Twenty-First Century Fox 2006 Annual Report Download - page 103

News Corporation
Notes totheConsolidated Financial Statements (CONTINUED)
Central District of California. Sogecable filed an amended complaint on October 9, 2003, which purported to allege claims
for violation of the DMCA and the federal RICO statute. The amended complaint also purported to allege claims for
interference with contract and prospective business advantage. The complaint sought injunctive relief, unspecified
compensatory and exemplary damages and restitution. On December 22, 2003, all of the claims were dismissed by the
court. Sogecable filed asecond amended complaint. NDS filed amotion to dismiss the second amended complaint on
March 31, 2004. On July 23, 2004, the court heard oral argument on the motion andadvised that aformal ruling should be
issued by early August. On August 4, 2004, the court issued an order dismissing the second amended complaint in its
entirety. Sogecable had until October 4, 2004 to file a third amended complaint. On October 1, 2004, Sogecable notified
the court that it would not be filing athird amended complaint, but would appeal the court’s entry of final judgment dis-
missing the suit totheUnited States Ninth Circuit Court of Appeals. Sogecable has filed abrief on appeal, NDS’s opposition
was filed on August 22, 2005, and Sogecable filed its reply on September 6, 2005.
Intermix
FIM Transaction
On August 26, 2005 and August 30, 2005, two purported class action lawsuits captioned, respectively, Ron Sheppard v.
Richard Rosenblatt et. al.,and John Friedmannv.Intermix Media, Inc. et al.,were filedinthe California Superior Court, County
of Los Angeles. Both lawsuits named as defendants all of the then incumbent members of the Intermix Board, including
Mr. Rosenblatt, Intermix’ former Chief Executive Officer, and certain entities affiliated with VantagePoint Venture Partners,
aformer major Intermix stockholder. The complaints alleged that, in pursuingthetransaction whereby Intermix was to be
acquired by FIM (the “FIM Transaction”) and approving the related merger agreement, the director defendants breached
their fiduciaryduties to Intermix stockholders by, among other things, engaging in self-dealingandfailing to obtain the
highest price reasonably available for Intermix and its stockholders. The complaints further alleged that the merger agree-
ment resulted from aflawed process and that the defendants tailored the terms of the merger to advance their own inter-
ests. The FIM Transaction was consummated on September 30, 2005. The Friedmann and Sheppard lawsuits were
subsequently consolidated and, on January 17, 2006, a consolidated amended complaint was filed (the “Intermix Media
Shareholder Litigation”). The plaintiffs in the consolidatedaction are seeking various forms of declaratory relief, damages,
disgorgement and fees and costs. By order of March 20, 2006, the court ordered that substantially identical claims asserted
in a separate state action filed by Brad Greenspan, captioned Greenspan v. Intermix Media, Inc., et al.,be severed and related
to the Intermix Media Shareholder Litigation.Thedefendants have filed demurrers seeking dismissal of all claims in the Inter-
mix Media Shareholder Litigation and the severed Greenspan claims, which were heard by the Court on July 6, 2006. The
Court reserved decision. Intermix believes that the Intermix Media Shareholder Litigation and the severed Greenspan claims are
meritless. Intermix intends to vigorously defend itself and expects that the individual defendants will vigorously defend
themselves against these claims and allegations.
In November 2005, plaintiff in aderivative action captioned LeBoyer v. Greenspan et al. pending against various former
Intermix directors and officers in the United States District Court for the Central District of California, filed aFirst
Amended Class and Derivative Complaint (the “Amended Complaint”). The original derivative action was filed in May
2003 and arose out of Intermix’ restatement of quarterly financial results for its fiscal year ended March 31, 2003. The
plaintiff asserted breach of fiduciary duty and related claims in connection with therestatement. Until the filing of the
Amended Complaint, the action had been stayed by mutual agreement of the partiessince its inception pending determi-
nation of whether plaintiffs in arelated securities class action lawsuit (the “Securities Litigation”) would be able to state a
claim against the defendants. The Securities Litigation was dismissed pursuant to aclass settlement in September 2005. In
addition, a substantially similar derivative action filed in Los Angeles Superior Court was dismissed based on inability of the
plaintiffs to adequately plead demand futility. Plaintiff LeBoyer’s November 2005 Amended Complaint added various
allegations and purported class claims arising out of the FIM Transaction which are substantially similar to those asserted in
the Intermix Media Shareholder Litigation.TheAmended Complaint also adds as defendants the individuals and entities
named in the Intermix Media Shareholder Litigation that were not already defendants in the matter. The plaintiff seeks
unspecified damages, disgorgement, costs and fees. Intermix believes that the plaintiff lacks standing to pursue any claims
in aderivative capacity and that the lawsuit is generally without merit. Intermix intends to vigorously defend itself, and
expects that the individual defendants will vigorously defend themselves in the matter.
On June14,2006, a purported class action lawsuit, captioned Jim Brown v. Brett C. Brewer, et al., was filed against certain
former Intermix directors and officers in the United States District Court for the Central District of California. The plaintiff
asserts claims for alleged violations of Section 14a of the Exchange Act and SEC Rule 14a-9, as well as control person
liability under Section 20a. The plaintiff alleges that certain defendants disseminated false and misleading definitive proxy
statements on two occasions: one on December 30, 2003 in connection with theshareholder vote on January 29, 2004 on
the election of directors and ratification of financing transactions with certain entities of VantagePoint Venture Partners
(“Vantage Point”), aformer large stockholderof Intermix, and another on August 25, 2005 in connection with theshare-
holder vote on the FIM Transaction. The complaint names as defendants certain Vantage Point related entities and the
members of the Intermix Board who were incumbent on the datesofthe respective proxy statements. Intermix is not
named as adefendant, but has certain indemnity obligations to the former officer and director defendants in connection
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