<PAGE>
Draft of 10/4/99
SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[_]Confidential, for use of the Commission only (as permitted by Rule 14a-6
(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Fox Entertainment Group, Inc.
...............................................................................
(Name of Registrant as Specified In Its Charter)
...............................................................................
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
...............................................................................
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction applies:
............................................................................
(2)Aggregate number of securities to which transaction applies:
............................................................................
(3)Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
............................................................................
(4)Proposed maximum aggregate value of transaction:
............................................................................
(5)Total fee paid:
............................................................................
[_]Fee paid previously with the preliminary materials:
...............................................................................
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1)Amount Previously Paid:
............................................................................
(2)Form, Schedule or Registration Statement No.:
............................................................................
(3)Filing Party:
............................................................................
(4)Date Filed:
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<PAGE>
FOX ENTERTAINMENT GROUP, INC.
Notice of Annual Meeting of Stockholders
[LOGO]Fox Entertainment
To the Stockholders of Fox Entertainment Group, Inc.:
The Annual Meeting of Stockholders of Fox Entertainment Group, Inc. (the
"Company") will be held at the Citibank Auditorium, 399 Park Avenue, 12th
Floor, New York, New York, at 10:00 a.m., local time, on November 23, 1999,
for the following purposes:
1.To elect the Board of Directors for the ensuing year.
2. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for the Company for the fiscal year ending June 30, 2000.
3. To transact such other business as may properly come before the meeting.
All stockholders are invited to attend the meeting. Stockholders of record
at the close of business on September 27, 1999, the record date fixed by the
Board of Directors, are entitled to notice of, and to vote at, the meeting. A
complete list of stockholders entitled to notice of, and to vote at, the
meeting will be open to examination by the stockholders beginning ten days
prior to the meeting for any purpose germane to the meeting during normal
business hours at the office of the Secretary of the Company at 1211 Avenue of
the Americas, New York, New York 10036.
Whether or not you intend to be present at the meeting, please sign and date
the enclosed proxy and return it in the enclosed envelope. Returning a proxy
will not deprive you of your right to attend the annual meeting and vote your
shares in person.
By Order of the Board of Directors
/s/ Lawrence A. Jacobs
Lawrence A. Jacobs
Secretary
New York, New York
October 8, 1999
<PAGE>
FOX ENTERTAINMENT GROUP, INC.
1211 Avenue of the Americas
New York, New York 10036
(212) 852-7111
----------------
PROXY STATEMENT
----------------
The accompanying proxy is solicited by the Board of Directors of Fox
Entertainment Group, Inc. (the "Company") for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 10:00 a.m., local time, on
November 23, 1999, at the Citibank Auditorium, 399 Park Avenue, 12th Floor,
New York, New York, and any adjournment thereof.
This proxy material is being mailed to stockholders commencing on or about
October 8, 1999.
VOTING SECURITIES; PROXIES
The Company will bear the cost of solicitation of proxies. In addition to
the solicitation of proxies by mail, certain officers and employees of the
Company, without additional remuneration, may also solicit proxies personally
by fax and by telephone. In addition to mailing copies of this material to
stockholders, the Company may request persons, and reimburse them for their
expenses in connection therewith, who hold stock in their names or custody or
in the names of nominees for others to forward such material to those persons
for whom they hold stock of the Company and to request their authority for
execution of the proxies.
The Company has two classes of common stock, Class A common stock ("Class A
Common Stock") and Class B common stock ("Class B Common Stock", and together
with the Class A Common Stock, the "Common Stock"). Holders of Class A Common
Stock are entitled to one vote per share, and holders of Class B Common Stock
are entitled to ten votes per share, on all matters to be voted on by
stockholders. A majority of all of the shares of stock entitled to vote at the
meeting, present in person or represented by proxy, shall constitute a quorum
at the Annual Meeting. A plurality of the votes cast, present in person or
represented by proxy at the Annual Meeting, is required for election of the
nominees as directors. Holders of shares of Class A Common Stock and Class B
Common Stock are not entitled to cumulate their votes in the election of
directors. In all matters other than the election of directors, a majority of
the votes cast by holders of shares of Class A Common Stock and Class B Common
Stock present in person or represented by proxy at the Annual Meeting, and
entitled to vote, is required.
The form of proxy solicited by the Board of Directors affords stockholders
the ability to specify a choice among approval of, disapproval of, or
abstention with respect to each matter to be acted upon at the Annual Meeting.
Shares of Class A Common Stock and Class B Common Stock, represented by the
proxy, will be voted, except as to matters with respect to which authority to
vote is specifically withheld. Where the solicited stockholder indicates a
choice on the form of proxy with respect to any matter to be acted upon, the
shares will be voted as specified. Abstentions and broker non-votes will not
effect the outcome of the election of directors or the ratification of the
appointment of the independent public accountants. With respect to all other
matters to be voted on by stockholders at the Annual Meeting, abstentions will
have the same effect as "no" votes, and broker non-votes will have no effect
on the outcome of the vote.
All shares of Class A Common Stock and Class B Common Stock, represented by
properly executed proxies which are returned and not revoked will be voted in
accordance with the instructions, if any, given therein. If no instructions
are provided in a proxy, the shares of Class A Common Stock and Class B Common
Stock represented by such proxy will be voted FOR the Board's nominees for
director, and FOR the ratification of the appointment of Arthur Andersen LLP
and in accordance with the proxy-holder's best judgment as to any other
matters raised at the Annual Meeting.
<PAGE>
A stockholder who has given a proxy may revoke it at any time prior to its
exercise by giving written notice of such revocation to the Secretary of the
Company, executing and delivering to the Company a later dated proxy
reflecting contrary instructions or appearing at the Annual Meeting and taking
appropriate steps to vote in person.
