<PAGE>
Filed by Fox Entertainment Group, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: The News Corporation Limited
Commission File No. 1-9141
The following communication contains forward-looking statements within the
meaning of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. These statements are based on management's current
expectations or beliefs and are subject to a number of factors and uncertainties
that could cause actual results to differ materially from those described in the
forward-looking statements. The forward-looking statements in this
communication address the following subjects among others: expected date of
closing the merger; future financial and operating results; and benefits of the
merger.
The following factors, among others, could cause actual results to differ
materially from those described in the forward-looking statements: the risk that
News Corporation's and Chris-Craft's, BHC's and UTV's businesses will not be
integrated successfully; costs related to the merger; failure of the
stockholders to approve the merger; inability to obtain or meet conditions
imposed for governmental approvals for the merger; increased competition and its
effects on price, spending, third-party relationships and revenues; inability to
establish and maintain relationships with advertising and marketing providers;
and risks of new and changing regulation in the U.S. and internationally.
For a detailed discussion of these and other cautionary statements, please refer
to Chris-Craft's, BHC's and UTV's filings with the Securities and Exchange
Commission, especially in the "Forward-Looking Statements" section of the
Management's Discussion and Analysis section of Chris-Craft's Form 10-K for the
fiscal year ending December 31, 1999, and to News Corporation's and Fox
Entertainment Group's filings with the Securities and Exchange Commission.
* * * * * * *
THE FOLLOWING IS A TRANSCRIPT OF A CONFERENCE CALL HELD ON AUGUST 14, 2000.
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 1
NEWS CORPORATION
August 14, 2000
9:00 A.M. CDT
Coordinator Investors and security holders of Chris-Craft, BHC and UTV are
advised to read the joint proxy statement prospectus regarding
the proposed merger when it becomes available because it will
contain important information about the transaction. The joint
proxy prospectus will be filed with the Securities and Exchange
Commission by Chris-Craft, BHC and UTV and by News Corporation.
Investors and security holders may obtain a free copy of the
joint proxy statement prospectus when it is available, another
document filed by Chris-Craft, BHC and UTV with the Securities
and Exchange Commission at its Web site at http://www.sec.gov.
The joint proxy statement prospectus and these other documents
may be obtained for free from Chris-Craft, BHC, UTV or News
Corporation. I would now like to turn the call over to Peter
Chernin, President and Chief Operating Officer of News
Corporation. Thank you, sir, you may begin.
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 2
P. Chernin Thank you. It's Peter Chernin. Welcome to the call. Also here
with me today is Dave DeVoe, News Corp's Chief Financial Officer
and Mitch Stern, who is the President of the Fox Television
Station Group.
I'm going to go through a couple of highlights on the deal. Then
Dave is going to run through the specifics of the deal. Then
we'll turn it over to Mitch who will talk about how he intends to
integrate these operations into his existing extremely well
managed group of television stations.
First of all, let me start off by saying that this is a truly an
electrifying day for News Corporation and Fox. Last night, we
concluded a deal with Chris-Craft Industries and its related
subsidiaries to acquire for cash and stock Chris-Craft assets for
a total of approximately $5.4 billion.
As I said, Dave will speak in a minute about the terms of the
transaction but before he does let me briefly outline why we're
so excited about this acquisition, what we think it will mean for
us going forward and specifically why it will allow us to
leverage our already dominant positions in television
broadcasting, production and syndication to deliver even greater
value to our customers and shareholders.
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 3
So for starters, we think this is the right deal for us. We think
it's at the right price and it's at the right time. It's not
often that assets that are this attractive, this complimentary
and in some ways most importantly this scarce come on the market.
We are acquiring assets, which perfectly compliment our most
profitable and lucrative operating business, our 23 owned and
operated television stations.
I think we've ably demonstrated over the past decade that we are
one of the most successful operators of local television
stations. We've built the most powerful, profitable grouping of
local television stations in the country with the best managers
and the best mix of local and national sports, news and general
entertainment.
By acquiring ten television stations in extremely key markets
throughout the United States, it makes us the largest owner and
operator of local television stations in the country.
These ten stations include three of the top five markets in the
country, New York, Los Angeles and San Francisco. As a result,
we'll now have
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 4
13 stations in the top ten television markets and 20 television
stations in the top 20 markets.
In two of these markets, and I would argue the two most important
markets, New York and Los Angeles, we will have multiple
stations. In fact, in Los Angeles we'll have two broadcast
stations and two regional Sports Networks all working together.
We'll also have duopolies in Salt Lake City and Phoenix in
addition to the already existing duopoly that we operate in
Dallas.
We think this deal will position us for long-term leadership in
television content in the creation of off nets in the selling and
airing of off net syndication and the creation of first run
syndicated product in news and in sports broadcasting.
That's just the beginning. I think in some ways stations are like
currencies. We can buy, sell and swap them creating potentially
more duopolies while creating additional cash for the company or
generating additional cash for the company. With that let me turn
it over to Dave DeVoe who will give us a couple of highlights.
Dave?
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 5
D. DeVoe Thanks, Peter. As Peter mentioned we will acquire up to three
related public companies of Chris-Craft, Chris-Craft Industries,
BHC Communications and United Television for $5.355 billion in
gross consideration fully diluted and $3.60 billion in net
consideration, this is after considering the cash in the company,
projected divestiture proceeds and transaction cost.
