Twenty-First Century Fox 2006 Annual Report Download - page 104

News Corporation
Notes totheConsolidated Financial Statements (CONTINUED)
with these claims and allegations. Intermix believes that the claims are without merit and expects that the individual
defendants will vigorously defend themselves in the matter.
Greenspan Litigation
On February 10, 2005, Brad Greenspan, Intermix’s former Chairman andChief Executive Officer who was asked to resign as
CEO and was removed as Chairman in the fall of 2003, filed aderivative complaint in Los Angeles Superior Court against
Intermix, various of its former directors and officers, VantagePoint and certain of VantagePoint’s principals and affiliates.
The complaint alleged claims of libel and fraud against Intermix and various of its then current and former officers and
directors, claims of intentional interference with contract and prospective economic advantage, unfair competition and
fraud against VantagePoint and certain of its affiliates and principals and claims alleging that Intermix’s forecasts of profit-
ability leading up to its January 2004 annual stockholder meeting and associated proxy contest waged by Mr. Greenspan
were false and misleading. These claims generally related to Intermix’s decision to consummate its Series C Preferred Stock
financing with VantagePoint in October 2003, Mr. Greenspan’s contemporaneous separation from Intermix and matters
arising during the proxy contest. The complaint also alleged that Intermix’s acquisition of the assets of acompany known
as Supernation LLC (“Supernation”) in July 2004 involved breaches of fiduciary duty.Mr.Greenspan sought remittance of
compensation received by the various then currentandformer Intermix director and officer defendants, unspecified dam-
ages, removal of various Intermix directors, disgorgement of unspecified profits, reformation of the Supernation purchase,
punitive damages, fees and costs, injunctive relief and other remedies. Intermix and the other defendants filed motions
challenging the validity of the action andMr.Greenspan’s ability to pursue it. Mr. Greenspan voluntarily dismissed this
action in October 2005.
Prior to dismissing his derivative lawsuit, in August 2005, Mr. Greenspan filed another complaint in Los Angeles
Superior Court against the same defendants. The complaint, for breach of fiduciary duty,included substantially the same
allegations made by Mr. Greenspan in the above-referenced lawsuit. Mr. Greenspan further alleged that defendants’ actions
have, with the FIM Transaction, culminated in the loss of Mr. Greenspan’s interest in Intermix for acash payment allegedly
below its value. On October 31, 2005, the defendants filed motions seeking dismissal of the lawsuit on the grounds that the
complaint fails to state any cause of action. Instead of responding to these motions, Mr. Greenspan filed an amended
complaint on February 21, 2006, in which Mr. Greenspan omitted certain previously named defendants and added two
other former directors as defendants. In this amended complaint, Mr. Greenspan asserts seven causes of action. The first
two causes of action, for intentional interference with prospective economic advantage and violation of California’s Busi-
ness &Professions Code section 17200, generally related to Intermix’ decision to consummate its Series C Preferred Stock
financing with VantagePoint in October 2003 and allege that Mr. Greenspan was “forced” to resign. The third through
sixth causes of action assert various claims for breach of fiduciary duty related to the FIM Transaction and substantially
mirror the allegations in the Intermix Media Shareholder Litigation. By Order of March 20, 2006, the court ordered that Mr.
Greenspan’s claims based on the FIM Transaction be severed from the rest of his complaint and coordinated
with theclaims asserted in the Intermix Media Shareholder Litigation. The seventh cause of action is asserted against
Intermix for indemnification. In his amended complaint, Mr. Greenspan seeks compensatory and consequential damages,
punitive damages, fees and costs, injunctive relief and other remedies. Motions to dismiss the first six causes of action have
been filed. The motions were heard on July 6, 2006, and the court reserved decision. Intermix, as well as News Corporation
with respect to certain claims, is obligated to defend and indemnify the defendants in the matter. Intermix believes that the
claims and allegations in the complaint are without merit and expects that the defendants in the matterwill vigorously
defend themselves.
News America Marketing
On January 18, 2006, Valassis Communications, Inc. (“Valassis”) filed acomplaint against News America Incorporated,
News America Marketing FSI, Inc. and News America Marketing Services, In-Store, Inc. (collectively “News America”) in the
United States District Court for the Eastern District of Michigan. Valassis alleges that News America possesses monopoly
power in aclaimed in-store advertising and promotions market (the “in-store market”) and has used that power to gain an
unfair advantage over Valassis in a purported market for coupons distributed by free standing inserts (“FSIs”). Valassis
alleges that News America has entrenched its monopoly power in the alleged in-store market by entering into exclusive
contracts with retailers. Valassis further alleges that News America has unlawfully bundled the sale of in-store marketing
products with the sale of FSIs and that such bundling constitutes unlawful tying in violation of Sections 1 and 3 of the
Sherman Antitrust Act of 1890, as amended (the “Sherman Act”). Valassis also asserts that News America has violated Sec-
tion 2of the Sherman Act, various state antitrust statutes and has tortiously interfered with Valassis’ actual or expected
business relationships. Valassis’ complaint seeks injunctive relief, damages, fees and costs. On April 20, 2006, News America
moved to dismiss Valassis’ complaint in its entirety for failure to state acause of action. Simultaneously, News America
moved to stay discovery until resolution of the motion to dismiss and the court granted the motion through September
2006. News America believes Valassis’ claims are without merit and intends to vigorously defend itself in this matter.
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