SEC Filing | News Corporation New News Corporation LLC
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 6
to
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
New Newscorp Inc
(Exact name of registrant as specified in its charter)
| Delaware |
46-2950970 |
|
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
|
1211 Avenue of the Americas, New York, New York |
10036 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: 212-852-7000
Securities to be registered pursuant to Section 12(b) of the Act:
|
Title of each class to be so registered |
Name of each exchange on which each class is to be registered |
|
|
Class A Common Stock, par value $0.01 per share Class B Common Stock, par value $0.01 per share Class A Preferred Stock Purchase Rights Class B Preferred Stock Purchase Rights |
NASDAQ Global Select Market |
Securities to be registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
| Non-accelerated filer | x (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
NEW NEWSCORP INC
INFORMATION REQUIRED IN REGISTRATION STATEMENT
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF
FORM 10
Cross-Reference Sheet Between Information Statement and Items of Form 10
Certain information required to be included in this Form 10 is incorporated by reference to specifically-identified portions of the body of the information statement filed herewith as Exhibit 99.1 (the “Information Statement”). None of the information contained in the Information Statement shall be incorporated by reference herein or deemed to be a part hereof unless such information is specifically incorporated by reference.
| Item 1A. | Risk Factors. |
The information required by this item is contained under the sections of the information statement entitled “Risk Factors” and “Cautionary Statements Concerning Forward-Looking Statements.” Those sections are incorporated herein by reference.
| Item 2. | Financial Information. |
The information required by this item is contained under the sections of the information statement entitled “Selected Historical Combined Financial Data,” “Unaudited Pro Forma Combined Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Those sections are incorporated herein by reference.
| Item 3. | Properties. |
The information required by this item is contained under the section of the information statement entitled “Business—Properties.” That section is incorporated herein by reference.
| Item 4. | Security Ownership of Certain Beneficial Owners and Management. |
The information required by this item is contained under the section of the information statement entitled “Security Ownership of Certain Beneficial Owners and Management.” That section is incorporated herein by reference.
| Item 5. | Directors and Executive Officers. |
The information required by this item is contained under the section of the information statement entitled “Management.” That section is incorporated herein by reference.
| Item 6. | Executive Compensation. |
The information required by this item is contained under the sections of the information statement entitled “Compensation of Directors,” “Management” and “Executive Compensation.” Those sections are incorporated herein by reference.
| Item 7. | Certain Relationships and Related Transactions, and Director Independence. |
The information required by this item is contained under the sections of the information statement entitled “Management,” “Certain Relationships and Related Person Transactions” and “Our Relationship With Parent Following the Distribution.” Those sections are incorporated herein by reference.
| Item 8. | Legal Proceedings. |
The information required by this item is contained under the section of the information statement entitled “Business—Legal Proceedings.” That section is incorporated herein by reference.
| Item 9. | Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters. |
The information required by this item is contained under the sections of the information statement entitled “Dividend Policy” and “Description of Our Capital Stock.” Those sections are incorporated herein by reference.
| Item 10. | Recent Sales of Unregistered Securities. |
The information required by this item is contained under the section of the information statement entitled “Description of Our Capital Stock—Sale of Unregistered Securities.” That section is incorporated herein by reference.
| Item 11. | Description of Registrant’s Securities to be Registered. |
The information required by this item is contained under the section of the information statement entitled “Description of Our Capital Stock.” That section is incorporated herein by reference.
| Item 12. | Indemnification of Directors and Officers. |
The information required by this item is contained under the section of the information statement entitled “Description of Our Capital Stock—Limitation of Liability for Officers and Directors and Insurance.” That section is incorporated herein by reference.
| Item 13. | Financial Statements and Supplementary Data. |
The information required by this item is contained under the section of the information statement entitled “Index to Financial Statements” (and the financial statements referenced therein). That section is incorporated herein by reference.
| Item 14. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
None.
| Item 15. | Financial Statements and Exhibits. |
| (a) | Financial Statements |
The information required by this item is contained under the section of the information statement entitled “Index to Financial Statements” (and the financial statements referenced therein). That section is incorporated herein by reference.
3
| (b) | Exhibits |
See below.