The headline price per share in the exchange ratio on a 60/40
basis for each company is 1.1591 News Corp A shares plus $34 for
Chris-Craft; 2.2278 News Corp A shares plus $66 for BHC and
2.0259 News Corp A shares plus $60 for UTV.
Gross considerations for the public shareholders on a 60/40 basis
is funded as follows, 72,998,623 News Corp preferred shares and
$2.13 billion in cash.
The cash portion of the transaction is substantially funded by
the acquired cash, which resides within BHC, United Television
and the balance by the projected net proceeds from station
divestitures, which we have to make to meet the 35% cap. All of
the assets that we're acquiring with the
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 6
exception of the $1.7 billion in cash will be transferred to Fox
Entertainment Group in exchange for shares in Fox. The
transactions been approved by the boards of all three companies.
The offer by News Corporation will be presented to each
shareholder group for approval.
CCN or Chris-Craft Industries, BHC and UTV have entered into
voting agreements wherein they will vote in favor of the
transaction. By virtue of Chris-Craft's control of BHC and BHC's
control of UTV, shareholder approval should be received for the
acquisition of BHC and UTV.
The transaction has been structured as nontaxable on the share
for share component. While we believe that the transaction has
been structured to comply with the IRS regulations, an IRS ruling
on the tax-free nature of the share for share exchange will be
requested. The ruling has no consequence on a closing of the
transaction. If a ruling is not received then a transaction will
be taxable to Chris-Craft shareholders, BHC and the UTV
shareholders.
The following additional consideration will be paid, $5 per share
to the shareholders of Chris-Craft, $8.25 per share to the
shareholders of BHC, $7.50 per share to the shareholders of UTV.
Such payment will be made
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 7
in 60% of News Corporations preferred shares and 40% in cash. If
this payment is required, the aggregate additional consideration
is approximately $300 million.
The transaction is subject to SEC and other regulatory approval
and is expected to close within one year. If the transaction does
not close within 15 months, then either party may terminate the
agreement.
Fox Entertainment group will acquire from News Corporation the
shares of Chris-Craft, BHC and UTV for $3.625 billion. This is
the gross consideration of $5.3 billion less the cash that's in
the company, which will be retained by News Corporation.
122, 241,985 shares of FEG will be issued to News Corporation at
a price of $29.85. This will increase News Corp's ownership in
Fox from 82.76% to 85.25. The transaction is accretive in
earnings to both Fox and to News Corporation. The acquisition
multiple on a fully integrated basis is about 9.4 times.
Now I'd like to turn it over to Mitch who is going to discuss the
highlights of how the acquisition will be integrated into our
existing operation.
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 8
M. Stern Thanks, Dave. Just to start right out I'd like to say that we
think this is the standout duopoly deal in broadcasting and we
think that in the same way we redefine the business with New
World, we're going to redefine the business with the Chris-Craft
purchase.
Let me just make sure, give you a few things to make sure
everybody knows what we bought. We bought ten stations. Eight
are UPN, one is ABC. One is NBC.
There are six V's, four U's. There are four FTS markets, four
duopoloies. There's three of the stations that are in the top
ten. Eight are in the top 25 and all ten are in the top 40
markets.
After the merger, it looks like there, it sounds a little weird,
but there are 13 stations in the top ten, 24 stations in the top
25 markets, 31 in the top 40 and 33 in total.
The market penetration in terms of reach, the Chris-Craft
stations is, according to the FCC definition, 18.8. Oddly enough,
if we combined everything just as without any swaps or anything,
we would, the combined
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 9
group, all 33 stations, would have a 40.5% penetration of the
FCC, according to the FCC definition. That sounds very close to a
lot of suggestions if the cap were raised, it would go to 40%.
That's just sort of coincidental.
Then, I'm going to echo some of the things that Peter said we are
going to acquire stations that we believe are under performing in
LA.
Currently, our station has five times the EBITDA of the Chris-
Craft station. In New York, Phoenix and Salt Lake our EBITDA is
nearly double. We think that given our ability to run a duopoly
as we've proven in Dallas and given our New World experience in
affiliations, which is creating a tremendous amount of wealth out
of the Chris-Craft stations is not all that difficult.
We get the station currency to be a key player in trades to
create strategic duopolies. We expect to create five to ten
additional dupolies as we trade stations with other groups. New
York, of course, is the number one market and we will be by far,
the strongest player. In LA, as Peter said, we'll have two
television stations and two regional cable sports channels
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 10
making us probably having the most leverage in sales in any
market in the country.
The Chris-Craft stations currently underperform to levels of
revenue market and share and return on sales. For example, where
they are in the mid 30's, we operate around 50. In terms of
market share ours is probably double. There are also some cases
where we may wind up with affiliation switches; the profits will
increase dramatically as we showed you in New World.
The New World experience, just to put some meat on this
conversation. In two years, we more than doubled the profits and
increased the market share by 3.5 share points. That had nothing
to do with duopolies or affiliation switches at that point. So
that was just hiring better people and selling better.
