New “Fox” to Include Fox News, Fox Business,
Fox Sports, Fox Broadcasting Company, Fox Television Stations
Group, FS1 and FS2, Fox Deportes and Big Ten Network
Remaining 21st Century Fox Businesses to
Combine with Disney as Part of Separate Transaction Announced
Today
Twenty-First Century Fox, Inc. (“21st Century Fox” or the
“Company” – NASDAQ: FOXA, FOX) today announced that it intends to
spin off to 21st Century Fox shareholders a portfolio of its
highly-rated news, sports and broadcast businesses to create a new
“Fox,” which will be a growth company centered on live news and
sports brands, anchored by the strength of the Fox Network.
This press release features multimedia. View
the full release here:
http://www.businesswire.com/news/home/20171214005660/en/
Left to right: Robert A. Iger, Chairman
and CEO of The Walt Disney Company, and Rupert Murdoch, Executive
Chairman, 21st Century Fox (Photo: Business Wire)
The new “Fox” will include iconic branded properties Fox News
Channel, Fox Business Network, Fox Broadcasting Company, Fox
Sports, Fox Television Stations Group, and sports cable networks
FS1, FS2, Fox Deportes and Big Ten Network (BTN). It will also
include the Company’s studio lot in Los Angeles and equity
investment in Roku.
The new Fox will house the #1 cable news channel in the country,
the most watched business news channel, and a stations group that
is present in 9 out of the 10 largest metro areas in the U.S. Its
broadcast and cable sports brands will have coveted, long-term
sports rights to the NFL, MLB, World Cup soccer and NASCAR. The new
Fox will have a strong financial profile, supported by peer-leading
growth and differentiated free cash flow generation, and will be
positioned to continue to deliver consistent growth driven by
affiliate rate increases, retransmission growth and strong
advertising demand for its live content and entertainment
product.
21st Century Fox Executive Chairman Rupert Murdoch said: “The
new Fox will draw upon the powerful live news and sports businesses
of Fox, as well as the strength of our Broadcast Network. It is
born out of an important lesson I’ve learned in my long career in
media: namely, content and news relevant to viewers will always be
valuable. We are excited by the possibilities of the new Fox, which
is already a leader many times over.”
In addition to the spin-off, 21st Century Fox today separately
announced that the Company has entered into a definitive agreement
to combine the rest of its businesses with Disney (NYSE: DIS),
including the Company’s film and television studios, cable
entertainment networks and international TV businesses.
Combining with Disney are 21st Century Fox’s critically
acclaimed film production businesses including Twentieth Century
Fox, Fox Searchlight and Fox 2000, which together offer diverse and
compelling storytelling businesses and are the homes of Avatar,
X-Men, Fantastic Four and Deadpool, as well as The Grand Budapest
Hotel, Hidden Figures, Gone Girl, The Shape of Water, and The
Martian – and its storied television creative units, Twentieth
Century Fox Television, FX Productions and Fox21, who have brought
The Americans, This Is Us, Modern Family, The Simpsons, and so many
more hit TV series to viewers across the globe. Disney will also
acquire FX Networks, Fox Sports Regional Networks, Fox Networks
Group International, Star India, and 21st Century Fox’s interests
in National Geographic Partners, Hulu, Sky, Tata Sky and Endemol
Shine Group. 21st Century Fox remains committed to completing its
proposed acquisition of the shares in Sky it does not own, and
anticipates that the acquisition of Sky will close by June 30,
2018.
Mr. Murdoch continued: “As a result of the transformative
transactions proposed today, we are paving the way for the new Fox,
as well as a better Disney, to chart a course across a broad
frontier of opportunity. We have always made a commitment to
deliver more choices for customers; provide great storytelling,
objective news, challenging opinion and compelling sports. Through
today's announcements we are proud to recommit to that promise and
enable our shareholders to benefit for years to come through
ownership of two of the world's most iconic, relevant, and dynamic
media companies. They will each continue to be leaders in creating
the very best experiences for consumers.”
