<PAGE>
EXHIBIT 7(F)
The News Corporation Limited
1211 Avenue of the Americas
New York, New York 10036
September 27, 2000
Liberty Media Corporation
9197 South Peoria Street
Englewood, Colorado 80112
Gentlemen:
This letter confirms the terms and conditions of our agreement and
understanding regarding the transactions described in the Summary of Proposed
Terms attached hereto (the "Summary" and together herewith, this "Letter").
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Summary.
Following the execution and delivery of this Letter, the parties shall
negotiate in good faith and enter into definitive agreements (the "Definitive
Agreements") with respect to the transactions contemplated by this Letter (the
"Proposed Transactions"). The Definitive Agreements will include (a) the terms
contained in the Summary, (b) mutually agreed representations and warranties,
including, without limitation, (i) representations and warranties of Liberty
relating to the Gemstar Stock and the DTH Interests being directly or indirectly
transferred, including good and valid title and no liens or restrictions with
respect to same (except as may be created by TNCL or SGN), and representations
and warranties of Liberty with respect to the capital stock of LUVSG, LTVGIA and
other subsidiaries of Liberty being directly or indirectly transferred,
including that the same are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights and liens and restrictions (except
as may be created
Page 24 of 31 Pages
<PAGE>
Liberty Media Corporation
September 27, 2000
Page 2
by TNCL or SGN), (ii) similar representations and warranties of TNCL and SGN,
as the case may be, with respect to the ADRs and SGN Stock, respectively, being
issued, including that the same are duly authorized and, when issued in the
applicable Proposed Transaction, will be validly issued, fully paid,
nonassessable and free of preemptive rights and liens and restrictions not
created by Liberty, (iii) representations and warranties of Liberty confirming
that none of LUVSG, LTVGIA or any of the other subsidiaries of Liberty being
directly or indirectly transferred to SGN, NPAL or any other affiliate of TNCL,
have any assets other than Gemstar Shares or DTH Interests, as the case may be,
or any liabilities other than pursuant to shareholder or investor agreements or
the like related thereto to which TNCL or any of its affiliates are also party
thereto, and (iv) a representation and warranty by SGN substantially to the same
effect as the "10b-5 representation" made to the underwriters of the Qualified
SGN IPO, and (c) covenants and conditions, including, without limitation, (x)
the receipt of any waiver or approval, or the expiration of any time period,
that may be required under applicable law or regulation, or under the
requirements of any applicable stock exchange (including, without limitation,
the Australian Stock Exchange), in order to consummate the Proposed
Transactions, and (y) the receipt of any waiver or approval from any person
(other than a party hereto or their respective affiliates) necessary for the
applicable transfer of the DTH Interests in accordance with the Summary.
Except as required by law or regulation or the requirements of applicable
stock exchanges, no public disclosure or publicity concerning the subject matter
hereof will be made without the approval of each of the parties hereto. The
parties hereto will issue a joint press release upon the execution and delivery
of this Letter.
Page 25 of 31 Pages
<PAGE>
Liberty Media Corporation
September 27, 2000
Page 3
Each party hereto shall pay its own expenses (including fees and expenses
of legal counsel, investment bankers, brokers or other representatives or
consultants) in connection with the Proposed Transactions (whether or not
consummated).
Each party agrees to take all such actions as may be required to
consummate the Proposed Transactions on the terms and conditions set forth in
this Letter, including using commercially reasonable efforts to procure each
required waiver, approval and expiration of time period. If, notwithstanding
the foregoing, the NPAL/LUVSG Merger is not completed before June 22, 2001, then
either party may terminate its obligations under this Letter, unless the reason
the NPAL/LUVSG Merger was not completed was a breach by the party seeking to
terminate.
The parties will in good faith cooperate to prepare one or more Definitive
Agreements to the extent necessary and appropriate to give effect to the
provisions of this Letter, but the failure of the parties to execute and deliver
such Definitive Agreement(s) will not affect the binding effect or
enforceability of this Letter.
