Twenty-First Century Fox 2007 Annual Report Download - page 44

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
on providing platform operators and content providers with technology to help them profit from the secure distribution of digital
information and entertainment to consumer devices which incorporate various technologies supplied by NDS.
News Outdoor
The Company sells, through its News Outdoor businesses, outdoor advertising space on various media, primarily in Russia and East-
ern Europe.
FIM
The Company sells, through its FIM division, advertising, sponsorships and subscription services on the Company’s various Internet
properties. The Company’s Internet properties include the social networking site MySpace.com, IGN.com, AmericanIdol.com,
Scout.com and Foxsports.com. The Company also has a distribution agreement with Microsoft’s MSN for Foxsports.com.
Other Business Developments
In August 2006, the Company announced that its FIM division entered into a multi-year search technology and services agreement
with Google, Inc. (“Google”), pursuant to which Google is the exclusive search and keyword-targeted advertising sales provider for
a majority of FIM’s web properties. Under the terms of the agreement, Google is obligated to make guaranteed minimum revenue
share payments to FIM of $900 million, of which the $50 million that was due was paid as of June 30, 2007. These guaranteed
minimum revenue share payments, which are based on FIM’s achievement of certain traffic and other commitments, are expected
to be made through the second quarter of calendar 2010.
On December 22, 2006, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Lib-
erty Media Corporation (“Liberty”). Under the terms of the Share Exchange Agreement, Liberty will exchange its entire interest in
the Company’s common stock (approximately 325 million shares of Class A Common Stock and 188 million shares of Class B
Common Stock) for 100% of a News Corporation subsidiary (“Splitco”), whose holdings will consist of an approximately 39% inter-
est (approximately 470 million shares) in The DIRECTV Group, Inc. (“DIRECTV”) constituting the Company’s entire interest in
DIRECTV, three of the Company’s RSNs (FSN Northwest, FSN Pittsburgh and FSN Rocky Mountain (the “Three RSNs”)) and
$588 million in cash, subject to adjustment. The transaction contemplated by the Share Exchange Agreement was approved by the
Class B common stockholders on April 3, 2007, but remains subject to customary closing conditions, including, among other things,
regulatory approvals, the receipt of a ruling from the Internal Revenue Service and the absence of a material adverse effect on Split-
co. If these conditions are satisfied, the transaction is expected to be completed in the fourth quarter of calendar 2007. The Com-
pany will enter into a non-competition agreement with DIRECTV and non-competition agreements with each of the Three RSNs, in
each case, restricting its right to compete for a period of four years with DIRECTV and the Three RSNs in the respective regions in
which such entities are operating on the date the Share Exchange Agreement is consummated.
In January 2007, the Company and VeriSign, Inc. (“VeriSign”) formed a joint venture to provide entertainment content for
mobile devices. The Company paid approximately $190 million for a controlling interest in VeriSign’s wholly-owned subsidiary,
Jamba, which was combined with certain of the Company’s Fox Mobile Entertainment assets. The results of the joint venture have
been included in the Company’s consolidated results of operations since January 2007. The Company and VeriSign have various call
and put rights related to VeriSign’s ownership interest including VeriSign’s right to put its share of the joint venture to the Company
for $150 million and $350 million, in fiscal 2010 and 2012, respectively.
In June 2007, the Company announced its plan to sell nine of its FOX-affiliated television stations. No agreement has yet been
entered into with respect to the sale of any of these stations.
In June 2007, the Company announced that it intends to explore strategic options for News Outdoor in connection with News
Outdoor’s continued development plans. The strategic options include, but are not limited to, exploring the opportunity to expand
News Outdoor’s existing shareholder group through new strategic and private equity partners. No agreement has yet been entered
into with respect to any transaction.
In July 2007, Gemstar-TV Guide International, Inc. (“Gemstar-TV Guide”) announced that its board of directors authorized
Gemstar-TV Guide and its advisors to explore strategic alternatives intended to maximize stockholder value, which may include a
sale of the company. The Company currently holds an approximate 41% interest in Gemstar-TV Guide. For more information on
Gemstar–TV Guide, please see its reports filed with the SEC.
On July 31, 2007, the Company entered into a definitive merger agreement (the “Merger Agreement”) with Dow Jones &
Company (“Dow Jones”), pursuant to which the Company will acquire Dow Jones in a transaction valued at approximately $5.6 bil-
lion. Under the terms of the Merger Agreement, Dow Jones Stockholders will be entitled to receive $60 in cash for each share of
Dow Jones stock they own, and up to 250 holders of record and not more than 10% of the shares of Dow Jones may elect to have
their shares of Dow Jones converted into a number of units of a newly formed subsidiary of the Company (each unit of which will be
exchangeable for one share of the Company’s Class A Common Stock in accordance with the terms and conditions of such sub-
sidiary’s operating agreement). The Merger Agreement is subject to customary closing conditions, including, among other things,
adoption of the Merger Agreement by the affirmative vote of Dow Jones stockholders holding a majority of the voting power of
Dow Jones’ outstanding common stock and Class B common stock voting together, the execution of an editorial agreement, the
establishment by the Company of a special committee as contemplated under such editorial agreement and regulatory approvals.
The transaction is expected to be completed in the fourth quarter of calendar 2007. The Company believes that this acquisition will
position it as a leader in the financial news and information market and will enhance its ability to adapt to future challenges and
opportunities within the Company’s Newspapers segment and across the Company’s other related business segments.
NEWS CORPORATION 2007 Annual Report 43