At the close of business on September 27, 1999, 176,559,834 shares of Class
A Common Stock and 547,500,000 of Class B Common Stock were outstanding and
eligible for voting at the meeting. Only stockholders of record at the close
of business on September 27, 1999 are entitled to notice of, and to vote at,
the meeting.
As of September 27, 1999, FEG Holdings, Inc., an indirect wholly-owned
subsidiary of The News Corporation Limited ("News Corporation"), owned
51,759,834 shares of Class A Common Stock and 547,500,000 shares of Class B
Common Stock of the Company, representing in the aggregate 82.7% of the equity
and 97.8% of the voting power of the Company.
FEG Holdings, Inc. has advised the Company that it intends to vote all of
its shares of Class A Common Stock and Class B Common Stock in favor of the
election of the nominated directors and the ratification of the appointment of
the independent public accountants. Such action by FEG Holdings, Inc. will be
sufficient to elect such directors and ratify the appointment of the
independent public accountants without any action on the part of any other
holder of Common Stock.
No Dissenter's Rights
Under Delaware law, stockholders are not entitled to dissenter's rights of
appraisal with respect to Proposal 2.
PROPOSAL 1
ELECTION OF DIRECTORS
The bylaws of the Company provide that each director serves from the date of
election until the next annual meeting of stockholders and until his successor
is elected and qualified. The specific number of directors is set by a
resolution adopted by a majority of the entire Board of Directors. The number
of directors is currently fixed at seven. Proxies cannot be voted for a
greater number of persons than the number of nominees named.
The persons named in the accompanying proxy intend to vote for the election
of the nominees listed herein as directors. Each nominee has consented to
serve if elected. The Board of Directors has no reason to believe that any
nominee will not serve if elected, but if any of them should become
unavailable to serve as a director, and if the Board of Directors designates a
substitute nominee or nominees, the persons named as proxies will vote for the
substitute nominee or nominees designated by the Board of Directors.
The following table sets forth certain information with respect to the
individuals nominated and recommended to be elected by the Board of Directors
of the Company and is based on the records of the Company and information
furnished to it by such persons. Reference is made to "Security Ownership of
Certain Beneficial Owners and Management" for information pertaining to stock
ownership by the nominees.
<TABLE>
<CAPTION>
Name of Nominee Age Position
--------------- --- --------
<S> <C> <C>
K. Rupert Murdoch..... 68 Chairman and Chief Executive Officer
Peter Chernin......... 48 President, Chief Operating Officer
Chase Carey........... 45 Co-Chief Operating Officer
David F. DeVoe........ 52 Senior Executive Vice President, Chief Financial Officer
Arthur M. Siskind..... 60 Senior Executive Vice President, General Counsel
Christos M. Cotsakos.. 51 Director
Laura D'Andrea Tyson.. 53 Director
</TABLE>
2
<PAGE>
Biographical Information
K. Rupert Murdoch has been a Director of the Company since 1985, Chairman
since 1992 and Chief Executive Officer of the Company since 1995. Mr. Murdoch
has been Chairman of the Board of Directors of News Corporation since 1991,
and an Executive Director and Chief Executive of News Corporation since its
formation in 1979. Mr. Murdoch has served as a Director of News Limited, News
Corporation's principal subsidiary in Australia, since 1953, a Director of
News International plc, News Corporation's principal subsidiary in the United
Kingdom, since 1969, and a Director of News America Incorporated ("NAI"), News
Corporation's principal subsidiary in the United States, since 1973. Mr.
Murdoch has served as a Director of STAR TV since 1993 and served as Chairman
from 1993 to 1998, and has served as a Director of British Sky Broadcasting
Group plc ("BSkyB") since 1990 and Chairman since June 1999, and as a Director
of Fox Family Worldwide ("FFW") since 1996. Mr. Murdoch is also a member of
the Board of Directors of Philip Morris Companies, Inc.
Peter Chernin has been a Director and President and Chief Operating Officer
of the Company since August 1998. Mr. Chernin has been an Executive Director,
President and Chief Operating Officer of News Corporation and a Director,
Chairman and Chief Executive Officer of NAI, since 1996. Mr. Chernin was
Chairman and Chief Executive Officer of Fox Filmed Entertainment ("FFE") from
1994 until 1996, Chairman of Twentieth Century Fox Film Corporation from 1992
until 1994 and President of FOX from 1989 until 1992. Mr. Chernin has served
as a Director of TV Guide, Inc. ("TV Guide") since March 1999 and has served
on the Advisory Board of PUMA AG since May 1999, and as a Director of
Tickets.com, Inc. since September 1999.
Chase Carey has been a Director of the Company since 1992 and Co-Chief
Operating Officer of the Company since August 1998. Mr. Carey was President of
the Company from 1995 to 1998, Executive Vice President and Chief Operating
Officer from 1991 to 1995 and Senior Vice President from 1988 to 1991.
Mr. Carey is an Executive Director and has been the Co-Chief Operating Officer
of News Corporation and a Director and Executive Vice President of NAI since
1996. Mr. Carey has served as the Chairman and Chief Executive Officer of Fox
Television since July 1994. Mr. Carey joined Fox, Inc. (predecessor of the
Company) in 1988 as Executive Vice President, served as Chief Financial
Officer, and assumed the title of Chief Operating Officer in February 1992.
Mr. Carey has been a member of the Boards of Directors of Star TV since 1993,
FFW, Gateway, Inc. and Colgate University since 1996 and TV Guide since March
1999.
