Under the terms of the transactions, News Corporation will acquire Liberty Media’s 21 percent interest in Gemstar-TV Guide International, increasing News Corporation’s ownership to 43 percent and making it the largest shareholder in the world’s leading provider of interactive programming guides and the popular TV Guide magazine.
According to the specific terms of the deal, Liberty Media has agreed to transfer 80 percent of its interest in Gemstar-TV Guide to News Corporation in exchange for approximately 121.5 million ADRs representing 486 million News Corporation preferred limited voting ordinary shares (NYSE: NWS.A; ASX: NCPDP) and 20 percent of its interest in Gemstar-TV Guide to Sky Global Networks, News Corporation’s global pay-TV subsidiary, for newly issued shares of its Class A common stock. Liberty’s acquisition of the News Corporation ADRs will increase its interest in News Corporation to approximately 18 percent of the company’s outstanding equity, making it the largest non-voting shareholder. Holders of preferred limited voting ordinary shares are not entitled to vote in the election of directors.
Liberty Media will also exchange its interests in the Sky Latin America platforms, operated as Sky Brazil, Sky Mexico and Sky Multi-Country Partners, to Sky Global Networks for additional shares of its Class A common stock. These Class A shares will be contributed to Liberty Satellite LLC, a joint venture between Liberty Media and Liberty Satellite & Technology, Inc. (NASDAQ: LSAT).
As a result of Liberty’s asset contributions to Sky Global Networks, Liberty and its subsidiaries will own 4.76 percent of the outstanding equity of Sky Global Networks before the anticipated initial public offering.
Liberty Media has also agreed to acquire $500 million of Class A common stock of Sky Global Networks at the time of Sky Global Network’s anticipated initial public offering.
Liberty Media will agree not to sell or transfer the News Corporation shares received by it for a two-year period and not to sell or transfer the Sky Global Network shares received by it for a one-year period.
News Corporation will indirectly transfer the Gemstar-TV Guide shares acquired from Liberty Media to Sky Global Networks.
We are thrilled to acquire a greater interest in Gemstar-TV Guide, whose unique assets and patents make it one of the most exciting companies in the emerging worlds of interactive television, broadband services and electronic books. Henry Yuen, Gemstar’s founder and CEO, has achieved a remarkable record of growth at Gemstar, and we look forward to working with him even more closely to develop and deploy new technologies and services that will continue the phenomenal growth his company has enjoyed, said Rupert Murdoch, Chairman and Chief Executive of News Corporation. Gemstar’s interactive programming guide may well occupy the most strategic position in the converged world of television and the Internet. As we continue to optimize our digital television platforms around the world, we see an enormous operational and strategic advantage from owning a larger percentage of Gemstar’s extremely valuable assets.
Mr. Murdoch continued: We have enjoyed a long, productive and mutually beneficial relationship with Liberty Media and Dr. John Malone, one of the giants of the media industry. That John has chosen to become our single largest non-voting equity owner is as strong an endorsement as we could get of our strategic direction and operational performance.
These transactions give us the opportunity to increase our ownership of News Corp., and to participate in News Corp.’s exciting new company, Sky Global Networks, while continuing to own a substantial indirect interest in Gemstar-TV Guide, said John Malone, Chairman of Liberty Media. Over the years, we have developed an outstanding relationship with Rupert and his management team and we continue to believe that News Corp. is one of the best managed and best positioned global entertainment companies in the world. This transaction gives the Liberty shareholders a unique participation in the tremendous potential of News Corp., Sky Global Networks and Gemstar-TV Guide.
These transactions are subject to customary closing conditions, including regulatory approval. The contribution of 80 percent of Liberty Media’s interest in Gemstar-TV Guide to News Corporation is expected to close before year-end. The transactions involving Sky Global Networks are to occur concurrently with the anticipated IPO of Sky Global.
Upon completion of the transaction, News Corporation and its subsidiary, Sky Global Networks, will be the largest single shareholder of Gemstar-TV Guide. Gemstar-TV Guide provides interactive program guides, which allow consumers to navigate, sort, select and record television programming. Its other products include VCR Plus+, a technology that simplifies the recording of television programming and TV Guide magazine, the best-selling weekly magazine in the U.S.
