UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K

ANNUAL REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

For the fiscal year ended June 30, 20062007

or

For the transition period from             to             

Commission file number 001-32352

NEWS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Registrant’s telephone number, including area code (212) 852-7000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933.    Yes  x    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Securities Exchange Act of 1934.

Large Accelerated Filer  x                            Accelerated Filer  ¨                            Non-accelerated Filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934.    Yes  ¨    No  x

As of December 31, 2005,29, 2006, which was the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of News Corporation’s Class A Common Stock, par value $0.01 per share, held by non-affiliates was approximately $33,110,077,172,$45,435,573,995, based upon the closing price of $15.55$21.48 per share as quoted on the New York Stock Exchange on that date, and the aggregate market value of News Corporation’s Class B Common Stock, par value $0.01 per share, held by non-affiliates was approximately $11,678,039,175,$15,100,155,432, based upon the closing price of $16.61$22.26 per share as quoted on the New York Stock Exchange on that date.

As of August 21, 2006, 2,171,163,68717, 2007, 2,141,871,251 shares of Class A Common Stock and 986,520,953 Class B Common Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required for Part III of this Annual Report on Form 10-K is incorporated by reference to the News Corporation definitive Proxy Statement for its 20062007 Annual Meeting of Stockholders, which shall be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, within 120 days of News Corporation’s fiscal year end.

TABLE OF CONTENTS

PART I

Background

News Corporation, a Delaware corporation, is a diversified entertainment company with operations in eight industry segments, including (i) Filmed Entertainment, (ii) Television, (iii) Cable Network Programming, (iv) Direct Broadcast Satellite Television, (v) Magazines and Inserts, (vi) Newspapers, (vii) Book Publishing and (viii) Other. The activities of News Corporation are conducted principally in the United States, the United Kingdom, Continental Europe, Australia, Asia and the Pacific Basin. For financial information regarding News Corporation’s segments and operations in geographic areas see “Item 8. Financial Statements and Supplementary Data.” Unless otherwise indicated, references in this Annual Report on Form 10-K (the “Annual Report”) to “we,” “us,” “our,” “News Corporation” or the “Company” means News Corporation’s predecessor corporation, TNCL (as defined below), and its subsidiaries prior to November 12, 2004 and News Corporation and its subsidiaries from November 12, 2004 forward. Descriptions of transactions contained in this Annual Report that occurred prior to the Reorganization (as defined below) have been adjusted to reflect the consummation of the Reorganization.

On November 12, 2004, a reorganization was completed (the “Reorganization”), whereby News Corporation became the parent company of News Holdings Limited (formerly known as The News Corporation Limited), a South Australia corporation (“TNCL”), and its subsidiaries. The Reorganization was completed pursuant to schemes of arrangements under Australian law in which all ordinary and preferred shares of TNCL were cancelled and, in exchange, holders of those shares received shares of News Corporation voting Class B common stock, par value $0.01 per share (“Class B Common Stock”), and non-voting Class A common stock, par value $0.01 per share (“Class A Common Stock”), respectively, on a one-for-two basis.

In March 2005, Fox Acquisition Corp., a direct wholly-owned subsidiary of News Corporation, completed an offer to the holders of Class A common stock of Fox Entertainment Group, Inc. (“FEG”) to exchange 2.04 shares of News Corporation’s Class A Common Stock for each outstanding share of FEG Class A common stock (the “FEG Offer”) that News Corporation did not already own. Shortly after the completion of the FEG Offer, News Corporation effected a merger of FEG with and into Fox Acquisition Corp. In the merger, each share of FEG Class A common stock not acquired in the FEG Offer, other than the shares owned by News Corporation, was converted into 2.04 shares of News Corporation’s Class A common stock.Common Stock. After the completion of the FEG Offer and the subsequent merger, Fox Acquisition Corp. changed its name to “Fox Entertainment Group, Inc.” (for periods following the completion of the FEG Offer and the subsequent merger, referred to as “FEG”). As a result of the transaction described above, News Corporation owns 100% of FEG.

In December 2006, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Liberty Media Corporation (“Liberty”). Under the terms of the Share Exchange Agreement, Liberty will exchange its entire interest in the Company’s common stock (approximately 325 million shares of Class A Common Stock and 188 million shares of Class B Common Stock) for 100% of a News Corporation subsidiary (“Splitco”), whose holdings will consist of the Company’s approximately 39% interest (approximately 470 million shares) in The DIRECTV Group, Inc. (“DIRECTV”) constituting the Company’s entire interest in DIRECTV, three of the Company’s Regional Sports Networks (FSN Northwest, FSN Pittsburgh and FSN Rocky Mountain (the “Three RSNs”)) and $588 million in cash, subject to adjustment.

The transaction contemplated by the Share Exchange Agreement was approved by the Company’ Class B stockholders on April 3, 2007, but remains subject to customary closing conditions, including, among other things, regulatory approvals, the receipt of a ruling from the Internal Revenue Service and the absence of a material adverse effect on Splitco. If these conditions are satisfied, the transaction is expected to be completed in the fourth quarter of calendar 2007.

On July 31, 2007, the Company entered into a definitive merger agreement (the “Merger Agreement”) with Dow Jones & Company, Inc. (“Dow Jones”), pursuant to which the Company will acquire Dow Jones in a transaction valued at approximately $5.6 billion. Members of the Bancroft family and related trusts owning approximately 37% of Dow Jones voting stock have agreed to vote their shares in favor of the transaction. Under the terms of the Merger Agreement, Dow Jones Stockholders will be entitled to receive $60 in cash for each share of Dow Jones stock they own, and up to 250 holders of record and not more than 10% of the shares of Dow Jones may elect to have their shares of Dow Jones converted into a number of units of a newly formed subsidiary of the Company (each unit of which will be exchangeable for one share of the Company’s Class A Common Stock in accordance with the terms and conditions of such subsidiary’s operating agreement). The Merger Agreement is subject to, among other things, the adoption of the Merger Agreement by Dow Jones’ stockholders, the execution of an editorial agreement (the form of which has been agreed by the parties), the establishment by the Company of a special committee as contemplated under such editorial agreement, the receipt of various regulatory approvals and other customary closing conditions. The Merger Agreement contains certain termination rights for both the Company and Dow Jones, including the right of Dow Jones to terminate the agreement to enter into an alternative transaction that constitutes a superior acquisition proposal. Upon termination of the Merger Agreement under specified circumstances, including a termination by Dow Jones to accept a superior acquisition proposal, Dow Jones would be required to pay the Company a termination fee of $165 million less any previously paid expenses. The transaction is expected to be completed in the fourth quarter of calendar 2007. The Company has agreed, upon consummation of the transaction, to appoint a member of the Bancroft family or another mutually acceptable person to the Company’s Board of Directors.

The Company’s subsidiary, NDS Group plc (“NDS”), and certain of the companies in which the Company owns equity interests, either directly or indirectly, including British Sky Broadcasting Group plc (“BSkyB”), Gemstar-TV Guide International, Inc. (“Gemstar-TV Guide”) and The DIRECTV, Group, Inc. (“DIRECTV”), are subject to the information requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in accordance with the Exchange Act, file reports and other information with the Securities and Exchange Commission (“SEC”).

The Company maintains a 52-53 week fiscal year ending on the Sunday nearest to June 30 in each year. At June 30, 2006,2007, the Company had approximately 47,30053,000 full-time and part-time employees. The Company’s principal executive offices are located at 1211 Avenue of the Americas, New York, New York 10036 and its telephone number is (212) 852-7000. The Company’s website iswww.newscorp.com. The Company’s annual reportsAnnual Report on Form 10-K, quarterly reportsQuarterly Reports on Form 10-Q, current reportsCurrent Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available, free of charge, through the Company’s website as soon as reasonably practicable after the material is electronically filed with or furnished to the SEC.

Special Note Regarding Forward-Looking Statements

This document and the documents incorporated by reference into this Annual Report, including “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contain statements that constitute “forward-looking statements” within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act of 1933, as amended. The words “expect,” “estimate,” “anticipate,” “predict,” “believe” and similar expressions and variations thereof are intended to identify forward-looking statements. These statements appear in a number of places in this document and include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things, trends affecting the Company’s financial condition or results of operations. The readers of this document are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties. More information regarding these risks, uncertainties and other factors is set forth under the heading “Item 1A. Risk Factors” in this Annual Report. The Company does not ordinarily make projections of its future operating results and undertakes no obligation (and expressly disclaims any obligation) to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Readers should carefully review this document and the other documents filed by the

Company with the SEC. This section should be read together with the audited consolidated financial statements of the Company and related notes set forth elsewhere in this Annual Report.

BUSINESS OVERVIEW

The Company is a diversified entertainment company, which manages and reports its businesses in the eight segments described below.

Filmed Entertainment

The Company engages in the development, production and acquisition of live-action and animated motion pictures for distribution and licensing in all formats in all entertainment media worldwide, distributionand the production and licensing of feature films and television programs.programming worldwide.

Feature Film Production and Distribution

One of the world’s largest producers and distributors of motion pictures, Fox Filmed Entertainment (“FFE”), produces, acquires and distributes motion pictures throughout the world under a variety of arrangements. During fiscal 2007, 2006 2005 and 2004,2005, FFE placed 34, 31 23 and 2423 motion pictures, respectively, in general release in the United States. Those motion pictures were produced and/or distributed by the following units of FFE: Twentieth Century Fox and Fox 2000, which produce and acquire motion pictures for mainstream audiences; Fox Searchlight Pictures, which produces and acquires specialized motion pictures; Fox Atomic, which produces and acquires motion pictures targeting the 17-24 year old demographic audience; and Twentieth Century Fox Animation, which produces feature length animated motion pictures. Motion pictures produced and/or distributed by FFE in the United States and international territories since the beginning of fiscal 20042005 includeLeague of Extraordinary Gentlemen,Master and Commander (together with Universal Studios and Miramax Film Corp.),Cheaper by the Dozen,Man on Fire (together with Regency Entertainment (USA), Inc. (“New Regency”)),The Day After Tomorrow,Sideways,Garfield,Dodgeball: A True Underdog Story,Napoleon Dynamite (together with Paramount Pictures Corporation and MTV),I, Robot,Robots,Alien vs. Predator,Hide and Seek,Kingdom of Heaven, Star Wars Episode III: Revenge of the Sith (distributed for Lucasfilm Ltd.),Mr. and Mrs. Smith(distributed for New Regency),Fantastic Four, Walk the Line, Ice Age: The Meltdown, X-Men: The Last Stand, The Devil Wears Prada, Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan,Night at the Museum,Fantastic Four: Rise of the Silver Surfer,Live Free or Die Hard,Little Miss Sunshine,The Omen, The Ringer, The Hills Have EyesLast King of Scotland,EragonandThank You for Smoking28 Weeks Later. FFE has already released or currently plans to release approximately 3430 motion pictures in the United States in fiscal 2007,2008, includingA Good Year, Eragon, Night at the Museum, Fantastic Four: RiseThe Simpsons Movie,Horton Hears a Who,Jumper, AVP: Survival of the Silver Surfer, Little Miss SunshineFittest, Alvin and the Chipmunks, The Dark is Rising, The Darjeeling Limited,The Savages,Juno,The ComebacksandI Think I Love My WifeStarship Dave.

In addition, pursuantPursuant to an agreement with Monarchy Enterprises Holdings B.V. (“MEH”), the parent company of New Regency in which the Company has a 20% interest, and certain of MEH’s subsidiaries, FFE distributes certain New Regency films and all films co-financed by FFE and New Regency in all media worldwide, excluding certain international territories with respect to theatrical and home video rights and most international territories with respect to television rights. Among its fiscal 20072008 releases, FFE currently expects to distribute twoseven films either fully financed by New Regency films.or co-financed by FFE and New Regency.

Motion picture companies, such as FFE, typically seek to generate revenues from various distribution channels. FFE derives its worldwide motion picture revenues primarily from four basic sources (set forth in general chronology of exploitation): (i) distribution of motion pictures for theatrical exhibition in the United States and Canada and markets outside of the United States and Canada (“International”international” markets); (ii) distribution of motion pictures in various home media formats; (iii) distribution of motion pictures for exhibition on pay-per-view, video-on-demand and premium pay television programming services; and (iv) distribution of motion pictures for exhibition on free television networks, other broadcast program services, independent television stations and basic cable programming services, including certain services which are affiliates of the Company. The Company does not always have rights in all media of exhibition to all motion pictures which it releases, and does not necessarily distribute a given motion picture in all of the foregoing media in all markets.

The Company believes that the pre-release marketing of a feature film is an integral part of its motion picture distribution strategy and generally begins marketing efforts three to six months in advance of a film’s release date in any given territory. The Company markets and distributes its films worldwide principally through its own distribution and marketing companies.

Through Twentieth Century Fox Home Entertainment, Inc., the Company distributes motion pictures and other programming produced by units of FFE, its affiliates and other producers in the United States, Canada and Internationalinternational markets in all home media formats, including the sale and rental of DVDs. In fiscal 2006,2007, the domestic home entertainment division released or re-released approximately 580711 produced and acquired titles, including 31 new FFE film releases, approximately 362533 catalog titles and approximately 187147 television and non-theatrical titles. In Internationalinternational markets, the Company distributed, produced and acquired titles both directly and through foreign distribution channels, with approximately 642over 720 releases in fiscal 2006,2007, including approximately 2433 new FFE film releases, over 495525 catalog titles and approximately 123161 television and non-theatrical releases. DuringIn fiscal 2006,2007, the Company broadenedcontinued its international video distribution agreement with Metro-Goldwyn-Mayer (“MGM”) into a worldwide home video distribution arrangement commencing September 1, 2006 for most territories. The Company releasedwith Metro-Goldwyn-Mayer (“MGM”), releasing approximately 350790 and 510 MGM home entertainment theatrical, catalog and television programs domestically and internationally, inrespectively. During fiscal 2006 under2007, the existing agreement.Company expanded its product portfolio to include the high-definition Blu-ray disc (“Blu-ray”) format. During fiscal 2007, the domestic home entertainment division released 26 Blu-ray titles, including nine new FFE film releases and 17 catalog titles. In international markets, the Company released 25 Blu-ray titles, including eight new FFE film releases and 17 catalog titles. The Company also distributed ten Blu-ray titles (one new release and nine catalog titles) from MGM domestically and five titles (one new release and four catalog titles) internationally.

Units of FFE license motion pictures and other programs in the United States, Canada and Internationalinternational markets to various third party and certain affiliated subscription pay television, pay-per-view, video-on-demand and video-on-demandelectronic sell-through services. The license agreements reflecting the subscription pay television arrangements generally provide for a specified number of exhibitions of the program during a fixed term in exchange for a license fee which is based on a variety of factors, including the box office performance of each program and the number of subscribers to the service or system. Among third-party license agreements that units of FFE have in place in the United States for television exhibition of their motion pictures are exclusive subscription pay television license agreements with Home Box Office (“HBO”), providing for the licensing of films initially released for theatrical exhibition through 2015, as well as arrangements with Starz Encore Group. The license agreements reflecting the pay-per-view and video-on-demand services arrangements generally provide for a license fee based on a percentage of the licensee’s gross receipts from the exhibition of the program, and in some cases, a guaranteed minimum fee. In addition, these agreements generally provide for a minimum number of scheduled pay-per-view exhibitions and a minimum video-on-demand exhibition period during a fixed term. Among third-party license agreements that units of FFE have in place in the United States for television exhibition of their motion pictures are exclusive subscription pay television license agreements with Home Box Office (“HBO”), providing for the licensing of films initially released for theatrical exhibition through the year 2009, as well as arrangements with Starz Encore Group. Units of FFE also license motion pictures in the United States to direct broadcast satellite (“DBS”) pay-per-view services operated by DIRECTV and EchoStar Communications Corporation, as well as to pay-per-view and video-on-demand services operated by iN Demand L.L.C. In addition, units of FFE license motion pictures and other programs to a number of distribution entitiesthird parties, including Wal-Mart, Apple and Amazon, for electronic sell-through (also referred to as licensed electronic download) over the Internet, enabling consumers in the United States to acquire the right to permanently retain such programs. In Internationalinternational markets, units of FFE license motion pictures and other programming to leading third-party pay television, servicespay-per-view and pay-per-viewvideo-on-demand services, as well as to emergingpay television and video-on-demand services and programming services operated by various affiliated entities.

Competition. Motion picture production and distribution are highly competitive businesses. The Company competes with other film studios, independent production companies and others for the acquisition of artistic properties, the services of creative and technical personnel, exhibition outlets and the public’s interest in its products. The number of motion pictures released by the Company’s competitors, particularly the other major film studios, in any given period may create an oversupply of product in the market, which may reduce the Company’s shares of gross box office admissions and may make it more difficult for the Company’s motion pictures to succeed. The commercial success of the motion pictures produced and/or distributed by the Company is substantially affected by the public’s unpredictable response to them. The competitive risks affecting the

Company’s home entertainment business include the number of home entertainment titles released by the Company’s competitors whichthat may create an oversupply of product in the market, competition among home media formats, such as DVDs, and other methods of distribution, such as video-on-demand services. In addition, television networks are now producing more programs internally, which may reduce those networks’ demand for programming from other parties.

The Company faces ongoing risks associated with controlling unauthorized copying and distribution of the Company’s programs. For a further discussion of issues relating to unauthorized copying and distribution of the Company’s programs, see “—Intellectual Property.”

Television Programming, Production and Distribution

Twentieth Century Fox Television (“TCFTV”). During the past fiscal year,2007, TCFTV produced television programs for the FoxFOX Broadcasting Company (“FOX”), ABC Television Network (“ABC”), CBS Broadcasting, Inc. (“CBS”), NBC Television Network (“NBC”), The CW Television Network (“The CW”), E! Entertainment Television, Inc. (“E!”), The WB Television NetworkFox News Channel (“The WB”Fox News”) and the FXTurner Network LLCTelevision (“FX”TNT”) ... TCFTV currently produces, or has orders to produce, episodes of the following television series:24,American Dad, Anchorwoman,Back To You, Bones,Family Guy, K-Ville, King of the Hill,Prison Break, The Simpsons andUnhitched for FOX;Boston Legal, Miss/Guidedand Women’s Murder Club for ABC;How I Met Your Mother, Shark andThe Unit for CBS;24 Journeyman,American Dad,Bones,Family Guy, Futurama,King of the Hill,The Loop,Prison Break,The Simpsons,Standoff, Vanished, The Wedding Album (a co-production with Fox Television Studios) and The Winner for FOX;My Name Is Earl and The Singles Tablefor NBC;RebaBeauty and the Geekfor The CW; andThe Simple Life for E!.; andHalf Hour News Hour for Fox News. Generally, a network will license a specified number of episodes for exhibition on the network during the license period. All other distribution rights, including Internationalinternational and off-network syndication rights, are typically retained by TCFTV, utilized by other units of the Company or sold to third parties.

Generally, television programs are produced under contracts that provide for license fees which may cover only a portion of the anticipated production costs. As these costs have increased in recent years, the resulting deficit between production costs and license fees for domestic first-run programming has also increased. Therefore, additional licensing is often critical to the financial success of a series. Successful U.S. network television series are, for example, (i) licensed for first-run exhibition in Canadian and Internationalinternational markets, (ii) released in seasonal DVD box sets, (iii) licensed for off-network exhibition in the United States (including in syndication or to cable programmers) and, (iv) licensed for syndicationfurther television exhibition in International markets.international markets and (v) made available for electronic sell-through, including individual episodes and full series. Generally, a series must be broadcast for at least three to four television seasons for there to be a sufficient number of episodes to offer the series in syndication in the United States or to cable and DBS programmers in the United States. The decision of a television network to continue a series through an entire television season or to renew a series for another television season depends largely on the series’ audience ratings.

Twentieth Television.Television. Twentieth Television licenses both television programming and feature films for domestic syndication to television stations and basic cable services in the United States. Twentieth Television distributes a program portfolio that includes original realitythe Company’s library of television and film assets, and first-run television programming produced by its production companies for sales to the Fox Television Stations, other local stations, including the Company’s cable network businessesstations owned and all other basic cable networks. Twentieth Television will launchoperated by the new general entertainment broadcast network MyNetworkTV in September 2006, which will provide primetime programming to the Company’s nine stations currently affiliated with UPN and its one currently independent station,Company, as well as to numerous affiliate stations.basic cable networks. First-run programs distributed by Twentieth Television isinclude the exclusive supplier of MyNetworkTV’s two hour-long

primetime dramas to be broadcast six nights a week. The dramas’ first 13-week installments to launch in September 2006 includecourt showsDesireDivorce Court,Judge Alex andFashion HouseCristina’s Court, the daytime talk show,The Morning Show with Mike and Juliet,and a new game show produced in concert with FremantleMedia calledTemptation.