The following documents are filed as exhibits hereto:
|
Exhibit |
Exhibit Description | |
| 2.1† | Form of Separation and Distribution Agreement | |
| 2.2† | Form of Tax Sharing and Indemnification Agreement | |
| 2.3† | Form of Transition Services Agreement | |
| 2.4† | Form of Employee Matters Agreement | |
| 3.1† | Form of Certificate of Incorporation of New News Corporation | |
| 3.2† | Form of By-laws of New News Corporation | |
| 4.1† | Form of Stockholder Rights Agreement | |
| 10.1† | Employment Agreement between NC Transaction, Inc. and Robert J. Thomson | |
| 10.2† | Employment Agreement between NC Transaction, Inc. and Bedi Ajay Singh | |
| 10.3† | Form of New News Corporation 2013 Long-Term Incentive Plan | |
| 10.4† | Form of FOX SPORTS Trademark License | |
| 10.5† | Form of FOX Trademark License | |
| 21.1† | List of Subsidiaries | |
| 24.1† | Power of Attorney | |
| 99.1 | Preliminary Information Statement | |
| 99.2† | Form of Notice of Internet Availability of Information Statement Materials | |
| † | Previously filed |
4
Exhibit Index
|
Exhibit Number |
Exhibit Description | |||
| 2.1† | Form of Separation and Distribution Agreement | |||
| 2.2† | Form of Tax Sharing and Indemnification Agreement | |||
| 2.3† | Form of Transition Services Agreement | |||
| 2.4† | Form of Employee Matters Agreement | |||
| 3.1† | Form of Certificate of Incorporation of New News Corporation | |||
| 3.2† | Form of By-laws of New News Corporation | |||
| 4.1† | Form of Stockholder Rights Agreement | |||
| 10.1† | Employment Agreement between NC Transaction, Inc. and Robert J. Thomson | |||
| 10.2† | Employment Agreement between NC Transaction, Inc. and Bedi Ajay Singh | |||
| 10.3† | Form of New News Corporation 2013 Long-Term Incentive Plan | |||
| 10.4† | Form of FOX SPORTS Trademark License | |||
| 10.5† | Form of FOX Trademark License | |||
| 21.1† | List of Subsidiaries | |||
| 24.1† | Power of Attorney | |||
| 99.1 | Preliminary Information Statement | |||
| 99.2† | Form of Notice of Internet Availability of Information Statement Materials | |||
| † | Previously filed |
5
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
| NEW NEWSCORP INC | ||
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/s/ K. Rupert Murdoch |
||
| By: |
K. Rupert Murdoch |
|
| Title: |
Executive Chairman |
|
Date: June 12, 2013
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Table of Contents
Exhibit 99.1
INFORMATION STATEMENT
New News Corporation
Class A Common Stock, Par Value $.01 Per Share
Class B Common Stock, Par Value $.01 Per Share
This information statement is being furnished in connection with the distribution by News Corporation (“Parent”) to its stockholders of all of the outstanding shares of common stock of New Newscorp Inc (“New News Corporation”), a wholly-owned subsidiary of Parent that will hold the following businesses of Parent: newspapers, information services and integrated marketing services, digital real estate services, book publishing, digital education and sports programming and pay-TV distribution in Australia. To implement the distribution, Parent will distribute the shares of New News Corporation common stock on a pro rata basis to Parent’s stockholders in a manner that is intended to be tax-free to its stockholders for U.S. federal income tax purposes, except for cash that stockholders receive in lieu of fractional shares. For tax consequences to Australian holders, see “The Distribution—Material Australian Tax Consequences of the Distribution.”
New News Corporation was organized as New Newscorp LLC, a limited liability company under the laws of the State of Delaware, and has been converted to New Newscorp Inc, a Delaware corporation.
For every four shares of Parent Class A Common Stock held of record by you as of the close of business on June 21, 2013, the record date for the distribution, you will receive one share of New News Corporation Class A Common Stock. For every four shares of Parent Class B Common Stock held of record by you as of the record date for the distribution, you will receive one share of New News Corporation Class B Common Stock. Each share of New News Corporation common stock will have attached to it a preferred stock purchase right as further described in “Description of Our Capital Stock—Anti-Takeover Effects of Various Provisions of Delaware Law, Our Amended and Restated Certificate of Incorporation and Amended and Restated By-laws and Our Stockholder Rights Agreement.” You will receive cash in lieu of any fractional shares of New News Corporation common stock which you would have received after application of the above-mentioned ratio, as applicable. We expect the applicable shares of New News Corporation common stock to be distributed by Parent to you on June 28, 2013. We refer to the date of the distribution of New News Corporation common stock as the “distribution date.” Immediately after the distribution becomes effective, New News Corporation will be an independent, publicly traded company.
No approval of the distribution by Parent’s stockholders is required. However, in order to effectuate the distribution in the manner discussed in this information statement, Parent intends to amend its Restated Certificate of Incorporation, and will hold a Special Meeting of its stockholders (the “Special Meeting”) in connection therewith. Parent has distributed a separate proxy statement which contains information regarding the Special Meeting. The distribution contemplated by this information statement assumes that certain proposals contained in the separate proxy statement will be approved by Parent’s stockholders and completion of the distribution is conditioned upon such approval.
You do not need to pay any consideration, exchange or surrender your existing common stock of Parent or take any other action to receive your applicable shares of New News Corporation common stock.
