Twenty-First Century Fox 2008 Annual Report Download - page 96

NEWSCORP
Notes to the Consolidated Financial Statements (continued)
In June 2008, the Company sold a parcel of land it owned in the United Kingdom, for total consideration of $163 million. The consideration at
closing was comprised of $91 million in cash and a $72 million note, secured by the land, payable in three equal annual installment commencing in
June 2009. The Company recorded a pre-tax gain of $126 million on the transaction which is included in Other operating (income) charges in the
consolidated statements of operations for the fiscal year ended June 30, 2008.
Share Exchange Agreement
In February 2008, the Company closed the transactions contemplated by the share exchange agreement (the “Share Exchange Agreement”) with
Liberty Media Corporation (“Liberty”). Pursuant to the terms of the Share Exchange Agreement, Liberty exchanged its entire interest in the
Company’s common stock (approximately 325 million shares of Class A Common Stock and 188 million shares of News Corporation Class B
Common Stock) for 100% of the stock of a wholly-owned subsidiary, whose holdings consisted of the Company’s approximate 41% interest
(approximately 470 million shares) in The DIRECTV Group, Inc. (“DIRECTV”) constituting the Company’s entire interest in DIRECTV, three of the
Company’s Regional Sports Networks (FSN Northwest, FSN Pittsburgh and FSN Rocky Mountain) (the “Three RSNs”) and approximately $625
million in cash (the “Exchange”). The Exchange resulted in the divestiture of the Company’s entire interest in DIRECTV, and the Three RSNs to
Liberty. The consideration was negotiated between the parties and the Share Exchange Agreement was approved by the disinterested
stockholders of the Company. A tax-free gain of $1.7 billion on the Exchange was recognized in Other, net in the consolidated statements of
operations in fiscal 2008. Upon closing of the Share Exchange Agreement, the Company entered into a non-competition agreement with DIRECTV
and non-competition agreements with each of the Three RSNs, in each case, restricting its right to compete for a period of four years with
DIRECTV and the Three RSNs in the respective regions in which such entities were operating on the closing date of the Share Exchange Agreement.
Other Transactions
In November 2007, Dow Jones announced that it would explore strategic alternatives for the Ottaway Community Newspapers (the “Ottaway
Newspapers”), which the Company acquired as part of the Dow Jones transaction. In June 2008, the Company determined that it would not sell the
Ottaway Newspapers.
In June 2008, the Company announced that it and two newly incorporated companies formed by funds advised by Permira Advisers LLP (“the
Permira Newcos”) proposed a transaction to an independent committee of the NDS board of directors, which would result in NDS ceasing to be a
public company, and the Permira Newcos and the Company owning 51% and 49% of NDS’ outstanding equity, respectively. On August 5, 2008,
NDS announced that the independent committee reached an agreement in principle with the Company and the Permira Newcos on a price at which
they would acquire all the issued and outstanding NDS Series A ordinary shares, including those represented by American Depositary Shares traded
on NASDAQ, for per share consideration of $63 in cash. (See Note 23—Subsequent Events for further details)
Fiscal 2007 Transactions
Acquisitions
In November 2006, the Company, together with a local Turkish partner, acquired TGRT (now called “FOX TV”), a national general interest
free-to-air broadcast television station in Turkey. The Company acquired its interest for approximately $103 million in cash plus acquisition related
costs.
In December 2006, NDS, an indirect majority owned subsidiary of the Company, acquired Jungo Limited (“Jungo”), a developer and supplier of
software for use in residential gateway devices, for approximately $91 million.
In January 2007, the Company and VeriSign, Inc. (“VeriSign”) formed a joint venture to provide entertainment content for mobile devices. The
Company paid approximately $190 million for a controlling interest in VeriSign’s wholly owned subsidiary, Jamba, which was combined with certain
of the Company’s FOX Mobile Entertainment assets. The results of the joint venture have been included in the Company’s consolidated results of
operations since January 2007. The Company and VeriSign have various put and call rights related to VeriSign’s ownership interests, including
VeriSign’s right to put its interest in the joint venture to the Company for $150 million and $350 million in fiscal 2010 and fiscal 2012, respectively.
The Company accounts for the VeriSign put rights in accordance with Emerging Issues Task Force (“EITF”) Topic No. D-98, “Classification and
Measurement of Redeemable Securities” (“EITF D-98”) because their exercise is outside the control of the Company and, accordingly, as of
June 30, 2008, has reflected the accreted value of the put right in minority interest in subsidiaries in its consolidated balance sheet. The accreted
value of VeriSign’s put right was determined by using the interest method and accreting the minority interest balance up to the fixed price put
amount in fiscal 2010 and fiscal 2012. At June 30, 2008, the accreted value of VeriSign’s put right was determined using an annual interest rate of
12%.
In March 2007, the Company acquired Strategic Data Corporation (“SDC”), a developer of technology that allows websites to target
advertisements to specific audiences. The Company acquired SDC for a total purchase price of $50 million, of which $40 million was in cash and
$10 million in deferred consideration which was paid during the third quarter of fiscal 2008. The Company may be required to pay up to an
additional $310 million through fiscal 2010 contingent upon SDC achieving specified advertising rate growth in future periods.
In April 2007, the Company completed its acquisition of Federal Publishing Company’s (“FPC”) magazines, newspapers and online properties
in Australia from F Hannan Pty Limited for approximately $393 million.
The aforementioned acquisitions were all accounted for in accordance with SFAS No. 141, “Business Combinations” (“SFAS 141”).
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