New Fox Assets
Fox’s assets will include:
Fox News Channel (FNC): 24-hour
all-encompassing news service dedicated to delivering breaking news
as well as political and business news. FNC has been the #1 cable
news channel in the country for 63 straight quarters, and more
recently has been the #1 basic cable network. FNC is available in
approximately 90 million homes and dominates the cable news
landscape, routinely notching the top ten programs in the
genre.
Fox Broadcasting Company (FOX): home
to some of the highest-rated and most acclaimed series on
television as well as the most sought after sports properties. FOX
is viewed by nearly 100 million households each month, airing 15
hours of primetime programming a week, as well as major sporting
events and Sunday morning news. Through the FOX NOW app, FOX
viewers can watch full episodes of their favorite FOX shows on a
variety of digital platforms, while enjoying enhanced interactive
and social capabilities around those shows.
Fox Business Network (FBN): financial
news channel delivering real-time information across all platforms
that impact both Main Street and Wall Street, Fox Business Network
has been the #1 business network for 4 consecutive quarters. FBN
launched in October 2007 and is available in more than 80 million
homes in major markets across the United States. The network has
bureaus in Chicago, Los Angeles, Washington, DC and London.
FOX Television Stations Group: one of
the nation's largest owned-and-operated network broadcast groups,
comprising 28 stations in 17 markets and covering over 37% of U.S.
television homes. This includes a presence in nine out of the 10
largest metro areas in the U.S. including seven duopolies in the
top 10 markets: New York, Los Angeles, Chicago, Dallas, San
Francisco, Washington, D.C. and Houston; as well as duopolies in
Phoenix, Minneapolis, Orlando and Charlotte.
FS1 and FS2: FS1 is a popular sports
cable network launched in 2013 in approximately 90 million homes
boasting nearly 5,000 hours of live event, news and original
programming annually. FS1 has several pillar sports: college
basketball and football, MLB, NASCAR, NFL (ancillary programs),
international soccer, Bundesliga, UFC, Premier Boxing Champions
(PBC) and USGA. Major events televised on FS1 include the U.S.
Open, MLB Postseason, the FIFA 2018 and 2022 World Cup and the FIFA
Women’s World Cup in 2019. FS2 was founded in 2013 and is focused
on extreme sports, including skateboarding, snowboarding,
wakeboarding, motocross, surfing, mixed martial arts, BMX and FMX.
FS2 is available in approximately 50 million homes.
Big Ten Network: the first
internationally distributed network dedicated to covering America’s
most storied collegiate conferences. Covering over 1,000 sporting
events each year, including football, basketball, Olympic sports
and championship events and award-winning original programming,
in-depth studio analysis and classic games. The network is in
approximately 50 million homes across the United States and Canada,
including carriage by all the major video distributors.
New Fox Financial Information
Using Fiscal 2017 as a base, Fox is expected to have annual
revenue of approximately $10 billion and EBITDA of approximately
$2.8 billion. The Company will have an investment grade balance
sheet conservatively levered with a maximum of $9 billion of new
gross debt or under 3x net leverage on day one. Following the
spin-off, Fox expects to continue to pay shareholders a strong
regular dividend, with the initial rate to be determined prior to
the completion of the spin-off.
Additional Transaction Details
The spin-off transaction will be taxable to 21st Century Fox,
but not to its shareholders. The new Fox will receive a step-up in
its tax basis commensurate with the amount of the corporate tax
relating to the spin-off that will generate annual cash tax savings
over the next 15 years.
Prior to completion of the spin-off, new Fox will pay an $8.5
billion cash dividend to 21st Century Fox, representing an estimate
of such tax liability. If the final tax liability of 21st Century
Fox is less than such amount, the first $2 billion of that
adjustment will be made by a net reduction in the amount of the
cash dividend to 21st Century Fox from new Fox. The amount of such
tax liabilities will depend on several factors, including tax rates
in effect at the time of closing as well as market values of Fox
following the closing.