Twentieth Television derives revenue from off-network, theatrical and first-run program sales in the form of cash license fees paid by both broadcast and cable licensees, and from the sales of national advertising units retained by Twentieth Television in its programs. Twentieth Television also sells advertising spots for DIRECTV.licenses such shows asMy Name Is Earl,Family Guy,The Bernie Mac Show, Malcolm in the Middle, 24 andThe Simpsonsto cable and broadcast networks.

Fox Television Studios (“FtvS”). FtvS is a program supplier to the major U.S. and Internationalinternational broadcast and cable networks. FtvSThe studio is currently producing:producingDuetsBurn Notice, premiering August 2006;for the USA Network (“USA”);Saving Grace for Turner Network Television (“TNT”);The Shield andThe Riches for FX; the late-nightTALKSHOWTalkshow with Spike Feresten for FOX; Crowned: The Mother of all Pageants, premiering September 2006;in 2008 on The CW; andThe Wedding Album (a co-production with TCFTV), premiering early 2007, all for the FOX Broadcasting Company. FtvS also producesThe Girls Next Door for E! andInked for A&E Television Networks (“A&E”). Through Regency Television (a partnership with New Regency), productions includesincludeHelp Me Help YouNew Amsterdam, premiering fall 20062007, andThe Return of Jezebel James, premiering in 2008, both for ABC. FtvS’sFOX. In fiscal 2007, FtvS’ made-for-TV movies includeincludedFlight 93The Mermaid Chair for A&E andA Little Thing Called MurderWhat if God Were the Sun for Lifetime. In fiscal 2006, FtvS’s2007, FtvS’ international format production arm, Fox World, consulted on over 40more than 25 series and specials in production around the world. FtvS maintains production studios inworld, including the United Kingdom, Australiahit showsBeauty and New Zealand.the Geek andThe Simple Life.

Competition. Similar to motion picture production and distribution, production and distribution of television programming is extremely competitive. The Company competes with other film studios, independent production companies and others for the acquisition of artistic properties, the services of creative and technical personnel, exhibition outlets and the public’s interest in its products. In addition, television networks have affiliated production companies from which they are increasingly obtaining their programming, which has reduced the demand for programming from other non-affiliated parties.

Motion Picture and Television Libraries

The Company’s motion picture and television library (the “Fox Library”) consists of varying rights to several thousand previously released motion pictures and many well-known television programs. The motion pictures in the Fox Library include many successful and well-known titles, such asThe Sound of Music,Mrs. Doubtfire,Planet of the Apes,Dr. Dolittle, theX-Men trilogy,The Day After Tomorrow, theIce Age series,I, RobotSideways, Sideways, Walk the Line,Fantastic Four,The Devil Wears Prada,Little Miss Sunshine,Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan,Night at the Museum and eightseven of the top 25 domestic box office grossing films of all time, which areTitanic (together with Paramount Pictures Corporation),Star Wars,Star Wars Episode I: The Phantom Menace,Star Wars Episode II: Attack of the Clones,Star Wars Episode III: Revenge of the Sith, Return of the Jedi, andIndependence Day andThe Empire Strikes Back.

The Fox Library contains varying rights to many television series and made-for-television motion pictures. The television programming in the Fox Library consists of such classic series asBatman,The Mary Tyler Moore Show,M*A*S*H,Hill Street Blues,Doogie Howser, M.D.,L.A. Law,The Wonder Years,Picket FencesFuturama,Room 222 The Practice,Trapper John, M.D.Ally McBeal,Daniel BooneAngel,Dharma & Greg,In Living Color,The X-Files,Buffy the Vampire Slayer andNYPD Blue, as well as such current hits asThe Simpsons,King of the Hill,24,The Shield,Family Guy,American Idol,Reba, My Name Is Earl, How I Met Your Mother, Boston Legal,Prison Break,Bones,American Dad and Prison BreakShark.

Television

Through its subsidiaries, theThe Company is engaged in the operation of broadcast television stations, the broadcasting of network programming in the United States and the development, production and distributionbroadcasting of network and television programming.programming in Asia.

Fox Television Stations

Fox Television Stations currently operates 35 full power stations, including stations located in nine of the top ten largest designated market areas (“DMAs”). Fox Television Stations operates two stations in nine DMAs, including New York, Los Angeles and Chicago, the first, second and third largest DMAs, respectively.

Of the 35 full power stations, 25 stations are affiliates of FOX Broadcasting Company (“FOX Affiliates”). For a description of the programming offered to FOX Affiliates, see “—FOX Broadcasting Company.” In

addition, Fox Television Stations owns and operates ten stations that are currently affiliated with the UPN network (“UPN”) in nine markets, including four of the top ten DMAs, and an additional independent station. The affiliation agreements with UPN expire at the end of the 2005-2006 season. UPN provides approximately 13 hours of programming a week, including two-hour prime-time programming blocks five nights a week, to its affiliates. In September 2006, the Fox Television Stations that are currently UPN affiliates and the independent station will become affiliates of MyNetworkTV, Inc. (“MyNetworkTV”). For a description of the programming offered by affiliates of MyNetworkTV, see “—Twentieth Television” above.

The following table lists certain information about each Fox Television Station. Unless otherwise noted, all stations are FOX Affiliates.

Source: Nielsen Media Research, January 20062007

same coverage as VHF television stations. To address this disparity, the Federal Communications Commission (the “FCC”) applies a discount (the “UHF Discount”) which attributes only 50% of the television households in a local television market to the audience reach of a UHF television station for purposes of calculating whether that station’s owner complies with the national station ownership cap imposed by FCC regulations and by statute. In addition, the coverage of two commonly owned stations in the same market is only counted once. The percentages listed are rounded and do not take into account the

UHF Discount. For more information regarding the FCC’s national station ownership cap, see “Regulation—Television.”

(2)	UPNaffiliate through 2005-2006 season. Will become a MyNetworkTV affiliate in September 2006.affiliate.

(3)	Independent station and secondary FOX Affiliate, carrying children’s programming provided by the FOX Broadcasting Company. Will become a MyNetworkTV affiliate in September 2006.

(4)	TheCompany also owns and operates KFTC, Channel 26, Bemidji, MN as a satellite station of WFTC, Channel 29, Minneapolis, MN.

(5)(4)

TheThe Company also owns and operates KFCT, Channel 22, Fort Collins, CO, as a satellite station of KDVR, Channel 31, Denver, CO.

In June 2007, the Company announced its plan to sell nine of the FOX Affiliates. The nine FOX Affiliates subject to potential sale are: WJW in Cleveland, Ohio; KDVR in Denver, Colorado; KTVI in St. Louis, Missouri; WDAF in Kansas City, Kansas; WITI in Milwaukee, Wisconsin; KSTU in Salt Lake City, Utah; WBRC in Birmingham, Alabama; WHBQ in Memphis, Tennessee; and WGHP in Greensboro, North Carolina. No agreement has yet been entered into with respect to the sale of any of these stations.

FOX Broadcasting Company (“FOX”)

FOX has 201213 FOX Affiliates, including 25 full power television stations that are owned by subsidiaries of the Company, which reach along with Fox Net, a News Corporation-owned cable service which reaches areas not served by a free over-the-air FOX Affiliate, approximately 98%99% of all U.S. television households. In general, each week FOX regularly delivers to its affiliates 15 hours of prime-time programming and one hour90 minutes of late-night programming on Saturday. FOX’s prime-time programming features such series as The Simpsons, Prison Break, Bones, The OC, 24 and House; unscripted series such as American Idol; and various movies and specials. In addition, a significant component of FOX’s programming consists of sports programming, with FOX providing to its affiliates live coverage (including post-season) of the National Football Conference of the National Football League (the “NFL”) and Major League Baseball (“MLB”), as well as live coverage of the premier racing series (the Nextel Cup and the Busch series) of the National Association of Stock Car Auto Racing (“NASCAR”) and the Bowl Championship Series (“BCS”). FOX also provides a four-hour block of children’s programming on Saturday morning, programmed by 4Kids Entertainment (“4Kids”), a children’s entertainment company. FOX’s agreement with 4Kids extends untilthrough the 2007-2008 broadcast season with an option to extend through the 2008-2009 season.

FOX’s prime-time line-up is intended to appeal primarily to target audiences of 18 to 49-year old adults, the demographic group that advertisers seek to reach most often. During the 2005-20062006-2007 traditional September to May broadcast season, FOX ranked first in prime-time programming based on viewership of adults aged 18 to 49 (FOX had a 4.1 rating and an 11 share, CBS had a 3.7 rating and a 10 share, ABC had a 4.0 rating and an 11 share, CBS had a 3.83.5 rating and a 10 share and NBC had a 3.33.1 rating and a 9an 8 share). The median age of the FOX viewer is 41 years, as compared to 4948 years for NBC, 4647 years for ABC and 5152 years for CBS.

FOX obtains programming from major television studios and independent television production companies pursuant to license agreements. The terms of those agreements generally provide FOX with the right to broadcast a television series for up to a minimum of four seasons. FOX licenses its film programming from major film studios and independent film production companies. National sports programming, such as NFL, MLB and NASCAR programming, is obtained under license agreements with professional sports leagues or organizations. FOX’s current licenses with the NFL, MLB, and NASCAR extend until the 2011 NFL season, the 2013 MLB season and the 2014 NASCAR season. FOX also has the right to broadcast the National Collegiate Athletic Association’s Bowl Championship Series from 2007BCS through 2010.

FOX provides programming to the FOX Affiliates in accordance with affiliation agreements of varying durations, which grant to each affiliate the right to broadcast network television programming on the affiliated station. Such agreements typically run three or more years and have staggered expiration dates. These affiliation agreements generally require FOX Affiliates to carry FOX programming in all time periods in which FOX programming is offered to those affiliates, subject to certain exceptions stated in the affiliation agreements.

Competition.MyNetworkTV

In September 2006, the Company launched MyNetworkTV, a primetime general entertainment broadcast television network. MyNetworkTV currently has 175 affiliates, including 10 stations owned by the Company, which reach approximately 97% of U.S. households.

MyNetworkTV’s 2007 fall schedule includes reality programming such asThe Academy,Jail,Decision House, andMeet My Folks, as well as various movies and specials. In addition, MyNetworkTV has partnered with International Fight League to broadcast mixed martial arts bouts and related content.

Competition. The network television broadcasting business is highly competitive. FOX and MyNetworkTV directly competescompete for programming, viewers and advertising with the ABC, NBC, CBS UPN and The WB networks (UPN and The WB will become The CW in September 2006).CW. ABC, NBC and CBS each broadcasts a significantly greater number of hours of programming than FOX and MyNetworkTV and, accordingly, may be able to designate or change time periods in which programming is to be broadcast with greater flexibility than FOX. FOX or MyNetworkTV. FOX and MyNetworkTV also competescompete with other non-network sources of television service, including cable television and DBS services. Other sources of competition may include home video exhibition, digital video recorders (“DVR”), the Internet and home computer usage. In addition, future technological developments may affect competition within the television marketplace.

Each of the stations operated by Fox Television Stations also competes for advertising revenues with other television stations and radio and cable systems in its respective market area and with other advertising media, such as newspapers, magazines, outdoor advertising, direct mail and Internet websites. All of the stations operated by Fox Television Stations are located in highly competitive markets. Additional elements which are material to the competitive position of each of the television stations include management experience, authorized power and assigned frequency of that station. Competition for sales of broadcast advertising time is based primarily on the anticipated and actually delivered size and demographic characteristics of audiences as determined by various rating services, price, the time of day when the advertising is to be broadcast, competition from the other broadcast networks, cable television systems, DBS services and other media and general economic conditions. Competition for audiences is based primarily on the selection of programming, the acceptance of which is dependent on the reaction of the viewing public which is often difficult to predict.

STAR

The Company, through its wholly-owned subsidiary Star Group Limited (“STAR”), engages in the development, production and broadcasting of television programming to 53 countries throughout Asia. As of June 30, 2007, STAR currently broadcastswas broadcast in nineten languages and across 59 channels.64 channels, with an additional channel launched in July 2007. STAR divides its markets into foursix regions: India; mainlandGreater China; Taiwan; andIndonesia; the rest of Asia.South East Asia; the Middle East; and Pakistan. STAR estimates that approximately 300 million people in 120143 million households have access to STAR’s owned and affiliated channels. STAR’s owned and affiliated channels and its library content are also distributed in Africa, Europe, Australia and North America.

STAR’s programming is primarily distributed via satellite to local cable and direct-to-home (“DTH”) operators for distribution to their subscribers. STAR is one of the leading providers of television programming in Asia. Of the 5965 channels currently offered by STAR, 2729 channels are wholly-owned and operated by STAR, including Xing Kong Wei ShiXING KONG WEI SHI (“Xing Kong”) (Xing Kong is a(a mainland China-oriented general entertainment channel that is broadcast in three-star or better hotels and other approved organizations and institutions throughout mainland China and in southern China where STAR has been granted official landing rights), STAR PLUS (the(a Hindi language general entertainment channel and the highest rated cable channel in India), STAR MOVIES (among the highest rated international movie channels in India) and STAR CHINESE CHANNEL (one of the leading general entertainment cable channels in Taiwan). STAR also owns and operates channels in other genres: CHANNEL [V], STAR’s music and youth entertainment television channels, STAR WORLD, an English language general entertainment channel, and STAR MOVIES, STAR CHINESE MOVIES and STAR GOLD, STAR’s English language, Chinese language and Hindi language movie channels, respectively. STAR’s channels are distributed both on a pay television and free over-the-air basis.

In addition, STAR provides 3236 channels that are either owned and operated by third parties or are joint ventures between the Company and other entities, including NGC Networks Asia (National Geographic), Phoenix Satellite Television Holdings Limited (“Phoenix”), ESPN STAR Sports and Media Content & Communications Services (India) Private Limited (“MCCS”). STAR currently ownshas an approximate 38%18% interest in Phoenix, a company listed company on the Growth Enterprise Market of The Stock Exchange of Hong Kong whichLimited. Phoenix owns and operates Chinese language general entertainment, movie and current affairs channels, including Phoenix Chinese Channel, Phoenix Chinese News and Entertainment Channel, and Phoenix North America Chinese Channel, Phoenix InfoNews Channel (a 24-hour news channel) and Phoenix Movies Channel, (a movie channel), all of which are targeted at Chinese audiences around the world. Phoenix’s channelsworld and are primarily distributed on a free over-the-air or an encrypted basis via pay television platforms in Asia and Europe and via pay television platforms in the United States. STAR has entered into an agreement to dispose of approximately 20% of its interest in Phoenix to China Mobile (Hong Kong) Group Limited for approximately $164 million, which is expected to be completed in August 2006. ESPN STAR Sports, a 50/50 joint venture between STAR and ESPN,

is the leading sports broadcaster in Asia and operates 1315 channels in different languages. MCCS, an approximate 26% STAR owned joint venture with the Anand Bazaar Patrika Group, owns and operates athree 24-hour Hindi news and current affairs channel (STAR NEWS)channels, namely, STAR NEWS in Hindi, STAR ANANDA in Bengali and STAR ANANDA, a news and current affairs channelMAJHA in Bengali.Marathi.

In India, STAR has expanded into regional language programming with Vijay, a Tamil general entertainment channel, and the Bengali STAR ANANDA. STAR also owns an approximate 26% stake in Balaji Telefilms Limited (“Balaji”), which is one of the largest television content production companies in India, the shares of which are listed on The Stock Exchange, Mumbai and the National Stock Exchange of India. Balaji currently produces many Hindi-language serials broadcast on STAR PLUS. In 2004,India, STAR has expanded into regional language programming with VIJAY, a Tamil general entertainment channel, the Bengali STAR ANANDA, and the Marathi STAR MAJHA. In April 2007, STAR entered into an agreement to form a joint venture with the Tata Group, oneBalaji, in which STAR will hold a 51% interest, to own and operate VIJAY and to create a network of India’s leading conglomerates, to establish a DTH platformother regional language general entertainment channels in India. STAR also holds a 20% stake in this joint venture. The joint venture, Tata Sky Limited (“Tata Sky”), was granted itswhich owns and operates a DTH License by the Government of Indiaplatform in March 2006.India. Tata Sky is expected to commercially launchlaunched its DTH service in lateIndia in August 2006. STAR also has an approximate 26%22% stake in Hathway Cable & Datacom Private Limited, a multi-system cable operator in India which also provides broadband Internet services.

STAR has minority interests in various cable systems throughout Taiwan, in which the Koos Group, a leading Taiwan business conglomerate, also has an interest. As of March 2006, these various cable systems had over 2.2 million homes passed and approximately 1.2 million subscribers. The Koos Group and STAR also formed a joint venture company in which STAR has a 20% interest, to fund the digitalization and encryption of certain Taiwan cable systems in which bothIn July 2007, the Koos Group and STAR have ownership interests. This digitalizationsold a majority of those Taiwan cable systems. STAR and encryption involvesKoos intend to sell the installation ofremaining cable systems in fiscal 2008.

STAR holds a digital set-top box20% interest in each subscriber’s home through which cable operators can offer additional payPT Cakrawala Andalas Televisi (“antv”), an Indonesian free over-the-air terrestrial television channels and simple interactive services.

In other parts of Asia,broadcaster. STAR also holds an almost 50% interest in Channel [V] Thailand, a 24-hour music and youth-oriented channel that is mostly in the Thai language. In November 2005,language, and has licensed the Company completed the acquisition of an approximate 20% interestChannel [V] brand in PT Cakrawala Andalas Televisis (“antv”), an Indonesian free over-the-air terrestrial television broadcaster.Australia and Korea.

The primary sources of programming on STAR’s owned and affiliated channels include exclusive rights to broadcast over many territories in Asia:Asia and other parts of the world: (i) original Indian and Chinese television programming produced, commissioned or commissionedacquired by STAR; (ii) many of Asia’s most popular sporting events, such as English Premier League soccer; (iii) Chinese feature films distributed by Emperor Motion Picture, Filmko, Media Asia, China Star, Universe Films and Mandarin Films; (iv) other feature films distributed by Twentieth Century Fox, Buena Vista International, Dreamworks SKG, MGM/United Artists, Universal Studios, Sony Pictures, Warner Bros. Studios and Paramount Pictures; (iv)(v) an extensive contemporary Chinese film library comprising over 600 titles; (v)(vi) an extensive Hindi film library comprising over 350400 titles; and (vi)(vii) high-definition Chinese telefeature films or programs produced by STAR. STAR’s other sources of programming include rights to broadcast music videos, as well as music and youth-oriented programming, produced and carried on Channel [V], STAR’s 24-hour music television service..

Competition.Competition.Generally, STAR competes against various channels for a share of subscription, distribution, channel position, ratings as well asand programming.

India.In India, the pay television broadcasting industry has several participants. Competition for STAR’s Indian entertainment channels in the pay television sector is provided by both pay and free over-the-air channels since they are delivered by common cable. The competition in the general entertainment television sector is mainly from Zee Telefilms, Sony Entertainment Television, Sahara TV, SUN Network and Doordarshan (the government-owned broadcasting company which currently has a monopoly on terrestrial broadcasting). In addition, STAR, through MCCS, competes against Aaj Tak, NDTV, IBN7 and the news channels operated by Zee Telefilms in the Hindi, Bengali and Marathi language news television sector.

STAR competes against primarily Zee Telefilms, and Sony Entertainment Television and Sahara TV in bidding foracquiring both Hindi film and programming rights and, through its 50% owned sports joint venture, with ESPN STAR Sports, for sports broadcast rights, such as cricket rights.

China.In mainland China, STAR competes primarily in two distinct markets for which it has received government approvals to distribute its services. One is among three-star and above hotels and other approved

organizations and institutions that are allowed to receive overseas satellite television channels throughout mainland China. The second is among general households in Guangdong that can view local Chinese channels, as well as the Xing Kong channel via cable networks. In the hotel and other institutional market, STAR competes mainly with foreign satellite television providers, such as Discovery, HBO, AXN, MTV and CETV. In the Guangdong cable market, STAR competes with CETV and other Chinese and Hong-Kong based satellite television channels.

Taiwan.In Taiwan, STAR competes against various local and foreign satellite channels, depending on programming genre. In the Mandarin Chinese language general entertainment genre, STAR CHINESE CHANNEL competes against local Taiwan channels, including TVBS and ETTV.

Cable Network Programming

The Company holds interests in cable network programming businesses that produceproduces and licenselicenses news, sports, general entertainment and movie programming for distribution to cable network systems and DBS providersdistributors in the United States and internationally.