In many of the Chris-Craft stations, actually the newer ones have
very low profits and very low market share. It will not be
difficult for us to, assuming we keep those, to increase those.
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 11
In Dallas, right now we operate as 60% return in our duopoly and
that has no network affiliation at all. We also feel that these
duopolies allow us to get local sports rights and have premiere
exhibition of those sports rights.
Our competitive position, general speaking, does not just reside
in the local markets. It will go across the group. Whenever we
buy programming, do national sales bid for sports rights, things
like that.
Considering that I run Twentieth Television, it's also extremely
lucrative being able to develop programming for day parts like
daytime and be able to air these all these shows across so many
different outlets. I mean the real estate given to us by this
purchase is second to none. In terms of efficiencies, I'm going
to say things that are maybe obvious to all of you, the cost. So
many costs go away. Sales leverage is great.
I think we're actually addressing a lot of the consolidation of
media buying by consolidating ourselves, our own advertising
efforts. I think our success in our current group is well known,
very often it's just reduced to profits but the fact is we
probably do more local news, sports, entertainment programming
than any other group as well. I think we do
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 12
over 100 hours a day of local news and I think we're going to
expand that a lot.
Our goal has always been to provide more local broadcasting and
more diversity of programming and it's worked. We'll actually
increase that effort. I think that's it.
The FCC definition of what was the point of dupoloies. So I
think that's where we are and we can't wait to get this done. So
now, I'll just turn it back to Peter.
P. Chernin I think that sort of gives you our view of the highlights of the
deal both in the financial and operating perspective. I think
maybe the best thing to do now is take any calls you may have.
Coordinator Jessica Reed Cowen, you may ask your question and please state
your company name.
J. Reif Cohen Okay, Merrill Lynch, a couple of questions, first of all can you
discuss UPN? What you think will happen with that and does it
matter to you?
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 13
P. Chernin Yes, I'm not sure I know what will happen to it. I do think, my
guess is that's a more appropriate question for Viacom, although
both Sumner and Mell have spent a large chunk of time in
Washington arguing about why they want to have two networks and
why they want to have two voices for diversity and for jobs, etc.
So I would assume they'll keep it going if they are true to their
word, but beyond that I don't think we have point of view what
will happen.
In terms of whether we care, I don't think we care enormously. I
think that we have multiple opportunities whether it's to be an
UPN affiliate, whether it is to run these as independent stations
and begin to share news programming and get more sports
programming, begin to use more Fox product on it. So I think we
have multiple ways to go, all of which I think we can use to
maximize these stations.
J. Reif Cohen On Salt Lake City, can you keep that second station? Is Fox
number five in that market?
M. Stern No, that's one where our station and their station are in the top
four and we'll probably have to swap the Chris-Craft station out.
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 14
J. Reif Cohen Okay, is there a breakup fee?
D. DeVoe No.
J. Reed Cowen Then, last question, Mitch, could you talk a little bit more
about the platform that you have in LA and New York, what kinds
of things you can do with it?
M. Stern Sure, it's sort of an amazing thing. First, of all New York and
LA have been very hot markets this year. The New York market has
grown 20% and the LA market is in double-digits. What you're
allowed to do with all that real estate is sort of incredible.
I'll start with LA because we have Fox Sports West 1 and 2; the
leverage in advertising that we'll have now is fantastic.
We will essentially have the number one market share before we
even do anything. We'll have the number one market share in both
markets, so there's no advertiser that really is going to go
around us. When you have all of that leverage it's pretty great
in terms of news. You can cover with the same newsroom; you'll
have so many hours to program with very little more expense.
You're going to basically convert some of these like our
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 15
current Fox stations into a much more of a New World, if you can
use that phrase, but our more traditional stations where you have
a lot more news on all day.
Then sort of, do a different programming strategy. The Chris-
Craft stations, that is more traditional in what they've done and
have much more of a block of sitcoms and things like that. So you
get the best of all worlds in that case.
You also have the options of cross promoting. You have a lot of
cost savings in all the engineering and administrative functions.
The average, look, this is not just me talking. This has been
proven by a lot of different groups and I think groups with not
even that talented group of management.
This is a very simple process. It's much easier than fixing the
New World stations in terms of getting all these cost savings. So
in the end, what will show up in the bottom lines are these sort
of enormous returns on sales in markets like New York and LA.
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 16
You will also, again, be able to clear any syndicated show that
we developed or really force or be in line to buy any show that's
put out by any other studio.
So again, you just are going to have to deal with us. The
benefits will, I think be dramatic and I think you'll start to,
after, I mean it's too bad this thing is going to take, whatever
nine months to a year to actually get done because we almost
can't wait.
Now, the other thing, that's New York and LA. In some of the
other markets in Chris-Craft, after the swaps you will see this
same kind of duopoly structure occur in some other fairly large
markets. Because there is so many alternatives there, there's no
point of me going through it but the New York and LA just simply
have the biggest dollars and therefore, will have the biggest
return.
J. Reif Cohen Yes.
Coordinator Rich Bilatti, you may ask your question and please state your
company name.
