the complaints are properly maintainable as a class action; (2) a
declaration that defendants have breached their fiduciary duties and other duties to the plaintiffs and other members of the purported class; (3)
injunctive relief; (4) unspecified monetary damages; (5) attorneys’ fees, costs and expenses; and (6) such other and further relief as the Court
may deem just and proper. News Corporation believes that these claims are without merit and intends to vigorously contest these allegations.
A memorandum of understanding setting forth the terms of a settlement with respect to the aforementioned litigation was entered into by the
plaintiffs and the named defendants as of March 2, 2005. The New York actions were dismissed. On or about June 15, 2005, the parties entered
into a stipulation of settlement in the consolidated Delaware action. In an Order dated June 23, 2005, the Chancellor, among other things, (i)
preliminarily approved the stipulation of settlement; (ii) preliminarily certified the class for settlement purposes; and (iii) set a hearing for
September 19, 2005. Among other conditions, the settlement is subject to final court approval of the settlement and dismissal with prejudice of
the litigation.
Other
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
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