Twenty-First Century Fox 2011 Annual Report Download - page 31

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
The Company’s contracts with NASCAR give the Company rights to broadcast certain races and ancillary content through calendar year 2014.
Under the Company’s contracts with certain collegiate conferences, remaining future minimum payments for program rights to broadcast certain sporting events are payable over the
remaining terms of the contracts.
Under the Company’s contract with Italy’s National League Football, remaining future minimum payments for programming rights to broadcast National League Football matches are
payable over the remaining term of the contract through fiscal 2017.
In addition, the Company has certain other local sports broadcasting rights.
(c) Primarily includes obligations relating to third party printing contracts, television rating services and paper purchase obligations.
(d) A joint-venture in which the Company owns a 50% equity interest entered into an agreement for global programming rights. Under the terms of the agreement, the Company and the other
joint-venture partner have jointly guaranteed the programming rights obligation.
(e) In connection with the transaction related to the Dow Jones financial index businesses, the Company agreed to indemnify CME with respect to any payments of principal, premium and
interest CME makes under its guarantee of the venture financing. (See Note 3 to the Consolidated Financial Statements of News Corporation for further discussion of this transaction.)
The table excludes the Company’s pension, other postretirement benefits (“OPEB”) obligations and the gross unrecognized tax benefits for
uncertain tax positions as the Company is unable to reasonably predict the ultimate amount and timing. The Company made contributions of
$158 million and $338 million to its pension plans in fiscal 2011 and fiscal 2010, respectively. The majority of these contributions were
voluntarily made to improve the funding status of the plans. Future plan contributions are dependent upon actual plan asset returns and interest
rates and statutory requirements. Assuming that actual plan asset returns are consistent with the Company’s expected plan returns in fiscal 2011
and beyond, and that interest rates remain constant, the Company would not be required to make any material contributions to its U.S. pension
plans for the immediate future. The Company expects to make a combination of voluntary contributions and statutory contributions of
approximately $50 million to its pension plans in fiscal 2012. Payments due to participants under the Company’s pension plans are primarily paid
out of underlying trusts. Payments due under the Company’s OPEB plans are not required to be funded in advance, but are paid as medical costs
are incurred by covered retiree populations, and are principally dependent upon the future cost of retiree medical benefits under the Company’s
pension plans. The Company expects its net OPEB payments to approximate $18 million in fiscal 2012. (See Note 17 to the Consolidated
Financial Statements of News Corporation for further discussion of the Company’s pension and OPEB plans.)
Contingencies
Other than as disclosed in the notes to the accompanying Consolidated Financial Statements of News Corporation, the Company is party to
several purchase and sale arrangements which become exercisable over the next ten years by the Company or the counter-party to the agreement.
In the next twelve months, none of these arrangements that become exercisable are material. Purchase arrangements that are exercisable by the
counter-party to the agreement, and that are outside the sole control of the Company, are accounted for in accordance with ASC 480-10-S99-3A
“Distinguishing Liabilities from Equity.” Accordingly, the fair values of such purchase arrangements are classified in redeemable noncontrolling
interests.
As disclosed in the notes to the accompanying Consolidated Financial Statements of News Corporation, U.K. and U.S. regulators and
governmental authorities are conducting investigations after allegations of phone hacking and inappropriate payments to police at our former
publication, News of the World, and other related matters, including investigations into whether similar conduct may have occurred at the
Company’s subsidiaries outside of the U.K. The Company is cooperating fully with these investigations. It is possible that these proceedings could
damage our reputation and might impair our ability to conduct our business.
The Company is not able to predict the ultimate outcome or cost associated with these investigations. Violations of law may result in civil,
administrative or criminal fines or penalties. The Company has admitted liability in a number of civil cases related to the phone hacking
allegations and has settled a number of cases. At June 30, 2011, the Company has provided for its best estimate of the liability for the claims that
have been filed. The Company has announced a process under which parties can pursue claims against the Company, and management believes
that it is probable that additional claims will be filed. It is not possible to estimate the liability for such additional claims given the early stage of
this matter and the information that is currently available to the Company. If more claims are filed and additional information becomes available,
the Company will update the provision for such matters. Any fees, expenses, fines, penalties, judgments or settlements which might be incurred by
the Company in connection with the various proceedings could affect the Company’s results of operations and financial condition.
The Company’s operations are subject to tax in various domestic and international jurisdictions and as a matter of course, the Company is
regularly audited by federal, state and foreign tax authorities. The Company believes it has appropriately accrued for the expected outcome of all
pending tax matters and does not currently anticipate that the ultimate resolution of pending tax matters will have a material adverse effect on its
consolidated financial condition, future results of operations or liquidity.
Critical Accounting Policies
An accounting policy is considered to be critical if it is important to the Company’s financial condition and results and if it requires significant
judgment and estimates on the part of management in its application. The development and selection of these critical accounting policies have been
determined by management of the Company and the related disclosures have been reviewed with the Audit Committee of the Company’s Board of
Directors. For the Company’s summary of significant accounting policies, see Note 2 to the Consolidated Financial Statements of News
Corporation.
2011 Annual Report 29