David F. DeVoe has been a Director of the Company since 1991 and Senior
Executive Vice President and Chief Financial Officer of the Company since
August 1998. Mr. DeVoe has been an Executive Director, Chief Financial Officer
and Finance Director of News Corporation since 1990 and Senior Executive Vice
President of News Corporation since 1996. Mr. DeVoe was an Executive Vice
President of News Corporation from 1990 until 1996, and has been a Director of
NAI since July 1991 and a Senior Executive Vice President since January 1998.
Mr. DeVoe served as Executive Vice President of NAI from 1991 to 1997. Mr.
DeVoe has also been a Director of STAR TV since 1993 and a Director of BSkyB
since 1994.
Arthur M. Siskind has been a Director and Senior Executive Vice President
and General Counsel of the Company since August 1998. Mr. Siskind has been an
Executive Director and Group General Counsel of News Corporation since 1991
and a Senior Executive Vice President of News Corporation since 1996. Mr.
Siskind served as Executive Vice President of News Corporation from 1991 until
1996. Mr. Siskind has been a Director of NAI since 1991 and Senior Executive
Vice President since January 1998. Mr. Siskind served as an Executive Vice
President of NAI from 1991 to 1997. Mr. Siskind has been a Director of BSkyB
since 1992 and a Director of STAR TV since 1993. Mr. Siskind has been a member
of the Bar of the State of New York since 1962.
Christos M. Cotsakos has been a Director of the Company since May 1999. Mr.
Cotsakos has been President, Chief Executive Officer and a Director of E*Trade
Group, Inc. since March 1996 and Chairman of the Board since December 1998.
Prior to joining E*Trade Group, Inc., he served as President, Co-Chief
Executive Officer, Chief Operating Officer and a director of A.C. Nielsen,
Inc. from March 1995 to January 1996, as President and Chief Executive Officer
of Nielsen International from September 1993 to March 1995, and as
3
<PAGE>
President and Chief Operating Officer of Nielsen Europe, Middle East and
Africa from March 1992 to September 1993. Mr. Cotsakos serves as a director of
several technology companies in both the public and private sectors including
Digital Island, Inc., Critical Path Software Incorporated and National
Processing Corporation.
Laura D'Andrea Tyson has served as a director of the Company since May 1999.
Dr. Tyson has been the Dean of the Haas School of Business Administration at
the University of California at Berkeley since July 1998 and has been a
Professor of Economics and Business Administration at the Haas School of
Business since 1997. Dr. Tyson served as National Economic Advisor to the
President of the United States from March 1995 to December 1996 and as Chair
of the White House Council of Economic Advisers from 1993 to 1995. She also
served as a member of the President's National Security Council and Domestic
Policy Council. Dr. Tyson is also a director of Ameritech Corporation, Eastman
Kodak Company, Healtheon Corporation, Human Genome Sciences, Inc. and Morgan
Stanley Dean Witter.
Stockholder Vote Required
A majority of all of the shares of stock entitled to vote at the meeting,
present in person or represented by proxy, shall constitute a quorum at the
Annual Meeting, and an inspector of election appointed for the meeting shall
determine whether a quorum is present.
A plurality of the votes cast, present in person or represented by proxy at
the Annual Meeting, is required for election of the nominees as directors.
Holders of Class A Common Stock and Class B Common Stock are not entitled to
cumulate their votes in the election of directors.
The Board of Directors recommends that you vote in favor of the election of
each of the nominees named above for election to the Board of Directors.
Committees of the Board--Board Meetings
The Board has established an audit and a remuneration committee to assist it
in the discharge of its responsibilities. The principal responsibilities of
each committee and the members of each committee are described in the
succeeding paragraphs. Actions taken by any committee of the Board are
reported to the Board of Directors, usually at its next meeting or by written
report. The Company's Board of Directors held one meeting during the fiscal
year ended June 30, 1999. All directors attended that meeting.
The Audit Committee of the Board of Directors currently consists of Christos
M. Cotsakos and Laura D'Andrea Tyson. The Audit Committee did not hold any
meetings during the fiscal year ended June 30, 1999. Its purpose is to review
the Company's yearly and half-yearly financial results and statements, the
findings of the Company's audit and any adjustment required as a result of the
audit; to recommend to the Board of Directors that the financial statements be
approved; to discuss any problems foreseen in the audit process; to review the
effect of any changes in accounting policies on the financial statements; to
review the auditors' fees and performance; to review the adequacy of internal
control; to advise the Board of Directors on any other requested issues and
such other duties as the Board of Directors may designate from time to time.
The Remuneration Committee of the Board of Directors currently consists of
K. Rupert Murdoch, Peter Chernin and Chase Carey. The Remuneration Committee
did not hold any meetings during the fiscal year ended June 30, 1999. The
Committee is to review and make recommendations to the Board of Directors on
the remuneration of the Chief Executive Officer, to review and make
recommendations to the Chief Executive Officer on the remuneration of the
other senior executive officers and such other duties as the Board of
Directors may designate from time to time.
The Board of Directors does not have a nominating committee. This function
is performed by the Board of Directors as a whole.
There are no family relationships among any of the directors or executive
officers of the Company. The Company's executive officers serve in such
capacity at the pleasure of the Board of Directors.
4
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The names and ages of the executive officers of the Company as of September
27, 1999 and their positions with the Company are as follows:
<TABLE>
<CAPTION>
Executive Officers Age Position
------------------ --- --------
<S> <C> <C>
K. Rupert Murdoch..... 68 Chairman and Chief Executive Officer
Peter Chernin......... 48 President, Chief Operating Officer
Chase Carey........... 45 Co-Chief Operating Officer
David F. DeVoe........ 52 Senior Executive Vice President, Chief Financial Officer
Arthur M. Siskind..... 60 Senior Executive Vice President, General Counsel
</TABLE>
All of the Executive Officers of the Company are also executive officers of
News Corporation. As executive officers of News Corporation, the Executive
Officers of the Company continue to render services to News Corporation.