Fox News Channel.. Fox News Channel (“owns and operates the Fox News”) isNews Channel, a 24-hour all news national cable channel, which is currently available to approximately 8992 million U.S. households according to Nielsen Media Research. Fox News also produces a weekend political commentary show, Fox News Sunday, for broadcast on local FOX television stations throughout the United States, and the nationally syndicated daytimemorning television program,Geraldo At LargeThe Morning Show with Mike and Juliet. Fox News, through its Fox News Edge service, licenses news feeds to FOX Affiliates and other subscribers to use as part of local news broadcasts.broadcasts throughout the United States and abroad. Fox News also produces and runs the website, FoxNews.com, and the national Fox News Radio Network which licenses news updates and long form programs to local radio stations as well asand satellite radio providers.

Fox Sports NetFSN. Fox Sports Net, Inc. (“FSN”FSN, Inc.”) is the largest regional sports network (“RSN”) programmer in the United States, focusing on live professional and major collegiate home team sports events. FSN’sFSN, Inc.’s sports programming business currently consists primarily of ownership interests in 16 RSNs (the “FSN RSNs”) and National Sports Programming, which operates Fox Sports NetFSN (“Fox Sports Net”FSN”), a national sports programming service. Fox Sports NetFSN, Inc. is also affiliated with, through FSN, an additional five RSNs that are not owned by FSN, Inc. (the “FSN Affiliated RSNs”). FSN provides its affiliatedthe FSN RSNs and the FSN Affiliated RSNs with 24-hour national sports programming, featuring original and licensed sports-related programming and live and replay sporting events.

FSN is also affiliated with, through Fox Sports Net, an additional six RSNs (the “FSN Affiliated RSNs”). The FSN RSNs and the FSN Affiliated RSNs reach approximately 8581 million U.S. households according to Nielsen Media Research and have rights to telecast live games of 6467 of 82 U.S. professional sports teams in MLB, the National Basketball Association (“NBA”) and the National Hockey League (“NHL”); numerous collegiate conferences; and college and high school sports teams.

In April 2006,

As discussed above, FSN Northwest, FSN Pittsburgh and FSN Rocky Mountain are part of the transactions contemplated by the Share Exchange Agreement. If consummated, the Company acquired Turner Regional Entertainment Networks, Inc. (“TRENI”),will not have any interest in these RSNs following the closing of the Share Exchange Agreement and its wholly-owned, Atlanta-based regional sports and entertainment network, Turner South, for approximately $375 million from Time Warner Inc. Inthese RSNs will become FSN Affiliated RSNs. For more information on the transaction,Share Exchange Agreement, please see discussion under the Company also acquired TRENI’s rights to televise certain games of MLB’s Atlanta Braves, the NBA’s Atlanta Hawks and the NHL’s Atlanta Thrashers. In June 2006, the Company partnered with The Big Ten Conference, Inc. to create The Big Ten Channel, a 24-hour national programming service devoted to the Big Ten Conference and Big Ten athletics, academics and related programming, which is expected to be launched in August 2007.heading “Background.”

FX. Currently reaching approximately 8992 million U.S. households according to Nielsen Media Research, FX is a general entertainment network that telecasts a growing roster of original series and films, as well as acquired television series and motion pictures. In addition, FX carries sports programming with live coverage of certain NASCAR events. FX’s lineup for the 2006-20072007-2008 season includes the following critically acclaimed and popular original programming: the Emmy^® and Golden Globe^® award-winning drama series,The Shield andNip/Tuck; the Morgan Spurlock documentary seriesThirty Days; and the highly rated and critically acclaimed drama seriesNip/Tuck andRescue Me. Also included in the 2006-20072007-2008 season line-up is the secondthird season of the comedy seriesIt’s

Always Sunny in Philadelphia. FX’s 2006-2007, the second season also showcasesofThe Riches, the followingsecond season ofDirtand the freshman series,Damages, as well as the syndicated series:seriesKing of the Hill,Fear Factor,Buffy the Vampire SlayerCops,The Practice,Married…with Children,That 70’s Show,Spin City andDharma and GregGreg.During the 2007-2008 season, FX will also showcase the television premieres of theatrical motion pictures, including Batman Begins,Mr. & Mrs. Smith, Fantastic Four andRobots.

SPEED. Currently reaching approximately 6771 million households in the United States according to Nielsen Media Research, SPEED brings viewers into the world of auto and motorcycle racing, showcasing NASCAR races, events and original programming, as well as other top racing series, such as Formula One, Grand American Road Racing, American Motorcycle Association and Moto GP racing and events. SPEED’s popular seriesPINKS is a reality-based racing show that pits amateur racers against each other in a unique drag racing format. SPEED also is distributed to subscribers in Mexico, Canada and Latin America.

FUEL TV. FUEL TV is the only domestic 24-hour programming service dedicated to action sports and the lifestyle surrounding it. FUEL TV covers both competitive and performance action in the arenas of skateboarding, surfing, BMX, freestyle motocross, snowboarding and wakeboarding. Programming includes U.S. and international action sports events and competitions, as well as original series and specials about top action sports athletes and their music, art and culture from a global perspective.

Fox College Sports. Fox College Sports consists of three regionally-aligned networks, FCS Pacific, FCS Central and FCS Atlantic. Fox College Sports provides live and delayed collegiate events from the nation’s top collegiate conferences, coaches’ shows and collegiate highlight and magazine-format programming from the FSN RSNs and certain of the FSN Affiliated RSNs across the country.

Fox Movie Channel. Fox Movie Channel (“FMC”) is Hollywood’s first and only studio-based movie network. FMC airs Twentieth Century Fox films, as well as documentaries and original series that explore the moviemaking process from script to screen.

Fox Sports International. Fox Sports International owns Fox Soccer Channel, a U.S. programming English-language service offering comprehensive coverage of world-class soccer, and Fox Sports Middle East, an English-language sports network airing in the Middle East, Turkey and Africa.

Fox Sports International owns approximately 38% of Fox Pan American Sports LLC (“FPAS”) with Hicks, Muse, Tate & Furst Incorporated owning the remainder. FPAS owns and operates Spanish-language sports businesses, including the Fox Sports Latin America network (a Spanish-language sports network distributed to subscribers in certain Caribbean and Central and South American nations outside of Brazil) and Fox Sports en Español (the first Spanish-language sports programming service to be distributed in the United States).

Fox Reality Channel. Fox Reality Channel is a 24-hour national programming service, which airs off-network and syndicated unscripted programming made popular on major U.S. networks, as well as international unscripted programming. Fox Reality’sReality Channel’s lineup for the 2006-20072007-2008 season includes the

following original programming: the daily reality magazine seriesReality Remix andReality Remix Weekend; the original reality series,SolitaryReality Revealed; The Academy; the original seriesa second season ofMy Bare LadySolitary v.2.0;The Search For The Next Elvira to launch in December 2006;October 2007;Long Way Down to launch in January 2008;Paradise Hotel expected to launch in March 2008; and a secondthird season of the Fox Reality original,American Idol Extra. Fox Reality is dedicated to delivering a wide variety of television’s popular realityChannel’s 2007-2008 lineup also includes original programming for its website, including going behind the scenes of favorite prime-time reality shows to give viewers never-before-seen bonus footage, compelling one-on-one interviews and exclusive insight from the cast and crew into reality television’s most memorable moments.Nightclub Confessions.

Fox International Channels.Fox International Channels (“FIC”) owns and operates channels in severalvarious countries in Europe, Latin America, the Caribbean and Asia, including: the Fox Channel, Fox Life, FX, SPEED and SPEEDUtilisma in Latin America; FOX, Fox Crime, Fox Life, FX, CULT, NEXT and theThe History Channel in Italy; FX in the United Kingdom; FOX and Fox Life in Japan and Portugal; the Voyage Channel and Fox Life in France; FOX in Spain and Korea; theThe History Channel in India; and Fox Life and Fox Crime in several countries in Eastern Europe. FIC also manages the Universal channel in Latin America.

In fiscal 2007, FIC plans to launch NEXT in Italy, Fox Crime in Japan, Spain, Portugal and several countries in Eastern Europe and FX in Japan and India.

The FOX, FX and Fox Life branded channels have first-run and library series programming and theatrical movies acquired primarily from major film studios, as well as original productions. CULT is a factual entertainment channel featuring arts and cultural programming. The History Channel provides factual series and specials acquired primarily from A&E Television Networks. The Voyage Channel is focused on travel related programming. Fox Crime is focused on crime related programming and NEXT is a high-definition documentary channel.

FIC also owns a 32.5% equity interest in LAPTV, a partnership which distributes three premium pay television channels (Movie City East and West, Cinecanal East and West and its multiplex channel Cinecanal 2) and one basic television channel (The Film Zone East and West) in Latin America (excluding Brazil). Such channels primarily feature theatrical motion pictures of Twentieth Century Fox and three other studio partners in the English language with Spanish subtitles. FIC has voting control over an additional 22.5% interest in the partnership.

National Geographic.The Company owns a 75% interest of NGC Network International LLC (“NGC International”), with National Geographic Television (“NGT”) holding the remaining 25% interest. NGC International produces and distributes the National Geographic Channel in various international markets, including certain countries in Europe and Asia. The Company and NGT also own interests of approximately 67% and 33%, respectively, in NGC Network Latin America LLC, which produces and distributes the National Geographic Channel throughout Latin America, Spain and Portugal. The National Geographic Channel is currently shown in approximately 162 countries internationally and in 28 languages, excluding the United States.

Big Ten Network. In February 2007, the Company formed a joint venture with a subsidiary of The Big Ten Conference, Inc. to create Big Ten Network, a 24-hour national programming service devoted to the Big Ten Conference and Big Ten athletics, academics and related programming. The Big Ten Network is expected to launch at the end of August 2007.

Fox Business Channel. The Company has announced that it will launch the Fox Business Channel, a 24-hour national business news channel, in October 2007. Currently, there are more than 30 million subscribers under contract to carry the channel at launch.

Competition.Competition.

GeneralGeneral.. Cable network programming is another highly competitive business. Cable networks compete for distribution and, when distribution is obtained, compete for viewers and advertisers with free over-the-air broadcast television, radio, print media, motion picture theaters, DVDs, Internet, wireless and portable viewing devices and other sources of information and entertainment. Important competitive factors include the prices charged for programming, the quantity, quality and variety of programming offered and the effectiveness of marketing efforts.

Fox NewsNews.. Fox News’ primary competition comes from the cable networks CNN, MSNBC, CNBC and CNN Headline News. Fox News also competes for viewers and advertisers within a broad spectrum of television networks, including other non-news cable networks and free over-the-air broadcast television networks.

Sports programming operations.A number of basic and pay television programming services, such as ESPN and CSTV, as well as free over-the-air stations and broadcast networks, provide programming that targets the FSN RSNs’ audience. Fox Sports NetFSN is currently the only programming service distributing a full range of sports programming on both a national and regional level. On a national level, Fox Sports Net’sFSN’s primary competitor is ESPN and, to a lesser extent, ESPN2. In regional markets, the FSN RSNs compete with other regional sports networks, including those operated by team owners, cable television systems, local broadcast television stations and other sports programming providers and distributors.

In addition, the FSN RSNs and Fox Sports NetFSN compete, to varying degrees, for sports programming rights. The FSN RSNs compete for local and regional rights with local broadcast television stations, other local and regional sports networks, including sports networks launched by team owners, and distribution outlets, such as cable television systems. Fox Sports NetFSN competes for national rights principally with the national broadcast television networks, a number of national cable services that specialize in or carry sports programming, and television “superstations,” which distribute sports, including sports networks launched by the leagues, and other programming to cable television systems by satellite.“superstations” that distribute sports. Independent syndicators also compete by acquiring and reselling such rights nationally, regionally and locally. Distribution outlets, such as cable television systems, sometimes contract directly with the sports teams in their service area for the right to distribute a number of those teams’ games on their systems. In certain markets, the owners of distribution outlets, such as cable television systems, also own one or more of the professional teams in the region, increasing their ability to launch competing networks and also limiting the professional sports rights available for acquisition by FSN RSNs.

FX. FX faces competition from a number of basic cable and pay television programming services, such as the USA, Network, Turner Network Television,TNT, Spike TV, HBO and Showtime, as well as free over-the-air broadcast networks that provide programming that targets the same viewing audience as FX. FX also faces competition from these programming services in the acquisition of distribution rights to movie and series programming.

Direct Broadcast Satellite Television

The Company engages in the direct broadcast satellite business through its subsidiary, SKY Italia. The Company also owns equity interests in BSkyB and DIRECTV, which are engaged in the DBS business (for a description of the businesses of these equity interests, please see discussion under heading “—Equity Interests”).

SKY Italia

SKY Italia currently distributes over 100 channels of basic and premium programming services via satellite and broadband directly to subscribers in Italy. This programming includes exclusive rights to popular sporting events, newly-released movies and SKY Italia’s original programming, such as SKY News, Italy’s first 24-hour news channel. As of June 30, 2006,2007, SKY Italia had approximately 3.84.2 million subscribers.

Competition. The number of pay television subscribers with services in Italy other than SKY Italia is minimal; however, competition in the Italian pay television market is growing and is expected to continue to increase. During fiscal 2006, the competitiveSKY Italia’s competition includes companies that offer video, audio, interactive programming, telephony, data and other information and entertainment services, including broadband Internet providers, digital terrestrial transmission (“DTT”) services, wireless companies and companies that are developing new media technologies. In fiscal 2005, the competitive DTT services in Italy includedexpanded to include pay-per-view offerings of soccer games previously available exclusively on the SkySKY Italia platform. The Company is currently prohibited from providing a DTT service under regulations of the European Commission. In addition, the Italian government previously offered a subsidy on the purchase of DTT decoders. Competition is encouraged through the regulatory environment which requires SKY Italia to wholesale its premium programming, to limit the length and exclusivity of certain of its premium programming contracts, as well as to provide third parties with access to the SKY Italia platform.

Magazines and Inserts

The Company through its subsidiaries, engages in marketing operations, primarily the publication of free standing inserts and the provision of in-store marketing products and services, and magazine publishing.

News America Marketing Group

The Company’s U.S. marketing operations are organized under News America Marketing Group (“NAMG”).

NAMG consists primarily of free-standing insert publications and in-store marketing products and services.

NAMG is one of the two largest publishers of promotional free-standing inserts in the United States. Free-standing inserts are multiple-page promotionalmarketing booklets containing coupons, sweepstakes, rebates and other consumer offers, which are distributed to consumers through insertion into local Sunday newspapers. Advertisers, primarily packaged goods companies, pay NAMG to produce free-standing inserts, and NAMG contracts with and pays newspapers to include the free-standing inserts into the newspapers’ Sunday editions. NAMG produces over 69 million free-standing inserts more than 50 times a year, which are inserted in approximately 1,400 Sunday newspapers throughout the United States. NAMG, through an affiliate, also produces approximatelyover six million free-standing inserts approximately 15 times annually, in Canada, which are inserted into approximatelyover 150 Canadian newspapers.newspapers in Canada.

NAMG is a leading provider of in-store marketing products and services, primarily to consumer packaged goods manufacturers, with products in more than 38,00036,000 supermarkets, drug stores and mass merchandisers worldwide.

SmartSource^® is the brand name whichthat is linked with NAMG’s vast assortment of promotional and marketing products, including free-standing inserts and NAMG’s instant coupon machines. The SmartSource^® brand currently reaches approximately 150 million consumers weekly.

The SmartSource iGroup manages NAMG’s portfolio of database marketing and on-line marketing products and services. The database marketing business, branded SmartSource Direct, provides database marketing and technology solutions for both retailers and manufacturers. The SmartSource Savings Network, which includes SmartSource.com, is an Internet-based network of approximately 145100 newspaper, retailer and lifestyle sites connected through a common platform that currently delivers printable coupons, samples and other consumer promotionsmarketing to an audience of approximately 50 million consumers.

Competition. NAMG competes against other producersproviders of marketing products and services, including those that provide promotional or advertising inserts and direct mailers of promotional andor advertising materials, as well as those that provide trade and in-store advertisements and promotions. Competition is based on, advertisingamong other things, rates, availability of markets, quality of products and services provided and their effectiveness, and rate of coupon redemption.

Magazines

United States. The Company publishesThe Weekly Standard, a weekly magazine offering political commentary, in the United States.

Australia.News Magazines Pty. Ltd (“News Magazines”) produces both direct sale magazines and inserts for the Company’s Australian newspapers. The direct sale magazines include: INSIDEout, a home and lifestyle magazine;donna hay, a food and lifestyle magazine; andBig League, a custom magazine for the National Rugby League. With the April 2007 acquisition of Federal Publishing Company’s (“FPC”) magazine group, News Magazines now also publishes more than 20 additional magazines, includingVogue Australia,Vogue Living,GQ Australia,Australian Good Taste,delicious.,Notebook:andGardening Australia. News Magazines also publishesSunday Magazine, which is an insert in the Company’s Australian newspapers in Sydney and Melbourne. In addition, News Magazines publishesALPHA, which is a sport and lifestyle men’s magazine, which is only sold together with one of the Company’s Australian newspapers.

Competition. The magazines all compete for circulation and advertising revenue with other published products, in their same categories, as well as other forms of media. Competition for circulation is based on the editorial and informational content of each publication and its price. Competition for advertising is based on circulation levels, reader demographics, advertising rates and advertiser results.

Newspapers

The Company through its various subsidiaries, is engaged in the newspaper and magazine publishing business in the United Kingdom, Ireland, Australia and the United States.

United Kingdom and Ireland. News International Limited (“News International”), a subsidiary of the Company, publishesThe Times,The Sunday Times,The Sun and theNews of the World in the United Kingdom and Ireland. Sales of these four newspapers account for approximately one-third of all national newspapers sold in the United Kingdom. BothThe Times, a daily published Monday through Saturday, andThe Sunday Times are leading quality newspapers.The Sun, published each morning Monday through Saturday, and theNews of the World, published on Sunday, are both popular, mass market newspapers. The average paid circulation for each of these four national newspapers during the six months ended June 30, 20062007 was approximately:The Times—666,018;640,893;The Sunday Times—1,339,111;1,230,790;The Sun—Sun3,163,504;—3,073,046; andNews of the World—3,552,119.3,315,976. In September 2006, News International launchedthelondonpaper, a free newspaper distributed by hand in central London each afternoon Monday through Friday.

The printing of all four of News International’s newspapers (except Saturday and Sunday supplements) takes place principally in its four printing facilities which are situatedlocated in England, Scotland and Ireland. The Company is in the process of updating the printing facilities of all News International’s newspapers to high speed, full color printing presses. In May 2007, the Company’s printing facility in Glasgow, Scotland was moved to an updated facility in North Lanarkshire, Scotland. In addition, the current printing operations in Wapping (East London), England; Knowsley, England (near Liverpool); Glasgow, Scotland; and Kells, Ireland. The Company has begun a major projectare expected to update News International’s presses in the United Kingdom. The Company has acquired new sites in two locations—Broxbourne, in North London, and North Lanarkshire, in Scotland. Over the next two to three years, new printing presses will be installed on these sites and in an extension to its existing site in Knowsley. In connection with this updating, the production facility in Wapping will be moved to Broxbourne.a new facility in Broxbourne, North London in 2008 and the Company expects to complete the expansion of its printing facility in Knowsley, England in late 2007.

News International also publishesThe Times Literary Supplement, a weekly literary review. In February 2006, News International launchedreview, andlove it!, a weekly real-life magazine, and in March 2006, launchedThe Sunday Timesinsideout, a monthly home magazine. In addition, in June 2006, News International began publishing a U.S. edition ofThe Times.

In October 2005, News International sold its TSL Education division, which included theTimes Educational Supplement and other newspapers, magazines, websites and exhibitions aimed at education professionals in the United Kingdom, for approximately $395 million.

Australia.News Limited the Company’s Australian operating subsidiary, is the largest newspaper publisher in Australia, owning more than 110approximately 145 daily, Sunday, weekly, bi-weekly and tri-weekly newspapers, of which 92three are free commuter titles and 105 are suburban publications.publications (including 17 of which News Limited has a 50% interest). News Limited publishes the only nationally distributed general interest newspaper in Australia, the leading metropolitan newspapers in each of the major Australian cities of Sydney, Melbourne,

Brisbane, Adelaide, Perth, Hobart and Darwin and the leading suburban newspapers in the suburbs of Sydney, Melbourne, Adelaide, Brisbane and Perth. News Limited’s daily and Sunday newspapers account for more than 65% of the total circulation of all daily and Sunday newspapers (excluding suburban and regional newspapers) published in Australia.