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 17
R. Bilotti Hello, Richard Bilotti, Morgen Stanley, two questions. One,
could you discuss the implications across your whole group now on
a proforma basis? Where do you actually have regional Sports
Networks in terms of overlap? And given what you've just stated
about the benefits of running two stations, in effect are there
even greater benefits where you have triopolies and I think in
LA, you may have the first quadopoly in history?
The other question is really simple. How much of the good will on
this deal is tax deductible? You all in the past have been
extremely creative and I think David's managed to keep the taxes
down to a fairly low degree. How does that work in this case?
R. Chernin Rich, we'll answer that question first because it's easy.
Unfortunately, in this transaction none of the goodwill is tax
deductible.
R. Bilotti That's a shame.
R. Chernin Yes, it is.
R. Billoti And in terms of the sports programming, what are the
opportunities there with the RSN's?
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 18
M. Stern I'm sorry. Say it again please.
R. Billoti What are the opportunities as far as using the regional Sports
Networks to create triopolies or as I said in LA, I think you
have the first quadopoly.
M. Stern Right. Well, we're going to give you credit for inventing a new
word today and that will go right on our letterhead. We're in at
least 15 different markets where we can try to use cross selling.
Now, what may actually occur through all this is we will target
certain markets where that kind of duopoly or triopoly would be
available to us. So it's very possible depending on how the
swaps go that we could wind up in a market that's not even on
this list yet or wind up where we have one station coming from
Chris-Craft, buy a second one and do a Sports Net there. So that
is definitely part of the strategy.
Just to give you an update on where we are, we've basically
integrated all the infrastructure across the group right now.
We've started to sell that way. So again, as we do Chris-Craft
and the quadopoly, obviously is the best example as such, that
that will be the most dramatic. In Phoenix,
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 19
which is a duopoly, we're also selling Sports Net. So that would
be a triopoly example.
R. Billoti Just one quick follow up, have you found in Los Angeles, for
instance, or I believe in Phoenix where you have a station and a
network already, that the buyers of IRSN time and buyers of
traditional broadcast time overlap to a large degree?
M. Stern It's interesting. They overlap in some cases, especially on
regional buys. What we have been able to do on a number of these
markets is actually bring local advertisers to the Sports Net for
the first time.
I'm sorry, I don't have a list, but I can follow up when I'm back
in LA. It's been really interesting how our sales guys, I know
this happened in Detroit, will walk into an advertiser and say,
"By the way, have you ever considered being on the Sports Net?"
They go, "Fine."
Because you have that combination of NFC, for example on the
station and lots of inventory for other sports on Sports Net.
Again, you have that sort of perfect combination on how to
acquire sort of ... in a synergistic share of the business, but
yes, it is working. It's going to be, I think, that
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 20
is the direction of advertising so that groups that have quite a
few media outlets are going to get more and more and more of
those, more than a fair share say of those dollars and groups,
that are just sort of nothing more than television groups say,
not that they are going to be terrible, but they are going to get
hurt.
R. Bilotti Thank you very much.
Coordinator Jill Cridick, you may ask your question and please state your
company name.
J. Cridick Good morning, Salomon Smith Barney. I was curious if you could
wrap up some of the discussion in terms of cost saves and what
you realistically think you can achieve over the next, one, two,
three years? You touched on divestiture proceeds, potentially,
have you earmarked certain assets at this stage what you might be
considering divesting? Finally, on the regulatory front, how do
you see those issues playing out? Thank you.
M. Stern In terms of the divestitures, I think that we have gone through
numerous scenarios and since it's not under our control, solely
our control, it will depend on a lot of meetings that we have.
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 21
Now, the one thing I can tell you is that I get lots of calls and
have all year round, can we please buy your O&O in such and such
a city? I always just say no, of course because they keep making
more money and they keep getting more valuable.
So at this point there is going to be a much more serious
discussion and I think we have a very clear strategy. I think
that's about the most I want to tell you.
In terms of the cost savings, I think the best way I can
summarize it without going person by person or something in a
station, because we've done that, in Dallas, for example and in
other, if you want to look at other groups that have done that.
You really run, can run, depending on the type of programming, a
second station with say somewhere between 5 and 15% of the
manpower and of the primary station and probably 2% of the
equipment.
So it's pretty spectacular. The return on sales, I would say it
should average for a duopoly. Again, depending on your size of
investment, whether you have local sports or things like that
should be between 55 and
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 22
65%. I think that sort of gives you a good indication of the kind
of cost savings you can have. Again, remember, Chris-Craft
operates their stations in the mid 30's.
J. Cridick At what growth rate...
M. Stern The regulatory question?
J. Cridick Yes.
M. Stern Well, I think that our company and NBC and some other companies
have been on the forefront of trying to encourage deregulation of
the broadcasting industry but I know that given our plans for
duopolies, we will make the 35% rule, so we intend to comply.
J. Cridick Thank you.
Coordinator Vincent Vickers, you may ask your question and please state your
company name.
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 23
V. Vickers Good morning, Vincent Vickers, Chase H&Q. David, you had
mentioned an acquisition multiple of about 9.4 times. Can you
just walk us through the assumptions for that? Just in terms of
revenues and cash flow for next year, what can we expect?
Thanks.