Parent currently owns all of the outstanding shares of New News Corporation. Accordingly, there is no current trading market for New News Corporation common stock, although we expect that a limited market, commonly known as a “when-issued” trading market, will develop shortly before the record date for the distribution, and we expect “regular-way” trading of New News Corporation common stock to begin on the first trading day following the completion of the distribution. New News Corporation intends to apply to have both its Class B Common Stock and Class A Common Stock authorized for listing on the NASDAQ Global Select Market (“NASDAQ”) under the symbols “NWS” and “NWSA,” respectively, and to have CHESS Depositary Interests (“CDIs”) representing its Class B Common Stock and Class A Common Stock listed and traded on the Australian Securities Exchange (“ASX”), initially under temporary trading symbols, and then under the symbols “NWS” and “NWSLV,” respectively. As discussed under “The Distribution—Trading Prior to the Distribution Date,” if you sell your Parent Class A Common Stock or Class B Common Stock in the “due-bills” market after the record date and before the distribution, you also will be selling your right to receive shares of New News Corporation Class A Common Stock or Class B Common Stock, as applicable, in connection with the distribution. However, if you sell your Parent Class A Common Stock or Class B Common Stock in the ex-distribution market up to and including the distribution date, you will still be entitled to receive shares of our common stock in the distribution. Holders of Parent CDIs representing shares of Parent common stock will receive CDIs representing shares of the applicable class of New News Corporation common stock, other than with respect to fractional CDIs. It is anticipated that Parent CDIs will commence trading on an ex-distribution and normal settlement basis shortly before the record date. Once this occurs, trading of Parent CDIs on a “cum” basis, with an entitlement to receive CDIs representing shares of our common stock in the distribution, will cease. Trading of CDIs representing New News Corporation Class A Common Stock and Class B Common Stock will commence shortly before the record date, initially, on a “conditional and deferred” settlement basis and then on an “unconditional and deferred” settlement basis between the distribution date and the mailing of holding statements. There are risks associated with the trading of Parent and New News Corporation CDIs prior to the distribution, which are disclosed in “The Distribution—Trading Prior to the Distribution Date,” and investors should read that section carefully and are encouraged to consult their brokers and financial advisors regarding these risks.
In reviewing this information statement, you should carefully consider the matters described under the caption “Risk Factors” beginning on page 21.
Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.
This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.
The date of this information statement is June 12, 2013.
Parent first mailed a Notice of Internet Availability of Information Statement Materials (the “Notice of Internet Availability”) containing instructions on how to access this information statement to its stockholders on or about May 20, 2013. Parent will mail this information statement to stockholders who previously elected to receive a paper copy of Parent’s materials.
cash or any other consideration to receive your shares of New News Corporation common stock. The number of shares of Parent’s Class A Common Stock or Class B Common Stock that you currently own will not change as a result of the distribution.
This information statement describes New News Corporation’s business, its relationship with Parent, how this transaction affects Parent’s stockholders and provides other information to assist you in evaluating the benefits and risks of holding or disposing of New News Corporation common stock that you will receive in the distribution.
Parent
News Corporation, a Delaware corporation, is a diversified global media company currently with operations in the following six industry segments: (i) Cable Network Programming; (ii) Filmed Entertainment; (iii) Television; (iv) Direct Broadcast Satellite Television; (v) Publishing; and (vi) Other. The activities of News Corporation are conducted principally in the U.S., the U.K., Continental Europe, Australia, Asia and Latin America. Parent owns all of our common stock issued and outstanding prior to the distribution. After the distribution, Parent will not own any of our common stock. It is anticipated that, on or about the distribution date and subject to the approval of the holders of a majority of Parent’s Class B Common Stock entitled to vote, Parent will change its name to Twenty-First Century Fox, Inc.
Our Company
We are a global diversified media and information services company focused on creating and distributing authoritative and engaging content to consumers and businesses throughout the English-speaking world, as well as increasingly in other countries across the globe. Our company is comprised of leading businesses across a range of media, including: news and information services, sports programming in Australia, digital real estate services, book publishing, and pay-TV distribution in Australia, that are distributed under some of the world’s most recognizable and respected brands, including The Wall Street Journal, Dow Jones, Herald Sun, The Sun, The Times, HarperCollins Publishers, FOX SPORTS Australia, realestate.com.au, and many others. We are also a rapidly developing provider of digital education content, assessment and delivery services. Our commitment to high-quality premium editorial content makes our media properties a trusted source of news and information among consumers; at the same time many of these properties deliver broad reach and high audience engagement levels in their respective markets, making them attractive advertising vehicles for our advertising customers. Key components of our business include:
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
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CHESS DEPOSITARY INTERESTS AND OTHER AUSTRALIAN MATTERS |
160 | |||
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i
Table of Contents
INFORMATION STATEMENT SUMMARY
The following is a summary of material information discussed in this information statement. This summary may not contain all the details concerning the distribution or other information that may be important to you. To better understand the distribution and New News Corporation’s business and financial position, you should carefully review this entire information statement. Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement, including the combined financial statements of New News Corporation, which will consist of the entities associated with the businesses comprising Parent’s newspapers, information services and integrated marketing services, digital real estate services, book publishing, digital education and sports programming and pay-TV distribution in Australia, assumes the completion of all the transactions referred to in this information statement in connection with the distribution. Unless the context otherwise requires, references in this information statement to “New Newscorp LLC,” “New Newscorp Inc,” “New News Corporation,” “we,” “us,” “our” and “our company” refer to New News Corporation and its combined subsidiaries. References in this information statement to “Parent” refers to News Corporation, a Delaware corporation, and its consolidated subsidiaries (other than, after the distribution, New News Corporation and its combined subsidiaries), unless the context otherwise requires.
