Twenty-First Century Fox 2011 Annual Report Download - page 51

Notes to the Consolidated Financial Statements (continued)
NOTE 3. Acquisitions, Disposals and Other Transactions
Fiscal 2011 Transactions
During the first quarter of fiscal 2011, the Company acquired an additional interest in Asianet Communications Limited (“Asianet”), an Asian
general entertainment television joint venture, for approximately $92 million in cash. As a result of this transaction, the Company increased its
interest in Asianet to 75% from the 51% it owned at June 30, 2010.
In November 2010, the Company formed a joint venture with China Media Capital (“CMC”), a media investment fund in China, to explore
new growth opportunities. The Company transferred the equity and related assets of its STAR China business along with the Fortune Star Chinese
movie library with a combined market value of approximately $140 million and CMC paid cash of approximately $74 million to the Company.
Following this transaction, CMC holds a 53% controlling stake in the joint venture and the Company holds a 47% stake. The Company’s interest
in the joint venture was recorded at fair value of $66 million, which was determined using a discounted cash flow valuation method and is now
accounted for under the equity method of accounting. The Company recorded a gain on this transaction of $55 million, which was included in
Other, net in the consolidated statements of operations for the fiscal year ended June 30, 2011.
In December 2010, the Company disposed of the Fox Mobile Group (“Fox Mobile”) and recorded a loss of approximately $29 million on the
disposition which was included in Other, net in the consolidated statements of operations for the fiscal year ended June 30, 2011. The net income,
assets, liabilities and cash flow attributable to the Fox Mobile operations are not material to the Company in any of the periods presented and,
accordingly, have not been presented separately.
In fiscal 2011, the Company acquired Wireless Generation, an education technology company, for cash. Total consideration was
approximately $390 million, which included the equity purchase price and the repayment of Wireless Generation’s outstanding debt.
In April 2011, the Company acquired Shine Limited (“Shine”), an international television production company, for cash. The total
consideration for this acquisition included (i) approximately $480 million for the acquisition of the equity, of which approximately $60 million
has been set aside in escrow to satisfy any indemnification obligations, (ii) the repayment of Shine’s outstanding debt of approximately $135
million and (iii) net liabilities assumed. Elisabeth Murdoch, Chairman and Chief Executive Officer of Shine, and daughter of Mr. K. R. Murdoch
and sister of Messrs. Lachlan and James Murdoch, received approximately $214 million in cash at closing in consideration for her majority
ownership interest in Shine, and is entitled to her proportionate share of amounts that are released from escrow.
The aforementioned acquisitions were all accounted for in accordance with ASC 805, “Business Combinations” (“ASC 805”). In accordance
with ASC 350, the excess purchase price that has been allocated or has been preliminarily allocated to goodwill is not being amortized for all of
the acquisitions noted above. Where the allocation of the excess purchase price is not final, the amount allocated to goodwill is subject to change
upon completion of final valuations of certain assets and liabilities. A future reduction in goodwill for additional value to be assigned to
identifiable finite-lived intangible assets or tangible assets could reduce future earnings as a result of additional amortization.
In June 2011, the Company transferred the equity and related assets of Myspace to a digital media company in exchange for an equity interest
in the acquirer. As a result of this transaction, the Company’s interest in the acquirer, which is not material, was recorded at fair value and is now
accounted for under the cost method of accounting. The loss on this transaction was approximately $254 million, net of tax of $61 million, or
($0.10) per diluted share and was included in Loss on disposition of discontinued operations, net of tax in the consolidated statements of
operations for the fiscal year ended June 30, 2011. The assets, liabilities and cash flows attributable to the Myspace operations were not material
to the Company in any of the periods presented and, accordingly, have not been presented separately. Revenues and operating loss attributable to
Myspace for the fiscal years ended June 30, 2011, 2010 and 2009 were as follows:
2011 2010 2009
For the years ended June 30, (in millions)
Revenues $ 108 $397 $605
Operating loss $(228) $ (84) $ (2)
Fiscal 2010 Transactions
During fiscal year 2010, the Company completed two transactions related to its financial indexes businesses:
The Company sold its 33% interest in STOXX AG (“STOXX”), a European market index provider, to its partners, Deutsche Börse AG and
SIX Group AG, for approximately $300 million in cash. The Company was entitled to receive additional consideration if STOXX achieved certain
revenue targets in calendar year 2010. These revenue targets were met and in June 2011, the Company received additional consideration of
approximately $43 million which was included in Other, net in the consolidated statements of operations for the fiscal year ended June 30, 2011.
The Company and CME Group Inc. (“CME”) formed a joint venture to operate a global financial index service business (the “Venture”), to
which the Company contributed its Dow Jones Indexes business valued at $675 million. This represents the estimated exit price to sell the asset
group based upon a third party valuation considering offers received from market participants interested in purchasing the business at $675
million (which included the Company’s agreement to provide to the Venture an annual media credit for advertising on the Company’s Dow Jones
media properties averaging approximately $3.5 million a year for a ten year term). CME contributed a business to the Venture which provides
certain market data services valued at $608 million. The Company and CME own 10% and 90% of the Venture, respectively. The Venture issued
approximately $613 million in third-party debt due in March 2018 that has been guaranteed by CME (the “Venture Financing”). The Venture
used the proceeds from the debt issuance to make a special distribution at the time of the closing of approximately $600 million solely to the
Company. The Company agreed to indemnify CME with respect to any payments of principal, premium and interest that CME makes under its
guarantee of the Venture Financing and certain refinancing of such debt. In the event the Company is required to perform under this indemnity,
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