D. DeVoe Yes, I think we get to a net consideration of slightly more than
$3 billion, which is the cash, which is in the company in our
play in divestitures. On a proforma basis, we believe in year
one of the deal we're going to be making an excess of $300
million off of this group of assets proforma for the
divestitures. I'm sorry what was the second part of the
question?
V. Vickers The second part of the question, actually you answered. I was
asking where you thought revenues and cash flow could go to in
2001. Thanks.
D. DeVoe It's not 2001. It's proforma for the first year of operations
after the transaction closes, which will be, I guess it will
probably be our fiscal 2002.
Coordinator Richard Simon, you may ask your question and please state your
company name.
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 24
R. Simon Yes, Goldman Sachs, I just had a follow up on that last question
and a second question if I could. Is that $300 million in EBITDA
in 2002? Can you sort of relate it to that contrast the
opportunities afforded to you in the Chris-Craft stations versus
your doubling of profits, I believe on the New World stations
over two years?
Then lastly, how far does this acquisition go to satisfy your US
distribution goals and folding in other distribution platform
opportunities?
M. Stern In terms of the New World, as a comparison to New World, first of
all the numbers on New World, those are actuals. That's what we
did. In terms of doing the Chris-Craft station, the reason we
feel so much more comfortable in this case is so much of the
value is in New York and LA, of course, and those will be
duopolies. When you do duopolies, it's a much more simple
procedure than to completely overhaul one station.
Of course, the other part is going to be post swaps. Again, the
swaps will be done in order to do duopolies. So in that sense,
again, it's a fairly simple procedure. So the idea of getting to
$300 million off of where Chris-Craft will be delivered is
actually conservative to tell you the truth.
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 25
In terms of distribution, as I was saying before, you cannot
clear a show in the US without New York and LA participating.
You cannot and that would be for somebody trying to sell me a
show. I can clear now virtually any show we create whether it's
by Twentieth TV, Twentieth Century Fox TV, the network. The
network wants to expand its day part. We have so many more
options now whereas it does to some degree need our agreement in
order for others to do it. It just provides us, it's taken us up
another notch.
R. Simon My distribution question, I understand what you're saying with
the stations but maybe more to Peter. Distribution versus Sky
Global and that whole platform approach.
P. Chernin Well, as it relates to Sky Global, we're actually in a silent
period. So we really have nothing to add about Sky Global. I
think that I would say is that this gives us, I think an
unmatched broadcast television distribution platform in the US,
which has always been a key part of our strategy. Beyond that
anything having to do with Sky, I can't comment on.
R. Simon Okay, thanks.
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NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 26
Coordinator Elanta Menesona, you may ask your question and please state your
company name.
E. Menesona It's First Suisse Boston. The question, first of all, Mr.
Chernin, is there any reason why the margins of the Fox station
should not reach 50% and over what timeframe do you think that's
achievable? Second of all, can you make some comments on your
use of digital spectrum at some point in the future?
M. Stern Well, I can fairly talk to the first part. The current stations
are already virtually 50%. So that's not hard and you do have,
the interesting part of the question is that you do have
benefits, not just as a Chris-Craft station. So you go back to,
it is a synergy. So it will occur on both. So we do expect
upside in the stations where there are duopolies and because
we're able to do deals now across a wider array of stations, we
will achieve benefits on license agreements, programming
agreements, all kinds of things that are more nationally based
because we have that much more leverage.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 27
In terms of the digital spectrum, what this gives us again, is a
lot more digital spectrum. You'll have in the end, we'll have
like whether it's in the exact ten markets that we're talking
about or some other markets after swaps, will have double the,
ten more, so I guess it turns into something like 40% or
something more digital spectrum than we have today. I think
Chris- Craft is built out to about seven stations of the ten. So
by the time, hopefully we take over they will be there or
virtually there.
One of the nice things in a way, is just that for example we can
combine facilities. It will be cheaper to operate. In terms of
the use of the digital spectrum, I think there are a lot of good
strategies that have just been bandied about and yet that is
really very much a topic in Washington and the FCC. So I think
I'll just wait for them before I say what we're thinking of
doing.
E. Menesona Thank you.
Coordinator David Lener, you may ask your question and please state your
company name.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 28
D. Lener Yes, it's AMB Amro. Two questions, one does ownership of the
New York Post in New York give you a regulatory problem of cross
ownership?
The other one is I'm still trying to calculate the multiples
here. It sounds as though you're going to divest yourself of
about $900 million worth of stations to get it down to that $3
billion net of divestitures. Is that right?
D. DeVoe No, it's about $600 million, David.
D. Lener Six hundred? I'm sorry. I thought that Chris-Craft stations
were doing about $150 or $160 million in cash flow currently. So
you're going to get rid of some of those stations and we're still
going to get it up to $300 million. Am I calculating something
wrong?
D. DeVoe No, you're right except I believe the Chris-Craft are operating
at slightly higher than 150. I think the number of the current
year is, the run rate is about $80.
P. Chernin On the New York Post, David, we currently have clearance from the
FCC to operate the New York Post and a television station.
Clearance was
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 29
given at a time when that was the most you could do. Clearly, the
FCC has now said that it's okay to operate two television
stations in the same market and we think that this deal is very
much in the spirit of the what the FCC has been looking to
achieve.