We anticipate that, on or about the distribution date and subject to the approval of the holders of a majority of Parent’s Class B Common Stock entitled to vote, Parent will change its name to Twenty-First Century Fox, Inc. and we will assume the name News Corporation. If such name changes are completed as anticipated, then from the time such name changes become effective, references to “New News Corporation” shall be deemed to refer to News Corporation and its combined subsidiaries and references to “Parent” shall be deemed to refer to Twenty-First Century Fox, Inc. and its consolidated subsidiaries.
New News Corporation was organized as a limited liability company under the laws of the State of Delaware and has been converted from a limited liability company to a Delaware corporation.
This information statement describes the businesses to be transferred to New News Corporation by Parent as if the transferred businesses were our businesses for all historical periods described. References in this information statement to our historical assets, liabilities, products, businesses or activities are generally intended to refer to the historical assets, liabilities, products, businesses or activities of the transferred businesses as they were conducted as part of Parent and its subsidiaries prior to the distribution.
You should not assume that the information contained in this information statement is accurate as of any date other than the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and we undertake no obligation to update the information, except in the normal course of our public disclosure obligations. In particular, a number of matters contained in this information statement relate to agreements or arrangements which have not yet been finalized and expectations of what may occur. It is possible that prior to the distribution these agreements, arrangements, and expectations may change.
Why New News Corporation Sent a Notice of Internet Availability or This Information Statement to You
New News Corporation sent a Notice of Internet Availability or this information statement to you because you were a holder of Parent’s Class A Common Stock or Class B Common Stock on the record date for the distribution of New News Corporation Class A Common Stock or Class B Common Stock, as applicable. Accordingly, you are entitled to receive one share of New News Corporation Class A Common Stock or New News Corporation Class B Common Stock, as applicable, for every four shares of Parent’s Class A Common Stock or Class B Common Stock that you held as of the record date, respectively. No action is required on your part to participate in the distribution, and you do not have to surrender or exchange your shares of Parent or pay cash or any other consideration to receive your shares of New News Corporation common stock. The number of shares of Parent’s Class A Common Stock or Class B Common Stock that you currently own will not change as a result of the distribution.
This information statement describes New News Corporation’s business, its relationship with Parent, how this transaction affects Parent’s stockholders and provides other information to assist you in evaluating the benefits and risks of holding or disposing of New News Corporation common stock that you will receive in the distribution.
Parent
News Corporation, a Delaware corporation, is a diversified global media company currently with operations in the following six industry segments: (i) Cable Network Programming; (ii) Filmed Entertainment; (iii) Television; (iv) Direct Broadcast Satellite Television; (v) Publishing; and (vi) Other. The activities of News Corporation are conducted principally in the U.S., the U.K., Continental Europe, Australia, Asia and Latin America. Parent owns all of our common stock issued and outstanding prior to the distribution. After the distribution, Parent will not own any of our common stock. It is anticipated that, on or about the distribution date and subject to the approval of the holders of a majority of Parent’s Class B Common Stock entitled to vote, Parent will change its name to Twenty-First Century Fox, Inc.
Our Company
We are a global diversified media and information services company focused on creating and distributing authoritative and engaging content to consumers and businesses throughout the English-speaking world, as well as increasingly in other countries across the globe. Our company is comprised of leading businesses across a range of media, including: news and information services, sports programming in Australia, digital real estate services, book publishing, and pay-TV distribution in Australia, that are distributed under some of the world’s most recognizable and respected brands, including The Wall Street Journal, Dow Jones, Herald Sun, The Sun, The Times, HarperCollins Publishers, FOX SPORTS Australia, realestate.com.au, and many others. We are also a rapidly developing provider of digital education content, assessment and delivery services. Our commitment to high-quality premium editorial content makes our media properties a trusted source of news and information among consumers; at the same time many of these properties deliver broad reach and high audience engagement levels in their respective markets, making them attractive advertising vehicles for our advertising customers.
