Twenty-First Century Fox 2007 Annual Report Download - page 80

NEWS CORPORATION
Notes to the Consolidated Financial Statements (continued)
In December 2006, the Company entered into an agreement to terminate the participation rights for $100 million, of which $50
million payments were received by the Company in each of December 2006 and March 2007. This transaction closed in March
2007 and the Company recorded a gain of approximately $97 million on this transaction which is included in Other, net in the
consolidated statements of operations. An additional termination payment of $175 million will be made to the Company by the
direct response marketing company if it is sold prior to March 31, 2008.
In fiscal 2007, the Company restructured the ownership interest in one of its majority-owned Regional Sports Networks
(“RSN”). The minority shareholder has a put right related to their respective ownership interest that is currently exercisable and is
outside of the control of the Company. The Company accounts for this put arrangement in accordance with EITF No. D-98
“Classification and Measurement of Redeemable Securities” (“EITF D-98”), and as of June 30, 2007 has included the value of the put
right in minority interest in subsidiaries in the consolidated balance sheet.
Fiscal 2006 Acquisitions
In September 2005, the Company acquired the 25% stake in News Out of Home (“NOOH”) that it did not own for approximately
$175 million in cash. This acquisition increased the Company’s ownership of NOOH to 100%.
In order to increase the Company’s Internet presence, the Company purchased several Internet companies during fiscal 2006
through its FIM division.
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 existing stockholders’ 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 mil-
lion in cash. This transaction, which closed in October 2005, increased Intermix’s ownership in MySpace to 100%. In a related
intercompany restructuring, the Company issued approximately 35 million shares of Class A Common Stock, which are consid-
ered treasury shares, to one of its subsidiaries, and, as a result, had no impact on the Company’s outstanding shares.
In September 2005, the Company acquired Scout Media, Inc. (“Scout”), the parent company of Scout.com, the country’s
leading independent online sports network, and Scout Publishing, producer of widely read local sports magazines in the United
States, for approximately $60 million.
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 $650 million in cash.
In May 2006, the Company acquired a U.S. regional cable sports and entertainment channel in the southeast region for approx-
imately $375 million. This channel has broadcast rights to the National Hockey League’s Atlanta Thrashers and shares broadcast
rights to Major League Baseball’s (“MLB”) Atlanta Braves and the National Basketball Association’s Atlanta Hawks together with one
of the Company’s existing regional sports networks.
The aforementioned acquisitions were all accounted for in accordance with SFAS No. 141.
Fiscal 2006 Disposals
In October 2005, the Company sold its TSL Education Ltd. division (“TSL”), which included The Times Educational Supplement and
other newspapers, magazines, websites and exhibitions aimed at teachers and education professionals in the United Kingdom for
cash consideration of approximately $395 million. In connection with this transaction, the Company recorded a gain of approx-
imately $381 million, net of tax of $0.
In April 2006, the Company sold Sky Radio Limited (“Sky Radio”), a commercial radio station group in the Netherlands and
Germany for cash consideration of approximately $215 million. In connection with this transaction, the Company recorded a gain of
approximately $134 million, net of tax of $0.
Both of these transactions are included in gain on disposition of discontinued operations in the consolidated statement of oper-
ations for the fiscal year ended June 30, 2006. The net income, assets, liabilities and cash flow attributable to the TSL and Sky Radio
operations are not material to the Company in any of the periods presented and accordingly have not been presented separately.
There was no provision for income taxes related to these transactions as any tax due is offset by a release of a valuation allowance
that was applied to an existing deferred tax asset established for capital losses, which because of the sale of TSL and Sky Radio can
now be utilized.
Fiscal 2005 Transactions
Incorporation in the United States
In April 2004, the Company announced that it would pursue the Reorganization, which would change the Company’s place of
incorporation from Australia to the United States. In August 2004, the Company announced that a special committee of
non-executive Directors and the Board of Directors of the Company had unanimously recommended the proposed Reorganization.
On October 26, 2004, the reorganization was approved by the Company’s stockholders and option holders and on November 3,
2004, the Federal Court of Australia also approved the Reorganization.
On November 12, 2004, the Reorganization was accomplished under Australian law whereby the holders of TNCL’s ordinary
and preferred limited voting ordinary shares, including those ordinary shares and preferred limited voting ordinary shares repre-
sented by American Depositary Receipts (“ADRs”), had their shares cancelled and received in exchange shares of voting and
non-voting common stock of News Corporation at a one-for-two ratio. Reorganization costs expensed during fiscal 2005 amounted
to $49 million and were included in Other operating charges in the Other segment in the consolidated statements of operations.
NEWS CORPORATION 2007 Annual Report 79