Twenty-First Century Fox 2006 Annual Report Download - page 81

News Corporation
Notes totheConsolidated Financial Statements (CONTINUED)
In November 2005, the FASB issued FASB Staff Position (“FSP”) FAS 115-1 and FAS 124-1, “The Meaning of Other-Than-
Temporary Impairment and Its Application to Certain Investments” (“FSP 115-1 and 124-1”), which addresses the determi-
nation as to when an investment is considered impaired, whether that impairment is other-than-temporary and the
measurement of an impairmentloss. FSP 115-1 and 124-1 also includes accounting considerations subsequent totherecog-
nition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been
recognized as other-than-temporary impairments. The guidance in FSP 115-1 and 124-1 amends FASB Statement No. 115,
“Accounting for Certain Investments in Debt and Equity Securities,” and Accounting Principles Board (“APB”) Opinion
No. 18, “The Equity Method of Accounting for Investments in Common Stock.” FSP 115-1 and 124-1 was effective for
reporting periods beginning after December 15, 2005. The adoption of FSP 115-1 and 124-1 did not have amaterial impact
on the Companies consolidated financial statements.
In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Instruments” (“SFAS No. 155”). SFAS
No. 155 amends SFAS No. 133 and SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities.” SFAS No. 155, among other things: permits the fair value remeasurement of any hybrid
financial instrument that contains an embedded derivative that otherwise would require bifurcation; clarifies which
interest-only strips and principal-only strips are not subject totherequirements of SFAS No. 133; and establishes arequire-
ment toevaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are
hybrid financial instruments that contain an embedded derivative requiring bifurcation. SFAS No. 155 is effective for all
financial instruments acquired or issued in fiscal years beginning after September 15, 2006. SFAS No. 155 is not expected to
have amaterial impact on the Company’s consolidated financial statements.
In June2006, the FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB State-
ment No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxesrecognized in accordance with
SFAS No. 109 and prescribes arecognition threshold and measurement attribute for the financial statement recognition and
measurement of ataxposition taken or expected to be taken in ataxreturn. FIN 48 also provides guidance on der-
ecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 will
become effective for the Company beginning in fiscal 2008. The Company is currently evaluating what effect the adoption
of FIN 48 will have on the Company’s future results of operations and financial condition.
NOTE 3. ACQUISITIONS AND DISPOSALS
Fiscal 2006 Acquisitions
In September 2005, the Company acquired the 25% stake in News Out of Home (“NOOH”) that it did not own from Capi-
tal International Global Emerging Markets Private Equity Fund, L.P. for approximately $175 million in cash. This acquis-
ition increased the Company’s ownership of NOOH to 100%. The excess purchase price over the fair value of the net assets
acquired of approximately $133 million has been preliminarily allocated to certain identifiable indefinite-lived intangible
assets, which in accordance with SFAS No. 142 are not being amortized. The allocation of the excess purchase price is not
final and is subject tochanges upon completion of final valuations of certain assets and liabilities.
In order to increase the Company’s Internet presence, the Company purchased several Internet companies during Sep-
tember and October 2005 through its recently formed Fox Interactive Media (“FIM”) division. The amount of goodwill
resulting from Internet acquisitions during the year ended June 30, 2006 was approximately $1.3 billion andprimarily
related to the following fiscal 2006 transactions:
In September 2005, the Company acquired all of the outstanding common and preferred stock of Intermix Media,
Inc. (“Intermix”) for approximately $580 million in cash. Under an existingstockholders’ agreement between Intermix,
MySpace, Inc. (“MySpace”), an Internet entertainment company, and certain other stockholders of MySpace, Intermix
exercised its option in July 2005 to acquire the outstanding 47% equity interest of MySpace that it did not already own
for approximately $70 million in cash which closed in October 2005. This transaction increased Intermix’s ownership
in MySpace to 100%. In arelated intercompany restructuring, the Company issued approximately 35 million shares of
Class ACommon Stock, which are considered treasury shares, to one of its subsidiaries, and, as aresult, had no impact
on the Company’s outstanding shares. The excess purchase price over the fair value of the net assetsacquired from
Intermix was approximately $644 million, of which $565 million has been preliminarily allocated to goodwill, with
the remaining $79 million allocated to definite-lived intangible assets.
In September 2005, the Company acquired Scout Media, Inc., the parent company of Scout.com, the country’s lead-
ing independent online sports network, and Scout Publishing, producer of widely read local sports magazines in the
United States, for approximately $60 million, substantially all of which has been preliminarily allocated to goodwill.
In October 2005, the Company acquired IGN Entertainment, Inc., a leading community-based Internet media and
services company for video games and other forms of digital entertainment, for approximately $620 million in cash
and approximately $30 million to be paid in cash pending the satisfaction of certain conditions. The excess purchase
price overthefair value of the net assetsacquired including acquisition related costs was approximately $624 million,
of which $554 million has been preliminarily allocated to goodwill, with the remaining $70 million allocated to
definite-lived intangible assets.
ANNUAL REPORT 81