Page 26 of 31 Pages
<PAGE>
Liberty Media Corporation
September 27, 2000
Page 4
Please indicate your agreement with the foregoing by signing a copy of
this letter in the space provided and returning it to the undersigned.
Sincerely,
THE NEWS CORPORATION LIMITED
BBy: /s/ Lawrence A. Jacobs
------------------------------
Name: Lawrence A. Jacobs
Title: Senior Vice President
Accepted and Agreed:
LIBERTY MEDIA CORPORATION
By: /s/ Charles Y. Tanabe
----------------------------
Name: Charles Y. Tanabe
Title: Senior Vice President
Page 27 of 31 Pages
<PAGE>
TNCL/SGN/LIBERTY TRANSACTIONS
SUMMARY OF PROPOSED TERMS
A. Acquisition by NPAL of Gemstar Shares held by Liberty Subsidiaries
---------------------------------------------------------------------
1. News Publishing Australia Limited ("NPAL"), a subsidiary of The News
Corporation Limited ("TNCL"), will acquire all of the 70,704,588 shares of
the Common Stock, par value $.01 per share ("Gemstar Stock"), of Gemstar-TV
Guide International, Inc. ("Gemstar") held by Liberty UVSG, Inc. ("LUVSG"),
a subsidiary of Liberty Media Corporation ("Liberty"). Such acquisition will
be effected through a tax-free forward subsidiary merger pursuant to which
LUVSG will merge with and into NPAL (the "NPAL/LUVSG Merger"). The
consideration for the Gemstar Stock acquired in the NPAL/LUVSG Merger will
be American Depository Receipts ("ADRs") representing Preferred Limited
Voting Ordinary Shares of TNCL. Liberty will receive 1.7179 ADRs in exchange
for each share of Gemstar Stock held by LUVSG.
2. Upon completion of the NPAL/LUVSG Merger, Liberty will agree, solely for the
benefit of TNCL and its controlled affiliates, to continue to be subject to
the non-compete obligations described in the Stockholders' Agreement, dated
as of October 4, 1999, by and among TNCL, Liberty, Henry C. Yuen and Gemstar
International Group Limited (the "Stockholders' Agreement"), until the
expiration of such obligations in accordance with their terms, but
determined as if the Liberty Designees (as defined in the Stockholders'
Agreement) continued to serve on Gemstar's Board of Directors after the
Closing Date. Upon completion of the NPAL/LUVSG Merger, Liberty shall assign
to TNCL all of its rights under the Stockholders' Agreement, and, in
connection therewith, Liberty and TNCL shall cause persons designated by
TNCL to replace the Liberty Designees on Gemstar's Board of Directors.
B. Acquisition by SGN of Gemstar Shares and Interests in the Latin American DTH
----------------------------------------------------------------------------
Platform Businesses held by Liberty Subsidiaries
------------------------------------------------
1. Subject to consummation of the NPAL/LUVSG Merger, Sky Global Networks, Inc.
("SGN") will acquire all of the 16,761,150 shares of Gemstar Stock held by
Liberty TVGIA, Inc. ("LTVGIA"), a subsidiary of Liberty. Such acquisition
will be effected through a tax-free merger of LTVGIA into a subsidiary of
SGN, or through some other mutually agreeable transaction (the "SGN/LTVGIA
Transaction"). The consideration for the Gemstar Stock acquired in the
SGN/LTVGIA Transaction will be shares of Class A Common Stock, par value
$.01 per share ("SGN Stock") of SGN.