Upon closing of the spin-off transaction, 21st Century Fox’s
shareholders would receive one share of common stock in new Fox for
each same class 21st Century Fox share currently held. Following
the separation, new Fox would maintain two classes of common stock:
Class A Common and Class B Common Voting Shares. Details of the
spin-off transaction distribution will be included in the
registration statement that will be filed with the Securities and
Exchange Commission.
As part of the definitive agreement with Disney announced today,
21st Century Fox shareholders will receive 0.2745 Disney shares for
each 21st Century Fox share in the merger. The per share
consideration is subject to adjustment up or down for certain tax
liabilities arising from the spinoff and other transactions related
to the acquisition. Terms of the transaction call for Disney to
issue approximately 515 million new shares to 21st Century Fox
shareholders, representing approximately a 25 percent stake in
Disney on a pro forma basis. The transaction values the merged 21st
Century Fox business at $28 per share using a reference Disney
share price of $102 and at nearly $30 per share based on Disney’s
closing share price on December 13, 2017. This equates to a total
enterprise value of approximately $69 billion.
The merger is subject to customary conditions, including
regulatory and shareholder approval.
Advisors
Goldman, Sachs & Co. is acting as the lead financial advisor
to the Company and provided a bridge loan commitment of up to $9
billion to the new Fox. Centerview Partners and Deutsche Bank are
also acting as financial advisors to the Company. Skadden, Arps,
Slate, Meagher & Flom LLP, Hogan Lovells, and Simpson Thacher
& Bartlett are acting as legal advisors to the Company.
Conference Call Details
21st Century Fox senior executives will host a conference call
this morning, Thursday, December 14, 2017 at
9:00am (New York) to discuss the creation of new “Fox” and
the merger of certain assets with Disney for analysts and
investors. Reporters are invited to join the call on a listen-only basis.
CALL DETAILS:Live
teleconference dial-in numbers:
United States: +1 (800) 230-1092
International: +1 (612) 288-0329
Passcode: FOX
Teleconference Replay dial-in
numbers:
United States: +1 (800) 475-6701
International: +1 (320) 365-3844
Passcode: 439113
The webcast will be broadcast on the Company’s investor
relations website:www.21cf.com/investor-relations
Transcript of the presentation will also be made available
shortly after the call, accessible via the same link.
About 21st Century Fox
21st Century Fox is one of the world's leading portfolios of
cable, broadcast, film, pay TV and satellite assets spanning six
continents across the globe. Reaching more than 1.8 billion
subscribers in approximately 50 local languages every day, 21st
Century Fox is home to a global portfolio of cable and broadcasting
networks and properties, including FOX, FX, FXX, FXM, FS1, Fox News
Channel, Fox Business Network, FOX Sports, Fox Sports Network,
National Geographic Channels, Star India, 28 local television
stations in the U.S. and more than 350 international channels; film
studio Twentieth Century Fox Film; and television production
studios Twentieth Century Fox Television and a 50 per cent
ownership interest in Endemol Shine Group. The Company also holds
approximately 39.1 per cent of the issued shares of Sky, Europe’s
leading entertainment company, which serves nearly 23 million
households across five countries. For more information about 21st
Century Fox, please visit www.21CF.com.
Important Information About the
Transaction and Where to Find It
In connection with the proposed transaction between The Walt
Disney Company (“Disney”) and Twenty-First Century Fox, Inc.
