SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 10, 2003 (April 9, 2003)
FOX ENTERTAINMENT GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-14595 95-4066193
(State or other
jurisdiction of incorporation) (Commission File (IRS Employer
Number) 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) 852-7111
Not applicable
(Former name or former address, if changed since last report)
Item 5: Other Events.
On April 9, 2003, The News Corporation Limited ("TNCL") and
Fox Entertainment Group, Inc. ("FEG") announced an agreement
whereby TNCL has agreed to purchase 34% of Hughes Electronics
("Hughes") for $6.6 billion in cash and stock. At the closing
of the transaction, TNCL's ownership interest in Hughes will
be transferred to FEG.
A copy of the press release issued by TNCL and FEG announcing
the agreement is attached as Exhibit 99.1 to this Report.
Item 7: Financial Statements and Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits. The following exhibits are being filed herewith:
99.1 Press Release
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Dated: April 10, 2003 FOX ENTERTAINMENT GROUP, INC.
By: /s/ Lawrence A. Jacobs
Lawrence A. Jacobs
Secretary
INDEX TO EXHIBITS
99.1 Press Release dated April 9, 2003
Exhibit 99.1
News Corporation
FOX ENTERTAINMENT GROUP
N E W S R E L E A S E
For Immediate Release Media: Andrew Butcher 212-852-7070
Investors: Reed Nolte 212-852-7092
Craig Felenstein 212-852-7084
News Corporation Agrees To Acquire 34% Of Hughes Electronics
For $6.6 Billion In Cash And Stock
Buys GM's 19.9% Interest in Hughes And A Further 14.1% From
Other Hughes Shareholders For $14 A Share
Hughes Stake To Be Held By Fox Entertainment Group, Creating
Premier US Content and Distribution Company
______________________
NEW YORK, NY, April 9, 2003: News Corporation (NYSE: NWS, NWS.A),
General Motors (NYSE: GM) and Hughes Electronics (NYSE: GMH)
today reached a definitive agreement in which News Corp. would
acquire GM's 19.9% stake in Hughes and a further 14.1% of Hughes
from public shareholders and GM's pension and other benefit plans.
At closing, News Corp.'s 34% ownership interest will be transferred
to Fox Entertainment Group, Inc. (NYSE: FOX), an 80.6%-owned News
Corp. subsidiary, in exchange for a $4.5 billion promissory note
and approximately 74.2 million shares in Fox at $27.99 per share,
increasing News Corp.'s equity interest in FEG to approximately 82%.
Following completion of the acquisition, which is subject to
regulatory approvals, a tax ruling, and GM stockholder approval,
News Corp. Chairman and Chief Executive Rupert Murdoch will
become Chairman of Hughes, while News Corp.'s former Co-Chief
Operating Officer, Chase Carey, will be President and Chief
Executive Officer of Hughes. Hughes' Corporate Senior Executive
Vice President Eddy Hartenstein will be Vice Chairman and report
to Mr. Carey.
The businesses contained in Hughes include leading satellite
broadcaster DIRECTV, which has more than 11 million subscribers
in the United States; an 81% equity holding in satellite
operator PanAmSat; and Hughes Network Systems, the world's
leading provider of broadband satellite network solutions.
Presently, the public shareholders as well as GM's pension and
other benefit plans own all of General Motors' Class H Common
Stock (GMH), representing 80.1% of the economic interest in
Hughes Electronics. GM retains 19.9% of the economic interest
in Hughes. Under the proposed transaction, a "split-off" will
occur in which shareholders exchange GMH tracking stock for
shares of Hughes.
News Corp. will simultaneously acquire GM's 19.9% interest for
$3.8 billion, or $14 a share. At News Corp.'s election, $768
million of the consideration may be paid to GM in News Corp.
preferred limited voting ordinary ADRs (NWS.A). News Corp.
will acquire through a merger an additional 14.1% of Hughes
from other shareholders for $14 a share payable, at News Corp.'s
election, in cash or News Corp. preferred ADRs. At a value of
$22.40 per ADR, News Corp. would issue 34.3 million News Corp.
preferred ADRs to GM and 122.2 million News Corp. preferred
ADRs to the public shareholders and the GM pension and other
benefit plans.
The number of News Corp. preferred ADRs payable to GM and
Hughes shareholders will adjust within a collar range of
20% above or below the News Corp. preferred ADR price of
$22.40. The number of Fox shares payable to News Corp.
will not be subject to adjustment based on the Fox or
News Corp. share price.
Commenting on the proposed acquisition, Mr. Murdoch said:
"Today we announce a genuinely exciting and transforming
deal for News Corp., the Fox Entertainment Group and Hughes
Electronics. The benefits will be felt almost immediately:
in the competition it will offer cable, the richer services
it will provide to American viewers, and the value it will
create for the shareholders of Fox, News Corp. and Hughes.
"With Fox taking a significant interest in Hughes, we are
forging what we believe will be the premier diversified
entertainment company in America today, with leading assets
in film, television broadcasting and production, cable
programming, and now pay-TV distribution. The alignment
of Fox's valuable content assets and DIRECTV's distribution
platform will provide significant benefits to consumers and
greatly enhance the future businesses of both companies.
"With almost 15 years of expertise gained at our worldwide
pay-TV platforms, including the industry-leading BSkyB,
we are confident in our ability to grow this asset quickly,
rewardingly and in a manner consistent with the competitive
spirit that has guided News Corp. for half a century. From
day one, we have pledged to make our programming available
to all multi-channel distributors on non-discriminatory
prices, terms and conditions, and at the same time to open
the DIRECTV platform to all competing programmers."