2. Subject to the consummation of an initial public offering of SGN Stock in
which the gross proceeds from the sale of SGN Stock is not less than $1
billion, excluding proceeds of the sale to Liberty contemplated hereby (a
"Qualified SGN IPO"), SGN will acquire Liberty's 10% interest in each of
Innova S. de R.L., Sky Multi-County Partners, NetSat Servicos Ltda, DTH
Techo Partners and Sky Latin
Page 28 of 31 Pages
<PAGE>
America Partners (collectively, the "DTH Interests"). The acquisition of the
DTH Interests will be effected through tax-free (for U.S. federal income tax
purposes) mergers of subsidiaries of SGN with U.S. "C" corporation
subsidiaries of Liberty (that directly or indirectly hold the DTH
Interests), or through some other mutually agreeable transaction
(collectively, the "SGN/DTH Transaction"), it being agreed that the parties
will use reasonable best efforts to effect the SGN/DTH Transaction in such a
manner that it will be tax-free under foreign tax laws. The consideration
for the DTH Interests acquired in the SGN/DTH Transaction will be shares of
SGN Stock. In connection with the closing of the SGN/DTH Transaction, TNCL
will cause one or more of its affiliates to reimburse Liberty for any and
all mandatory cash contributions made by Liberty's affiliates in respect of
the DTH Interests between the date of this Letter and the date of the
closing of the SGN/DTH Transaction, together with interest on each such
contribution from the date thereof to the date of payment at the rate of 8%
per annum.
3. The closing of the SGN/LTVGIA Transaction and the SGN/DTH Transaction
(collectively, the "SGN Closing") will be subject to and will occur
concurrently with the consummation of a Qualified SGN IPO. TNCL agrees that
at the SGN Closing, the assets and liabilities of SGN (the "Base Assets and
Liabilities") will consist of: (a) the assets and liabilities (excluding
liabilities due to or preferred stock held by TNCL or any of its
subsidiaries) set forth in the registration statement on Form S-1 of SGN
(Registration No. 333-39672) filed June 20, 2000 (the "S-1"), including Star
Television Limited; (b) indebtedness for borrowed money and preferred stock
(valued at its liquidation value), including indebtedness due to or
preferred stock held by TNCL or any of its subsidiaries, equal to $3 billion
(which indebtedness and preferred stock will be on reasonable arms-length
terms); (c) the assets to be acquired from Liberty pursuant to the
NPAL/LUVSG Merger (which will be owned, directly or indirectly, by SGN), the
SGN/LTVGIA Transaction and the SGN/DTH Transaction[; and (d) any assets
received by SGN in connection with a transaction in which the Base
Percentage (as defined in paragraph 6 hereof) is adjusted in accordance with
paragraph 6 hereof].
4. As between Liberty and its affiliates, on the one hand, and TNCL, SGN and
their affiliates on the other hand, at the time of the closing of the
SGN/DTH Transaction, [TNCL and Liberty and their respective affiliates will
cease to be bound by or subject to any channel put agreements referred to in
any of the agreements relating to the entities in which the DTH Interests
are held,] and Liberty and its affiliates will cease to be bound by or
subject to any of the non-compete, must carry or program service supply
obligations referred to in any of the agreements relating to the entities in
which the DTH Interests are held.
5. Subject to adjustment as set forth below, at the SGN Closing, Liberty will
receive shares of SGN Stock representing 4.76% of SGN's common equity on a
fully-diluted basis (not including options to be issued to employees prior
to the Qualified SGN IPO) (the "Base Percentage").
Page 29 of 31 Pages
<PAGE>
6. If between the date hereof and the SGN Closing, SGN issues shares of SGN
Stock (a "Dilutive Equity Issue") other than pursuant to the capitalization
of SGN with the Base Assets and Liabilities, the Base Percentage shall be
adjusted as follows:
a. For each Dilutive Equity Issue, the Base Percentage shall be adjusted in
accordance with the following formula:
adjusted Base Percentage = current Base Percentage -
(current Base Percentage x P),
where
P = the percentage interest of SGN issued [(on a post-issuance basis)]
in the Dilutive Equity Issue (on a fully diluted basis, not including
options to be issued to employees prior to the Qualified SGN IPO)
b. Adjustments of the Base Percentage shall be made successively for all
Dilutive Equity Issues consummated by SGN between the date hereof and
the effective date of the SGN Closing.