I think that they've been looking to strengthen local
broadcasting, give us the opportunity to do more news, more
sports, etc. Yet at the same time I think their concerns tend to
be with diversity of voices and the number of voices in a given
market.
We think that there are so many strong media voices in the New
York market between numbers of newspapers, various cable channels
and New York 1 and MSN and Fox News, etc., that we think we
believe that this deal is absolutely is within the spirit of what
the FCC is looking to achieve.
D. Lener You do have to go for a waiver though, is that right, Peter?
M. Stern Yes, David, it's not clear as to how they will interpret the
existing... You need to have a conversation with the FCC.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 30
D. Lener Okay, good luck with it.
P. Chernin Thank you.
Coordinator Rich McDonald, you may ask your question and please state your
company name.
R. McDonald Yes, it's JP Morgan. Most of my questions have been answered,
but I would like to congratulate you guys on a very interesting
transaction. Just to quick follow up on David's question, of the
say $300 million plus, Dave or Peter or Mitch, is that simply
from within the broadcast group or does that include syndication
and all the other potential benefits that you get?
M. Stern No, one of the reasons why I said we were conservative because I
think that depending on the number of swaps we do and that is
something we can try to work out even before the closing. We'll
try to get the plans in place. I think that really was primarily
for the stations that we will have.
The upside to syndication and other parts of this company are
really not part of this announcement. They are and will be
dramatic.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 31
I think the one thing I didn't say in regard to New World was one
of the major benefits when we did the New World deal was how
great the ratings in those ten markets got for FCC, for the
network. Of course, that went into their sales numbers as well
but that is not part of anything I even mentioned about doubling
profits.
P. Chernin I don't think we can really calculate exactly what it's going to
be in the first run in terms of the benefits as we continue to
roll out our off net syndication in terms of additional news
programming. Also, just in terms of clearly the amount of flux
that's going on in the broadcast business. I think this puts us
in a much stronger position to maximize our position as those
changes occur.
R. McDonald Thanks.
Coordinator Robert Shipman, you may ask your question and please state your
company name.
R. Shipman Hello, it's DLJ. So if I get this right, the proceeds from
divestitures coupled with Chris-Craft cash on hand should cover
the entire cash
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 32
component that you're paying here. So net debt at the end of the
day additional should be zero?
P. Chernin Net debt actually goes down marginally on this transaction.
R. Shipman So with the additional $300 million in cash, leverage has
improved. Have you spoken with the rating agencies? Have you
gotten any comments from them on this? Finally, if ownership
restrictions are listed would you still anticipate the $600
million in divestitures? Thanks.
D. DeVoe Coming from a credit standpoint, all of our credit staff and
ratios improved as a result of this transaction. We've had a
conversation with one of the rating agencies. If anything it's
just positive for us from a credit perspective. So we're not
concerned about it.
With respect to the cap being listed, I think at the time
certainly we believe in the business and we'll have to wait and
see what happens to it.
M. Stern If the cap were lifted the number of options goes up. I think
the way we figured it out was to maximize future cash flows. So
again, duopoly would still be the rule of the day.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 33
R. Shipman Thank you, congrats.
Coordinator Peter Charhouse, you may ask your question and please state your
company name.
P. Charhouse Hello, good morning, it's Peter Charhouse, UBS Warburg. A couple
of questions for you. Firstly, as regards the comment on being
immediately earnings accretive, does that tie in with all the
comments you made about the 9.4 times proforma multiple? If I
run the same numbers down to earnings that's where you're making
the assumption that it's earning accretive?
D. DeVoe Probably, Peter, yes, that's right.
P. Charhouse Okay, as regards the.
D. DeVoe Peter, to be clear, it's going to take us a bit more, slightly
longer than 12 months to get to that 9.4 times but we're still in
the first year of acquisition, it's still accretive to earnings.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 34
P. Charhouse Which I'm assuming is now fiscal 2002, we should run our numbers
on?
D. DeVoe That's correct, yes.
P. Charhouse Okay, as regards the Salt Lake City market where you talk about
the duopoly potential, the CBS station isn't going to work. So
you're going to have to sort that for a lower ranking station,
are you?
M. Stern Not necessarily a lower ranking station. There's no reason why
we have to have a duopoly in Salt Lake. What we will do is trade
stations around the country for other stations. It's an ABC
station. It's more likely we will swap that one out.
P. Charhouse Okay, so you do intend to swap or sell almost immediately? I
assumed that you would basically run with this and assume the FCC
limit will be changed, but it sounds as if you're going to do
these trades and stick within the limit for the time being.
M. Stern That's correct.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 35
P. Chernin I think, Peter, there's other reasons to doing trades, which is
to try to create additional duopolies, as Mitch has sort of said,
we now have a great currency. I think that there's going to be
some consolidation where other people are looking to create
duopolies, where we have the opportunity to create the additional
duopolies lined up even better with our local Sports Networks,
etc., etc. All of these trades are not just divestitures to get
into the cap. They are to maximize the results of this
acquisition.
P. Charhouse Okay, in terms of getting your margins up and take a proforma
station that's doing 35% and you're going to get that to say 55
in a duopoly market. Of those 20 margin points, I get the
impression it sounds as most of that comes from ratings, improved
advertising sales and a reduction in operating costs. There
isn't that much reduction in cost to content from the current
operating situation or are there significant content cost
reductions?