Key components of our business include:
| • |
News and Information Services: Our key brands include The Wall Street Journal, Dow Jones Newswires and Factiva, Herald Sun in Australia, The Sun and The Times in the U.K. and News America Marketing Group. |
| • |
Cable Network Programming: FOX SPORTS Australia is the leading sports programming provider in Australia based on total subscribers. |
| • |
Digital Real Estate Services: We own 61.6% of REA Group Limited (“REA”), which owns the leading digital portals for residential and commercial property in Australia based on monthly site visits. |
| • |
Book Publishing: HarperCollins is one of the largest English-language consumer publishers in the world based on global revenue, with an active print and digital catalog of over 50,000 publications and over 60 branded imprints. |
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Amplify: Our innovative digital education business is focused on the digitization of K-12 education. |
| • |
Foxtel: We own 50% of Foxtel, the largest pay-TV provider in Australia based on total subscriber We deliver our premium content to consumers across numerous distribution platforms consisting not only of traditional print and television, but also through an expanding array of digital platforms including websites, electronic readers and applications for tablets and mobile devices. We are focused on pursuing integrated strategies across our businesses to continue to capitalize on the transition from print to digital consumption of high-quality content. We believe that the increasing availability of high-speed Internet access, electronic readers and connected mobile devices will allow us to continue to deliver our content in a more engaging, timely and personalized manner; provide opportunities to more effectively monetize our content via strong customer relationships and more compelling and engaging advertising solutions; and reduce our physical production and distribution costs as we continue to shift to digital platforms. Our diversified revenue base consists of recurring subscriptions, circulation copies, licensing fees, affiliate fees and direct sales, as well as the sale of advertising and sponsorships. We manage our businesses to take advantage of opportunities to share technologies and practices across geographies and businesses and bundle selected offerings to provide greater value to consumers and advertising partners. Headquartered in New York, we operate primarily in North America, Australia, and the U.K., and our content is distributed and consumed worldwide. Our North American, Australian and U.K. premium content and trusted brands include:
For the fiscal year ended June 30, 2012, we recorded combined revenue of $8,654 million, loss before income tax benefit of $2,377 million and Total Segment EBITDA of $782 million. For the nine months ended March 31, 2013, we recorded combined revenue of $6,634 million, income before income tax benefit of $1,633 million and Total Segment EBITDA of $558 million. For a reconciliation of Total Segment EBITDA, a non-GAAP measure, to (loss) income before income tax benefit (expense), reported in accordance with generally accepted accounting principles (“GAAP”), see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our results of operations in recent periods have been negatively impacted by write-downs of goodwill and intangible assets in our News and Information Services segment, due largely to declines in advertising and circulation revenue, as well as restructuring charges primarily resulting from closures of some of our newspapers and organizational restructurings at others. We expect to record a pre-tax non-cash impairment charge in the range of $1.2 billion to $1.4 billion in the quarter ending June 30, 2013 related to our News and Information Services segment. These charges reflect the challenging environment faced by our News and Information Services segment as a result of, among other things, unfavorable economic conditions in some of our markets and adverse trends in the newspaper industry generally. It is anticipated that, on or about the distribution date and subject to the approval of the holders of a majority of Parent’s Class B Common Stock entitled to vote, Parent will change its name to Twenty-First Century Fox, Inc. and we will assume the name News Corporation. Our operations are organized into five reporting segments: (i) News and Information Services; (ii) Cable Network Programming (a separate segment since November 2012—see “Cable Network Programming” below); (iii) Digital Real Estate Services; (iv) Book Publishing; and (v) Other, which primarily consists of Amplify, our digital education business, and general corporate overhead expenses. We account for our 50% stake in Foxtel as an equity investment.
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News and Information Services
The News and Information Services segment comprises different products and services targeting consumer and enterprise customers and includes the global product offerings of The Wall Street Journal and Barron’s
Cable Network Programming
Our Cable Network Programming segment consists of FOX SPORTS Australia, Australia’s leading sports programmer based on total subscribers. FOX SPORTS Australia is focused on live national and international sports events and is distributed via long-term carriage agreements with pay-TV providers (mainly Foxtel) in Australia. FOX SPORTS Australia provides featured original and licensed premium sports content tailored to the Australian market, including live sports such as National Rugby League, the domestic football league, English Premier League, Australian and international cricket, as well as the NFL. FOX SPORTS Australia offers seven standard definition television channels, high definition versions of five of those channels, an interactive viewing application and one internet protocol (“IPTV”) channel. Its channels consist of FOX SPORTS 1, FOX SPORTS 2, FOX SPORTS 3, FOX FOOTY, FOX SPORTS NEWS, FUEL TV and SPEED. FOX SPORTS Australia’s channels provide premium compelling live broadcasts, including almost every game of the highly popular Australian Football League. FOX SPORTS Australia also operates foxsports.com.au and offers a range of interactive mobile and tablet applications. Revenues comprise primarily affiliate fees, as well as advertising sales.
Prior to November 2012, we owned a 50% interest in FOX SPORTS Australia, which we accounted for as an equity investment. In November 2012, we acquired Consolidated Media Holdings Limited (“CMH”), a media investment company that owned the remaining 50% interest in FOX SPORTS Australia. As a result of the CMH acquisition, our ownership interest in FOX SPORTS Australia increased to 100% and, accordingly, the results of FOX SPORTS Australia are included within a new Cable Network Programming segment beginning in November 2012.
Digital Real Estate Services
We own 61.6% of REA, a publicly traded company listed on ASX (ASX: REA) that is a leading digital advertising business specializing in real estate services. REA operates Australia’s largest residential property website, realestate.com.au, and Australia’s largest commercial property site, realcommercial.com.au, which have approximately 23.1 million visits each month combined based on Nielsen average monthly total traffic ratings for the six months ended March 31, 2013. REA also operates a market-leading Italian property site, casa.it, and other property sites and apps across Europe and in Hong Kong. REA’s portfolio of property sites is used by approximately 21,000 agents, with over 37 million visits per month based on Nielsen average monthly total traffic ratings for the six months ended December 31, 2012. REA generates revenue primarily through the sale of basic and premium advertising subscription packages and advertising listing upgrades to real estate agents. REA also provides unique digital advertising solutions to help real estate agents sell or rent properties and win new listings. REA increasingly generates revenue as a result of customers upgrading to premium listing services.
