Twenty-First Century Fox 2014 Annual Report Download - page 99

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TWENTY-FIRST CENTURY FOX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
93
Other
In fiscal 2012, the Company entered into an asset acquisition agreement with a third party in exchange for a
noncontrolling ownership interest in one of the Company’s majority-owned RSNs. The noncontrolling shareholder
has a put option related to its ownership interest that is exercisable beginning in March 2015. Since redemption of
the noncontrolling interest is outside of the control of the Company, the Company has accounted for this put option
in accordance with ASC 480-10-S99-3A, “Distinguishing Liabilities from Equity” (“ASC 480-10-S99-3A”), and has
recorded the put option at its fair value as a Redeemable noncontrolling interest in the Consolidated Balance Sheets.
(See Note 8 – Fair Value)
NOTE 4. DISCONTINUED OPERATIONS
Separation of News Corp
On June 28, 2013, the Company completed the Separation of its business into two independent publicly traded
companies by distributing to its stockholders all of the outstanding shares of News Corp. The Company retained its
interests in a global portfolio of media and entertainment assets spanning six continents. News Corp holds the
Company’s former businesses including newspapers, information services and integrated marketing services, digital
real estate services, book publishing, digital education and sports programming and pay-TV distribution in Australia.
The Company completed the Separation by distributing to its stockholders one share of News Corp Class A common
stock for every four shares of the Company’s Class A Common Stock held on June 21, 2013, and one share of News
Corp Class B common stock for every four shares of the Company’s Class B Common Stock held on June 21, 2013.
The Company’s stockholders received cash in lieu of fractional shares. Following the Separation, the Company does
not beneficially own any shares of News Corp Class A common stock or News Corp Class B common stock.
Effective June 28, 2013, the Separation qualified for discontinued operations treatment in accordance with
ASC 205-20 and accordingly the Company deconsolidated News Corp’s balance sheet as of June 30, 2013, and
presented its results for the fiscal years ended June 30, 2013 and 2012 as discontinued operations on the
Consolidated Statements of Operations and the Consolidated Statements of Cash Flows. The footnotes to the
financial statements have also been revised accordingly.
The Company entered into a separation and distribution agreement with News Corp (the “Separation and
Distribution Agreement”) pursuant to which the Company agreed to provide a cash contribution to News Corp
immediately prior to the Separation, so that as of the Separation, News Corp would have approximately $2.6 billion
of cash on hand. Accordingly, immediately prior to the Separation, the Company distributed approximately $2.4
billion to News Corp, which was comprised of $1.6 billion in cash funding and approximately $800 million that was
held by News Corp’s subsidiaries immediately prior to the Separation. The Company made a final cash distribution
of $217 million in September 2013, pursuant to the Separation and Distribution Agreement.
Separation and Distribution Agreement
The Separation and Distribution Agreement sets forth, among other things, the parties’ agreements regarding
the principal transactions necessary to effect the Separation. It also provides that the Company will indemnify News
Corp, on an after-tax basis, for payments made after the Separation arising out of civil claims and investigations
relating to the U.K. Newspaper Matters (as defined below), as well as legal and professional fees and expenses paid
in connection with the related criminal matters, other than fees, expenses and costs relating to employees who are
not (i) directors, officers or certain designated employees or (ii) with respect to civil matters, co-defendants with
News Corp. U.K. Newspaper Matters refers to ongoing investigations by U.K. and U.S. regulators and governmental
authorities relating to phone hacking, illegal data access and inappropriate payments to public officials at The News
of the World and The Sun and related matters. In addition, the Separation and Distribution Agreement governs the
Company’s and News Corp’s agreements with regard to each party’s ability to comply with certain statutes or rules
and regulations promulgated by the FCC. (See Note 16 – Commitments and Contingencies)