Twenty-First Century Fox 2014 Annual Report Download - page 96

TWENTY-FIRST CENTURY FOX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
90
accounting. The Company’s total investment of $834 million was allocated between tangible and intangible assets in
accordance with ASC 323, “Investments – Equity Investments.”
On February 28, 2014, the Company acquired an additional 31% interest in the YES Network, increasing the
Company’s ownership interest to 80%, for approximately $680 million, net of cash acquired, and subsequent to the
acquisition, the Company has consolidated the balance sheet and operating results of the YES Network, including
$1.7 billion in debt. The remaining 20% of the YES Network not owned by the Company has been recorded at fair
value of approximately $385 million based on the Company’s provisional valuation of the YES Network business
using a market approach (a Level 3 measurement as defined in Note 8 – Fair Value). The carrying amount of the
Company’s previously held equity interest in the YES Network was revalued to its provisional fair value of
approximately $860 million as of the acquisition date. The aggregate excess purchase price has been preliminarily
allocated, based on a provisional valuation of 100% of the YES Network, as follows: approximately $1.7 billion to
intangible assets consisting of MVPD affiliate agreements and relationships with useful lives of 20 years and
advertiser relationships with useful lives of 6 years, and the indefinite-lived YES Network trade name;
approximately $1.7 billion to debt; approximately $1.6 billion representing the goodwill on the transaction; and
other net assets. The goodwill reflects the synergies and increased market penetration expected from combining the
operations of the YES Network and the Company. Subsequent to the acquisition, the Company paid approximately
$160 million of upfront programming costs on behalf of the YES Network.
For the fiscal year ended June 30, 2014, the incremental revenues and Segment OIBDA (as defined in Note 19
– Segment Information) related to the YES Network included in the Company’s consolidated results of operations
were not material.
San Francisco-Bay Area Television Stations
In June 2014, the Company entered into an agreement to acquire two San Francisco-Bay area television
stations from Cox Media Group in exchange for the Company’s FOX affiliated stations WHBQ-TV FOX 13 and
WFXT-TV FOX 24, located in the Memphis and Boston markets, respectively. The transaction is subject to
regulatory approvals and other closing conditions.
Fiscal 2013
Acquisitions
Eredivisie Media & Marketing
In November 2012, the Company acquired a controlling 51% ownership stake in Eredivisie Media &
Marketing CV (“EMM”) for approximately $350 million, of which $325 million was cash and $25 million was
contingent consideration. EMM is a media company that holds the collective media and sponsorship rights of the
Dutch Premier League. The remaining 49% of EMM, which is owned by the Dutch Premier League and the global
TV production company Endemol, has been recorded at its acquisition date fair value. The excess purchase price,
based on a valuation of 100% of EMM, of approximately $670 million has been allocated as follows: $325 million
to amortizable intangible assets, primarily customer relationships, with useful lives ranging from 6 to 20 years, and
approximately $345 million representing the goodwill on the transaction. The goodwill reflects the synergies and
increased market penetration expected from combining the operations of EMM and the Company. The contingent
consideration relates to payments that are contingent upon the achievement of certain performance objectives and
was valued using an income approach using a probability-weighted discounted cash flow method. The contingent
consideration is remeasured to fair value at each reporting date until the contingency is resolved.
Fox Sports Asia (formerly ESPN Star Sports)
In November 2012, the Company acquired the remaining 50% interest in ESPN Star Sports, now operating as
Fox Sports Asia, that it did not already own for approximately $220 million, net of cash acquired. Fox Sports Asia is
a leading sports broadcaster in Asia and the Company now, through its wholly owned subsidiaries, owns 100% of
Fox Sports Asia. The carrying amount of the Company’s previously held equity interest in Fox Sports Asia was
revalued to fair value as of the acquisition date, resulting in a non-taxable gain of $174 million which was included