New News Corporation recognized a tax benefit on vested RSUs and
stock options exercised of approximately nil and $1 million for the
three months ended September 30, 2012 and 2011, respectively.
NOTE 8. RELATED PARTY TRANSACTIONS AND PARENT COMPANY
INVESTMENT
Corporate Allocations and Parent Company Investment
Historically, Parent has provided services to and funded certain
expenses for New News Corporation that have been included as a
component of Parent company equity such as: global real estate and
occupancy; and employee benefits. In addition, New News
Corporation's combined financial statements include general
corporate expenses of Parent which were not historically allocated
to New News Corporation for certain support functions that are
provided on a centralized basis within Parent and not recorded at
the business unit level, such as expenses related to finance, human
resources, information technology, facilities, and legal, among
others ("General Corporate Expenses"). For purposes of these
stand-alone financial statements, the General Corporate Expenses
have been allocated to New News Corporation. The General Corporate
Expenses are included in the combined statements of operations in
selling, general and administrative expenses and accordingly as a
component of Parent company equity. These expenses have been
allocated to New News Corporation on the basis of direct usage when
identifiable, with the remainder allocated on a pro rata basis of
combined revenues, operating income, headcount or other measures of
New News Corporation. Management believes the assumptions
underlying the combined financial statements, including the
assumptions regarding allocating General Corporate expenses from
Parent are reasonable. Nevertheless, the combined financial
statements may not include all of the actual expenses that would
have been incurred and may not reflect our combined results of
operations, financial position and cash flows had we been a
stand-alone company during the periods presented. Actual costs that
would have been incurred if we had been a stand-alone company would
depend on multiple factors, including organizational structure and
strategic decisions made in various areas, including information
technology and infrastructure. The General Corporate Expenses
allocated to New News Corporation during the three months ended
September 30, 2012 and 2011 were approximately $26 million and $19
million, respectively.
All significant intercompany transactions between New News
Corporation and Parent have been included in these combined
financial statements and are considered to be effectively settled
for cash at the time the transaction is recorded. The total net
effect of the settlement of these intercompany transactions is
reflected in the combined statements of cash flow as a financing
activity and in the combined balance sheets as Parent company
investment.
NOTE 9. COMMITMENTS AND GUARANTEES
Commitments
New News Corporation has commitments under certain firm
contractual arrangements ("firm commitments") to make future
payments. These firm commitments secure the future rights to
various assets and services to be used in the normal course of
operations. Other than as previously disclosed in these notes to
New News Corporation's unaudited combined financial statements, New
News Corporation's commitments have not changed significantly from
the disclosures included in the June 30, 2012 audited combined
financial statements.
Guarantees
New News Corporation's guarantees as of September 30, 2012 have
not changed significantly from disclosures included in the June 30,
2012 audited combined financial statements.
F-65
Table of Contents
NEW NEWS CORPORATION
NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS
(CONTINUED)
Contingencies
U.K. Newspaper Matters
On July 19, 2011, a purported class action lawsuit captioned
Wilder v. News Corp., et al. was filed on behalf of all purchasers
of Parent's common stock between March 3, 2011 and July 11, 2011,
in the U.S. District Court for the Southern District of New York.
The plaintiff brought claims under Section 10(b) and Section 20(a)
of the Securities Exchange Act, alleging that false and misleading
statements were issued regarding alleged acts of voicemail
interception at The News of the World . The suit names as
defendants Parent, Rupert Murdoch, James Murdoch and Rebekah
Brooks, and seeks compensatory damages, rescission for damages
sustained, and costs.
This litigation and certain other Parent stockholder lawsuits
are all now before the same judge. On June 5, 2012, the court
issued an order appointing the Avon Pension Fund ("Avon") as lead
plaintiff in the litigation and Robbins Geller Rudman & Dowd as
lead counsel. Thereafter, on July 3, 2012, the court issued an
order providing that an amended consolidated complaint was to be
filed by July 31, 2012. Avon filed an amended consolidated
complaint on July 31, 2012, which among other things, added as
defendants New News Corporation's subsidiary, NI Group Limited, and
Les Hinton, and expanded the class period to include February 15,
2011 to July 18, 2011. Defendants filed their motion to dismiss on
September 25, 2012, and the parties have completed briefing on the
motion. The court has not yet set a date for oral argument.