News Limited’s principal daily newspapers in Australia are: The Australian; The Daily Telegraph, published in Sydney; the Herald Sun, published in Melbourne;The Courier-Mail, published in Brisbane;The Advertiser, published in Adelaide;The Mercury, published in Hobart; and theNorthern Territory News, published in Darwin.The Australian, which is Australia’s only general interest national daily newspaper, is printed in six cities and distributed nationwide. News Limited’s other principal daily newspapers in Australia are mass circulation, regional newspapers with broad-based readerships and are published and distributed regionally. The average Monday to Saturday paid circulation of each of these daily newspapers during fiscal 20062007 was approximately as follows: The Australian—159,000;161,000; The Daily Telegraph—392,000;380,000; the Herald Sun—544,000;530,000; The Courier-Mail—231,000;237,000;The Advertiser—208,000;203,000;The Mercury—51,000;49,000; and theNorthern Territory News —24,000.—22,000.

News Limited’s principal Sunday newspapers in Australia are: The Sunday Telegraph, published in Sydney; the Sunday Herald Sun, published in Melbourne;The Sunday Mail, published in Brisbane; the Sunday Mail, published in Adelaide;The Sunday Times, published in Perth; theSunday Tasmanian, which is published in Hobart; and theSunday Territorian, published in Darwin. All these newspapers are mass circulation, metropolitan Sunday newspapers with broad-based readerships reflecting the diversity of the populations of the cities in which they are published. The average paid circulation of each of these Sunday newspapers during fiscal 20062007 was approximately as follows: The Sunday Telegraph—702,000;684,000; the Sunday Herald Sun—621,000;617,000; The Sunday Mail (Brisbane)—610,000;601,000; the Sunday Mail (Adelaide)—326,000;321,000;The Sunday Times—348,000;342,000; theSunday Tasmanian—61,000;60,000; and theSunday TerritorianTerritorian——24,000.22,000.

The other newspapers which News Limited owns and publishes in Australia are distributed to a wide range of readers in urban, suburban and rural areas and are principally weekly publications. The majority of such newspapers are free-distribution suburban publications, having average weekly circulations of between approximately 16,000 and 128,000.publications. In the Sydney suburban markets, News Limited owns 1824 weekly newspapers; in Melbourne, 3033 weekly newspapers; in Brisbane, 1720 weekly newspapers; in Adelaide, 11 newspapers and one monthly magazine;weekly newspapers; and in Perth, News Limited’s 50% owned suburban group publishes 1617 weekly newspapers. The aggregate average weekly circulations of News Limited’sthese suburban newspapers for the six months ended March 31, 2006 aggregated2007 was approximately 4,700,000 homes. 5,200,000 homes (adjusted to reflect the acquisition of seven community newspapers from FPC in April 2007, which had an average weekly circulation of approximately 360,000 homes).

In addition to these newspapers, News Limited and its 50% owned Perth suburban group also publish 18 other publications (16 monthlies and two weeklies) with an average circulation for the six months ended March 31, 2007 of approximately 560,000 homes for the monthly titles and approximately 80,000 for the two weekly titles (adjusted to reflect the acquisition of six publications from FPC in April 2007, which had an average circulation of approximately 180,000 homes for the period).

News Limited’s suburban newspapers are leading publications in terms of advertising and circulation in each of their respective markets. News Limited’s other newspapers in Australia are regional newspapers, circulating throughout broader, less densely populated areas.

Except for 2653 of its suburban newspapers and one provincial newspaper,three regional newspapers, News Limited’s Australian newspapers are produced and printed in facilities owned by the Company.

United States.States.The Company owns the New York Post (the “Post”), a mass circulation, metropolitan morning newspaper that is published seven days a week and distributed in New York City, Baltimore, Boston, Florida and California. For the fiscal year ended June 30, 2006,2007, the newspaper had average daily circulation of approximately 685,000.715,000. The Company prints the Post in a printing facility in the Bronx, New York and uses third-party printers in Baltimore, Boston, Floridaits other markets in the United States.

In fiscal 2007, the Company formed the Community Newspaper Group and California.acquired several local newspapers and other publications distributed in the New York metropolitan area.

Competition.The newspapers published by the Company compete for readership and advertising with local and national newspapers and also compete with television, radio, the Internet and other communications media in their respective locales. Competition for newspaper circulation is based on the news and editorial content of the newspaper, cover price and, from time to time, various promotions. The success of the newspapers published by the Company in competing with other newspapers and media for advertising depends upon advertisers’ judgments as to the most effective use of their advertising budgets. Competition for advertising among

newspapers is based upon circulation levels, readership levels, reader demographics, advertising rates and advertiser results. Such judgments are based on factors such as cost, availability of alternative media, circulation and quality of readership demographics.

In recent years, the newspaper industry has experienced difficulty increasing circulation volume and revenues. This is due to, among other factors, increased competition from new media formats and sources, and

shifting preferences among some consumers to receive all or a portion of their news from sources other than a newspaper. The Company believes that competition from new media formats and sources and shifting consumer preferences will continue to pose challenges within the newspaper industry.

Book Publishing

Through HarperCollins Publishers (“HarperCollins”), its wholly-owned subsidiary, the Company is engaged in English language book publishing on a worldwide basis. HarperCollinsbasis and is one of the world’s largest English language book publishers. Its most significant componentsHarperCollins’ principal businesses are HarperCollins Publishers LLC (“HarperCollins U.S.”), headquartered in New York, HarperCollins Publishers Limited, headquartered in London, and The Zondervan Corporation LLC (“Zondervan”), headquartered in Grand Rapids, Michigan. HarperCollins primarily publishes fiction and non-fiction, including religious books, for the general consumer. In the United Kingdom, HarperCollins publishes some titles for the educational market as well.

During fiscal 2006,2007, HarperCollins U.S. had 109128 adult and children’s titles onTheNew York Times bestseller list, with 1416 titles that reached thehitting number one, position, including:State of Fearby Michael Crichton;includingMarley & Meby John Grogan;Grogan,The Purpose Driven LifeReagan Diaries by Rick Warren;Ronald Reagan,YOU: The Owner’s ManualAt the Center of the Storm by Michael F. Roizen and Mehmet C. Oz M.D.;George Tenet,Dispatches from the EdgeThe Measure of a Manby Anderson Cooper;Sidney Poitier,The Fair Tax BookPursuit of Happyness by Neal Boortz and John Linder;Chris Gardner,Anansi BoysThe Volumetrics Eating Plan by Neil Gaiman;Barbara Rolls,Lilly’s Big Day by Kevin Henkes;Fancy Nancy by Jane O’Connor;Diary of a Spider by Doreen Cronin;Ready or Not by Meg Cabot; Lemony Snicket’sA Series of Unfortunate Events, #12:#13: The Penultimate PerilEnd by Lemony Snicket,Fancy Nancy and C.S. Lewis’sthe Posh Puppyby Jane O’Connor,Bridge to Terabithia by Katherine Paterson,The ChroniclesNight before Christmas by Clement Moore, Is There Really a Human Race? by Jamie Lee Curtis,Bad Dog, Marley! by John Grogan,Charlotte’s Web The Movie Storybook by Kate Egan,Thanks to You by Julie Andrews and Emma Hamilton andWarriors: The New Prophecy andWarriors: Power of Narniaand The Lion, The Witch and The Wardrobe.

Zondervan, HarperCollins’ Evangelical Christian publishing division, published theNew York Timesbestseller The Purpose Driven LifeThree in October 2002 and it has remained on the list for more than 184 weeks.both by Erin Hunter.

Competition.The book publishing business operates in a highly competitive market and has been affected by consolidation trends. This market continues to change in response to technological innovations and other factors. Recent years have brought a number of significant mergers among leading book publishers. The book superstore remains a significant fact in the industry contributing to the general trend toward consolidation in the retail channel. There have also been a number of mergers completed in the distribution channel. HarperCollins must compete with other publishers, such as Random House, Penguin Group, Simon & Schuster and Hachette Livre, for the rights to works by well-known authors and public personalities. Although HarperCollins currently has strong positions in each of its markets, further consolidation in the book publishing industry could place it at a competitive disadvantage with respect to scale and resources.

Other

NDS

The Company owns approximately 74%73% of the equity and approximately 97%96% of the voting power of NDS’s American Depositary Shares, of NDS,which each representingrepresent one NDS Series A ordinary share, $0.01 par value $0.01 per share, and which are quoted on both theThe NASDAQ Stock Market and on Euronext in Brussels under the symbol “NNDS.”

NDS supplies open end-to-end digital technology and services to digital pay television platform operators and content providers. NDS’s technologies include conditional access and microprocessor security, broadcast stream management, set-top box and residential gateway middleware, electronic program guides, digital video recorder systemsDVR technologies and interactive infrastructure and applications. NDS provides technologies can be used over many broadcast media, including satellite, cable, digital terrestrial and Internet.services supporting standard definition and high definition televisions and a variety of industry, Internet and Internet protocol standards. NDS’s software systems, consultancy and systems integration services are focused on providing platform operators and content providers with technology to help them profit from the secure distribution of digital information and entertainment and the development and implementation of enhanced-television and interactive-television services from which broadcasters can derive additional revenues.to consumer devices that incorporate various technologies supplied by NDS. For more information on NDS, please see its reports filed with the SEC.

Competition. NDS competes with a number of companies, although no single company competes with it in all of its product lines.

Fox Interactive Media

In July 2005, the Company formed Fox Interactive Media, Inc. (“FIM”), a subsidiary that operates manythe majority of the Company’s Internet businesses, across the Internet, including MySpace.com, FoxSports.com, Scout.com, Fox.com, AmericanIdol.com, IGN.com, RottenTomatoes.com, AskMen.com, Photobucket.com, Flektor.com and other of the Company’sCompany web properties. For the three months endedIn June 30, 2006,2007, the FIM network of websites averaged 77(excluding Photobucket.com and Flektor.com, which were acquired in July 2007 and May 2007, respectively) had approximately 164 million unique visitors a monthworldwide and approximately 84 million unique visitors in the United States and, as of June 30, 2006,2007, was the sixthfifth largest network of users on the Internet in the United States according to comScore Media Metrix. FIM also provides users of mobile and wireless devices with content and services, such as video access, from a number of its properties, including FoxSports.com, MySpace.com and IGN.com, through carriers such as Verizon, Sprint and Cingular.

FIM is focusedMetrix (based on increasing its audience by developing and supporting user communities, as well as by creating and providing high quality entertainment, news and information content. FIM supports user communities by providing tools and services that encourage user involvement and allow users to generate content and personalize and customize their Internet space. In addition to internal development of new community tools and services, FIM acquired community service developers Newroo Inc. (provider of a customizable news aggregator that allows users easily to find, select and incorporate news articles and similar content into their sites) and kSolo.com (provider of online karaoke) in May 2006.monthly unique users). The FIM properties create original entertainment, news and information content and leverage the Company’s current and archived video assets. In August 2006, the Company announced that FIM entered into a multi-year search technology and services agreement with Google Inc. (“Google”), pursuant to which Google will be the exclusive search and keyword targeted advertising sales provider for a majority of FIM’s web properties.

In September 2005, FIM acquired Intermix Media, Inc. (“Intermix”), an online media and e-commerce provider with more than 30 Internet sites, for approximately $580 million. In a related transaction, Intermix exercised its option to acquire the remaining interest in MySpace, Inc. (“MySpace”), an Internet entertainment company and parent company of MySpace.com, that it did not already own for approximately $70 million. This transaction increased Intermix’s ownership in MySpace to 100%. MySpace.com is the leading social networking site on the Internet, with over 90 million registered users as of June 30, 2006. MySpace.com allows users, such as individuals, bands, comedians and film producers, to create and customize content-rich Internet profile pages, share user-generated video, participate in user groups and comment on other users’ pages. For the three months ended June 30, 2006, MySpace.com averaged 50.6 million unique visitors and 29 billion page views a month in the United States according to comScore Media Metrix. MySpace has also launched international versions of the site in the United Kingdom, Australia and France, and expects to launch in additional European Union countries and elsewhere in the coming fiscal year. The international MySpace sites provide unique local content to users in those countries while maintaining the MySpace.com model for each site.

Also in September 2005, FIM acquired Scout Media, Inc., the parent company of Scout.com, the country’s leading independent online sports network, and Scout Publishing, producer of widely read local sports magazines in the United States, for approximately $60 million. In addition, FIM acquired IGN Entertainment, Inc. (“IGN”), a leading community-based Internet media and services company for video gaming and other digital entertainment, for approximately $620 million in October 2005, and approximately an additional $30 million to be paid upon the satisfaction of certain conditions.

FIM derives revenue principally from the sale of Internet advertising and sponsorships, as well as from subscription services and e-commerce, including the digital sale of video games, television programming and other entertainment products. FIM has a multi-year search technology and services agreement with Google Inc. (“Google”), pursuant to which Google provides search and keyword targeted advertising on an exclusive basis for a majority of FIM’s web properties domestically and internationally. In furtherance of FIM’s monetization strategy, it purchased an interactive advertising technology company, Strategic Data Corporation (“SDC”) in March 2007. SDC’s advanced, proprietary technology is designed to optimize the delivery of FIM’s online advertising.

MySpace.com is the leading social networking site on the Internet, with over 188 million registered users worldwide as of June 30, 2007. MySpace.com allows users, such as individuals, bands, comedians and film producers, to create and customize content-rich Internet profile pages, share user-generated video, participate in user groups and communicate with each other using various technologies, including instant messaging. In June 2007, MySpace.com had approximately 70 million unique visitors and 46 billion page views in the United States according to comScore Media Metrix.

During fiscal 2007, MySpace launched international sites in the United Kingdom, Australia, France, Germany, Italy, Spain, Canada, the Netherlands, Switzerland, Sweden, Austria and Mexico and expects to launch in additional countries in the coming year. The international MySpace sites provide unique local content to users in those countries while maintaining global connectivity to MySpace.com. In addition, FIM formed a joint venture with Softbank Corp. to launch MySpace Japan in November 2006. MySpace also licenses its trademarks and technology to a local company that operates a MySpace site in China, which launched in April 2007.

MySpace launched a number of new features and services during the past year, including the Impact Channel (http://impact.myspace.com), which provides a community for politicians, non-profit organizations and others to communicate with MySpace users, MySpace News (http://news.myspace.com), which provides users with access to news stories from over 8,000 sources across the Internet, and, most recently, MySpaceTV, an integrated component of the company’s worldwide community and content platform which provides users personalized video channels, exclusive and original content, user generated and partner driven branded channels. MySpace announced video-focused content deals and partnerships with a variety of content partners, including Broadband Emmy Awards, Michael Eisner’sProm Queen, Mark Burnett’sINDEPENDENT, the NBA, the NHL and The Sony Minisode Network. Branded channel partners include National Geographic, The New York Times and Reuters.

FIM’s IGN network of video game-related Internet properties (IGN.com, GameSpy, FilePlanet, TeamXbox, Direct2Drive and others) is the Web’s number one video game information destination and attracts one of the largest concentrated audiences of young males on the Internet. IGN also owns and operates the popular movie-related website, RottenTomatoes.com, and one of the leading male lifestyle websites, AskMen.com. In addition, IGN provides technology for online game play in video games. IGN has launched international versions of IGN.com in the United Kingdom and Australia and expects to launch in additional countries in the coming year. Collectively, IGN’s properties had approximately 36 million unique users worldwide in June 2007 according to comScore Media Metrix.

FoxSports.com, part of the MSN Network, is the leading general interest sports destination on the Internet in the United States. Through its strategic relationship with MSN.com, FoxSports.com surpassed ESPN.com in unique users in fiscal 2007, and grew over 16% over the prior year. In June 2007, FoxSports.com on the MSN Network had approximately 15 million unique visitors and 506 million page views in the United States according to comScore Media Metrix.

FIM acquired Photobucket.com, Inc. in July 2007 and Flektor, Inc. in May 2007. Photobucket.com is a web-based provider of photo- and video-sharing services, and Flektor.com is a next-generation website that provides users with a suite of web-based tools to transform their photos and videos into dynamic slideshows, postcards, live interactive presentations and video mash-ups.

Other OperationsCompetition. FIM’s business and the Internet generally are highly competitive. FIM properties compete with other Internet sites for advertisers, users and traffic. FIM develops new tools and features to remain competitive in the Web 2.0 world. These new tools and features are key competitive factors in keeping users engaged with FIM properties.

News Outdoor

The Company owns News Out of Home BVOutdoor Group (“NOOH”News Outdoor”), which operates outdoor advertising companies. In September 2005, the Company acquired the remaining 25% stakeNews Outdoor owns an approximately 73% interest in NOOH that it did not already own from Capital International Global Emerging Markets Private Equity Fund, L.P. for approximately $175 million. NOOH owns approximately 68% of Media Support Services Limited (“MSS”), the largest outdoor advertising company in Russia. TheIn certain limited circumstances, the minority stockholders of MSS had the right to sell a portion of their interests in MSS to NOOH during the first quarter of fiscal 2007 and have exercised those rights. The minority stockholders have the right to sell, and News Outdoor has the remainder of theirright to purchase, the minority interests after June 2010. NOOHat fair market value. News Outdoor also owns or has interests in outdoor advertising companies located in Poland, Romania, the Czech Republic, Ukraine, Turkey, Bulgaria, Israel, India and India, as well asSoutheast Asia.

In June 2007, the Company announced that it intends to explore strategic options for News Outdoor in connection with News Outdoor’s continued development plans. The strategic options include, but are not limited to, exploring the opportunity to expand News Outdoor’s existing shareholder group through new strategic and private equity partners. No agreement has yet been entered into with respect to any transaction.

Other Operations

In January 2007, the Company and VeriSign, Inc. (“VeriSign”) formed a 66%joint venture to provide entertainment content for mobile devices. The Company paid approximately $190 million for a controlling interest in a company in Bulgaria and a 67% interest in a company in Israel.

The Company, through its Balkan News CorporationVeriSign’s wholly-owned subsidiary, operates bTV,Jamba, which was combined with certain of the first national private free over-the-air television station in Bulgaria. bTV provides original and acquired general entertainment programming and news programs.Company’s Fox Mobile Entertainment assets.

The Company owns an interestor has interests in the following free over-the-air, general entertainment television stations: bTV in Bulgaria; TV Puls in Poland; LNT and TV5 in Latvia; Fox Televizija in Serbia; and FOX TV in Turkey. The Company has also entered into agreements in principle to acquire interests in television stations in Israel (Channel 10) and Georgia (TV IMEDI). In addition, the Company owns interests in Nashe Radio and Best FM, both Russian radio stations. In April 2006, the Company sold Sky Radio Limited, a commercial radio station group in the Netherlands and Germany for approximately $215 million.

The Company owns Global Cricket Corporation, which has the exclusive rights to broadcast the Cricket World Cup and other related cricket events through 2007.

News InteractiveDigital Media is the Company’s Australian online division. In addition to maintaining the Company’s Australian websites, News InteractiveDigital Media is responsible for online advertising in Australia. News InteractiveDigital Media operates CareerOne.com.au, CARSguide.com.au, NEWS.com.au, homesite.com.au, truelocal.com.au and FOXSPORTS.com.au.

In February 2006, the Company launched Mobizzo, a comprehensive destination site for accessing mobile content. Mobizzo aggregates diverse content, including games, music, graphics and other mobile content, from across the Company’s divisions, as well as from other media companies, for use on mobile devices.

In February 2004, the Company sold the Los Angeles Dodgers (the “Dodgers”) and related properties to entities owned by Frank McCourt (the “McCourt Entities”) for $421 million in consideration. Part of the consideration delivered by the McCourt entities at closing was a $125 million note secured by certain real estate in Boston, Massachusetts. In March 2006, the McCourt Entities remitted the real estate to the Company in full satisfaction of the note, including accrued interest of $20 million. This real estate consists of approximately 23 acres located in the Seaport District of Boston, Massachusetts. In conjunction with this transfer, the Company assumed $36 million in debt.

Equity Interests

BSkyB

The Company holds an approximate 38%39% interest in BSkyB. BSkyB’s ordinary shares are listed on the London Stock Exchange and its American Depositary Shares, each representing four BSkyB ordinary shares, are

listed on the New York Stock Exchange (“NYSE”), in each case under the symbol “BSY.” BSkyB is the leading pay television broadcasterbroadcast service in the United Kingdom and Ireland and is one of the leading suppliers of content, including movies, news, sports and general entertainmentIreland. BSkyB acquires programming to pay televisionbroadcast on its own channels and also supplies certain of those channels to cable operators for retransmission in the United Kingdom.Kingdom and Ireland. BSkyB also retails channels (both its own and those of third parties) to DTH subscribers and to a limited number of DSL subscribers. For more information on BSkyB, please see its reports filed with the SEC.

