Twenty-First Century Fox 2005 Annual Report Download - page 94

NEWS CORPORATION
Notes to the Consolidated Financial Statements (continued)
> Note 10 Film Production Financing
Considering the competitive environment and costs associated with film production, all film studios, including the Company, constantly evaluate
the risks and rewards of film production. Various strategies are used to balance risk with capital needs, including, among other methods, co-
production, contingent profit participations, acquisition of distribution rights only and insurance. Historically, the Company has funded its film
production by borrowing under a commercial paper facility (the “Facility” or “New Millennium”) but in May 2004, the Company ceased utilizing
the Facility. At June 30, 2005 and 2004 total amounts borrowed under the Facility were $0 and $659 million, respectively.
Under the Facility, for the three years ended June 30, 2005, the Company borrowed $0, $479 million and $520 million, respectively, and
repaid $659 million, $556 million and $608 million, respectively.
> Note 11 Shareholders’ Equity
Preferred Stock and Series Common Stock
Under the News Corporation certificate of incorporation, the Board of News Corporation is authorized to issue shares of preferred stock or
series common stock at any time, without stockholder approval, and to determine all the terms of those shares, including the following:
(i) the voting rights, if any, except that the issuance of preferred stock or series common stock which entitles holders thereof to more
than one vote per share requires the affirmative vote of the holders of a majority of the combined voting power of the then outstanding
shares of the Company’s capital stock entitled to vote generally in the election of directors;
(ii) the dividend rate and preferences, if any, which that preferred stock or series common stock will have compared to any other class;
and
(iii) the redemption and liquidation rights and preferences, if any, which that preferred stock or series common stock will have
compared to any other class.
Any decision by the Board to issue preferred stock or series common stock must, however, be taken in accordance with the Board’s
fiduciary duty to act in the best interest of the Company’s shareholders. The Board has designated 9,000,000 shares of preferred stock as
Series A Junior Participating Preferred Stock although none of this stock has been issued.
As of June 30, 2005, there were approximately 50,000 holders of record of shares of Class A Common Stock and 2,000 holders of record
of Class B Common Stock.
Stockholder Rights Plan
In fiscal 2005 the Company’s Board of Directors adopted a stockholder rights plan (the “Rights Plan”).
Under the Rights Plan, each stockholder of record received a distribution of one Right for each share of voting and non-voting common
stock of the Company (the “Rights”).
Initially, the Rights will be represented by the Company’s common stock certificates, will not be traded separately from the common stock
and will not be exercisable.
The Rights will become exercisable only if a person or group obtains ownership (defined to include stock which a person has the right to
acquire, regardless of whether such right is subject to the passage of time or the satisfaction of conditions), or announces a tender offer that
would result in ownership of 15% or more of the Company’s voting common stock, at which time each Right would enable the holder of such
Right to buy additional stock of the Company. Following the acquisition of 15% or more of the Company’s voting common stock, the holders of
Rights (other than the acquiring person or group) will be entitled to purchase from the Company shares of the Company’s voting or non-voting
common stock, as applicable, at half price, and in the event of a subsequent merger or other acquisition of the Company, to buy shares of
common stock of the acquiring entity at half price. The Rights Plan grandfathered holdings of voting common stock and disclosed contracts
permitting the acquisition of voting common stock in each case that existed at the time the Right Plan was adopted, including the then existing
holdings of the Murdoch family and affiliated entities and Liberty Media Corporation (“Liberty”), but any additional acquisitions (subject to a 1%
cushion granted to all exempt holders) by the Murdoch family and its affiliated entities or by Liberty and its affiliated entities would trigger the
Rights. On August 10, 2005, the Company announced that the Board of Directors determined to extend the expiration date of the Rights Plan for
an additional two-year period, expiring in November 2007. Each Right permits the holder to spend $80 for the purchases described above.
>93<