Book Publishing
Our HarperCollins book publishing segment is one of the largest English-language consumer publishers in the world based on global revenue, with particular strengths in general fiction, nonfiction, children’s and religious publishing, and an industry leader in digital publishing. HarperCollins includes over 60 branded publishing imprints including Avon, Harper, HarperCollins Children’s Publishers, William Morrow and Christian publishers Zondervan and Thomas Nelson, and publishes works by well-known authors such as J.R.R. Tolkien, Paulo Coelho, Rick Warren and Agatha Christie and popular titles such as The Hobbit, Goodnight Moon and To Kill a Mockingbird. HarperCollins’ active print and digital global catalog includes over 50,000 publications and approximately 100,000 SKUs, including various print and digital editions of the same title. Nearly all of our titles published in the last four years, as well as the majority of our entire catalog, are available in electronic reader and tablet formats. Our growing digital publishing business provides us opportunities to enhance our products and secure new avenues to reach our consumers, including through Amazon, Apple, Google and Barnes & Noble, and to improve our operating results.
Other
Our Other segment primarily consists of Amplify, our digital education business focused on the K-12 learning market, and general corporate overhead expenses. Amplify focuses on three areas of business: data and analytics; digital content and curriculum; and mobile distribution systems designed for education. Amplify Insight, Amplify’s data and analytics division, which formerly operated as Wireless Generation, Inc. (“Wireless Generation”), commenced operations in 2000 and was acquired by Parent in 2010. Amplify Insight provides premium data and analytics services to enable real-time personalization of educational content. Through its Amplify Learning division, Amplify is creating innovative digital curricula for K-12 education designed to enhance teaching and learning in English Language Arts, Science and Math. Through its Amplify Access division, Amplify is developing an open, tablet-based education platform that integrates its existing assessment and analytics tools and services with its digital curricula, as well as third-party content and interactive applications.
Equity Investments
Foxtel
We own 50% of Foxtel, Australia’s largest pay-TV provider, which has approximately 2.3 million subscribing households in Australia, or over 30% of the country’s population (as of December 31, 2012). Foxtel’s 200-plus channel selection (which includes standard definition channels, high definition versions of some of those channels, and audio and interactive channels) provides premium and exclusive content, and a wide array of digital and mobile features not available to viewers via the three major commercial Free-To-Air (“FTA”) networks and two major government-funded broadcasters in Australia, which collectively broadcast approximately 17 main channels in most major metropolitan markets. Foxtel’s premium content includes FOX SPORTS Australia’s suite of sports channels and TV shows from HBO, FOX and Universal, among others. Foxtel also owns and operates 26 channels, including general entertainment and movie channels and sources an extensive range of movie programming through arrangements with major U.S. studios. Through innovative products such as high definition channels, the extension of pay-TV programming to mobile devices and tablets (including iPads and iPhones via FOXTEL Go), as well as IPTV, and advanced DVR and Electronic Program Guide technology, we believe Foxtel offers subscribers a compelling alternative to FTA TV. The remaining 50% of Foxtel is owned by Telstra Corporation Limited (“Telstra”), one of Australia’s leading telecommunications companies. Foxtel generates revenue primarily through subscription revenue as well as advertising revenue.
Our Competitive Strengths
Extensive portfolio of premium content and trusted brands
We distribute high quality content through some of the world’s leading and most trusted brands. For example, our news and information products and services, including The Wall Street Journal, Barron’s, WSJDN, Factiva, Dow Jones Newswires and other sources, provide timely, premium information for their respective customer bases. Likewise the sports content offered via FOX SPORTS Australia’s channels and the content offered by our HarperCollins titles are compelling and entertaining for our customers. We distribute content via trusted brands such as The Wall Street Journal, The Australian and The Times that have cultural relevance, longevity and stature in their respective markets with audiences and advertisers alike. The nature and quality of our content as well as the strength of our brands allow us to effectively monetize our content via a combination of subscriptions, circulation, licensing fees, affiliate fees and direct sales, as well as the sale of advertising and sponsorships.
Leadership positions across most of our key businesses
We enjoy strong leadership positions across most of our key businesses, allowing us to not only effectively monetize our content but also to innovate and take advantage of opportunities to transform and grow our businesses in the digital era. The Wall Street Journal is the leading daily newspaper in the U.S. based on average print and digital circulation for the six months ended March 31, 2013. We also own leading news brands by circulation in Australia, such as Herald Sun, and the U.K., such as The Sunday Times. This position has helped us to actively transition these products for effective digital consumption and monetization through, for example, the successful implementation of digital subscriptions. NAMG is a leading provider of free-standing coupon inserts, in-store marketing products and digital-savings marketing solutions for advertisers in the U.S. and Canada. Our HarperCollins book publishing segment is one of the largest English-language consumer publishers in the world based on global revenue, with particular strengths in general fiction, nonfiction, children’s and religious publishing, and an industry leader in digital publishing. REA owns the leading residential and commercial real estate websites in Australia based on monthly site visits. Likewise, FOX SPORTS Australia and Foxtel are leaders based on total subscribers and each is leveraging digital technology to improve and expand its product offerings.