The biographical description of each Executive Officer is set forth under
"Election of Directors" above.
For the fiscal year ended June 30, 1999, no amount of compensation was paid
or accrued by the Company for the account of the Executive Officers of the
Company, and no amount of compensation was paid or accrued to News Corporation
with respect to the services of the Executive Officers. Information regarding
the compensation received by the Executive Officers for their services to News
Corporation and its subsidiaries will be included in the Annual Report of News
Corporation on Form 20-F for the fiscal year ended June 30, 1999.
The Senior Executives of the Company (in addition to persons identified as
Executive Officers above) are as follows:
<TABLE>
<CAPTION>
Senior Executives Age Position
----------------- --- --------
<S> <C> <C>
David Hill.............. 53 Chairman and Chief Executive Officer of Fox Sports Television Group
William Mechanic........ 49 Chairman and Chief Executive Officer of Fox Filmed Entertainment
Mitchell Stern.......... 45 Chairman and Chief Executive Officer of Fox Television Stations
</TABLE>
Set forth below is a brief biographical description of the Senior Executives
who are not Executive Officers of the Company:
David Hill has served as Chairman and Chief Executive Officer of Fox Sports
Television Group since June 1999. Mr. Hill served as Chairman and Chief
Executive Officer of FOX from October 1997 until June 1999 and served as
President of Fox Sports, a division of Fox Television, from December 1993 to
June 1999. From July 1996 until October 1997, Mr. Hill served as Chief
Operating Officer of Fox Television. In addition, Mr. Hill served as Chairman
of Fox Sports Networks, LLC from April 1996 until June 1999. From April 1996
through October 1997, Mr. Hill also served as Fox Sports Networks LLC's Chief
Executive Officer.
William Mechanic has been Chairman and Chief Executive Officer of FFE since
December 1996. Mr. Mechanic was President and Chief Operating Officer of FFE
from 1994 until 1996 and President and Chief Operating Officer of Twentieth
Century Fox from 1993 until 1994.
Mitchell Stern has been Chairman and Chief Executive Officer of Fox
Television Stations since June 1998. Mr. Stern was President and Chief
Operating Officer of Fox Television Stations, Inc. from 1993 to 1998.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is stock ownership information as of September 27, 1999 as
to each person who owns, or is known by the Company to own beneficially
(within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934),
more than 5% of the Common Stock, and the number of shares of Common Stock
owned by its Directors and by all Executive Officers and Directors as a group.
Other than News Corporation, the persons named below own only Class A Common
Stock.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class
------------------- ----------------------- --------
<S> <C> <C>
News Corporation (1)...................... 599,259,834(2) 82.7%
K. Rupert Murdoch......................... 5,000 *
Peter Chernin............................. 4,444 *
Chase Carey............................... 5,000 *
David F. DeVoe............................ 4,000 *
Arthur M. Siskind......................... 4,000 *
Christos M. Cotsakos...................... 20,000 *
Laura D'Andrea Tyson...................... -0-
All Directors and Executive Officers as a
group (7 persons)........................ 42,444 *
</TABLE>
- --------
(1) Such shares are held by FEG Holdings, Inc., an indirect wholly-owned
subsidiary of News Corporation.
(2) Consists of 51,759,834 shares of Class A Common Stock and 547,500,000
shares of Class B Common Stock. The shares of Class B Common Stock are
convertible on a 1:1 basis at the option of the holder into shares of
Class A Common Stock.
* Less than one percent
Set forth below is the information as of September 27, 1999 as to the
beneficial ownership of the outstanding Ordinary Shares of News Corporation
(the only class of shares of News Corporation generally entitled to voting
rights) by each person who at such time owned more than five percent thereof,
by the Company's Directors and Executive Officers and by all of the Directors
and Executive Officers of the Company as a group. The following table does not
include beneficial ownership of Preferred Limited Voting Ordinary Shares of
News Corporation ("Preferred Ordinary Shares").
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class
------------------- ----------------------- --------
<S> <C> <C>
Cruden Investments Pty. Limited............ 613,209,949(1) 30.36%
K. Rupert Murdoch.......................... 613,209,949(1) 30.36%
Peter Chernin.............................. -- (2) --
Chase Carey................................ 680,000(3) *
David F. DeVoe............................. 32,000(4) *
Arthur M. Siskind.......................... 27,821(5) *
All Directors and Executive Officers of the
Company as a group
(5 persons)............................... 613,949,770 30.40%
</TABLE>
- --------
(1) Includes Ordinary Shares owned by (i) Mr. Murdoch and members of his
family, (ii) Cruden Investments Pty. Limited, a private Australian
investment company owned by Mr. Murdoch, members of his family and various
corporations and trusts, the beneficiaries of which include Mr. Murdoch,
members of his family and certain charities and (iii) corporations which
are controlled by trustees of settlements and trusts set up for the
benefit of the Murdoch family, certain charities and other persons. By
virtue of shares of News Corporation owned by such persons and entities
and Mr. Murdoch's positions as Chairman and Chief Executive of News
Corporation and Chairman and Chief Executive Officer of the Company, Mr.
Murdoch
6
<PAGE>
may be deemed to control the operations of News Corporation and the
Company. In addition, Mr. Murdoch, Cruden Investments Pty. Limited and such
other entities beneficially own 241,211,302 Preferred Ordinary Shares. The
address of Cruden Investments Pty. Limited is Level 2, 306 Little Collins
Street, Melbourne, Victoria, Australia.
(2) Mr. Chernin has been granted options to purchase 4,175,000 Preferred
Ordinary Shares, of which 1,700,000 are currently exercisable or become
exercisable within 60 days. In addition, Mr. Chernin was granted options
to purchase 600,000 Preferred Ordinary Shares subject to the approval of
shareholders at News Corporation's Annual General Meeting to be held on
November 3, 1999.