(“21CF”), Disney and 21CF will file with the Securities and
Exchange Commission (the “SEC”) a registration statement on Form
S-4 that will include a joint proxy statement of Disney and 21CF
that also constitutes a prospectus of Disney. 21CF will file with
the SEC a registration statement for a newly formed subsidiary
(“New Fox”), which is contemplated to own certain assets and
businesses of 21CF not being acquired by Disney in connection with
the proposed transaction. 21CF and Disney may also file other
documents with the SEC regarding the proposed transaction. This
document is not a substitute for the joint proxy
statement/prospectus or registration statement or any other
document which 21CF or Disney may file with the SEC. INVESTORS
AND SECURITY HOLDERS OF 21CF AND DISNEY ARE URGED TO READ THE
REGISTRATION STATEMENTS, THE JOINT PROXY STATEMENT/PROSPECTUS AND
ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH
THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE
DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION
AND RELATED MATTERS. Investors and security holders may obtain
free copies of the registration statements and the joint proxy
statement/prospectus (when available) and other documents filed
with the SEC by 21CF and Disney through the web site maintained by
the SEC at www.sec.gov or by contacting the investor relations
department of:
21CF
Disney
1211 Avenue of Americas c/o Broadridge Corporate Issuer Solutions
New York, NY 10036 P.O. Box 1342 Attention: Investor Relations
Brentwood, NY 11717 1 (212) 852 7059 Attention: Disney Shareholder
Services
Investor@21CF.com
1 (855) 553 4763
Participants in the
Solicitation
21CF, Disney and their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information
regarding 21CF’s directors and executive officers, including a
description of their direct interests, by security holdings or
otherwise, is available in 21CF’s Annual Report on Form 10-K for
the year ended June 30, 2017 and its proxy statement filed on
September 28, 2017, which are filed with the SEC. Information
regarding Disney’s directors and executive officers, including a
description of their direct interests, by security holdings or
otherwise, is available in Disney’s Annual Report on Form 10-K for
the year ended September 30, 2017 and its proxy statement filed on
January 13, 2017, which are filed with the SEC. A more complete
description will be available in the registration statement on Form
S-4, the joint proxy statement/prospectus and the registration
statement of New Fox.
No Offer or Solicitation
This communication is for informational purposes only and is not
intended to and does not constitute an offer to subscribe for, buy
or sell, or the solicitation of an offer to subscribe for, buy or
sell, or an invitation to subscribe for, buy or sell any securities
or a solicitation of any vote or approval in any jurisdiction, nor
shall there be any sale, issuance or transfer of securities in any
jurisdiction in which such offer, invitation, sale or solicitation
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended, and otherwise in accordance with applicable law.
Cautionary Notes on Forward Looking
Statements
This communication contains “forward-looking statements” within
the meaning of the federal securities laws, including Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In this context,
forward-looking statements often address expected future business
and financial performance and financial condition, and often
contain words such as “expect,” “anticipate,” “intend,” “plan,”
“believe,” “seek,” “see,” “will,” “would,” “target,” similar
expressions, and variations or negatives of these words.
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain, such as statements about the
consummation of the proposed transaction and the anticipated
benefits thereof. These and other forward-looking statements are
not guarantees of future results and are subject to risks,
uncertainties and assumptions that could cause actual results to
differ materially from those expressed in any forward-looking
statements, including the failure to consummate the proposed
transaction or to make any filing or take other action required to
consummate such transaction in a timely matter or at all, are not
guarantees of future results and are subject to risks,
uncertainties and assumptions that could cause actual results to
differ materially from those expressed in any forward-looking
statements. Important risk factors that may cause such a difference
include, but are not limited to: (i) the completion of the proposed
transaction may not occur on the anticipated terms and timing or at
all, (ii) the required regulatory approvals are not obtained, or
that in order to obtain such regulatory approvals, conditions are
imposed that adversely affect the anticipated benefits from the
proposed transaction or cause the parties to abandon the proposed
transaction, (iii) the risk that a condition to closing of the
transaction may not be satisfied (including, but not limited to,
the receipt of legal opinions and rulings with respect to the
treatment of the transaction under U.S. and Australian tax laws),