DIRECTV

The Company holds an approximate 38%39% interest in DIRECTV. DIRECTV’s common stock is listed on the NYSE under the symbol “DTV.” DIRECTV is the largest provider of DTH digital television services and the second largest provider in the multichannel video programming distribution (“MVPD”) industry in the United States, in each case based on the number of subscribers. DIRECTV is a leading provider of digital television entertainment in the United States and Latin America. DIRECTV’s common stock is listed on the NYSE under

the symbol “DTV.” DIRECTV is the largest provider of DTH television servicesacquires, promotes, sell and the second largest multichannel videodistributes digital entertainment programming distributor (“MVPD”) provider in the United States, in each case based on the number of subscribers. DIRECTV provides its customers with accessvia satellite to hundreds of channels of digital-quality videoresidential and audio programming that are transmitted directly to its customers’ homes or businesses via high-powered geosynchronous satellites. For more information regarding the Company’s acquisition of its interest in DIRECTV, please see “Item 8: Financial Statements and Supplementary Data.”commercial customers. For more information on DIRECTV, please see its reports filed with the SEC.

As discussed above, the Company’s interest in DIRECTV is part of the transactions contemplated by the Share Exchange Agreement. If consummated, the Company will not have any interest in DIRECTV following the closing of the Share Exchange Agreement. For more information on the Share Exchange Agreement, please see discussion under the heading “Background.”

Gemstar-TV Guide

The Company owns approximatelyholds an approximate 41% ofinterest in Gemstar-TV Guide. Gemstar–TV Guide’s common stock is quoted on the NasdaqThe NASDAQ Stock Market under the symbol “GMST.” Gemstar–TV Guide is a media, entertainment and technology company that develops, licenses, markets and distributes technologies, products and services targeted at the televisionvideo guidance and home entertainment needs of television viewersconsumers worldwide. In July 2007, Gemstar-TV Guide announced that its board of directors authorized Gemstar-TV Guide and its advisors to explore strategic alternatives intended to maximize stockholder value, which may include a sale of the company. For more information on Gemstar–TV Guide, please see its reports filed with the SEC.

FOXTEL

The Company, Telstra Corporation Limited, an Australian telecommunications company, and Publishing and Broadcasting Limited, an Australian media and entertainment company, own and operate FOXTEL, a cable and satellite television service in Australia with 25%, 50% and 25% interests, respectively. At June 30, 2006,2007, FOXTEL had approximately 1.271.4 million subscribers (including subscribers to Optus, an Australian telecommunications company). At June 30, 2006, approximately 90%2007, 100% of the FOXTEL managed subscriber base (excluding wholesale) was connected to FOXTEL’s digital service, which delivers over 100 channels on cable and satellite.

Other Investments

National Geographic Channel.The Company holds an approximate 67% non-controlling interest in the National Geographic Channel in the United States, with National Geographic Television (“NGT”)NGT holding the remaining interest. The National Geographic Channel currently reaches approximately 59.564.5 million households in the United States according to Nielsen Media Research. The National Geographic Channel airs documentary programming on such topics as natural history, adventure, science, exploration and culture. In addition, the Company, NBC and NGT own interests of 50%, 25% and 25%, respectively, in NGC Network International LLC, which produces and distributes the National Geographic Channel in various international markets, including certain countries in Europe and Asia. The Company and NGT also own interests of approximately 67%25% and 33%75%, respectively, in NGC Network Latin America LLC,(UK) Limited, which produces and distributes the National Geographic Channel throughout Latin America, Spain and Portugal. The National Geographic Channel is currently shown in approximately 161 countries internationally, excluding the United States.Kingdom, Benelux, Scandinavia, Eastern and Central Europe, Russia, Israel, Greece, Africa, Australia and New Zealand.

LAPTVTelecine. The.The Company owns a 22.5% equity interest in LAPTV, a partnership which distributes three premium pay television channels (Movie City East and West, Cinecanal East and West and its multiplex channel Cinecanal 2) and one basic television channel (The Film Zone East and West) in Latin America (excluding Brazil). Such channels primarily feature theatrical motion pictures of Twentieth Century Fox and three other studio partners in the English language with Spanish subtitles. The Company has voting control over an additional 22.5% interest in the partnership and has entered into an agreement to acquire an additional interest in LAPTV from another partner.

Telecine. The Company owns an approximate 13%12.5% equity interest in Telecine, Ltda., which distributes five premium pay television channels (Telecine Premium, Telecine Action, Telecine Emotion, Telecine Popcorn and Telecine Cult) in Brazil. Such channels primarily feature theatrical motion pictures of Twentieth Century Fox and three other studio partners in the English language with Portuguese subtitles, except that Telecine Popcorn is dubbed into Portuguese.

Premium Movie Partnership. The Company owns an approximate 20% equity interest in The Premium Movie Partnership, which distributes three premium pay television channels (Showtime and its multiplex channel, Showtime 2, and Showtime Greats) in Australia. Such channels primarily feature theatrical motion pictures of the Company and three other studio partners.

SkyNZ.The Company owns an approximate 44% interest in Sky Network Television Limited (“SkyNZ”), a land-linked UHF network and digital DBS service in New Zealand.

China NetcomNews Corporation/NBC Universal Online Joint Venture. In July 2005, the Company sold its entire investment in China Netcom Group Corporation (“China Netcom”). The Company’s 1% interest in China Netcom was sold for total consideration of approximately $112 million.

Recent Developments

In July 2006,March 2007, the Company and an independent third party agreedNBC Universal announced the formation of a joint venture to purchase TGRT,launch a national, general interest broadcast television station in Turkeywebsite and online video distribution network. The joint venture will be a platform for premium produced content from Ihlas Yahin Holding for approximately $100 million. The closing of this transaction is subject to customary closing conditions, including Turkish regulatory review.

On August 8, 2006, the Company, announced that, in accordance with the termsNBC Universal and a myriad of the settlement of a lawsuit regarding the Company’s stockholder rights plan, the Company’s Board of Directors (the “Board”) approved the adoption of an Amendedother content partners. The joint venture’s content library will also be distributed by partners, such as AOL, MSN, MySpace, Yahoo! and Restated Rights Plan, extending the term of the Company’s existing stockholder right plan from November 7,Comcast. In August 2007, to October 20, 2008. The Board has the right to extend the term of the Amended and Restated Rights Plan for an additional year if the situation with Liberty has not, in the Board’s judgment, has not been resolved. The terms of the Amended and Restated Rights Plan remain the same as the Company’s existing stockholder rights plan in all other material respects. Pursuant to the terms of the settlement, the Amended and Restated Rights Plan will be presented for a vote of the Company’s Class B stockholders at the Company’s 2006 annual meeting of stockholders. For a further discussion of the lawsuit and the related settlement, see “Item 3. Legal Proceedings—Stockholder Litigation.”

On August 23, 2006, the Company completed the sale of its interest in Sky Brasil Servicos Limitada (“Sky Brasil”), a Brazilian DTH platform, for approximately $300 million in cash which was received in fiscal 2005. The sale of Sky Brasil was a part of a series of transactions announced by the Company and DIRECTV in October 2004,NBC Universal entered into an agreement with Providence Equity Partners (“Providence”), a media investment firm, pursuant to which Providence will invest $100 million and will acquire a 10% interest in the companies’ DTH satellite television platforms in Latin America were reorganized. In connection with these transactions, DIRECTV acquired the Company’s interests in Innova Holdings, S. de R.L. de C.V., Innova S. de R.L. de C.V., Sky Brasil, Sky Multi-Country Partners, DTH Techo Partners and Sky Latin America Partners.joint venture.

Government Regulation

General

Various aspects of the Company’s activities are subject to regulation in numerous jurisdictions around the world. The Company believes that it is in material compliance with the requirements imposed by those laws and regulations. The introduction of new laws and regulations in countries where the Company’s products and services are produced or distributed (and changes in the enforcement of existing laws and regulations in those countries) could have a negative impact on the interests of the Company.

Filmed Entertainment

United States

FFE is subject to the provisions of so-called “trade practice laws” in effect in 25 states relating to theatrical distribution of motion pictures. These laws substantially restrict the licensing of motion pictures unless theater

owners are first invited to attend a screening of the motion pictures and, in certain instances, also prohibit payment of advances and guarantees to motion picture distributors by exhibitors. Further, pursuant to various consent judgments, FFE and certain other motion picture companies are subject to certain restrictions on their trade practices in the United States, including a requirement to offer motion pictures for exhibition to theaters on a theater-by-theater basis and, in some cases, a prohibition against the ownership of theaters.

Other International Regulation

In countries outside of the United States, there are a variety of existing or contemplated governmental laws and regulations which may affect the ability of FFE to distribute and/or license its motion picture and television products to cinema, television or in-home media, including copyright laws and regulations which may or may not be adequate to protect its interests, cinema screen quotas, television quotas, contract term limitations, discriminatory taxes and other discriminatory treatment of U.S. products. The ability of countries to deny market access or refuse national treatment to products originating outside their territories is regulated under various international agreements, including the World Trade Organization’s General Agreement on Tariffs and Trade and General Agreement on Trade and Services; however, these agreements have limited application with respect to preventing the denial of market access to audio-visual products originating outside the European Union.

Television

United States

In general, the television broadcast industry in the United States is highly regulated by federal laws and regulations issued and administered by various federal agencies, including the FCC. The FCC regulates television broadcasting, and certain aspects of the operations of cable, satellite and other electronic media that compete with broadcasting, pursuant to the Communications Act of 1934, as amended (the “Communications Act”).

The Communications Act permits the operation of television broadcast stations only in accordance with a license issued by the FCC upon a finding that the grant of the license would serve the public interest, convenience and necessity. The FCC grants television broadcast station licenses for specific periods of time and, upon application, may renew the licenses for additional terms. Under the Communications Act, television broadcast licenses may be granted for a maximum permitted term of eight years. Generally, the FCC renews broadcast licenses upon finding thatthat: (i) the television station has served the public interest, convenience and necessity; (ii) there have been no serious violations by the licensee of the Communications Act or FCC rules and regulations; and (iii) there have been no other violations by the licensee of the Communications Act or FCC rules and regulations which, taken together, indicate a pattern of abuse. After considering these factors, the FCC may grant the license renewal application with or without conditions, including renewal for a lesser term than the maximum otherwise permitted, or hold an evidentiary hearing. Fox Television Stations has pending and will file renewal applications for a number of its television station licenses in calendar years 2006 and 2007. Tenlicenses. Nine of the pending applications have been opposed by third parties, and other renewal applications may be opposed in the future.parties. For information on the television stations owned and operated by the Company, see “—Fox Television Stations” above.

In February 1998, the FCC adopted a final table of digital channel allotments and rules for the implementation of digital television (“DTV”) service (including high-definition television) in the United States. The digital table of allotments provides each existing full power television station licensee or permittee, including the 35 stations operated by Fox Television Stations, with a second broadcast channel in order to facilitate a transition from analog to digital transmission, conditioned upon the surrender of one of the channels at the end of the DTV transition period. By law, all full power television stations must cease transmission of analog signals by February 17, 2009. The law sets aside $1.5 billion in subsidies to help consumers obtain converter boxes that will allow analog television sets to receive digital broadcasts. All of the stations operated by Fox

Television Stations have launched digital facilities. Under FCC rules, television stations may use their second channel to broadcast either one stream of “high definition” digital programming or to “multicast” several streams of standard definition digital programming or a mixture of both. Broadcasters may also deliver data over these channels, provided that the supplemental services do not derogate the mandated, free over-the-air program service. Fox Television Stations is currently formulating plans for use of its digital channels. It is difficult to assess the impact of cessation of analog broadcasting and how the conversion to digital television will affect Fox Television Stations’ business.

Under the Communications Act, a broadcast license may not be granted to or held by any corporation that has more than one-fifth of its capital stock owned or voted by non-U.S. citizens or entities or their representatives, by foreign governments or their representatives or by non-U.S. corporations. The Communications Act further provides that no FCC broadcast license may be granted to any corporation directly or indirectly controlled by any other corporation of which more than one-fourth of its capital stock is owned of record or voted by non-U.S. citizens ifOn October 6, 2006 the FCC finds the public interest will be served by the refusal of the license. In 1995, the FCC acknowledged that the Company, then an Australian company, owned the vast preponderance of equity of the corporate parent of thegranted Fox Television Stations; however, the FCC also concluded that Mr. K. Rupert Murdoch, Chairman and Chief Executive Officer of the Company, a U.S. citizen, controlled the corporate licensee by virtue of his 76% voting control of Fox Television Holdings, Inc. (“FTH”), the corporate parent of Fox Television Stations, and, thus, found the level of alien equity to be consistent with the public interest. The remaining 24% voting interest in FTH is held by the Company.

As a result of the Reorganization, the Company became a U.S. corporation and currently less than one-fourth of its capital stock is currently owned or voted by non-U.S. citizens or their representatives. On August 19, 2005, Fox Television Stations filedStations’ applications with the FCC seeking authority to transfer control of its television station licenses from Mr. K Rupert Murdoch to the Company through a recapitalization of FTH stock that would reducereduced Mr. K. Rupert Murdoch’s voting interest to 14.8% and raiseraised the Company’s voting interest to 85.2% (the “October 2006 Order”). AThe grant of the applications will effecteffected no change with respect to the equity held in FTH, the officers or directors of FTH or to its day-to-day operations. The proposed license transfers would reduce corporate complexity and yield financial savings to the Company. It is not possible to predict the timing or outcome of the FCC’s action on the applications or its effect on the Company.

On June 2, 2003, the FCC concluded the 2002 biennial review of its broadcast ownership regulations required by the 1996 Telecom Act by amending its rules governing the ownership of television and radio stations and by replacing its newspaper/broadcast cross-ownership ban and the radio/television cross-ownership restriction with a new set of cross-media ownership limits (the “June 2003 Order”). In the Consolidated Appropriations Act of 2004, Congress increased the national television station ownership cap to permit an entity to have an attributable ownership interest in an unlimited number of television stations nationally, so long as the

audience reach of those stations does not exceed, in the aggregate and after the application of the UHF Discount, 39% of U.S. television households.

Several parties appealed the June 2003 Order and, on September 3, 2003, the United States Court of Appeals for the Third Circuit (the “Third Circuit”) issued an Order staying the effectiveness of the new rules. On June 24, 2004, the Third Circuit remanded the FCC’s June 2003 Order for additional justification or modification of the revisions the FCC had made to its ownership regulations. On June 21, 2006, the FCC commenced a proceeding to again review its media ownership rules and to address the issues raised by the Third Circuit’s remand. The September 3, 2003 stay remains in effect pending the remand, and, therefore, the FCC broadcast ownership rules that were operative prior to the June 2003 Order continue to govern the ownership of multiple stations and cross-ownership. Those rules (i) permit the ownership of two television stations with overlapping coverage areas if the stations are in separate DMAs; (ii) permit the ownership of two stations in the same DMA if their Grade B coverage areas do not overlap or if eight independently owned full power television stations will remain in the DMA after the stations that had been independently owned become commonly owned, and one of the merged stations is not among the top four-ranked stations in the market, based on audience share; and

(iii) prohibit the common ownership of a broadcast station and a newspaper in the same market. Fox Television Stations is in compliance with the rules governing ownership of multiple stations in the same market and with the national station ownership cap established by Congress. It is not possible to predict the timing or outcome of the FCC’s action on remand or its effect on the Company.

Fox Television Stations retains an attributable interest in thePost and two television stations in the New York DMA pursuant to a temporary waiver byDMA. In the October 2006 Order, the FCC reaffirmed the Company’s permanent waiver of the newspaper/broadcast cross-ownership rule. On September 22, 2004, Fox Television Stations petitioned the FCC to modify its existing permanent waiver of the rule, which allows the common ownership of thePost and WNYW(TV), and granted a two-year temporary waiver of the rule to encompasscontinue to allow the common ownership of a second television station in the New York market (WWOR-TV). On April 15, 2005, Free Press filed an oppositionPostand WWOR-TV. Parties opposed to the FCC’s decision filed a petition asking that it be dismissed or, alternatively, thatfor reconsideration with the FCC seek public comment on the petition. Fox Television Stations reiterated its request for modification of the existing permanent waiver in the August 19, 2005 applications seeking transfer of control of its station licensesagency and an appeal to the Company. The FCC has yet to act on the petition, the Free Press opposition or the transfer applications.D.C. Circuit Court of Appeals, both of which are pending. It is not possible to predict the timing or outcome of the FCC’s or the Court’s action on these requestsfilings or itstheir effect on the Company.

FCC regulations implementing the Cable Television Consumer Protection and Competition Act of 1992 (the “1992 Cable Act”) require each television broadcaster to elect, at three-year intervals, either to (i) require carriage of its signal by cable systems in the station’s market (“must carry”) or (ii) negotiate the terms on which that broadcast station would permit transmission of its signal by the cable systems within its market (“retransmission consent”). On February 10, 2005, the FCC resolved issues relating to carriage requirements for digital broadcast television signals on cable systems by concluding that cable operators are not required by law to carry simultaneously the analog and digital signals of local television stations during the period of transition from analog to digital broadcasting. In addition, the FCC concluded that stations that “multicast” several streams of digital programming and that elect “must carry” are entitled to the carriage by cable systems of only a single “primary” programming stream. The Satellite Home Viewer Improvement Act of 1999 required satellite carriers, as of January 1, 2002, to carry upon request all television stations located in markets in which the satellite carrier retransmits at least one local station pursuant to the copyright license provided in the statute. FCC regulations implementing this statutory provision require affected stations to either elect mandatory carriage at the same three year intervals applicable to cable must carry or to negotiate carriage terms with the satellite operators. The FCC has yet to decide what obligations satellite carriers will have with respect to carriage of digital broadcast signals.

Legislation enacted in 1990 limits the amount of commercial matter that may be broadcast during programming designed for children 12 years of age and younger. In addition, under FCC license renewal processing guidelines, television stations are generally required to broadcast a minimum of three hours per week of programming, which, among other requirements, must serve, as a “significant purpose,” the educational and informational needs of children 16 years of age and under. A television station found not to have complied with the programming requirements or commercial limitations could face sanctions, including monetary fines and the possible non-renewal of its license.

FCC rules prohibit the broadcast by television and radio stations of indecent or profane material between the hours of 6:00 a.m. and 10:00 p.m. Beginning in March 2004, the FCC implemented a new policy regarding this prohibition and generally stepped up its enforcement of indecency violations. Under the new policy, the single use of certain forbidden expletives, or variations of those expletives, arewere deemed “indecent” and “profane.” The FCC also warned broadcasters that serious multiple violations of the indecency prohibition could lead to license revocation proceedings, and that fines could be imposed for each incident in a single broadcast. Fox Entertainment Group and other broadcasters have asked the FCC to reconsider this new policy on First Amendment grounds. Under the new FCC policy, both complaints about indecency and FCC enforcement actions have increased, and several complaints alleging the broadcast of alleged indecent or profane material by Fox Television Stations are pending at the FCC. In 2004, the FCC notified Fox Television Stations of apparent liability for a $175,000 forfeiture relating to the broadcast of an episode of the programMarried by America by

the Company’s FOX Affiliates, including its owned and operated FOX stations. On March 15, 2006, the FCC notified Fox Television Stations of apparent liability for a $27,500 forfeiture relating to the broadcast of the movieThe Pursuit of D.B. Cooper by its owned and operated station KTVI(TV) in St. Louis, Missouri (the “March 15 Order”). Fox Television Stations is contesting both forfeitures.

In the March 15 Order, the FCC also determined that the 2002 and 2003Billboard Music Awards programs, both live broadcasts on FOX, violated the prohibitions against indecent and profane broadcasts because they contained isolated uses of the forbidden expletives. However, since these broadcasts preceded the FCC’s March 2004 policy, no forfeiture or other penalty was imposed. Nonetheless, onin April 14, 2006, Fox Television Stations appealed the March 15 Order to the Second Circuit Court of Appeals (the “Second Circuit”). On June 4, 2007 the Second Circuit granted Fox’s appeal, vacated the FCC’s decision in theBillboard Music Awardscases as well as the FCC’s new policy on “fleeting expletives” in its entirety on the grounds that it is unconstitutional, contrary to law, andboth were arbitrary and capricious. CBS, ABC and Hearst-Argyle Television, which were each subjectThe Court remanded the case to similar rulings relating to isolated expletives in the March 15 Order, also filed appealsFCC for further proceedings consistent with the Second Circuit, as did the associations representing the station affiliates of FOX, ABC, CBS and NBC. Court’s opinion.