(3) Such shares are subject to currently exercisable options. Mr. Carey has
been granted options to purchase 2,780,000 Preferred Ordinary Shares, of
which 1,815,000 are currently exercisable or become exercisable within 60
days. In addition, Mr. Carey was granted options to purchase 360,000
Preferred Ordinary Shares subject to the approval of shareholders at News
Corporation's Annual General Meeting to be held on November 3, 1999.
(4) In addition, Mr. DeVoe beneficially owns 24,000 Preferred Ordinary Shares
and has been granted options to purchase 1,020,000 Preferred Ordinary
Shares, of which 365,000 are currently exercisable or become exercisable
within 60 days. Mr. DeVoe has also been granted options to purchase
300,000 Preferred Ordinary Shares subject to the approval of shareholders
at News Corporation's Annual General Meeting to be held on November 3,
1999.
(5) In addition, Mr. Siskind beneficially owns 50,143 Preferred Ordinary
Shares and has been granted options to purchase 1,460,000 Preferred
Ordinary Shares, of which 805,000 are currently exercisable or become
exercisable within 60 days. Mr. Siskind has also been granted options to
purchase 300,000 Preferred Ordinary Shares subject to the approval of
shareholders at News Corporation's Annual General Meeting to be held on
November 3, 1999.
* Less than one percent.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Relationships Between the Company and News Corporation
Business Relationships
News Corporation and its subsidiaries have, in the past, engaged in a broad
range of relationships with the Company and its subsidiaries. These
relationships have included the purchase by programming platforms owned, in
whole or in part, by News Corporation of programming created or owned by the
Company; the purchase by the Company of television and movie rights related to
books published by HarperCollins Publishers Inc. or other News Corporation
publications; the purchase of advertising in TV Guide and in free-standing
inserts or other publications of News Corporation; and the purchase of certain
television broadcasting equipment services from News Corporation. The Company
believes that the terms and conditions of all such arrangements were
comparable to those the Company believes would pertain to transactions with
unaffiliated third parties.
Master Intercompany and Other Agreements
For purposes of governing certain on-going relationships between the Company
and News Corporation, the Company and News Corporation have entered into
various agreements and relationships, including those described below. The
agreements described below were negotiated in the context of a parent-
subsidiary relationship and therefore are not the result of arm's-length
negotiations between independent parties. There can be no assurance,
therefore, that each of such agreements, or the transactions provided for
therein, or any amendments thereof will be effected on terms at least as
favorable to the Company as could have been obtained from unaffiliated third
parties.
7
<PAGE>
The following descriptions summarize all material terms of such agreements.
Master Intercompany Agreement
The Company and News Corporation have entered into a Master Intercompany
Agreement which provides, among other things, for certain agreements governing
the relationship between the Company and News Corporation. The consideration
for each of the services and other arrangements set forth in the Master
Intercompany Agreement have been mutually agreed upon between News Corporation
and the Company based upon allocated costs, provided that all such
consideration and any material arrangements is subject to the approval of the
respective Audit Committees of the Company's and News Corporation's Boards of
Directors. For the fiscal year ended June 30, 1999, no amount was paid or
accrued by the Company to or for the account of News Corporation for services
under the Master Intercompany Agreement other than the amounts set forth under
"Cash Management and Financing."
Cash Management and Financing
Pursuant to the Master Intercompany Agreement, the Company may utilize the
worldwide treasury and cash management function, including the use of bank
overdraft facilities, of News Corporation and its subsidiaries, subject to
certain limitations. In addition, the Company's cash balances are available to
News Corporation and its subsidiaries. From November 11, 1998, interest on
outstanding intercompany balances (see "Intercompany Debt") has been charged
at commercial market rates not exceeding News Corporation's average cost of
borrowings as set forth in the Master Intercompany Agreement. At June 30,
1999, the intercompany interest rate approximated 8%.
Executive Officer Services
The Master Intercompany Agreement provides that News Corporation or its
subsidiaries will make available to the Company the services of Messrs. K.
Rupert Murdoch, the Company's Chairman and Chief Executive Officer; Peter
Chemin, the Company's President and Chief Operating Officer; Chase Carey, the
Company's Co-Chief Operating Officer; David F. DeVoe, the Company's Senior
Executive Vice President and Chief Financial Officer; and Arthur M. Siskind,
the Company's Senior Executive Vice President and General Counsel, and such
other employees of News Corporation as the Company and News Corporation may
from time to time designate.
Although it is contemplated that such executives will spend a considerable
portion of their business time in connection with the business of the Company,
they will also be engaged in activities for News Corporation not related
directly to the business of the Company. In addition, pursuant to the Master
Intercompany Agreement, News Corporation may terminate the availability of the
services of such executives upon notice to the Company.
Services of Company Employees
The Master Intercompany Agreement provides that News Corporation and its
subsidiaries may from time to time request certain employees of the Company to
devote time to the business activities of News Corporation, its subsidiaries
and affiliated and associated companies.
Facility Arrangements
Certain of the Company's facilities are or may in the future be located on
premises owned or leased by News Corporation, or entities in which News
Corporation has an interest. Furthermore, certain facilities of News
Corporation, or entities in which News Corporation has an interest, are or may
in the future be located on premises owned or leased by the Company. The
Master Intercompany Agreement provides that News Corporation and its
subsidiaries, on the one hand, and the Company, on the other hand, will permit
each other to use all or a portion of their respective premises.