Global reach and distribution of premium content across major English-speaking markets
We create and distribute our proprietary content through print, digital and pay-TV platforms to major English-speaking markets worldwide. Our expanding global presence, as well as our large multi-platform footprint in each of these markets, allows us to produce, distribute and monetize our content in a cost-effective manner, develop new offerings, engage new audiences, and share practices and models across geographies. Our size and breadth of platforms allow us to cross-market our products across many of our customers, as well as to create more compelling product offerings via cross-branded and bundled offerings
Ownership in the leading Australian media and sports franchises across multiple media platforms
We have an advantageous position in Australia as a result of our leading national and local presence across each of our Australian businesses. Through News Limited, we are the leader in print and digital news content in Australia based on total circulation. News Limited also owns a portfolio of leading digital properties in key categories including business, lifestyle, food and health. Through FOX SPORTS Australia, we own the largest sports programmer in Australia based on total subscribers, with seven TV sports channels and, together with Foxtel, the rights to one of the most compelling suites of sports video programming in the country. Additionally we own foxsports.com.au, a leading general sports website in Australia, an IPTV sports channel, as well as an 89.5% equity stake in SportingPulse, one of the leading online community sports networks in the country. Combined with our Australian newspaper publications’ sports editorial content we have created one of the strongest multi-platform sports media franchises in Australia with further opportunities to increase subscription and advertising revenues through continued investment in premium sports content, increased provision of enhanced services to our audience and advertisers and further integration across our properties. Foxtel, in which we own a 50% equity stake, is the leading pay-TV provider in Australia based on total subscribers. Foxtel delivers premium news, sports and entertainment programming to consumers through its popular content packages and provides integrated advertising and sponsorship options to its advertising partners. Through significant investments in proprietary technology, Foxtel has amassed a leading portfolio of programming and developed leading traditional and digital delivery capabilities. We believe Foxtel is uniquely positioned to deliver a compelling alternative to FTA TV, thus increasing penetration and driving significant growth in Australian pay-TV. However, we can offer no assurance that any increased penetration or growth will be achieved.
History of successful innovation in and expansion across digital media platforms
Our ongoing commitment to innovation and the development of new business models and sources of revenue have resulted in numerous new businesses and growth opportunities. The combination of our size, premium content and leading market positions has been instrumental in the development of businesses such as WSJDN, REA and HarperCollins’ e-book business, among others. Other examples of our digital expansion include the launch of paid-for digital platforms across a number of our newspapers, including Herald Sun in Australia and The Times in the U.K., as well as the introduction of one of the earliest print-at-home coupon websites in the U.S. We have leveraged technology to enhance our ability to monetize our content through digital subscriptions, electronic reader products and mobile applications and to retain and attract advertisers seeking integrated digital advertising solutions. As the shift to digital consumption continues, we believe we have the vision and the expertise to utilize current and emerging technologies to provide adaptive and transformative products and create future revenue opportunities, including in our digital education business.
Strong balance sheet and diversified revenue base
Our strong balance sheet provides us with the financial flexibility to continue our development of premium content, make investments across our businesses to maintain our leadership position amidst the continuing digital evolution, allocate capital towards investments in higher growth initiatives, and take advantage of strategic opportunities, including potential acquisitions, across the range of the media categories in which we operate. In connection with the distribution, Parent is expected to make a cash contribution to us such that at the distribution date, we expect to have approximately $2,600 million of cash on hand. As of March 31, 2013, on a pro forma basis taking into consideration Parent’s expected contribution, we had combined assets of approximately $18,600 million. See “Summary Historical and Unaudited Pro Forma Combined Financial Information” and the “Unaudited Pro Forma Combined Financial Statements” for further details. We also expect to benefit from our diversified revenue base, which reduces our dependence on any one geography, business or customer, and from the cash flow generated by our portfolio of businesses. For the fiscal year ended June 30, 2012, we generated combined revenue of $8,654 million, of which approximately 41% was generated in the U.S., 20% was generated in the U.K. and 32% was generated in Australia. In the same period, we recorded a net loss of $2,040 million, primarily resulting from non-cash impairment charges.
Experienced management team with demonstrated industry expertise
We will be led by company founder and Executive Chairman, K. Rupert Murdoch, our CEO, Robert J. Thomson, and a management team with demonstrated industry expertise. The team shares a vision to capitalize
on our current strengths and strategically invest in new initiatives and businesses to grow our platform and generate value for our stockholders. The management team is supported by experienced senior executives with significant tenure in our company and the industries in which we operate.
Goals and Strategies
Continue to invest in high quality premium content
We intend to continue investing in compelling content and new and existing brands to build on our leadership positions and to continually improve the quality of the platforms, products and services we deliver to our audiences and advertisers. For example, we recently enhanced our online and mobile offerings in the U.K. through the acquisition of the rights to show highlight clips for all Premier League soccer matches for three years on these platforms. We believe that these investments will allow us to grow and increase the engagement level of our audiences and improve the monetization of our content through subscription revenues, as well as increase our advertising revenues through the provision of increasingly effective marketing solutions.
