Twenty-First Century Fox 2013 Annual Report Download - page 138

TWENTY-FIRST CENTURY FOX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
engage in a cover up; and against James Murdoch for breach of fiduciary duty for allegedly engaging in a cover
up related to the NoW Matter. The class action claim asserted in the Second Amended Complaint pertaining to
the buyback of Common B shares and the relief related to that claim was removed. The Third Amended
Complaint sought a declaration that the defendants violated their fiduciary duties, damages, pre- and post-
judgment interest, fees and costs.
On July 18, 2012, the defendants renewed their postponed motion to dismiss in the Consolidated Action,
and in support thereof, they filed supplemental briefing directed towards the allegations of the Third Amended
Complaint. Plaintiffs’ response was filed on August 8, 2012. A hearing on the fully briefed motion was held in
Chancery Court on September 19, 2012. The Court reserved decision.
On April 17, 2013, the parties reached an agreement in principle to settle the Consolidated Action. Pursuant
to the terms of that settlement, the parties agreed that the director defendants in the Consolidated Action would
cause to be paid on their behalf the amount of $139 million to the Company, minus any attorneys’ fees and
expenses awarded by the Court to the plaintiffs’ counsel. Such amount is to be paid from an escrow account
created for the benefit of the director defendants pursuant to an agreement reached between the defendants and
their directors’ and officers’ liability insurers for the payment of insurance proceeds, subject to a claims release.
In addition to the payment to the Company, the settlement contemplates that the Company will build on
corporate governance and compliance enhancements which the Company has implemented in the past year.
These shall remain in effect at least through December 31, 2016, and will be applicable to both the Company and
News Corp. The Memorandum of Understanding related to the settlement was filed with the Court, and on
May 3, 2013, the Stipulation of Settlement was filed with the Court. On May 6, 2013, the Court entered a
Scheduling Order, which, among other things, set the settlement hearing for June 26, 2013 (the “Settlement
Hearing”), and approved the form of Notice of Pendency of Derivative Action, Proposed Settlement of
Derivative Action, Settlement Hearing, and Right to Appear, which was distributed to holders of the Company’s
common stock in accordance with the Scheduling Order.
At the Settlement Hearing, the Court approved the settlement and entered a final judgment dismissing the
Consolidated Action. In connection therewith, the Court approved an attorneys’ fee award to plaintiffs’ counsel
of $28 million, payable from the $139 million settlement proceeds to be received by the Company. No
stockholder objected to either the settlement or the proposed fee award. The settlement became effective on
August 16, 2013, because as of that date, the dismissal of the Consolidated Action as well as the dismissals of
each of the Shields Litigation, the Iron Workers Litigation and the Stricklin Litigation (each as described below
under the heading “Shareholder Litigation—Southern District of New York”) were no longer subject to appeal,
and accordingly no amount has been recorded for this contingent asset in the consolidated balance sheets.
On May 30, 2012, a purported stockholder of the Company filed a class action lawsuit in the Delaware
Court of Chancery on behalf of all non-U.S. stockholders of the Company’s Class B shares, captioned Första
Ap-Fonden v. News Corporation, et al. The plaintiff alleged that, by temporarily suspending 50% of the voting
rights of the Class B shares held by non-U.S. stockholders to remain in compliance with U.S. governing
broadcast licenses (the “Suspension”), the Company and the Board violated the Company’s charter and the
General Corporation Law of the State of Delaware (“DGCL”) and the directors breached their fiduciary duties,
both in approving the Suspension and in failing to monitor the Company’s ownership by non-U.S.
stockholders. The complaint named as defendants the Company and all directors of the Company at the time of
the Suspension. The complaint sought a declaration that the defendants violated the Company’s charter and the
DGCL, a declaration that the directors breached their fiduciary duties, a declaration that the Suspension is invalid
and unenforceable, an injunction of the Suspension, damages, fees, and costs. On June 11, 2012, the defendants
filed an opening brief in support of a motion to dismiss the complaint in its entirety. On August 2, 2012, the
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