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Employee Matters
The Master Intercompany Agreement provides that certain employees of the
Company may from time to time continue to be eligible to participate in stock
option and other employee benefit plans maintained by News Corporation and its
subsidiaries. The Company will assume and be solely responsible for all
liabilities and obligations whatsoever with respect to current officers and
employees of the businesses owned and operated by the Company and former
officers and employees of such businesses who, immediately prior to the
termination of their employment, were employed in such businesses.
Insurance
The Master Intercompany Agreement provides that News Corporation or its
subsidiaries will provide insurance coverage on behalf of the Company against
certain risks and in amounts of coverage consistent with current coverages or
as otherwise may be agreed between them. The Master Intercompany Agreement
further provides that News Corporation will not be obligated to maintain any
type or amount of coverage.
Services
The Master Intercompany Agreement provides that News Corporation and its
subsidiaries will continue to provide various services to each other,
including material procurement, transportation and financial and
administrative services.
Trademarks
The Master Intercompany Agreement provides that News Corporation and its
subsidiaries and the Company will be granted a royalty-free license to use
certain trademarks and service marks of the Company and that the Company will
be granted a royalty-free license to use certain trademarks and service marks
of News Corporation and its subsidiaries. The Master Intercompany Agreement
also provides that the license granted by News Corporation to the Company may
be terminated at any time by News Corporation.
Indemnities by the Company
News Corporation or its subsidiaries have, in the past, given certain
guarantees or made commitments relating to the businesses that are conducted
by the Company. These include commitments made in connection with film rights
agreements and funding and other obligations made to Liberty IFE, Inc., the
holder of Series A Preferred Stock of FFW having a liquidation preference of
$345 million. The Master Intercompany Agreement provides that the Company will
assume all such obligations and commitments, and will indemnify and hold News
Corporation and its subsidiaries harmless from and against all liabilities
arising from any default thereunder.
Indemnities by News Corporation
The Master Intercompany Agreement provides that News Corporation will
indemnify and hold the Company harmless from and against any and all
liabilities arising from any default under the debt instruments or obligations
of News Corporation which have been guaranteed by the Company or will be
guaranteed by the Company in the future.
Tax Sharing Agreement
The Company and certain of its subsidiaries are included in the consolidated
group of News Publishing Australia Limited, the principal U.S. subsidiary of
News Corporation, for U.S. federal income tax purposes (the "Consolidated
Group") as well as in certain consolidated, combined or unitary groups which
include News Publishing Australia Limited and/or certain of its subsidiaries
(a "Combined Group") for state and local income tax purposes. The Company and
News Publishing Australia Limited have entered into a tax sharing agreement
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(the "Tax Sharing Agreement"). Pursuant to the Tax Sharing Agreement, the
Company and News Publishing Australia Limited generally make payments between
them such that, with respect to tax returns for any taxable period in which
the Company or any of its subsidiaries is included in the Consolidated Group
or any Combined Group, the amount of such consolidated or combined taxes to be
paid by the Company will be determined, subject to certain adjustments, as if
the Company and each of its subsidiaries included in the Consolidated Group or
Combined Group filed their own consolidated, combined or unitary tax return.
Net operating losses and other future tax benefits actually availed of to
reduce the tax liabilities of the Consolidated Group or Combined Group and any
taxes actually paid by the Company's subsidiaries included in such Groups will
be taken into account for this purpose. The Company and News Publishing
Australia Limited will cooperate in preparing any tax return filed with
respect to the Consolidated Group or any Combined Group.
News Publishing Australia Limited is primarily responsible for preparing and
filing any tax return with respect to the Consolidated Group or any Combined
Group, as well as for controlling and contesting any audit or other tax
proceeding with respect to the Consolidated Group or any Combined Group. The
Company is responsible for preparing and filing any tax returns that include
only the Company and its subsidiaries and for any taxes with respect to such
tax returns.
In general, the Company will be included in the Consolidated Group for so
long as News Publishing Australia Limited beneficially owns at least 80% of
the total voting power and value of the outstanding stock of the Company. Each
member of a consolidated group for federal income tax purposes is jointly and
severally liable for the federal income tax liability of each other member of
the consolidated group. Accordingly, although the Tax Sharing Agreement
allocates tax liabilities between the Company and News Publishing Australia
Limited, during the period in which the Company is included in the
Consolidated Group, the Company could be liable in the event that any federal
tax liability is incurred, but not discharged, by any other member of the
Consolidated Group.
Intercompany Debt
Prior to the consummation of the initial public offering which closed on
November 16, 1998, News Corporation and its subsidiaries eliminated certain of
the Intercompany borrowings owed by the Company, and the Company issued
Intercompany Notes to a subsidiary of News Corporation in an aggregate amount
of $4.5 billion, representing the remaining Intercompany borrowings and
payment of dividends by the Company to a subsidiary of News Corporation (and
$4.5 billion was the largest aggregate amount of such indebtedness in the
fiscal year ended June 30, 1999). The Intercompany Notes constitute unsecured,
general obligations of the Company and mature on June 30, 2003. The
Intercompany Notes bear interest at a rate equal to the average cost of long-
term debt of News Corporation (currently 8% per annum), adjusted annually. The
Company used the entire net proceeds from the initial public offering to repay
a portion of the amounts due under the Intercompany Notes. The aggregate
amount outstanding under the Intercompany Notes at June 30, 1999 was
approximately $1.4 billion.