M. Stern No, there are some. In terms of local news, it's a much more
efficient process. So in that sense of programming, yes, there
are real savings. In terms of buying programming, the more
leverage you have theoretically, the lower the price. So I think
there will be some real savings in the content area.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 36
P. Charhouse Okay, then. Now, Peter, one comment you were making late last
year was that News Corp was very much past the peak in its
investment cycle or past an investment peak, let's say because I
don't want to suggest you're going to give up. Can you comment
how this fits in with that? I'm not trying to undermine the
comment at all, but I guess the extent to which you're still
hungry to expand the core media businesses and extent to which
there may still be some major acquisitions down the line.
P. Chernin Well, I actually think we've been fairly consistent over the past
year, which is to say that there have not been acquisitions that
we feel the need to make at any cost and that we will always look
at acquisitions on an opportunistic basis. Those that we think
allow us that are accretive, that allow us to grow the value of
the company. So that's very much the sort of the decision-making
matrix in which we looked at this acquisition. I think that's
the way in which we'll look at future acquisitions.
We don't feel some desperate need to acquire things just for the
sake of it. On the other hand, if we think that there are things
that potentially help us grow the business, help us grow our
earnings, help us our strategic position we'll consider them. I
think I've been fairly consistent about that
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 37
perspective for the past year and I think I've exercised a fair
amount of discipline over the past year among those lines.
P. Charhouse Okay, and just finally, the $600 million also of consideration
you expect to generate, that comes from the industrial division
and a handful of smaller stations, doesn't it or are there some
other efforts also?
D. DeVoe Yes, I don't think we're planning a lot of the proceeds, at least
for the industry division but it's principally, station sales
we're going to make. It's all station sales we're probably going
to make.
P. Charhouse Okay, well thanks, very much. I must admit this morning that the
deal looked very cheap in Australia, by the end of the day we're
looking expensive and now it looks quite reasonable again.
Thanks, very much.
P. Chernin Thank you.
Coordinator Dean Chung, you may ask your question and please state your
company name.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 38
D. Chung Hello, Dean Chung,...Capital Management. Two questions, number
one has Chris-Craft committed to elect its shares being BFC and
BHC committed to elect its shares in United Television one way
or the another in terms of shares or cash? Secondly, as BHC
shareholders, are we going to continue to get our $2 dividend now
until the deal closes?
P. Chernin No one's made any election. Well, actually, the way it works is
that on the assumption that all three transactions happen then
Chris-Craft doesn't get any consideration from the mergers of BHC
and UTV. So we get considerations at top level. That's an
election by the separate shareholder... That assumption has not
been made.
D. Chung It has not committed to elect one or the other in terms of shares
of stock?
P. Chernin That's correct.
D. DeVoe They have in the normal dividend that Chris-Craft has been paying
will continue to be paid.
D. Chung Okay, great, thank you.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 39
Coordinator Brad Miller, you may ask your question and please state your
company name.
B. Miller Brad Miller, Fidelity Investments, they always say the mark of a
good opportunity is buy low, sell high. In that context, I think
bingo, you ran into a great opportunity with BHC given the cash
profile. I'm just kind of wondering how you determined a price
of 165?
D. DeVoe It was done on a multiple broadcast cash flow principally.
B. Miller So the consideration of the cash and the balance sheet was not a
factor in that valuation?
D. DeVoe No, pertinent assets of that company were considered in arriving
at the valuation.
B. Miller Isn't the majority of the billion dollars plus part of BHC? In
other words, all the cash owned by Chris-Craft is held by BHC,
which is an independent company.
D. DeVoe Yes.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 40
B. Miller Well, like I said again, buy low, sell high. In terms of the
capitalization of BHC is there super voting shares or is it all
one for one?
D. DeVoe I believe it's all one for one.
B. Miller That's what I thought too. Okay, well when the vote comes around
we'll see you, thanks.
D. DeVoe Great.
Coordinator Raymond Catch, you may ask your question and please state your
company name.
R. Catch Ray Catch, Bear Stearns. Mitch, could you comment on WWF
programming, what your feelings are on that either as part of UPN
or as not part of UPN?
Then also, I guess, Peter, if you will getting back to regional
sports and drilling a little deeper, since you have 40% interest
in MSG Network who's in the deep negotiations with the Yankees,
do you think a duopoly
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 41
and your sport strategy in New York helps your affiliates out in
those negotiations?
P. Chernin Ray, I mean I can tell you how much I personally like WWF.
R. Catch No. How about professionally?
M. Stern Well, it's really an amazing demo for males 18 to 34. It's just
an amazing franchise, but other than saying that, I really don't
have any other comments. I think it's helped UPN dramatically
and it's a huge promotional pace but that's all I am going to
say.
P. Chernin I think in terms of our 40% ownership of the regional Sports
Network in New York and the upcoming Yankees negotiation, I think
it's difficult to attribute a direct relationship. Clearly, we
have been, we've been aggressive about using the Yankees both on
MSG and in fact, we have run Yankee games on the Fox affiliate
this year. I think as those negotiations continue it just gives
us one more outlet that we can potentially play with but
specifically how it affects it, I think it's too early to tell.