On June 15, 2006, the Broadcast Decency Enforcement Act was signed into law. This law raises the maximum amount the FCC can impose for a violation of the prohibition against indecent and profane broadcasts from $32,500 to $325,000 per incident. Some members of Congress have supported extending the indecency rules applicable to free over-the-air broadcasters to cable and satellite programming, and/or requiring MVPDs to provide their subscribers with the option of purchasing programming on a channel by channel (or à la carte) basis or to provide them with a family-friendlyfamily - -friendly program tier without obligating the subscriber to purchase any other programming channels or tiers.

Modifications to the Company’s programming to reduce the risk of indecency violations could have an adverse effect on the competitive position of Fox Television Stations and FOX. If indecency regulation is extended to cable and satellite programming, and such extension was found to be constitutional, some of the Company’s cable programming services could be subject to additional regulation that might affect subscription and viewership levels. Regulation requiring à la carte or family-friendly program options might decrease the distribution of the Company’s cable services and increase their marketing expenses, which could affect results of operations.

The FCC continues to enforce strictly its regulations concerning political advertising, children’s television, environmental concerns, equal employment opportunity, technical operating matters and antenna tower maintenance. FCC rules require the closed captioning of almost all broadcast and cable programming. Although not required by FCC regulation, the Company has committed to provide program ratings information for its broadcast network programming for use in conjunction with V Chip technology, a technology that blocks the display of television programming based on its rating. FCC regulations governing network affiliation agreements mandate that television broadcast station licensees retain the right to reject or refuse network programming in certain circumstances or to substitute programming that the licensee reasonably believes to be of greater local or national importance. Violation of FCC regulations can result in substantial monetary forfeitures, periodic reporting conditions, short-term license renewals and, in egregious cases, denial of license renewal or revocation of license.

Asia

STAR broadcasts television programming over a “footprint” covering approximately 53 countries. Government regulation of direct reception and redistribution via cable or other means of satellite television signals, where it is addressed at all, is treated differently throughout STAR’s footprint. At one extreme are absolute bans on private ownership of satellite receiving equipment. Some countries, however, have adopted a less restrictive approach, opting to allow ownership of satellite receiving equipment by certain institutions and individuals but allowing them to receive only authorized broadcasts. At the opposite end of the spectrum are countries where private satellite dish ownership is allowed and laws and regulations have been adopted which support popular access to satellite services through local cable redistribution.

Most television services within STAR’s footprint, whether free over-the-air or pay television, are also subject to licensing requirements, although these requirements are imposed on the local broadcast operators who collect the subscription fees rather than on program suppliers, such as STAR, which license local broadcast operators to receive their programming. In addition, most countries in STAR’s footprint control the content offered by local broadcast operators through censorship requirements to which program suppliers, such as STAR, are subject. Certain countries also impose obligations to carry government-operated or terrestrial channels or require a minimum percentage of local content. Other countries require local broadcast operators to obtain government approval to retransmit foreign programming.

Most countries within STAR’s footprint, including in STAR’s key markets (India, mainland China and Taiwan), have a regulatory framework for the satellite and cable television industry.

India.In India, private satellite dish ownership, including DTH, is allowed. There is a licensing frameworkTelevision viewers receive broadcast television signals primarily through terrestrial and cable delivery and in place to governmore recent years, DTH platform operators. Presently, local cable television operators are subject only to an annual registration requirement and are not required to obtain licenses for operations. However, localdelivery.

All cable television operators are required to carry certain government-operated and free over-the-air channels. As of January 2005, with respect to the prices payable by cable operators to broadcasters for channels existing on December 26, 2003 (which include certain STAR channels), the Telecom Regulatory Authority of India imposes a price cap permitting little or no increase year on year from the prices payable by cable operators as of December 26, 2003.

Retransmissions of foreign satellite channels, such as STAR’s channels in India, are permitted, subject to licensing requirements (which were introduced at the end of 2005) and compliance with local applicable laws. Further,laws, including censorship codes. The Indian government also places certain restrictions on advertising and requires that certain media, whether produced in India or abroad, must be certified by the Central Board of Film Certification prior to exhibition in India.

Limits are imposed on the increase in the year-on-year prices payable by cable operators to broadcasters such asfor certain channels, including certain STAR channels. There is no tariff regulation for DTH; however, broadcasters are required upon requestto offer their channels to DTH platforms at 50% of the rates charged by analogue cable operators. Broadcasters are also required to provide signals of its televisiontheir channels on non-discriminatory terms to all distributorsdistributors.

In certain metropolitan areas, viewers are required to buy or rent a set-top-box from cable operators to access pay television channels, which allows viewers to choose the pay television channels they wish to subscribe to on an à la carte basis, rather than on a bundled basis. Further cable operators are required to provide a pay television channel at a capped retail price, of which the broadcasters’ share is restricted to 45%. Broadcasters and cable operators must execute standard format agreements regarding the provision of television channels irrespective of where the channels originate.signals in certain metropolitan areas.

China.In mainland China, private satellite dish ownership is prohibited except with special approval for hotels, government and foreign institutions which can receive only authorized broadcasts. Local cable and free over-the-air terrestrial operators are required to broadcast a minimum percentage of local content and retransmission of foreign satellite channels by local operators is prohibited except with special approval.

Taiwan.In Taiwan, private satellite dish ownership is allowed. The maximum subscription fee chargeable by cable television operators is set by both the national and local governments. Cable television operators may offer analog basic channels in a single package and digital premium channels in packages or on an à la carte basis.basis as a

buy through to their basic analog service. All channels offered in Taiwan must be licensed. Retransmission of foreign satellite programming by local cable operators is permitted, but local cable operators are also required to carry terrestrial channels and broadcast a minimum percentage of local content.

Additional categories of regulation of actual or potential significance to STAR within its footprint are restrictions on foreign investment in platform or channel businesses, uplink-downlink licensing regulations, content protection under copyright or communications law, limitations on exclusive arrangements for channel distribution and non-discrimination requirements for supply or carriage of programming.

Cable Network Programming

FCC regulations adopted pursuant to the 1992 Cable Act (the “Program Access Rules”) prevent a cable operator that has an attributable interest (including voting or non-voting stock ownership of 5% or more or limited partnership equity interests of 5% or more) in a programming vendor from exercising undue or improper influence over the vendor in its dealings with competitors to cable. The Program Access Rules also prohibit a cable programmer in which a cable operator has an attributable interest from entering into exclusive contracts with any cable operator or from discriminating among competing MVPDs in the price, terms and conditions of sale or delivery of programming. As a result of Liberty’s ownership interest in the Company and the conditions

imposed on the Company by the FCC in connection with the Company’s acquisition of an interest in DIRECTV, cable networks operated by the Company are subject to the Program Access Rules. These regulations therefore restrict the ability of the Company’s cable programming services to enter into exclusive contracts. The rules also permit MVPDs (such as cable operators, multi-channel multi-point distribution services, satellite master antenna television services, DBS and DTH operators) to bring complaints against the Company to the FCC charging they are unable to obtain the affected programming networks on nondiscriminatory terms and conditions.

Program Access Conditions

In connection with its approval of the transfer of licenses controlled by DIRECTV to the Company, the FCC imposed the following conditions relating to the carriage and availability of its broadcast and cable programming services: (i) extended the requirements of the Program Access Rules to DIRECTV; (ii) extended the non-discrimination requirements of the Program Access Rules to any television station owned and operated or represented by the Company with respect to negotiations or agreements for retransmission consent and required the Company to negotiate in “good faith” over retransmission consent rights for as long as the Program Access Rules are in effect; (iii) required the Company to enter into commercial arbitration if negotiations with an MVPD over retransmission consent for its television stations’ signals and/or carriage of the regional sports networks it owns, controls or manages reach an impasse; and (iv) prohibited the Company from unduly or improperly influencing the decision of any affiliated program rights holder (a program rights holder that holds an attributable interest in the Company or in which the Company holds an attributable interest) to sell programming to an unaffiliated MVPD, or the prices, terms and conditions of such a sale.

Internet

The Children’s Online Privacy Protection Act of 1998 (“COPPA”) prohibits web sites from collecting personally identifiable information online from children under age 13 without prior parental consent. The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM”) regulates the distribution of unsolicited commercial emails, or “spam.” Online services provided by the Company may be subject to COPPA and CAN-SPAM requirements. Congress and individual states may also consider online privacy legislation that would apply to personal information collected from teens and adults.

In addition, the federal government and some state governments have introduced or considered legislation relating to Internet usage generally, including measures relating to privacy and data security, as well as specific legislation aimed at social networking sites, such as MySpace.com. Because most of such legislation is in its

early stages, it is unclear how this would affect the Company’s business conducted on the Internet. The CompanyTheCompany monitors pending legislation to ascertain relevance, analyze impact and develop strategic direction surrounding regulatory trends and developments within the industry.

Raw Materials

As a major publisher of newspapers, magazines, free-standing inserts and books, the Company utilizes substantial quantities of various types of paper. In order to obtain the best available prices, substantially all of the Company’s paper purchasing is done on a centralized, volume purchase basis, and draws upon major paper manufacturing countries around the world. The Company believes that under present market conditions, its sources of paper supply used in its publishing activities are adequate and that there are alternative sources of supply available at prices comparable to those presently being paid.

Intellectual Property

The Company’s intellectual property assets include: copyrights in motion pictures, television programming, newspapers, books, magazines, websites and technologies; trademarks in names, logos and characters; domain names; patents or patent applications for inventions related to its products, andbusiness methods and/or services; and licenses of intellectual property rights of various kinds. The Company derives value from these assets through the theatrical

release of films and the production, distribution and/or licensing of its films and television programming to domestic and international television and cable networks, pay television services, pay-per-view, video-on-demand services and direct-to-home satellite services, operation of websites, and through the sale of products, such as DVDs, books, newspapers and magazines, among others.

The Company devotes significant resources to protecting its intellectual property in the United States and other key foreign territories. To protect these assets, the Company relies upon a combination of copyright, trademark, unfair competition, patent, trade secret and Internet/domain name statutes and laws and contract provisions. However, there can be no assurance of the degree to which these measures will be successful in any given case. Policing unauthorized use of the Company’s products and services and related intellectual property is often difficult and the steps taken may not in every case prevent the infringement by unauthorized third parties of the Company’s intellectual property. The Company seeks to limit that threat through a combination of approaches, including offering legitimate market alternatives, deploying digital rights management technologies, pursuing legal sanctions for infringement, promoting appropriate legislative initiatives and international treaties and enhancing public awareness of the meaning and value of intellectual property and intellectual property laws. In addition, piracy, including in the digital environment, continues to present a threat to revenues from products and services based on intellectual property.

Third parties may challenge the validity or scope of the Company’s intellectual property from time to time, and such challenges could result in the limitation or loss of intellectual property rights. Irrespective of their validity, such claims may result in substantial costs and diversion of resources which could have an adverse effect on the Company’s operations. Moreover, effective intellectual property protection may be either unavailable or limited in certain foreign territories. Therefore, the Company engages in efforts to strengthen and update intellectual property protection around the world, including efforts to ensure the effective enforcement of intellectual property laws and remedies for infringement.

ITEM 1A.     RISK FACTORS

Prospective investors should consider carefully the risk factors set forth below before making an investment in the Company’s securities.

A Decline in Advertising Expenditures Could Cause the Company’s Revenues and Operating Results to Decline Significantly in any Given Period or in Specific Markets.

The Company derives substantial revenues from the sale of advertising on or in its television stations, broadcast and cable networks, newspapers and inserts, websites and DBS television services. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions, as well as budgeting and buying patterns. A decline in the economic prospects of advertisers or the economy in general could alter current or prospective advertisers’ spending priorities. Demand for the Company’s products is also a factor in determining advertising rates. For example, ratings points for the Company’s television stations, and broadcast and cable networks and circulation levels for the Company’s newspapers are factors that are weighed when determining advertising rates, and with respect to the Company’s television stations and broadcast and television networks, when determining the affiliate rates received by the Company. In addition, newer technologies, including new video formats, streaming and downloading capabilities via the Internet, video-on-demand, personal video recorders and other devices and technologies are increasing the number of media and entertainment choices available to audiences. Some of these devices and technologies allow users to view television or motion pictures from a remote location or on a time-delayedtime- delayed basis and provide users the ability for users to fast-forward, rewind, pause and skip programming. These technological developments are increasing the number of media and entertainment choices available to audiences and may cause changes in consumer behavior that could affect the attractiveness of the Company’s offerings to viewers, advertisers and/or distributors. A decrease in advertising expenditures or reduced demand for the Company’s offerings can lead to a reduction in pricing and advertising spending, which could have an adverse effect on the Company’s businesses.

Acceptance of the Company’s Film and Television Programming by the Public is Difficult to Predict, Which Could Lead to Fluctuations in Revenues.

Feature film and television production and distribution are speculative businesses since the revenues derived from the production and distribution of a feature film or television series depend primarily upon its acceptance by the public, which is difficult to predict. The commercial success of a feature film or television series also depends upon the quality and acceptance of other competing films and television series released into the marketplace at or near the same time, the availability of a growing number of alternative forms of entertainment and leisure time activities, general economic conditions and other tangible and intangible factors, all of which can change and cannot be predicted with certainty. Further, the theatrical success of a feature film and the audience ratings for a television series are generally key factors in generating revenues from other distribution channels, such as home entertainment and premium pay television, with respect to feature films, and syndication, with respect to television series.

The Loss of Carriage Agreements Could Cause the Company’s Revenue and Operating Results to Decline Significantly in any Given Period or in Specific Markets.

The Company is dependent upon the maintenance of affiliation agreements with third-party owned television stations, and there can be no assurance that these affiliation agreements will be renewed in the future on terms acceptable to the Company. The loss of a significant number of these affiliation arrangements could reduce the distribution of FOX and adversely affect the Company’s ability to sell national advertising time. Similarly, the Company’s cable networks maintain affiliation and carriage arrangements that enable them to reach a large percentage of cable and direct broadcast satellite households across the United States. The loss of a significant number of these arrangements or the loss of carriage on basic programming tiers could reduce the distribution of the Company’s cable networks, which may adversely affect those networks’ revenues from subscriber fees and their ability to sell national and local advertising time.

The Inability to Renew Sports Programming Rights Could Cause the Company’s Advertising Revenue to Decline Significantly in any Given Period or in Specific Markets.

The sports rights contracts between the Company, on the one hand, and various professional sports leagues and teams, on the other, have varying duration and renewal terms. As these contracts expire, renewals on favorable terms may be sought; however, third parties may outbid the current rights holders for the rights contracts. In addition, professional sports leagues or teams may create their own networks or the renewal costs could substantially exceed the original contract cost. The loss of rights could impact the extent of the sports coverage offered by the Company and its affiliates, as it relates to FOX, and could adversely affect the Company’s advertising and affiliate revenues. Upon renewal, the Company’s results could be adversely affected if escalations in sports programming rights costs are unmatched by increases in advertising rates and, in the case of cable networks, subscriber fees.

Technological Developments May Increase the Threat of Content Piracy and Signal Theft and Limit the Company’s Ability to Protect Its Intellectual Property Rights.

The Company seeks to limit the threat of content piracy and DBS programming signal theft; however, policing unauthorized use of the Company’s products and services and related intellectual property is often difficult and the steps taken by the Company may not in every case prevent the infringement by unauthorized third parties. Developments in technology, including digital copying, file compressing and the growing penetration of high-bandwidth Internet connections, increase the threat of content piracy by making it easier to duplicate and widely distribute pirated material. In addition, developments in software or devices that circumvent encryption technology increase the threat of unauthorized use and distribution of DBS programming signals. The Company has taken, and will continue to take, a variety of actions to combat piracy and signal theft, both

individually and, in some instances, together with industry associations. There can be no assurance that the Company’s efforts to enforce its rights and protect its products, services and intellectual property will be successful in preventing content piracy or signal theft. Content piracy and signal theft present a threat to the Company’s revenues from products and services, including, but not limited to, films, television shows, books and DBS programming.

Labor Disputes May Have an Adverse Effect on the Company’s Business.

In a variety of the Company’s business, the Company and its partners engage the services of writers, directors, actors and other talent, trade employees and others who are subject to collective bargaining agreements, including employees of the Company’s film and television studio operations and newspapers. If the Company or its partners are unable to renew expiring collective bargaining agreements, certain of which are expiring within the next year or so, it is possible that the affected unions could take action in the form of strikes or work stoppages. Such actions, as well as higher costs in connection with these collective bargaining agreements or a significant labor dispute could have an adverse effect on the Company’s business by causing delays in production or by reducing profit margins.

Changes in U.S. or Foreign Communications Laws and Other Regulations May Have an Adverse Effect on the Company’s Business.

In general, the television broadcasting and multichannel video programming and distributionsdistribution industries in the United States are highly regulated by federal laws and regulations issued and administered by various federal agencies, including the FCC. The FCC generally regulates, among other things, the ownership of media, (including ownership by non-U.S. citizens), broadcast and multichannel video programming and technical operations of broadcast and satellite licensees. Further, the United States Congress and the FCC currently have under consideration, and may in the future adopt, new laws, regulations and policies regarding a wide variety of matters, including technological changes, which could, directly or indirectly, affect the operations and ownership of the Company’s U.S. media properties. Similarly, changes in regulations imposed by governments in other jurisdictions in which the Company, or entities in which the Company has an interest, operate could adversely affect its business and results of operations.

Provisions in the Company’s Corporate Documents, Delaware Law and the Ownership of the Company’s Class B Common Stock by Certain Principal Stockholders Could Delay or Prevent a Change of Control of News Corporation, Even if That Change Would be Beneficial to the Company’s Stockholders.

The existence of some provisions in the Company’s corporate documents could delay or prevent a change of control of News Corporation, even if that change would be beneficial to the Company’s stockholders. The Company’s Restated Certificate of Incorporation and Amended and Restated By-laws, contain provisions that may make acquiring control of News Corporation difficult, including:

In addition, the Company currently has in place a stockholder rights plan, which would cause extreme dilution to any person or group that attempts to acquire a significant interest in the Company without advance approval of the Board. Further, as a result of Mr. K. Rupert Murdoch’s ability to appoint certain members of the board of directors of the corporate trustee of the A.E. HarrisMurdoch Family Trust, which beneficially owns 2.8%1.6% of the Company’s Class A Common Stock and 30.1% of itsthe Class B Common Stock, Mr. K. Rupert Murdoch may be deemed to be a beneficial owner of the shares beneficially owned by the A.E. HarrisMurdoch Family Trust. Mr. K. Rupert Murdoch, however, disclaims any beneficial ownership of those shares. Also, Mr. K. Rupert Murdoch beneficially owns an additional 0.7%1.2% of the Company’s Class A Common Stock and 1.1% of itsthe Class B Common Stock. Thus, Mr. K. Rupert Murdoch may be deemed to beneficially own in the aggregate 3.5%2.7% of the Company’s Class A Common Stock and 31.2% of itsthe Class B Common Stock. If the Share Exchange Agreement is consummated, the Company intends to redeem the rights issued under the stockholder rights plan at that time and to take the necessary steps to declassify its classified board structure. Further, if the Share Exchange Agreement is consummated, the aggregate voting power represented by the shares of Class B Common Stock held by Mr. K. Rupert Murdoch and the Murdoch Family Trust would increase to approximately 38.6% of the Company’s aggregate voting power, subject to further increase to approximately 40.0% if the Company completes its previously announced stock repurchase program.

None.

ITEM 2.

PROPERTIES

The Company owns and leases various real properties in the United States, Latin America, Europe, Australia and Asia which are utilized in the conduct of its businesses. Each of these properties is considered to be in good condition, adequate for its purpose and suitably utilized according to the individual nature and requirements of the relevant operations. The Company’s policy is to improve and replace property as considered appropriate to meet the needs of the individual operation.

United States

The Company’s principal real properties in the United States are the following:

machinery, equipment facilities and three restaurants. FEG also leases approximately 300,000 square feet of office space at Fox Plaza, located adjacent to the Fox Studios Lot;

Europe

The Company’s principal real properties in Europe for newspaper production and printing facilities in the United Kingdom are located in: Wapping (East London), England; Knowsley, England (near Liverpool); Kinning Park (in Glasgow), Scotland; and Kells, Ireland, where The Times, The Sunday Times, The Sun and the News of the World are printed. The three newspaper production and printing facilities contain approximately 990,000, 487,000 and 150,000 square feet of building space, respectively. The Company owns the real property located at Kinning Park. With respect to the real property located at Wapping and Knowsley, the Company owns the buildings and leases on a long-term basis the land on which the buildings are situated. The Company has begun a major project to update News International’s presses in the United Kingdom. The Company has acquired new sites in two locations—Broxbourne, in North London, and North Lanarkshire, in Scotland. Over the next two to three years, new printing presses will be installed on these sites and in an extension to its existing site in Knowsley. In connection with this updating, the production facility in Wapping will be moved to Broxbourne.