c. Notwithstanding anything to the contrary set forth herein, TNCL agrees
that prior to the consummation of a Qualified SGN IPO, SGN will not
issue or agree to issue shares of SGN Stock (or securities convertible
into or exercisable or exchangeable for shares of SGN Stock, other than
employee stock options) (i) to TNCL or any of its affiliates or (ii) to
any other person or entity unless the [economic] [pricing] terms of the
transaction with such unaffiliated acquiror of such shares or securities
are no more favorable to the acquiror than those applicable to Liberty's
acquisition of SGN Stock at the SGN Closing.
7. If the aggregate amount of indebtedness for borrowed money and preferred
stock of SGN as of the effective date of the SGN Closing is more or less
than $3 billion, TNCL and Liberty shall agree to a reasonable adjustment
in the Base Percentage to reflect the increase or decrease in the value
of SGN in light of such reduced or increased indebtedness.
C. Backup LTVGIA Transaction
-----------------------------
If a Qualified SGN IPO does not occur by the date that is 14 months after
the date of the letter of which this Summary is a part (the "Letter"), (i)
neither Liberty nor SGN shall be under any obligation to consummate the
SGN/DTH Transaction, and (ii) Liberty and TNCL will effect a transaction
(the "Backup LTVGIA Transaction") in which Liberty will receive 1.7179 ADRs
for each share of Gemstar Stock held by LTVGIA. The Backup LTVGIA
Transaction will be effected through a tax-free forward subsidiary merger of
LTVGIA with and into NPAL.
D. Investment by Liberty of $500 million in SGN in exchange for SGN Stock
--------------------------------------------------------------------------
1. Subject to the condition that the NPAL/LUVSG Merger has been consummated,
prior to the closing of a Qualified SGN IPO, Liberty will purchase from SGN
shares of SGN Stock for an aggregate purchase price of $500,000,000 (the
"SGN
Page 30 of 31 Pages
<PAGE>
Investment Transaction"). The number of shares of SGN Stock that Liberty
will receive for the consideration paid in the SGN Investment Transaction
will be determined by dividing $500,000,000 by the price per share that SGN
Stock is offered to the public in a Qualified SGN IPO.
2. If a Qualified SGN IPO does not occur by the date that is 9 months after the
date of the Letter, neither Liberty nor SGN shall be under any obligation to
consummate the SGN Investment Transaction.
E. Lock-Ups and Registration Rights
------------------------------------
1. Liberty will agree to a two year lock-up agreement with respect to the ADRs
received by it and a one year lock-up agreement with respect to the shares
of SGN Stock received by it. Such lock-up agreements will prohibit any
transaction (including a derivative transaction) relating to the ADRs or the
SGN Stock, provided that, as to 25% of the ADRs, derivative transactions
will be permitted on the same terms as are permitted under the Registration
and Lock-Up Agreement dated as of July 15, 1999 between TNCL and Liberty
(the "Sports Net Agreement"), commencing 12 months after the closing of the
NPAL/LUVSG Merger.
Liberty will also agree to enter into customary lock-up agreements with
respect to such ADRs and shares of SGN Stock at the request of any managing
underwriters engaged in connection with a public offering of securities for
TNCL or SGN; provided that in no event will any lock-up period applicable to
Liberty under such agreements exceed 90 days or, if shorter, the shortest
lock-up period applicable to TNCL or SGN or any of the principal
stockholders of TNCL or SGN, as applicable.
2. Subject to such lock-up agreements, (i) TNCL shall grant Liberty
registration rights with respect to the ADRs pursuant to a registration
rights agreement (the "TNCL Registration Rights Agreement") with terms that
are substantially the same as those set forth in the Sports Net Agreement,
and (ii) SGN shall grant Liberty registration rights with respect to the
shares of SGN Stock pursuant to a registration rights agreement with
substantially equivalent terms to the TNCL Registration Rights Agreement.
Page 31 of 31 Pages