Chase Carey said: "This agreement represents an unprecedented
opportunity to elevate what is already the leading brand in
multi-channel television to a more profitable and valuable
level. We look forward to building on the progress that
Hughes' management has made under difficult circumstances
over these past three years by focusing on three main areas
of the business: costs, customer service and offerings, and
future growth opportunities. These are areas where there
is clear potential, and in which we have proven skills, to
achieve dramatic improvement."
President and Chief Executive Officer of Hughes Jack Shaw
said: "This transaction is a win-win situation for Hughes
and News Corp. and also for the residential and commercial
customers of Hughes. Hughes and its operating companies
will be gaining access to world-class management that has
participated in the growth of News Corp. as a global media
leader. Hughes will be in a much stronger position to
achieve profitable growth and maximize cash flow, while
enhancing its commitment to excellence to our valued
customers."
As part of the acquisition, News Corp. and DIRECTV has agreed
to abide by FCC program access regulations, for as long as those
regulations are in place and for as long as News Corp. and Fox
hold an interest in DIRECTV, as if News Corp. and its subsidiaries
were vertically integrated programming vendors. Specifically,
News Corp. will continue to make all of its national and regional
programming available to all multi-channel distributors on a non-
exclusive basis and on non-discriminatory prices, terms and
conditions. Neither News Corp. nor DIRECTV will discriminate
against unaffiliated programming services with respect to the
price, terms or conditions of carriage on the DIRECTV platform.
The transaction is subject to a number of conditions, including
approval by a majority of each class of GM shareholders,
GM $1-2/3 and GM Class H, voting both separately as distinct
classes, and also together as a single class. The proposed
transaction is also subject to regulatory clearance under
the Hart-Scott-Rodino Act and approval by the Federal
Communications Commission. The transaction is also contingent
upon the receipt of a favorable ruling from the Internal
Revenue Service that the separation of Hughes from GM will
qualify as a tax-free spin-off for U.S. Federal Income Tax
purposes. The transaction is expected to close by the end of
calendar 2003, or at the latest during the first quarter of
calendar 2004.
Hughes' 11-member board will consist of Mr. Murdoch, Mr. Carey,
News Corp. and Fox Entertainment Group President and Chief
Operating Officer Peter Chernin, News Corp. and Fox Entertainment
Group Chief Financial Officer David DeVoe, Mr. Hartenstein and
six independent directors, including Neil Austrian, former
President and COO of the National Football League; James
Cornelius, Chairman of Guidant Corp.; Charles Lee, Chairman of
Verizon Communications Inc.; Peter Lund, former President and
CEO of CBS; and John Thornton, Co-President of Goldman Sachs.
Today's agreement further stipulates that News Corp. and Fox
may not acquire additional Hughes shares for one year after
the transaction closes. In addition, News Corp. and Fox
cannot exceed 50% ownership unless they gain the approval
of a majority of the Hughes' board of directors, tender
for 100% of Hughes, or a third party tenders for 25% or
more of the shares.
The agreement terminates if the transaction is not consummated
within one year. A termination fee of up to $300 million will
be payable to News Corp. if the transaction fails to close under
certain circumstances. GM is entitled to a $150 million
termination fee if the agreement terminates due to a significant
decline in the price of News Corp.'s preferred ADRs.
Citigroup Global Markets Inc. and J.P. Morgan Securities Inc.
have acted as financial advisers to News Corporation in
connection with this transaction.
The News Corporation Limited (NYSE: NWS, NWS.A; ASX: NCP,
NCPDP) had total assets as of December 31, 2002 of
approximately US$42 billion and total annual revenues of
approximately US$16 billion. News Corporation is a diversified
international media and entertainment company with operations
in seven industry segments: filmed entertainment; television;
cable network programming; magazines and inserts; newspapers;
book publishing; and other. The activities of News Corporation
are conducted principally in the United States, the United
Kingdom, Australia, Asia and the Pacific Basin. For more
information, please visit www.newscorp.com
Fox Entertainment Group, Inc., 80.6% owned by The News Corporation
Limited, is principally engaged in the development, production and
worldwide distribution of feature films and television programs,
television broadcasting and cable network programming. Fox had
total assets as of December 31, 2002 of approximately US$24
billion and total annual revenues of approximately US$10
billion. The Company's studios, production facilities and film
and television library provide high-quality creative content,
and the Company's broadcasting and cable networks provide
extensive distribution platforms for the Company's programs.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction. No offering
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.
This release contains statements that constitute forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Investors are cautioned that any
such forward-looking statements are not guarantees of future
performance or results and involve risks and uncertainties,
and that actual results or developments may differ materially
from those in the forward-looking statements as a result of
various factors, including financial community and rating
agency perceptions of the company and its business,
operations, financial condition and the industry in which it
operates and the factors described in the company's filings
with the Securities and Exchange Commission, including the
sections entitled "Risk Factors" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations"
contained therein. The company disclaims any obligation to
update the forward-looking statements contained herein.
In connection with the proposed transactions, The News
Corporation Limited ("News Corp."), General Motors
Corporation ("GM") and Hughes Electronics Corporation
("Hughes") will file relevant materials with the
Securities and Exchange Commission ("SEC"), including
one or more registration statement(s) that contain a
prospectus and proxy/consent solicitation statement.
Investors and security holders are urged to read these
documents (if and when they become available) and any
other relevant documents filed with the SEC, as well
as any amendments or supplements to those documents,
because they will contain important information. Investors
and security holders may obtain these documents free of
charge at the SEC's Internet web site at www.sec.gov. The
documents may also be obtained free of charge by directing
such request to: News America Incorporated, 1211 Avenue of
the Americas, 7th Floor, New York, New York 10036,
Attention: Investor Relations. Such documents are
not currently available.