Credit Arrangements
News Corporation and certain of its subsidiaries, including the Company and
certain of its significant subsidiaries (the "Fox Guarantors"), are guarantors
of the obligations of NAI under various guaranteed debt instruments (the
"Guaranteed Debt Instruments"). Such guarantees, including those of the
Company, represent contingent and not current obligations of the Fox
Guarantors. The principal amount of indebtedness outstanding under such
Guaranteed Debt Instruments at June 30, 1999 was approximately $9.2 billion,
which amount includes approximately $1 billion of obligations under
Exchangeable Trust Originated Preferred SecuritiesSM due 2016. The Guaranteed
Debt Instruments mature at various times between 1999 and 2096, with a
weighted average maturity of over 20 years, and are generally not redeemable
prior to maturity. The indentures governing the Guaranteed Debt Instruments
limit the ability of News Corporation and its subsidiaries (including the Fox
Guarantors) to subject their properties to liens. Certain Guaranteed Debt
Instruments issued prior to March 1993 also may impose limitations on the
ability of News Corporation and its subsidiaries, including the Company to
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<PAGE>
incur indebtedness in certain circumstances. The Guaranteed Debt Instruments
also contain customary representations, warranties, covenants and events of
default. Under the terms of the Guaranteed Debt Instruments, the holders
thereof have the right to require NAI to make an offer to repurchase the
outstanding debt instruments in the event of a "Change of Control Triggering
Event." A Change of Control Triggering Event occurs when the Guaranteed Debt
Instrument is downgraded below investment grade following a "Change of
Control" of News Corporation or an announcement of an intended Change of
Control (or in the event the Guaranteed Debt Instrument is not investment
grade at such time, a reduction in the rating by one or more gradations). A
Change of Control occurs when a person other than News Corporation,
subsidiaries and certain affiliates of News Corporation and the Murdoch Family
(as defined in the Guaranteed Debt Instruments) owns (i) 30% or more of the
voting power of News Corporation's common shares or (ii) if the Murdoch Family
is the beneficial owner of more than 30% of such voting power of News
Corporation, a percentage greater than that owned by the Murdoch Family.
Certain Guaranteed Debt Instruments require any subsidiary of News Corporation
which issues any guarantee for money borrowed in excess of $50 million to
guarantee all outstanding and future senior indebtedness issued by News
Corporation or its affiliates pursuant to the indentures governing the
Guaranteed Debt Instruments. Therefore, additional subsidiaries of the Company
may from time to time be required to become guarantors under certain
Guaranteed Debt Instruments.
The Fox Guarantors have also guaranteed the obligations of News Corporation
and certain of its subsidiaries under the Revolving Credit Agreement. The
Revolving Credit Agreement provides for borrowings of up to approximately $2.0
billion and expires on June 30, 2004. As of September 27, 1999, there were no
borrowings outstanding under the Revolving Credit Agreement. The Revolving
Credit Agreement contains certain covenants which, among other things, limit
the ability of News Corporation and the Fox Guarantors to subject their
properties to liens, to incur indebtedness, to make certain investments and to
prepay certain indebtedness. News Corporation is also required to maintain
certain financial covenants, calculated on a consolidated basis, including a
leverage ratio, interest coverage ratio and fixed charge covenant ratio. The
Revolving Credit Agreement also contains representations, warranties,
covenants and events of default customary to senior unsecured credit
facilities of similar size and nature. Each subsidiary of News Corporation,
including subsidiaries of the Company, which account for greater than 5% of
the consolidated operating income of News Corporation are required to become
guarantors under the Revolving Credit Agreement. Therefore, additional
subsidiaries of the Company may from time to time be required to become
guarantors under the Revolving Credit Agreement in certain circumstances.
In addition to the foregoing, the Company and its subsidiaries may from time
to time in the future guarantee additional obligations of News Corporation and
its subsidiaries.
Pursuant to the Master Intercompany Agreement, News Corporation has agreed
to indemnify and hold the Company and its subsidiaries harmless from and
against all liabilities arising from any default under the debt instruments or
obligations of News Corporation or its subsidiaries (other than the Company)
which have been guaranteed by the Company or its subsidiaries.
Acquisition of Liberty Media Corporation's Interest in Fox/Liberty Networks,
LLC
On July 15, 1999, News Corporation acquired substantially all of Liberty
Media Corporation's and its related companies' 50% interest in Fox/Liberty
Networks, LLC and certain related businesses. In exchange for its interest,
Liberty received approximately 51.8 million ADRs (representing 207.1 million
Preferred Ordinary Shares of News Corporation) valued at $1.425 billion.
Upon consummation of this transaction on July 15, 1999, News Corporation
transferred the acquired interests to the Company in exchange for 51,759,834
shares of the Company's Class A Common Stock valued at $1.425 billion. This
transfer to the Company increased News Corporation's equity interest to 82.7%
from 81.44% while its voting interest remained at 97.8%.
11
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PROPOSAL 2
INDEPENDENT PUBLIC ACCOUNTANTS
Ratification of Appointment of Independent Public Accountants
The firm of Arthur Andersen LLP, independent public accountants, has audited
the books and records of the Company for the previous fiscal year.
Accordingly, the Board of Directors recommends that the stockholders vote FOR
the ratification of the appointment by the Board of Directors of the firm of
Arthur Andersen LLP to audit the books and accounts of the Company for the
fiscal year ending June 30, 2000.
Representatives of Arthur Andersen LLP are expected to be available at the
meeting to respond to appropriate questions and will be given the opportunity
to make a statement if they desire to do so.
The Board of Directors recommends that you vote in favor of the ratification
of the appointment of Arthur Andersen LLP as the independent public
accountants of the Company.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who beneficially own more than ten percent of a registered class of
the Company's equity securities, to file with the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc. initial
reports of ownership and reports of changes in ownership of common stock and
the other equity securities of the Company. Officers, directors, and persons
who beneficially own more than ten percent of a registered class of the
Company's equities are required by the regulations of the Securities and
Exchange Commission to furnish the Company with copies of all Section 16(a)
forms they file. To the Company's knowledge, based solely on review of copies
of reports furnished to the Company and upon representations made, except as
described below, the Company believes that during the fiscal year ended June
30, 1999, all Section 16(a) filing requirements applicable to its officers,
directors, and greater than ten percent beneficial owners were complied with.
