Twenty-First Century Fox 2008 Annual Report Download - page 97

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NEWSCORP
Notes to the Consolidated Financial Statements (continued)
Other Transactions
In fiscal 2007, the Company restructured the ownership interest in one of its majority-owned Regional Sports Networks (“RSNs”). The minority
shareholder has a put right related to its ownership interest that is currently exercisable and is outside of the control of the Company. The
Company accounts for this put arrangement in accordance with EITF D-98, and, as of June 30, 2008, has included the value of the put right in
minority interest in subsidiaries in the consolidated balance sheet. The fair value of the minority shareholder’s put right was determined by using a
discounted earnings (losses) before interest, taxes, depreciation, and amortization valuation model, assuming a 10% compounded annual growth
rate and an 8% discount rate in fiscal 2008 and a 9% discount rate in fiscal 2007.
The Company previously entered into an agreement with a direct response marketing company that provided the Company with participation
rights if the direct response marketing company is ever sold or consummates certain other strategic transactions. In December 2006, the Company
entered into an agreement to terminate the participation rights for $100 million. This transaction closed in March 2007 and the Company recorded
a gain of approximately $97 million on this transaction which is included in Other, net in the consolidated statements of operations.
Fiscal 2006 Transactions
Acquisitions
In September 2005, the Company acquired the 25% stake in News Out of Home (“NOOH”) that it did not own for approximately $175 million in
cash. This acquisition increased the Company’s ownership of NOOH to 100%.
In order to increase the Company’s Internet presence, the Company purchased several Internet companies during fiscal 2006 through its FIM
division.
In September 2005, the Company acquired all of the outstanding common and preferred stock of Intermix Media, Inc. (“Intermix”) for
approximately $580 million in cash. Under an existing stockholders’ agreement between Intermix, MySpace, Inc. (“MySpace”), an Internet
entertainment company, and certain other stockholders of MySpace, Intermix exercised its option in July 2005 to acquire the outstanding 47%
equity interest of MySpace that it did not already own for approximately $70 million in cash. This transaction, which closed in October 2005,
increased Intermix’s ownership in MySpace to 100%. In a related intercompany restructuring, the Company issued approximately 35 million
shares of Class A Common Stock, which are considered treasury shares, to one of its subsidiaries, and, as a result, had no impact on the
Company’s outstanding shares.
In September 2005, the Company acquired Scout Media, Inc. (“Scout”), the parent company of Scout.com, the country’s leading
independent online sports network, and Scout Publishing, producer of widely read local sports magazines in the United States, for
approximately $60 million.
In October 2005, the Company acquired IGN Entertainment, Inc., a leading community-based Internet media and services company for
video games and other forms of digital entertainment, for approximately $650 million in cash.
In May 2006, the Company acquired a U.S. regional cable sports and entertainment channel in the southeast region for approximately $375
million. This channel has broadcast rights to the National Hockey League’s Atlanta Thrashers and shares broadcast rights to Major League
Baseball’s (“MLB”) Atlanta Braves and the National Basketball Association’s Atlanta Hawks together with one of the Company’s existing regional
sports networks.
The aforementioned acquisitions were all accounted for in accordance with SFAS No. 141.
Disposals
In October 2005, the Company sold its TSL Education Ltd. division (“TSL”), which included The Times Educational Supplement and other
newspapers, magazines, websites and exhibitions aimed at teachers and education professionals in the United Kingdom for cash consideration of
approximately $395 million. In connection with this transaction, the Company recorded a gain of approximately $381 million, net of tax of $0.
In April 2006, the Company sold Sky Radio Limited (“Sky Radio”), a commercial radio station group in the Netherlands and Germany for cash
consideration of approximately $215 million. In connection with this transaction, the Company recorded a gain of approximately $134 million, net
of tax of $0.
Both of these transactions are included in gain on disposition of discontinued operations in the consolidated statements of operations for the
fiscal year ended June 30, 2006. The net income, assets, liabilities and cash flow attributable to the TSL and Sky Radio operations are not material
to the Company in any of the periods presented and accordingly have not been presented separately. There was no provision for income taxes
related to these transactions as any tax due is offset by a release of a valuation allowance that was applied to an existing deferred tax asset
established for capital losses, which because of the sale of TSL and Sky Radio was utilized.
96 NEWSCORP 2008 Annual Report