<PAGE>
EXHIBIT 7F
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>
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>
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>
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
By:_____________________________
Name:
Title:
Accepted and Agreed:
LIBERTY MEDIA CORPORATION
By:____________________________
Name:
Title:
<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.
<PAGE>
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
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); and (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.
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, 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.
2
<PAGE>
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").
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 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 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
3
<PAGE>
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
----------------------------------------------------------------
1. Subject to the condition that the NPAL/LUVSG Merger has been
consummated, concurrent with 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 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.
4