including the tax-free treatment of the transaction to 21CF’s
stockholders of the distribution of shares of New Fox common stock,
(iv) the risk that the anticipated tax treatment of the transaction
is not obtained, (v) an increase or decrease in the anticipated
transaction taxes (including due to any changes to tax legislation
and its impact on tax rates (and the timing of the effectiveness of
any such changes)) to be paid in connection with the separation
prior to the closing of the transactions could cause an adjustment
to the exchange ratio, (vi) potential litigation relating to the
proposed transaction that could be instituted against 21CF, Disney
or their respective directors, (vii) potential adverse reactions or
changes to business relationships resulting from the announcement
or completion of the transactions, (viii) risks associated with
third party contracts containing consent and/or other provisions
that may be triggered by the proposed transaction, (ix) negative
effects of the announcement or the consummation of the transaction
on the market price of 21CF and/or Disney’s common stock, (x) risks
relating to the value of the Disney shares to be issued in the
transaction and uncertainty as to the long-term value of Disney’s
common stock, (xi) the potential impact of unforeseen liabilities,
future capital expenditures, revenues, expenses, earnings,
synergies, economic performance, indebtedness, financial condition
and losses on the future prospects, business and management
strategies for the management, expansion and growth of Disney’s
operations after the consummation of the transaction and on the
other conditions to the completion of the merger, (xii) the risks
and costs associated with, and the ability of Disney to, integrate
the businesses successfully and to achieve anticipated synergies,
(xiii) the risk that disruptions from the proposed transaction will
harm 21CF’s or Disney’s business, including current plans and
operations, (xiv) the ability of 21CF or Disney to retain and hire
key personnel, (xv) adverse legal and regulatory developments or
determinations or adverse changes in, or interpretations of, U.S.,
Australian or other foreign laws, rules or regulations, including
tax laws, rules and regulations, that could delay or prevent
completion of the proposed transactions or cause the terms of the
proposed transactions to be modified, (xvi) the risk that New Fox,
as a new company that currently has no credit rating, will not have
access to the capital markets on acceptable terms, (xvii) the risk
that New Fox may be unable to achieve some or all of the benefits
that 21CF expects New Fox to achieve as an independent,
publicly-traded company, (xviii) the risk that New Fox may be more
susceptible to market fluctuations and other adverse events than it
would have otherwise been while still a part of 21CF, (xix) the
risk that New Fox will incur significant indebtedness in connection
with the separation and distribution, and the degree to which it
will be leveraged following completion of the distribution may
materially and adversely affect its business, financial condition
and results of operations, (xx) the ability to obtain or consummate
financing or refinancing related to the transaction upon acceptable
terms or at all, (xxi) as well as management’s response to any of
the aforementioned factors. These risks, as well as other risks
associated with the proposed transactions, will be more fully
discussed in the joint proxy statement/prospectus that will be
included in the registration statement on Form S-4 that will be
filed with the SEC in connection with the proposed transactions, as
well as in the registration statement filed with respect to New
Fox. While the list of factors presented here is, and the list of
factors to be presented in the registration statement on Form S-4
and the registration statement of New Fox are, considered
representative, no such list should be considered to be a complete
statement of all potential risks and uncertainties. Unlisted
factors may present significant additional obstacles to the
realization of forward looking statements. Consequences of material
differences in results as compared with those anticipated in the
forward-looking statements could include, among other things,
business disruption, operational problems, financial loss, legal
liability to third parties and similar risks, any of which could
have a material adverse effect on 21CF’s or Disney’s consolidated
financial condition, results of operations, credit rating or
liquidity. Neither 21CF nor Disney assumes any obligation to
publicly provide revisions or updates to any forward looking
statements, whether as a result of new information, future
developments or otherwise, should circumstances change, except as
otherwise required by securities and other applicable laws.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171214005660/en/
21st Century FoxInvestor Relations:Reed Nolte,
212-852-7092Mike Petrie, 212-852-7130orPress:Julie
Henderson, 310-369-0773Nathaniel Brown, 212-852-7746
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