Twenty-First Century Fox 2014 Annual Report Download - page 38

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xan acquisition of a business or assets with equity securities to the extent one or more persons would
acquire in excess of a specified percentage of our common stock
These restrictions may limit our ability to pursue strategic transactions or engage in new business or other
transactions that may maximize the value of our business.
The Separation and Distribution Agreement May Restrict Us From Acquiring or Owning Certain Types of Assets in
the U.S.
The FCC has promulgated certain rules and regulations that limit the ownership of radio and television
broadcast stations, television broadcast networks and newspapers (the “Broadcast Ownership Rules”). Under the
FCC’s rules for determining ownership of the media assets described above, the Murdoch Family Trust’s ownership
interest in both News Corp and the Company following the Separation would generally result in each company’s
businesses and assets being attributable to the Murdoch Family Trust for purposes of determining compliance with
the Broadcast Ownership Rules. Consequently, our future conduct, including the acquisition of any broadcast
networks, or stations or any newspapers, in the same local markets in which News Corp owns or operates
newspapers or has acquired television stations, may affect News Corp’s ability to own and operate its newspapers or
any television stations it acquires or otherwise comply with the Broadcast Ownership Rules. Therefore, we and
News Corp agreed in the Separation and Distribution Agreement that if the Company acquires, after the Separation,
newspapers, radio or television broadcast stations or television broadcast networks in the U.S. and such acquisition
would impede or be reasonably likely to impede News Corp’s business, then the Company will be required to take
certain actions, including divesting assets, in order to permit News Corp to hold its media interests and to comply
with such rules. This agreement will effectively limit the activities or strategic business alternatives available to us if
such activities or strategic business alternatives implicate the Broadcast Ownership Rules and would impede or be
reasonably likely to impede News Corp’s business.
The Indemnification Arrangements We Entered Into With News Corp in Connection With the Separation May
Require Us to Divert Cash to Satisfy Indemnification Obligations to News Corp.
Pursuant to the Separation and Distribution Agreement and certain other related agreements, the Company
agreed to indemnify News Corp for certain liabilities and News Corp agreed to indemnify the Company for certain
liabilities. As a result, we could be required, under certain circumstances, to indemnify News Corp against certain
liabilities to the extent such liabilities result from an action we or our affiliates take or from any breach of our or our
affiliates’ representations, covenants or obligations under the Separation and Distribution Agreement, tax sharing
and indemnification agreement or any other agreement entered into in connection with the Separation.
Certain of Our Directors and Officers May Have Actual or Potential Conflicts of Interest Because of Their Equity
Ownership in News Corp, and Certain of Our Officers and Directors May Have Actual or Potential Conflicts of
Interest Because They Also Serve as Officers and/or on the Board of Directors of News Corp.
Certain of our directors and executive officers own shares of News Corp’s common stock, and the individual
holdings may be significant for some of these individuals compared to their total assets. In addition, certain of our
officers and directors also serve as officers and/or as directors of News Corp, including our Chairman and Chief
Executive Officer K. Rupert Murdoch, who serves as News Corp’s Executive Chairman, our Non-Executive Co-
Chairman Lachlan K. Murdoch, who serves as News Corp’s Non-Executive Co-Chairman and our Group General
Counsel Gerson Zweifach, who serves as News Corp’s General Counsel. This ownership or service to both
companies may create, or may create the appearance of, conflicts of interest when these directors and officers are
faced with decisions that could have different implications for News Corp and us.
For example, potential conflicts of interest could arise in connection with the resolution of any dispute that
may arise between News Corp and us regarding the terms of the agreements governing the internal reorganization,
the distribution and the relationship thereafter between the companies, including with respect to the indemnification
of certain matters. In addition to any other arrangements that the Company and News Corp may agree to implement,
the Company and News Corp agreed that officers and directors who serve at both companies will recuse themselves
from decisions where conflicts arise due to their positions at both companies.