Twenty-First Century Fox 2008 Annual Report Download - page 95

NEWSCORP
Notes to the Consolidated Financial Statements (continued)
The unaudited pro forma data is provided for informational purposes only. The pro forma information is not necessarily indicative of the
results that would have been obtained had the acquisition been completed at the dates indicated. In addition, the unaudited pro forma data does
not purport to project the future financial position or operating results of the Company and Dow Jones.
Under the purchase method of accounting, the total purchase price is allocated to Dow Jones net tangible and intangible assets based upon
Dow Jones’ estimated fair value as of the date of completion of the acquisition. Based upon the purchase price and the valuation performed, the
preliminary purchase price allocation, which is subject to change based on the Company’s final analysis, is as follows (in millions):
Assets acquired:
Current assets $ 339
Property, plant and equipment 582
Other assets 52
Intangible assets 2,397
Goodwill 4,193
Total assets acquired $7,563
Liabilities assumed:
Current liabilities $ 560
Deferred income taxes 676
Deferred revenue 227
Other liabilities 408
Borrowings 378
Total liabilities assumed 2,249
Minority interest in subsidiaries 165
Net assets acquired $ 5,149
The Company has not finalized the detailed valuation studies necessary to arrive at the required estimates of the fair market value of the
Dow Jones assets acquired and the liabilities assumed and the related allocations of purchase price. The Company allocated, on a preliminary basis,
approximately $800 million to amortizable intangible assets primarily consisting of subscriber relationship intangible assets. The pattern of
economic benefits to be derived from certain amortizable intangible assets is estimated to be greater in the initial period of ownership;
accordingly, amortization expense is recognized on an accelerated basis over the weighted-average useful life of 25 years. The Company also
allocated, on a preliminary basis, approximately $1,600 million to trade names, which will not be amortized as they have an indefinite remaining
useful life based primarily on their market position and the Company’s plans for continued indefinite use. Further, approximately $4,200 million
was preliminarily allocated to goodwill, which represents the excess of the purchase price over the fair value of the net tangible and intangible
assets acquired. The goodwill is not being amortized in accordance with SFAS No. 142 and is not deductible for tax purposes. The preliminary
allocation of Goodwill is included in the Other segment until the final valuation is complete. The amount of goodwill assumed will change
depending on the fair values allocated to the tangible and intangible assets and liabilities acquired. For every $25 million reduction in goodwill for
additional value to be assigned to identifiable finite-lived intangible assets or tangible assets, Depreciation and amortization expense would
increase by approximately $1 million per fiscal year, representing amortization expense assuming an average useful life of 25 years.
Actual allocations may differ from these once the Company has completed the valuation studies necessary to finalize the required purchase
price allocations. There can be no assurance that this finalization will not result in material changes to the purchase price allocation above.
As a result of the Dow Jones acquisition, the Company established and approved plans to integrate the acquired operations into the
Company’s Newspapers and Information Services segment, for which the Company preliminarily recorded approximately $180 million in accrued
liabilities of which $30 million has been paid. These purchase accounting adjustments consist of separation payments for certain Dow Jones
executives under the change in control plan Dow Jones had previously established, non-cancelable lease commitments and lease termination
charges for leased facilities that will be exited and other contract termination costs associated with the restructuring activities. The finalization of
certain of these actions could result in changes in the accrual amount.
Disposals
In December 2007, Fox Television Stations, Inc., a Delaware corporation and a wholly owned subsidiary of the Company and FoxCo Acquisition Sub,
LLC, a Delaware limited liability company and an indirect, wholly owned subsidiary of Oak Hill Capital Partners III, L.P. (“Oak Hill Capital”), entered
into a Stock and Asset Purchase Agreement (the “Purchase Agreement”), pursuant to which the Company agreed to sell eight of its
owned-and-operated FOX network affiliated television stations to Oak Hill Capital for approximately $1.1 billion in cash. The Stations include: WJW
in Cleveland, OH; KDVR in Denver, CO; KTVI in St. Louis, MO; WDAF in Kansas City, MO; WITI in Milwaukee, WI; KSTU in Salt Lake City, UT; WBRC
in Birmingham, AL; and WGHP in Greensboro, NC. The transaction closed in July 2008.
94 NEWSCORP 2008 Annual Report