It's obviously a very complicated negotiation, which is going on.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 42
R. Catch All right, thank you.
Coordinator Brian Long, you may ask your question and please state your
company name.
B. Long It's Chesapeake Partners. Is there a standard election here and
are we guaranteed of getting it? I'm sorry, but I missed your
answer to how the Chris-Craft insiders will elect? Have they
committed either way to taking cash or stock?
D. DeVoe I think the answer is that the Chris-Craft insiders have not
elected yet.
B. Long Okay, and as far as just the election are we guaranteed, just for
the Chris-Craft example, the $34 in cash and 1.1591?
D. DeVoe I think what you're guaranteed in getting a consideration of the
$85 a share at the Chris-Craft level.
B. Long Okay, so are you telling me that there's not a standard election
and everything is subject to a prorate?
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 43
D. DeVoe Yes, that's what I'm saying.
B. Long Okay, thank you.
D. DeVoe You're welcome.
Coordinator Mario Gabelli, you may ask your question and please state your
company name.
M. Gabelli Hello, Mario Gabelli, just a couple of nitpicking technical
questions. First, does the majority of the minority have to vote
for these at the BHC, the United Television?
D. DeVoe The answer is no.
M. Gabelli Okay, second, you mentioned in response to Jessica's question
that there is no breakout fee. Was that traded off of the
negotiations with no collar? How did that come about?
D. DeVoe There is a lot of various points in negotiated deals. It's just
part of the negotiations.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 44
M. Gabelli One last little mip, in response to someone's question on the
Chris-Craft dividend policy, does that apply to the BHC and UTV
dividend policy?
D. DeVoe Yes, they would be able to continue to make the dividends that
have been made historically.
M. Gabelli Terrific. Thanks, very much. I appreciate it in many ways.
Coordinator Michael Minden, you may ask your question and please state your
company name.
M. Minden Deutsche Bank, David, I was just wondering why Fox didn't buy
Chris-Craft outright? Why it had to go through News Corp?
D. DeVoe That's part of the negotiations that we have. It's what the
buyer wanted.
M. Minden He wanted News Corp shares?
D. DeVoe It was part of the negotiation. It's what the seller wanted.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 45
M. Minden Okay. And, Mitch, I was just wondering, it might have already
been asked but I missed it. How long does it take to get to the
60% margins that you're talking about in the duopolies?
M. Stern I just think it depends on a few things but you get most of the
benefit almost immediately because you just have that short
period of time where you're combining things. And because we
have essentially somewhere between nine months and a year to get
FCC approval we should be able to have that plan ready to go. So
as soon as we are ready to operate, we do it. It actually
happens very quickly.
M. Minden So it's basically on that $300 million number that David's
talking about, is it?
M. Stern That's correct.
M. Minden David, sorry, one last question, is there a chance that the BHC
minorities can vote against this and knock it on its head?
D. DeVoe No.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 46
M. Minden Because Chris-Craft has 80% so they can't vote against it and
derail it?
D. DeVoe Well, they can vote against it but.
M. Minden They can't derail it.
D. DeVoe Right.
M. Stern I mean there are dissenter's rights, which would give them a cash
pay off...
M. Minden Right. Okay. David, you said $85 is guaranteed to these guys.
When is the News Corp share price strike? Is it as of today or
as of when it closes or how does that work?
D. DeVoe No, the consideration, it's already been set. So the exchange
ratios that we went through is what you're going to get. So in
the $85 case, you're going to get this 1.16 or slightly less than
that News Corp plus $34 a share. The answer to the other
question is everyone gets treated fairly.
<PAGE>
NEWS CORPORATION
Moderator: Dave DeVoe
August 14, 2000/9:00 A.M. CDT
Page 47
M. Minden Sure, no, I didn't want to imply that they weren't. I was just
interested in the mechanics.
P. Chernin Okay, we want to thank all you and I guess for any additional
investor questions it will be Reed Nolte or press questions it
will be Andrew Butcher. Thank you, very much. Okay, goodbye.
<PAGE>
* * * * * * *
Investors and security holders of Chris-Craft, BHC and UTV are advised to read
the joint proxy statement/prospectus regarding the proposed merger when it
becomes available because it will contain important information about the
transaction. The joint proxy statement/prospectus will be filed with the
Securities and Exchange Commission by Chris-Craft, BHC and UTV and by News
Corporation. Investors and security holders may obtain a free copy of the joint
proxy statement/prospectus when it is available and other documents filed by
Chris-Craft, BHC and UTV with the Securities and Exchange Commission at its Web
site at http://www.sec.gov. The joint proxy statement/prospectus and these
other documents may also be obtained for free from Chris-Craft, BHC, UTV or News
Corporation.
Each of Chris-Craft, BHC and UTV and each of its executive officers and
directors may be deemed to be participants in the solicitation of proxies from
each of its stockholders with respect to the transactions contemplated by the
merger agreements. Information regarding such officers and directors is
included in each of its proxy statements for each of its 2000 Annual Meeting of
Stockholders filed with the Securities and Exchange Commission. These documents
are available free of charge at the Securities and Exchange Commission's Web
site at http://www.sec.gov and from each of the companies.