The headquarters of HarperCollins Publishers Limited (which also includes editorial offices) are located in London and consist of approximately 120,000 square feet of leased building space.

The Company also leases approximately 32,145 square feet of office and theater space in London for use by FEG.

The Company’s principal real properties in Italy for SKY ItaliaEurope are the following:

In addition, SKY Italia has entered into an agreement for the construction and subsequent lease to SKY Italia of premises that will contain the new head offices and television production and transmission studios for SKY Italia operations in Milan which will consist of approximately 570,490 square feet in addition to parking areas and warehouses.Milan. Pursuant to the agreement, SKY Italia will occupy approximately 365,970 square feetthe majority of such space in June 2007March 2008 and will occupy the remaining space by October 2008.2009. SKY Italia also has an option to increase the total surface area of the portion of the space designated as office space by an additional 75,350 square feet.space.

Australia and Asia

The Company’s principal real properties in Australia and Asia are the following:

Latin America

The Company owns a studio facility in Rosarito, Mexico which consists of approximately 37 acres of land containing office space, production facilities and the largest fresh and salt water tanks used in motion picture production in the world.

ITEM 3.

LEGAL PROCEEDINGS

Stockholder Litigation

On October 6, 2005, 13 professionally managed investment funds that own the Company’s stock filed a complaint in the Court of Chancery of the State of Delaware against the Company and its individual directors. The complaint, captionedUnisuper et al. v. News Corp., C.A. No. 1699-N, raised claims of breach of contract, promissory estoppel, fraud, negligent misrepresentation and breach of fiduciary duty relating to the policy of the Board concerning the Company’s stockholder rights plan, and the August 2005 decision of the Board to extend the expiration of the existing stockholder rights plan until November 8, 2007.

On April 13, 2006, the Company announced that it had entered into a settlement agreement with the plaintiffs. Under the terms of the settlement agreement, the trial and all remaining proceedings in the litigation will be postponed pending a stockholder vote on a rights plan to be held at the Company’s annual stockholders meeting in October 2006 (the “Annual Meeting”). If stockholders vote in favor of the rights plan, the litigation will be dismissed. If stockholders vote against the rights plan, the Company has the right to treat the vote as advisory and proceed with the litigation.

At the Company’s 2006 annual meeting of stockholders, the Company’s stockholders will be asked to approve an extension of the existing rights plan to October 2008, with the Company having the right to extend the rights plan for one year if the situation with Liberty Media Corporation, which led to the adoption of the rights plan, remains unresolved. If the Company’s stockholders vote in favor of the rights plan, then at the expiration of the existing rights plan or any other rights plan, the Company may adopt subsequent rights plans of one-year duration without stockholder approval, subject to interim periods of nine months between rights plans. If during or prior to any interim period, any stockholder (i) acquires 5 percent or more of the Company’s voting stock, (ii) offers to purchase voting stock or assets that would result in their owning 30 percent or more of the Company’s voting stock or assets or (iii) in certain other circumstances, the Company may immediately adopt a new rights plan of one-year duration. The Company may, of course, also adopt new rights plans or extend existing rights plans of unlimited duration with stockholder approval. The provisions discussed in this paragraph shall be in effect until the twentieth anniversary of the Annual Meeting. The terms of the settlement agreement are not intended to limit, restrict or eliminate the ability of the Company’s stockholders under applicable Delaware law to amend the Company’s certificate of incorporation in any manner. As part of the settlement, the Company has agreed to pay the plaintiffs’ attorneys fees and expenses in the litigation.

On April 18, 2006, the Delaware Court of Chancery entered a scheduling order (the “Scheduling Order”) (i) preliminarily approving the lawsuit as a class action on behalf of the class of Plaintiffs (the “Class”) set forth in the Stipulation of Settlement and (ii) setting the date for a hearing for the purposes of: (a) determining whether the action should be certified as a class action, (b) determining whether the terms of the proposed settlement are fair, reasonable and in the best interests of the Class, and (c) considering the application of Plaintiffs’ counsel for an award of attorneys’ fees and expenses. The settlement hearing was held on May 23, 2006. Liberty Media Corporation filed an objection to the settlement. Before approving the settlement, the Court instructed the parties to clarify the terms of the releases that they were providing each other in order to make them easier to read, and to make express that claims against the parties based on future conduct were not being released. On June 1, 2006, the Court issued its order and final judgment approving the settlement.

NDS

Echostar Litigation

On June 6, 2003, Echostar Communications Corporation, Echostar Satellite Corporation, Echostar Technologies Corporation and Nagrastar L.L.C. (collectively, “Echostar”) filed an action against NDS in the United States District Court for the Central District of California. Echostar filed an amended complaint on October 8, 2003, which purported to allege claims for violation of the Digital Millennium Copyright Act (“DMCA”), the Communications Act of 1934 (“CA”), the Electronic Communications Privacy Act, the

Computer Fraud and Abuse Act, California’s Unfair Competition statute and the federal RICORacketeer Influenced and Corrupt Organizations (“RICO”) statute. The complaint also purported to allege claims for civil conspiracy, misappropriation of trade secrets and interference with prospective business advantage. The complaint sought injunctive relief, unspecified compensatory and exemplary damages and restitution. On December 22, 2003, all of the claims were dismissed by the court, except for the DMCA, CA and unfair competition claims, and the court limited these claims to acts allegedly occurring within three years of the filing of Echostar’s original complaint.

After Echostar filed a second amended complaint, NDS filed a motion to dismiss this complaint on March 31, 2004. On July 21, 2004, the court issued an order directing Echostar to, among other things, file a third amended complaint within ten days correcting various deficiencies noted in the second amended complaint. Echostar filed its third amended complaint on August 4, 2004. On August 6, 2004, the court ruled that NDS was free to file a motion to dismiss the third amended complaint, which NDS did on September 20, 2004. The hearing occurred on January 3, 2005. On February 28, 2005, the court issued an order treating NDS’s motion to dismiss as a motion for a more definite statement, granting the motion and giving Echostar until March 30, 2005 to file a fourth amended compliantcomplaint correcting various deficiencies noted in the third amended complaint. On March 30, 2005, Echostar filed a fourth amended complaint, which NDS moved to dismiss. On July 27, 2005, the court granted in part and denied in part NDS’s motion to dismiss, and again limited Echostar’s surviving claims to acts allegedly occurring within three years of the filing of Echostar’s original complaint. NDSNDS’s management believes these surviving claims are without merit and intends to vigorously defend against them.

On October 24, 2005, NDS filed its Amended Answer with Counterclaims, alleging that Echostar misappropriated NDS’s trade secrets, violated the Computer Fraud and Abuse Act and engaged in unfair competition. On November 8, 2005, Echostar moved to dismiss NDS’s counterclaims for conversion and claim and delivery, arguing that these claims were preempted and time-barred. Echostar also moved for a more definite

statement of NDS’s trade secret misappropriation claim. On December 8, 2005, the court granted in part and denied in part Echostar’s motion to dismiss and for a more definite statement, but granted NDS leave to file amended counterclaims. On December 13, 2005, NDS filed itsa Second Amended Answer with Counterclaims, which Echostar answered on December 27, 2005. The court has set this case forto go to trial in AprilFebruary 2008.

Sogecable Litigation

On July 25, 2003, Sogecable, S.A. and its subsidiary Canalsatellite Digital, S.L., Spanish satellite broadcasters and customers of Canal+ Technologies SA (together, “Sogecable”), filed an action against NDS in the United States District Court for the Central District of California. Sogecable filed an amended complaint on October 9, 2003, which purported to allege claims for violation of the DMCADigital Millennium Copyright Act and the federal RICO statute.Act. The amended complaint also purported to allege claims for interference with contract and prospective business advantage. The complaint sought injunctive relief, unspecified compensatory and exemplary damages and restitution. On December 22, 2003, all of the claims were dismissed by the court. Sogecable filed a second amended complaint. NDS filed a motion to dismiss the second amended complaint on March 31, 2004. On July 23, 2004, the court heard oral argument on the motion and advised that a formal ruling should be issued by early August. On August 4, 2004, the court issued an order dismissing the second amended complaint in its entirety. Sogecable had until October 4, 2004 to file a third amended complaint. On October 1, 2004, Sogecable notified the court that it would not be filing a third amended complaint, but would appeal the court’s entry of final judgment dismissing the suit to the United States Ninth Circuit Court of Appeals. Sogecable hasOn December 14, 2006, the appellate court issued a memorandum decision reversing the district court’s dismissal. On January 26, 2007, NDS filed its petition for rehearing by an en banc panel of the United States Ninth Circuit Court of Appeals. On February 21, 2007, the petition was denied. On June 11, 2007, NDS filed a brief on appeal, NDS’s opposition was filed on August 22, 2005,petition for a Writ of Certiorari in the United States Supreme Court seeking reversal of the Ninth Circuit Court of Appeals’ decision. The Company believes that Sogecable’s claims are without merit and Sogecable filed its reply on September 6, 2005.will continue to vigorously defend itself in this matter.

Intermix

FIM Transaction

On August 26, 2005 and August 30, 2005, two purported class action lawsuits captioned, respectively,Ron Sheppard v. Richard Rosenblatt et. al., andJohn Friedmann v. Intermix Media, Inc. et al., were filed in the

California Superior Court, County of Los Angeles. Both lawsuits named as defendants all of the then incumbent members of the Intermix Board, including Mr. Rosenblatt, Intermix’Intermix’s former Chief Executive Officer, and certain entities affiliated with VantagePoint Venture Partners, a former major Intermix stockholder. The complaints alleged that, in pursuing the transaction whereby Intermix was to be acquired by FIM (the “FIM Transaction”) and approving the related merger agreement, the director defendants breached their fiduciary duties to Intermix stockholders by, among other things, engaging in self-dealing and failing to obtain the highest price reasonably available for Intermix and its stockholders. The complaints further alleged that the merger agreement resulted from a flawed process and that the defendants tailored the terms of the merger to advance their own interests. The FIM Transaction was consummated on September 30, 2005. TheFriedmannand Sheppardlawsuits were subsequently consolidated and, on January 17, 2006, a consolidated amended complaint was filed (the “Intermix Media Shareholder Litigation”). The plaintiffs in the consolidated action are seeking various forms of declaratory relief, damages, disgorgement and fees and costs. By order ofOn March 20, 2006, the court ordered that substantially identical claims asserted in a separate state action filed by Brad Greenspan, captionedGreenspan v. Intermix Media, Inc., et al., be severed and related to theIntermix Media Shareholder Litigation. The defendants have filed demurrers seeking dismissal of all claims in theIntermix Media Shareholder Litigation and the severed Greenspan claims, which were heard by the Court on July 6, 2006. The Court reserved decision. Intermix believes thatOn October 6, 2006, the court sustained the demurrers without leave to amend. On December 13, 2006, the court dismissed the complaints and entered judgment for the defendants. On February 6, 2007, theIntermix Media Shareholder Litigation and the severedGreenspan claims are meritless. Intermix intends to vigorously defend itself and expectsplaintiffs filed a notice of appeal. Although their opening brief is currently due on August 24, 2007, plaintiffs have requested that the individual defendantsCourt of Appeal grant them an extension of this due date to October 23, 2007. The Court of Appeal has not yet ruled on this request. The matter will vigorously defend themselves against these claimslikely not be fully briefed and allegations.ready for oral argument until the first half of 2008.

In November 2005, plaintiff in a derivative action captionedLeBoyer v. Greenspan et al. pending against various former Intermix directors and officers in the United States District Court for the Central District of California, filed a First Amended Class and Derivative Complaint (the “Amended Complaint”). The original derivative action was filed in May 2003 and arose out of Intermix’Intermix’s restatement of quarterly financial results for its fiscal year ended March 31, 2003. The plaintiff asserted breach of fiduciary duty and related claims in connection with the restatement. Until the filing of the Amended Complaint, the action had been stayed by mutual agreement of the parties since its inception pending determination of whether plaintiffs in a related securities class action lawsuit (the “Securities Litigation”) would be able to state a claim against the defendants. The Securities Litigation was dismissed pursuant to a class settlement in September 2005. In addition, ainception. A substantially similar derivative action filed in Los Angeles Superior Court was dismissed based on inability of the plaintiffs to adequately plead demand futility. Plaintiff LeBoyer’s November 2005 Amended Complaint added various allegations and purported class claims arising out of the FIM Transaction which are substantially similar to those asserted in theIntermix Media Shareholder Litigation. The Amended Complaint also adds as defendants the individuals and entities named in theIntermix Media Shareholder Litigation that were not already defendants in the matter. The plaintiff seeks unspecified damages, disgorgement, costsOn July 14, 2006, the parties filed their briefing on defendants’ motion to dismiss and fees. Intermix believesstay the matter. On October 16, 2006, the court dismissed the fourth through seventh claims for relief, which related to the 2003 restatement, finding that the plaintiff lacksis precluded from relitigating demand futility. At the same time, the court asked for further briefing regarding the standing to pursue anyissues and the effect of the judge’s dismissal of the claims in the Greenspan case and the Intermix Media Shareholder Litigation on the remaining claims, which include two direct class action claims related to alleged breaches of fiduciary duty leading up to the FIM Transaction and a third claim under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) asserted as a derivative capacityclaim and alleging material misstatements and omissions in the FIM Transaction proxy statement. The parties filed the requested additional briefing in which the defendants requested that the lawsuit is generally without merit.court stay the federal court proceedings pending the resolution of any appeal in the Greenspan case and the Intermix intendsMedia Shareholder Litigation. The court vacated the scheduled November 27, 2006 hearing with respect to vigorously defend itself,this briefing and expects thattook the individual defendants will vigorously defend themselvesmatter under submission. The court denied the stay in an order dated May 22, 2007, and as explained in more detail in the matter.next paragraph, consolidated this case with theBrown v. Brewer action also pending before the court. On July 11, 2007, plaintiffs filed the consolidated first amended complaint. Pursuant to the stipulated briefing schedule ordered by the court, the parties’ joint brief is due to be filed on October 11, 2007.

On June 14, 2006, a purported class action lawsuit, captionedJim Brown v. Brett C. Brewer, et al., was filed against certain former Intermix directors and officers in the United States District Court for the Central District of California. The plaintiff asserts claims for alleged violations of Section 14a of the Exchange Act and SEC Rule 14a-9, as well as control person liability under Section 20a. The plaintiff alleges that certain defendants disseminated false and misleading definitive proxy statements on two occasions: one on December 30, 2003 in connection with the shareholder vote on January 29, 2004 on the election of directors and ratification of financing transactions with certain entities of VantagePoint Venture Partners (“Vantage Point”VantagePoint”), a former large stockholder of Intermix, and another on August 25, 2005 in connection with the shareholder vote on the FIM Transaction. The complaint names as defendants certain Vantage PointVantagePoint related entities and the members of the Intermix Board who were incumbent on the dates of the respective proxy statements. Intermix is not named as a defendant, but has certain indemnity obligations to the former officer and director defendants in connection with these claims and allegations. Intermix believes that the claims are without merit and expects that the individual defendants will vigorously defend themselves in the matter. On August 25, 2006, plaintiff amended his complaint to add certain investment banks (the “Investment Banks”) as defendants. Intermix has certain indemnity obligations to the Investment Banks as well. After conferring with defendants concerning deficiencies in the amended complaint pursuant to local rule and entering a stipulation with defendants regarding a briefing schedule, plaintiff amended his complaint again on September 27, 2006. On October 19, 2006, defendants filed motions to dismiss all claims in the Second Amended Complaint. These motions were scheduled to be heard on February 12, 2007. On February 9, 2007, the case was transferred from Judge Walter to Judge George H. King, the judge assigned to the LeBoyer action on the grounds that it raises substantially related questions of law and fact as LeBoyer, and would entail substantial duplication of labor if heard by different judges. Judge King took the February 26, 2007 hearing date for the motions to dismiss off-calendar. On May 22, 2007, Judge King ordered a combined status conference with theLeBoyer action occur on June 11, 2007 at which he ordered theBrown case be consolidated with theLeBoyer action. Judge King also stated that he was not going to consider the pending motions to dismiss but rather ordered plaintiffs’ counsel to file a consolidated first amended complaint

setting forth the causes of action in theLeBoyer andBrownmatters and further ordered the parties to file a joint brief regarding dismissal of the first amended complaint. On July 11, 2007, plaintiffs filed the consolidated first amended complaint. Pursuant to the stipulated briefing schedule ordered by the court, the parties’ joint brief is due to be filed on October 11, 2007. Intermix believes that the claims are without merit and expects the individual defendants will vigorously defend themselves in the matter.

Greenspan Litigation

On February 10, 2005, Brad Greenspan, Intermix’s former Chairman and Chief Executive Officer who was asked to resign as CEO and was removed as Chairman in the fall of 2003, filed a derivative complaint in Los Angeles Superior Court against Intermix, various of its former directors and officers, VantagePoint and certain of VantagePoint’s principals and affiliates. The complaint alleged claims of libel and fraud against Intermix and various of its then current and former officers and directors, claims of intentional interference with contract and prospective economic advantage, unfair competition and fraud against VantagePoint and certain of its affiliates and principals and claims alleging that Intermix’s forecasts of profitability leading up to its January 2004 annual stockholder meeting and associated proxy contest waged by Mr. Greenspan were false and misleading. These claims generally related to Intermix’s decision to consummate its Series C Preferred Stock financing with VantagePoint in October 2003, Mr. Greenspan’s contemporaneous separation from Intermix and matters arising during the proxy contest. The complaint also alleged that Intermix’s acquisition of the assets of a company known as Supernation LLC (“Supernation”) in July 2004 involved breaches of fiduciary duty. Mr. Greenspan sought remittance of compensation received by the various then current and former Intermix director and officer defendants, unspecified damages, removal of various Intermix directors, disgorgement of unspecified profits, reformation of the Supernation purchase, punitive damages, fees and costs, injunctive relief and other remedies. Intermix and the other defendants filed motions challenging the validity of the action and Mr. Greenspan’s ability to pursue it. Mr. Greenspan voluntarily dismissed this action in October 2005.

Prior to dismissing his derivative lawsuit, in August 2005, Mr. Greenspan filed another complaint in Los Angeles Superior Court against the same defendants. The complaint, for breach of fiduciary duty, included substantially the same allegations made by Mr. Greenspan in the above-referenced lawsuit. Mr. Greenspan further alleged that defendants’ actions have, with the FIM Transaction, culminated in the loss of Mr. Greenspan’s interest in Intermix for a cash payment allegedly below its value. On October 31, 2005, the defendants filed motions seeking dismissal of the lawsuit on the grounds that the complaint fails to state any cause of action. Instead of responding to these motions, Mr. Greenspan filed an amended complaint on February 21, 2006, in which Mr. Greenspan omitted certain previously named defendants and added two other former directors as defendants. In this amended complaint, Mr. Greenspan asserts seven causes of action. The first two causes of action, for intentional interference with prospective economic advantage and violation of California’s Business & Professions Code section 17200, generally related to Intermix’Intermix’s decision to consummate its Series C Preferred Stock financing with VantagePoint in October 2003 and allege that Mr. Greenspan was “forced” to resign. The third through sixth causes of action assert various claims for breach of fiduciary duty related to the FIM Transaction and substantially mirror the allegations in the Intermix Media Shareholder Litigation.Litigation. By Order of March 20, 2006, the court ordered that Mr. Greenspan’s claims based on the FIM Transaction be severed from the rest of his complaint and coordinated with the claims asserted in the Intermix Media Shareholder Litigation.Litigation. The seventh cause of action is asserted against Intermix for indemnification. In his amended complaint, Mr. Greenspan seeks compensatory and consequential damages, punitive damages, fees and costs, injunctive relief and other remedies. Motions to dismiss the first six causes of action have been filed. The motions were heardfiled and, on JulyOctober 6, 2006, granted without leave to amend. On November 21, 2006, Mr. Greenspan dismissed with prejudice the seventh cause of action for indemnity, which was the only remaining claim and his sole cause of action against Intermix. On January 24, 2007, Mr. Greenspan filed a notice of appeal of the court reserved decision. Intermix, as well as News Corporation with respect to certain claims, is obligated to defend and indemnify the defendantscourt’s October 6, 2006 ruling. Mr. Greenspan’s opening brief in the matter. Intermix believes that the claims and allegations in the complaint are without merit and expects that the defendants in theCourt of Appeal is currently due August 24, 2007. The matter will vigorously defend themselves.likely not be fully briefed and ready for oral argument until the first half of 2008.