Leverage our brands to expand our content across digital products and platforms
We plan to continue to take advantage of emerging technologies and consumer preferences in order to expand the channels through which we distribute our content and enhance our existing digital products, such as web sites, smartphone and tablet applications, video-on-demand services, online video, IPTV and other emerging digital technology. We are transforming each of our businesses by leveraging their powerful brands through enabling investments in new technologies, platforms and partnerships with leading distributors to deliver an enhanced value proposition to our audiences and advertisers alike. Additionally, we expect to continue to build new business models and revenue streams through exploitation of our existing content and brands as well as product innovations and strategic relationships. We have established a Strategy and Creative group to identify new products and services across our businesses to increase revenues and profitability.
Improve operating results through increased integration, focus on operational efficiencies and the continued expansion of our digital platforms
We are focused on implementing operational initiatives across all of our businesses and in each of our geographies to continue to improve our operating results. We intend to maintain cost discipline across the organization through tighter integration of technology and purchasing across our businesses, as well as enhanced sharing of new products, technology, business models and practices. For example, we have implemented a cross-platform editorial technology system, which will enable seamless content sharing across our global network of media channels (including print, digital media and video). We are also leveraging our existing paywall technology to increase content monetization across our digital businesses. We also intend to continue to simplify our organizational structure and processes while maintaining the high journalistic and content standards that our products are known for. Recent examples include: unifying our U.S. newsroom by combining Wall Street Journal and Dow Jones Newswires newsroom staff and improving our operations by consolidating newspaper warehouses and outsourcing non-strategic functions such as printing (in the U.S.) and distribution. Separately, the expansion of our businesses across digital platforms presents opportunities to continue to reduce our distribution and warehousing infrastructure and overall operational footprint.
Take advantage of our brands, content, shared technologies and expertise to continue to expand into new geographies
We see significant opportunities to expand our footprint into new geographies by taking advantage of our trusted brands, premium content and global platform. Much of our content, including business news and information as well as certain book and educational content, has a global audience outside our current core markets in the U.S., Australia and the U.K. For example, we now publish over 12 versions of The Wall Street Journal in 9 languages, including versions in China, Japan and Korea. In addition, REA, which began as a leading digital real estate site in Australia, has since expanded to operate leading sites in Hong Kong, Italy and Luxembourg. With the ongoing digitization of content creation and distribution as well as our focus on a fully integrated global infrastructure, we believe that we will be able to continue to efficiently expand into and operate our businesses in new markets across the globe.
Integrate our media offerings in Australia and strengthen our sports leadership position
We continue to focus on finding ways to integrate our diverse set of businesses and improve our organizational structure. In our Australian news business we have integrated our operations into a single, data-driven, customer-focused marketing organization and have built a collaborative, national editorial structure. At FOX SPORTS Australia, we will continue to invest in compelling sports programming and extend distribution of our content across our multiple media platforms. We plan on integrating foxsports.com.au with the digital properties of our existing Australian news sports brands and SportingPulse, a leading online community sports network, which provides unique local sports content to incorporate into our community newspaper and other digital properties. As we expand our digital presence, we expect to cross-sell advertising across multiple platforms to create stronger integrated advertising offerings.
Increasingly supplement advertising revenue with recurring subscription revenue
Many of our businesses (including Dow Jones Newswires, Factiva and FOX SPORTS Australia) generate revenues largely via recurring subscriptions for their content and services. In these businesses, we strive to grow our revenues by expanding our subscriber base. Other businesses, including The Wall Street Journal, The Times and other newspapers, generate revenues largely via the sale of advertising or a combination of subscriptions and advertising sales. Within these businesses, we are pursuing strategies to grow subscription revenues by, among other things, continuing to monetize our digital content by increasing digital subscriptions and expanding the size of our customer base through a focus on customer service, ongoing investments in subscriber management and customer insight platforms and other initiatives. As we execute on these strategies across our businesses, we expect that the revenues we generate from the sale of advertising will increasingly be supplemented by stable and growing sources of recurring subscription revenues.
Establish Amplify as the leading digital education provider for improving outcomes in K-12 education
We believe that technological innovation coupled with the movement to Common Core Standards and a desire by educators and taxpayers to deliver world-class educational services in a scaled, cost-effective manner will drive fundamental changes in the nature and delivery of education services in the coming years. We plan to take advantage of these changes and grow our education business, Amplify, by building an innovative and compelling digital curriculum for K-12 education to enhance teaching and learning in English Language Arts, Science and Math. We also aim to develop a 4G mobile tablet-based platform for students and teachers that will support our assessment tools, our digital curriculum as well as other third-party content and interactive applications. We believe Amplify will be a transformative and effective solution for the challenges facing K-12 education, and are focused on creating content as immersive and entertaining as the best films and games to drive the growth of this business. See “Risk Factors—No Assurance of Profitability of Amplify” for a discussion of risks associated with our Amplify business.
Risks Associated with the Proposed Transaction and Our Business
You should carefully consider the matters discussed under the heading “Risk Factors” of this information statement.
Risks Associated with the Proposed Transaction and Our Business