In August 1999, FEG Holdings, Inc., News Corporation and NAI filed an Annual
Statement of Changes in Beneficial Ownership to report the filing persons'
initial beneficial ownership as of November 9, 1998 of 547,500,000 shares of
Class A Common Stock of the Company (representing shares of Class A Common
Stock issuable upon conversion of a like number of shares of Class B Common
Stock).
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended June 30, 1999 is
being mailed to stockholders with this proxy statement.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered for inclusion in the proxy
statement for presentation at the Company's 2000 Annual Meeting of
Stockholders must be received by the office of the Secretary of the Company at
1211 Avenue of the Americas, New York, New York 10036 no later than June 11,
2000, for inclusion in the Company's proxy statement and form of proxy
relating to such meeting. All proposals must comply with applicable Commission
rules and regulations. In addition, in order for nominations or other business
to be properly brought before the Company's 2000 Annual Meeting of
Stockholders, stockholders must give timely notice thereof in writing to the
Secretary of the Company at the Company's offices not less than 45 or more
than 75 days prior to the anniversary date on which the Company first mailed
its proxy materials for the preceding year's Annual Meeting; provided,
however, that if the date of the Annual Meeting is advanced by
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<PAGE>
more than 30 days prior to or delayed by more than 30 days after the
anniversary of the preceding year's Annual Meeting, notice by the stockholder
to be timely must be delivered not later than the close of business on the
later of (i) the 90th day prior to the Annual Meeting or (ii) the 10th day
following the day on which public announcement of the date of such meeting is
first made. The bylaws of the Company define "public announcement" for these
purposes, as disclosure in a press release reported by the Dow Jones News
Service, Associated Press or a comparable national news service or in a
document publicly filed by the Company with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. Such
stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or reelection as a director all
information relating to such person as would be required to be disclosed in
solicitations of proxies for the election of such nominees as directors
pursuant to Regulation 14A under the Exchange Act, and such person's written
consent to serve as a director if elected; (b) as to any other business that
the stockholder proposes to bring before the meeting, a brief description of
such business, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made; (c) as to the stockholder
giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made (i) the name and address of such stockholder,
as they appear on the Company's books, and of such beneficial owner, (ii) the
class and number of shares of the Company that are owned beneficially and of
record by such stockholder and such beneficial owner; and (iii) whether either
such stockholder or beneficial owner intends to deliver a proxy statement and
form of proxy to holders of, in the case of a proposal, at least the
percentage of the Company's voting shares required under applicable law to
carry the proposal or, in the case of a nomination or nominations, a
sufficient number of holders of the Company's voting shares to elect such
nominee or nominees.
OTHER MATTERS
The Board of Directors is not aware of any other matter other than those set
forth in this proxy statement that will be presented for action at the
meeting. If other matters properly come before the meeting, the persons named
as proxies intend to vote the shares they represent in accordance with their
best judgment in the interest of the Company.
THE COMPANY UNDERTAKES TO PROVIDE ITS STOCKHOLDERS WITHOUT CHARGE A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS
AND SCHEDULES FILED THEREWITH. WRITTEN REQUESTS FOR SUCH REPORT SHOULD BE
ADDRESSED TO THE OFFICE OF THE SECRETARY, FOX ENTERTAINMENT GROUP, INC., 1211
AVENUE OF THE AMERICAS, NEW YORK, NY 10036.
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FOX ENTERTAINMENT GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS - NOVEMBER 23, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder in Fox Entertainment Group, Inc.
("Corporation") hereby constitutes and appoints K. Rupert Murdoch, David F.
DeVoe and Arthur M. Siskind, and each of them, his true and lawful attorneys and
proxies, with full power of substitution in and for each of them, to vote all
shares of the Corporation which the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held at Citibank, N.A., 399 Park Avenue,
12th Floor, New York, New York, at 10:00 a.m., local time, or at any
postponement or adjournment thereof, on any and all of the proposals contained
in the Notice of the Annual Meeting of Stockholders, with all the powers the
undersigned would possess if present personally at said meeting, or at any
postponement or adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE NOMINEES LISTED ON THE REVERSE SIDE.
(Continued and to be signed and dated on the other side)
FOX ENTERTAINMENT GROUP, INC.
P.O. BOX 11191
NEW YORK, N.Y. 10203-0131
<PAGE>
[______]
THE DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 1
<TABLE>
<S> <C> <C> <C>
1. Election of Directors FOR all nominees [ ] WITHHOLD AUTHORITY [ ] *EXCEPTIONS [ ]
listed below to vote for all
nominees listed
below
Nominees: K. Rupert Murdoch, Peter Chermin, Chase Carey, David F. DeVoe, Arthur M. Siskind, Christos M. Cotsakos and
Laura D'Andrea Tyson
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and strike a line through
that nominee's name.)
</TABLE>
<TABLE>
<CAPTION>
THE DIRECTORS RECOMMEND A VOTE FOR PROPOSAL 2
<S> <C> <C> <C>
2. Proposal to ratify Arthur Andersen LLP
as independent accountants. For [ ] Against [ ] Abstain [ ]
</TABLE>
Change of Address and
or Comments Mark Here [ ]
The above named proxies are granted the authority, in their
discretion, to act upon such other matters as may properly
come before the meeting or any postponement or adjournment
thereof.
Dated: ______________________________________________, 1999
___________________________________________________________
Signature(s)
___________________________________________________________
Signature
Votes must be indicated (x) in Black or Blue ink.
Please sign exactly as your name appears and return this proxy immediately in
the enclosed stamped self-addressed envelope.