Parent and New News Corporation's management believe these
Parent stockholder claims are entirely without merit, and New News
Corporation intends to vigorously defend this action.
In addition, U.K. and U.S. regulators and governmental
authorities continue to conduct investigations initiated in 2011
with respect to phone hacking, illegal data access, inappropriate
payments to public officials and related matters at New News
Corporation's former publication, The News of the World , and at
The Sun (the "U.K. Newspaper Matters"). New News Corporation,
together with Parent, is cooperating with these investigations. It
is possible that these proceedings could damage New News
Corporation's reputation and might impair its ability to conduct
its business.
New News Corporation is not able to predict the ultimate outcome
or cost associated with these investigations. Violations of law may
result in civil, administrative or criminal fines or penalties. New
News Corporation has admitted liability in a number of civil cases
related to the phone hacking allegations and has settled a number
of cases. As of September 30, 2012, New News Corporation has
provided for its best estimate of the liability for the claims that
have been filed. New News Corporation has announced a process under
which parties can pursue claims against it, and management believes
that it is probable that additional claims will be filed. It is not
possible to estimate the liability for such additional claims given
the information that is currently available to New News
Corporation. If more claims are filed and additional information
becomes available, New News Corporation will update the liability
provision for such matters. Any fees, expenses, fines, penalties,
judgments or settlements which might be incurred by New News
Corporation in connection with the various proceedings could affect
its results of operations and financial condition.
HarperCollins
Commencing on August 9, 2011, twenty-nine purported consumer
class actions have been filed in the U.S. District Courts for the
Southern District of New York and for the Northern District of
California, which relate to the decisions by certain publishers,
including HarperCollins Publishers L.L.C. ("HarperCollins"), to
begin selling their eBooks pursuant to an agency relationship. The
Judicial Panel on Multidistrict Litigation has transferred the
F-66
Table of Contents
NEW NEWS CORPORATION
NOTES TO THE UNAUDITED COMBINED FINANCIAL STATEMENTS
(CONTINUED)
various class actions to the Honorable Denise L. Cote in the
Southern District of New York. On January 20, 2012, plaintiffs
filed a consolidated amended complaint, again alleging that certain
named defendants, including HarperCollins, violated the antitrust
and unfair competition laws by virtue of the switch to the agency
model for eBooks. The actions seek as relief treble damages,
injunctive relief and attorneys' fees. On June 25, 2012, Judge Cote
issued a scheduling order for the multi-district litigation going
forward. Additional information about In re MDL Electronic Books
Antitrust Litigation, Civil Action No. 11-md-02293 (DLC), can be
found on Public Access to Court Electronic Records (PACER). While
it is not possible to predict with any degree of certainty the
ultimate outcome of these class actions, HarperCollins believes it
was compliant with applicable antitrust and competition laws.
Following an investigation, on April 11, 2012, the Department of
Justice (the "DOJ") filed an action in the U.S. District Court for
the Southern District of New York against certain publishers,
including HarperCollins, and Apple, Inc. The DOJ's complaint
alleges antitrust violations relating to defendants' decisions to
begin selling eBooks pursuant to an agency relationship. This case
was assigned to Judge Cote. Simultaneously, the DOJ announced that
it had reached a proposed settlement with three publishers,
including HarperCollins, and filed a Proposed Final Judgment and
related materials detailing that agreement. Among other things, the
Proposed Final Judgment requires that HarperCollins terminate its
agreements with certain eBook retailers and places certain
restrictions on any agreements subsequently entered into with such
retailers. On September 5, 2012, Judge Cote entered the Final
Judgment. A third party has filed a motion to intervene in the case
for the purpose of appealing Judge Cote's decision entering the
Final Judgment to the U.S. Court of Appeals for the Second Circuit.
Additional information about the Final Judgment can be found on the
DOJ's website.
News Corp A (LSE:NCRA)
Historical Stock Chart
From Jun 2024 to Jul 2024
News Corp A (LSE:NCRA)
Historical Stock Chart
From Jul 2023 to Jul 2024