News America Marketing

On January 18, 2006, Valassis Communications, Inc. (“Valassis”) filed a complaint against News America Incorporated, News America Marketing FSI, Inc.LLC and News America Marketing Services, In-Store, Inc.LLC (collectively “News America”) in the United States District Court for the Eastern District of Michigan. Valassis alleges that News America possesses monopoly power in a claimed in-store advertising and promotions market (the “in-store market”) and has used that power to gain an unfair advantage over Valassis in a purported market for coupons distributed by free standing inserts (“FSIs”). Valassis alleges that News America has entrenchedis attempting to monopolize the purported FSI market by leveraging its alleged monopoly power in the allegedpurported in-store market, by entering into exclusive contracts with retailers.thereby allegedly violating Section 2 of the Sherman Antitrust Act of 1890, as amended (the “Sherman Act”). Valassis

further alleges that News America has unlawfully bundled the sale of in-store marketing products with the sale of FSIs and that such bundling constitutes unlawful tying in violation of Sections 1 and 3 of the Sherman Antitrust ActAct. Additionally, Valassis alleges that News America is predatorily pricing its FSI products in violation of 1890, as amended (the “Sherman Act”).Section 2 of the Sherman Act. Valassis also asserts that News America has violated Section 2 of the Sherman Act, various state antitrust statutes and has tortiously interfered with Valassis’ actual or expected business relationships. Valassis’ complaint seeks injunctive relief, damages, fees and costs. On April 20, 2006, News America moved to dismiss Valassis’ complaint in its entirety for failure to state a cause of action. Simultaneously,On September 28, 2006, the Magistrate Judge issued a Report and Recommendation granting the motion. On October 16, 2006, Valassis filed an Amended Complaint, alleging the same causes of action. On November 17, 2006, News America answered the three federal antitrust claims and moved to staydismiss the remaining nine state law claims. On March 23, 2007, the Court granted News America’s motion and dismissed the nine state law claims. On April 12, 2007, the Court entered a Scheduling Order that provides that all discovery until resolutionwill be closed on or before October 12, 2007 and sets a jury trial date for February 5, 2008. The parties are in ongoing negotiations regarding discovery and production of responsive discovery is imminent.

On March 9, 2007, Valassis filed a two-count complaint in Michigan state court against News America. That complaint, which is based on the same factual allegations as the federal complaint discussed above, alleges that News America has tortiously interfered with Valassis’ business relationships and that News America has unfairly competed with Valassis. Valassis’ Michigan complaint seeks injunctive relief, damages, fees and costs. On May 4, 2007, News America filed a motion to dismiss or, in the alternative stay, that complaint. On August 14, 2007, the Court denied the motion.

On March 12, 2007, Valassis filed a three-count complaint in California state court against News America. That complaint, which is based on the same factual allegations as the federal complaint discussed above, alleges that News America has violated the Cartwright Act (California’s state antitrust law) by unlawfully tying its FSI products to its in-store products, has violated California’s Unfair Practices Act by predatorily pricing its FSI products, and has unfairly competed with Valassis. Valassis’ California complaint seeks injunctive relief, damages, fees and costs. On May 4, 2007, News America filed a motion to dismiss or, in the alternative stay, that complaint. On June 28, 2007, the court grantedissued a tentative ruling denying the motion through September 2006. and reassigned the case to the Complex Litigation Program. On July 19, 2007, the court denied the motion.

News America believes Valassis’that all of the claims in each of the complaints filed by Valassis are without merit and it intends to vigorously defend itself vigorously in this matter.the three matters.

Other

The Company experiences routine litigation in the normal course of its business. The Company believes that none of its pending litigation will have a material adverse effect on its consolidated financial condition, future results of operations or liquidity.

The Company’s operations are subject to tax in various domestic and international jurisdictions and as a matter of course, the Company is regularly audited by federal, state and foreign tax authorities. The Company believes it has appropriately accrued for the expected outcome of all pending tax matters and does not currently

anticipate that the ultimate resolution of pending tax matters will have a material adverse effect on its consolidated financial condition, future results of operations or liquidity.

Not applicable.The Company held a special meeting of stockholders (the “Special Meeting”) on April 3, 2007. A brief description of the matters voted upon at the Special Meeting on such matters is set forth below.

Proposal 1: A proposal to approve the Share Exchange was voted upon as follows:

Proposal 2: A proposal to approve the adjournment or postponement of the Special Meeting, if necessary or appropriate, to solicit additional proxies for approval of the Share Exchange if there were insufficient votes at the time of the Special Meeting to approve the Share Exchange was voted upon as follows:

PART II

The Company’s Class A common stock, par value $0.01 per share (“Class A Common Stock”),Stock and Class B common stock, par value $0.01 per share (“Class B Common Stock”),Stock are listed and traded on the New York Stock Exchange (“NYSE”), its principal market, under the symbols “NWS.A” and “NWS”, respectively. CHESS Depositary Interests (“CDIs”) representing the Class A Common Stock and Class B Common Stock are listed and traded on the Australian Stock Exchange (“ASX”) under the symbols “NWS” and “NWSLV,” respectively. The Class A and Class B Common Stock are also traded on the London Stock Exchange. As of June 30, 2006,2007, there were approximately 56,00054,000 holders of record of shares of Class A Common Stock and 1,7001,600 holders of record of shares of Class B Common Stock.

The following table sets forth, for the fiscal periods indicated, the reported high and low closing sales prices for the Class A Common Stock and Class B Common Stock, as reported on the NYSE. High and low closing sales prices for the

The total dividends declared related to fiscal 2007 results were $0.12 per share of Class A Common Stock and $0.10 per share of Class B Common Stock. In August 2007, the Company declared the final dividend on fiscal 2007 results of $0.06 per share for Class A Common Stock and $0.05 per share for Class B Common Stock. This, together with the interim dividend of $0.06 per share of Class A Common Stock and a dividend of $0.05 per Class B Common Stock, for periods priorconstitute the total dividend relating to November 3, 2004 have been adjusted to reflect the impact of the consummation of the Reorganization. Prior to November 3, 2004, The News Corporation Limited (“TNCL”) ordinary shares and preferred shares were listed on the ASX, the London Stock Exchange and the New Zealand Stock Exchange, and TNCL American Depositary Receipts (“ADRs”), each representing four TNCL ordinary shares or preferred shares, were listed on the NYSE.fiscal 2007.

The total dividends declared related to fiscal 2006 results were $0.12 per share of Class A Common Stock and $0.10 per share of Class B Common Stock. In August 2006, the Company declared the final dividend on fiscal 2006 results of $0.06 per share for Class A Common Stock and $0.05 per share for Class B Common Stock. This, together with the interim dividend of $0.06 per share of Class A Common Stock and a dividend of $0.05 per Class B Common Stock, constitute the total dividend relating to fiscal 2006.

The total dividends declared related to fiscal 2005 results were $0.12 per share of Class A Common Stock and $0.10 per share of Class B Common Stock. In August 2005, the Company declared the final dividend on fiscal 2005 results of $0.07 per share for Class A Common Stock and $0.08 per share for Class B Common Stock. This, together with the interim dividend of $0.05 per share of Class A Common Stock and a dividend of $0.02 per Class B Common Stock, constitute the total dividend relating to fiscal 2005.

Information regarding the Company’s equity compensation plans is incorporated by reference from Item 12 in Part III of this report.

In June 2005, the Company announced a stock repurchase program under which the Company is authorized to acquire from time to time up to an aggregate of $3 billion in Class A Common Stock and Class B Common

Stock. In May 2006, the Company announced that the Company’s Board of Directors had authorized increasing the total amount of the stock repurchase program to $6 billion. Through June 30, 2006,2007, the Company had repurchased an aggregate of approximately 155213 million shares of its Class A Common Stock and Class B Common Stock for a total cost of purchase of $2,561$3,855 million since the announcement of the stock repurchase program in June 2005. Below is a summary of the Company’s purchases of its Class A Common Stock and Class B Common Stock during the fiscal year ended June 30, 2006:2007:

The remaining authorized amount at June 30, 2006, excluding commissions2007, under the Company’s stock repurchase program excluding commissions, was approximately $3,442$2,149 million.

ITEM 6.

SELECTED FINANCIAL DATA

The selected consolidated financial data should be read in conjunction with “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8—Financial Statements and Supplementary Data” and the other financial information included elsewhere herein.

value $0.01 per share (“Class A Common Stock”)) and the sale of its interest in Fox Family Worldwide to The Walt Disney Company (“Disney”) for total consideration of approximately $1.6 billion, which resulted in a pre-tax gain of approximately $1.3 billion.

(4)

BasicBasic and diluted earnings (loss) from continuing operations per share, basic and diluted earnings (loss) per share and cash dividend per share reflect per share amounts based on the adjusted share amounts to reflect the November 12, 2004 one-for-two share exchange in the reincorporation of News Corporation.

(5)

ClassClass A common stock, par value $0.01 per share (“Class A Common StockStock”) carry rights to a greater dividend than the Company’s Class B common stock, par value $0.01 per share (“Class B Common Stock”) through fiscal 2007. As such, net income available to the Company’s stockholders is allocated between the Class A Common Stock and Class B Common Stock. The allocation between these classes of common stock was based upon the two-class method. See Notes 2 and 20 to the Consolidated Financial Statements of News Corporation for further discussion. Subsequent to the final fiscal 2007 dividend payment, shares of Class A Common Stock will cease to carry any rights to a greater dividend than shares of Class B Common Stock. Earnings (loss) per share based on the total weighted average shares outstanding (Class A Common Stock and Class B Common Stock combined) are as follows:

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This document contains statements that constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended. The words “expect,” “estimate,” “anticipate,” “predict,” “believe” and similar expressions and variations thereof are intended to identify forward-looking statements. These statements appear in a number of places in this document and include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things, trends affecting the Company’s financial condition or results of operations. The readers of this document are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties. More information regarding these risks, uncertainties and other factors is set forth under the heading “Risk Factors” in Item 1A of the Annual Report on Form 10-K. The Company does not ordinarily make projections of its future operating results and undertakes no obligation (and expressly disclaims any obligation) to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Readers should carefully review this document and the other documents filed by the Company with the Securities and Exchange Commission (the “SEC”). This section should be read together with the audited consolidated financial statements of the Company and related notes set forth elsewhere in this Annual Report.

REORGANIZATION

Effective November 12, 2004, the Company changed its corporate domicile from Australia to the United States and its reporting currency from the Australian dollar to the U.S. dollar (“the Reorganization”). As a result, the Company’s accompanying consolidated financial statements are stated in U.S. dollars as opposed to Australian dollars, which was the currency the Company previously used to present its financial statements, and have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP.

In the Reorganization, all outstanding The News Corporation Limited (“TNCL”) ordinary shares and preferred limited voting ordinary shares were cancelled and shares of Class A common stock, par value $0.01 per share (“Class A Common StockStock”) and Class B common stock, par value $0.01 per share (“Class B Common StockStock”) were issued in exchange, respectively, on a one-for-two share basis. The financial statements have been presented as if the one-for-two share exchange took place on July 1, 2003.2004.

INTRODUCTION

Management’s discussion and analysis of financial condition and results of operations is intended to help provide an understanding of the Company’s financial condition, changes in financial condition and results of operations. This discussion is organized as follows:

•

Critical Accounting Policies—This section discusses accounting policies considered important to the Company’s financial condition and results of operations, and which require significant judgment and estimates on the part of management in application. In addition, Note 2 to the accompanying consolidated financial statements and footnotes summarizes the Company’s significant accounting policies, including the critical accounting policy discussion found in this section.

OVERVIEW OF THE COMPANY’S BUSINESS

The Company is a diversified entertainment company, which manages and reports its businesses in eight segments:

Filmed Entertainment

The Filmed Entertainment segment derives revenue from the production and distribution of feature motion pictures and television series. In general, motion pictures produced or acquired for distribution by the Company are exhibited in U.S. and foreign theaters, followed by DVDs, pay-per-view television, premium subscription television, network television and basic cable and syndicated television exploitation. Television series initially produced for the networks and first-run syndication are generally licensed to domestic and international markets concurrently. The more successful series are typicallyconcurrently and subsequently released in seasonal DVD box sets andsets. More successful series are later syndicated in

domestic markets and international markets.Themarkets. The length of the revenue cycle for television series will vary depending on the number of seasons a series remains in active production and, therefore, may cause fluctuations in operating results. License

fees received for television exhibition (including international and U.S. premium television and basic cable television) are recorded as revenue in the period that licensed films or programs are available for such exhibition, which may cause substantial fluctuations in operating results.

The revenues and operating results of the Filmed Entertainment segment are significantly affected by the timing of the Company’s theatrical and home entertainment releases, the number of its original and returning television series that are aired by television networks and the number of its television series in off-network syndication. Theatrical and home entertainment release dates are determined by several factors, including timing of vacation and holiday periods and competition in the marketplace. The distribution windows for the release of motion pictures theatrically and in various home entertainment formats have been compressing and may continue to change in the future. A reduction in timing between theatrical and home entertainment releases could adversely affect the revenues and operating results of this segment. In seeking

The Company enters into arrangements with third parties to manageco-produce many of its risk, the Company has pursued a strategy of entering into agreementstheatrical productions. These arrangements, which are referred to share the financing of certain films with other parties.as co-financing arrangements, take various forms. The parties to these arrangements include studio and non-studio entities, both domestic and foreign. In several of these agreements, other parties control certain distribution rights. The Filmed Entertainment segment records the amounts received for the sale of an economic interest as a reduction of the cost of the film, as the investor assumes full risk for that portion of the film asset acquired in these transactions. The substance of these arrangements is that the third-party investors own an interest in the film and, therefore, receive a participation based on the third-party investor’s interest in the profits or losses incurred on the film. Consistent with the requirements of Statement of Position 00-2, “Accounting by Producers or Distributors of Films” (“SOP 00-2”), the estimate of the third-party investor’s interest in profits or losses incurred on the film is determined by reference to the ratio of actual revenue earned to date in relation to total estimated ultimate revenues.

Operating costs incurred by the Filmed Entertainment segment includeinclude: exploitation costs, primarily theatrical prints and advertising and home entertainment marketing and manufacturing costs; the amortization of capitalized production, overhead and interest costs; and participations and talent residuals. Selling, general and administrative expenses include salaries, employee benefits, rent and other routine overhead.

The Company competes with other major studios, such as Disney, DreamWorks, Paramount, Sony, Universal, Warner Bros., and independent film producers in the production and distribution of motion pictures and DVDs. As a producer and distributor of television programming, the Company competes with studios, television production groups and independent producers and syndicators, such as Disney, Sony, NBC Universal, Warner Bros. and Paramount Television, to sell programming both domestically and internationally. The Company also competes to obtain creative talent and story properties which are essential to the success of the Company’s filmed entertainment businesses.

In the operation of its businesses, the Company engages the services of writers, directors, actors and others, which are subject to collective bargaining agreements. Work stoppages and/or higher costs in connection with these agreements could adversely impact the Company’s operations.

Television and Cable Network Programming

The Company’s U.S. television operations primarily consist of the FOX Broadcasting Company (“FOX”), MyNetworkTV, Inc. (“MyNetworkTV”) and the 35 television stations owned by the Company. The Company’s international television operations consist primarily of STAR Group Limited (“STAR”).

The U.S. television broadcast environment is highly competitive. Thecompetitive and the primary methods of competition in broadcast television are the development and acquisition of popular programmingprogramming. Program success is measured by ratings, which are an indication of market acceptance, with the top rated programs commanding the highest advertising prices. FOX and the development of audience interest through programming promotion, in order to sell advertising at profitable rates. FOX competesMyNetworkTV compete for audience, advertising revenues and programming with other broadcast networks, such as CBS, ABC, NBC UPN and The WB,CW, independent television stations, cable program services, as well as other media, including DBS television services, DVDs, video games, print and the Internet. In addition, FOX competesand MyNetworkTV compete with the other broadcast networks to secure affiliations with independently owned television stations in markets across the country. (See Other Recent Business Developments below for discussion of the announced UPN and The WB network combination and the launch of MyNetworkTV.)

The television stations owned by the Company compete for programming, audiences and advertising revenues with other television stations and cable networks in their respective coverage areas and, in some cases,

with respect to programming, with other station groups, and in the case of advertising revenues, with other local and national media. The competitive position of the television stations owned by the Company is largely influenced by the strength of FOX and MyNetworkTV, and, in particular, the primetimeprime-time viewership of FOX,the respective network, as well as the quality of the syndicated programs and local news programs in time periods not programmed by FOX.FOX and MyNetworkTV.

In Asia, STAR’s channels are primarily distributed to local cable operators or other pay-television platform operators for distribution to their subscribers. STAR derives its revenue from the sale of advertising time and affiliate fees from these pay-television platform operators.

The Company’s U.S. cable network operations primarily consist of the Fox News Channel (“Fox News”), the FX Network (“FX”) and the Regional Sports Networks (“RSNs”). The Company’s international cable networks consist of the Fox International Channels (“FIC”) with operations primarily in Latin America and Europe.

Generally, the Company’s cable networks, which target various demographics, derive a majority of their revenues from monthly affiliate fees received from cable television systems and DBS operators based on the number of its subscribers,subscribers. Affiliate fee revenues are net of the amortization of cable distribution investments (capitalized fees paid to a cable operator or DBS operator to facilitate the launch of a cable network). The Company defers the cable distribution investments and amortizes the amounts on a straight-line basis over the contract period. Cable television and DBS are currently the predominant means of distribution of the Company’s program services in the United States. Internationally, distribution technology varies region by region.

The Company’s cable networks including the Fox News Channel (“Fox News”), the FX Network (“FX”), and the Regional Sports Networks (“RSNs”), compete for carriage on cable television systems, DBS systems and other distribution systems with other program services, as well as other uses of bandwidth, such as retransmission of free over-the-air broadcast networks, telephony and data transmission. A primary focus of competition is for distribution of the Company’s cable network channels that are not already distributed within aby particular cable television or DBS system.systems. For such program services, distributors make decisions on the use of bandwidth based on various considerations, including amounts paid by programmers for launches, subscription fees payable by distributors and appeal to the distributors’ subscribers.

In Asia, STAR’s programming is primarily distributed via satellite to local cable operators or other pay television platform operators for distribution to their subscribers. STAR derives its revenue from the sale of advertising time and affiliate fees from these pay television platform operators.

The most significant operating expenses of the Television segment and the Cable Network Programming segment are the acquisition and production expenses related to programming and the production and technical expenses related to operating the technical facilities of the broadcaster or cable network. Other expenses include promotional expenses related to improving the market visibility and awareness of the broadcaster or cable network and its programming. Additional expenses include sales commissions paid to the in-house advertising sales force, as well as salaries, employee benefits, rent and other routine overhead expenses.

The Company has several multi-year sports rights agreements, including contracts with the National Football League (“NFL”) through fiscal 2012, contracts with the National Association of Stock Car Auto Racing (“NASCAR”) for certain races and exclusive rights for certain ancillary content through calendar year 2014, and a contract with Major League Baseball (“MLB”) through calendar year 2013.2013 and a contract for the Bowl Championship Series (“BCS”) through fiscal year 2010. These contracts provide the Company with the broadcast rights to certain national sporting events during their respective terms. The costs of these sports contracts are charged to expense based on the ratio of each period’s operating profitsprofit to estimated total remaining operating profit for the remaining term of the contract.

The profitability of these long-term national sports contracts is based on the Company’s best estimates at June 30, 20062007 of directly attributable revenues and costs; such estimates may change in the future and such changes may be significant. Should revenues decline from estimates applied at June 30, 2006,2007, a loss may be

recorded. Should revenues improve as compared to estimated revenues, the Company willmay have an improved operating profit related to the contract, which willmay be recognized over the estimated remaining contract term.

While the Company seeks to ensure compliance with federal indecency laws and related Federal Communications Commission (“FCC”) regulations, the definition of “indecency” is subject to interpretation and there can be no assurance that the Company will not broadcast programming that is ultimately determined by the FCC to violate the prohibition against indecency. Such programming could subject the Company to regulatory review or investigation, fines, adverse publicity or other sanctions, including the loss of station licenses.

Direct Broadcast Satellite Television

The DBS segment’s operations consist of SKY Italia, which provides basic and premium programming services via satellite and broadband directly to subscribers in Italy. SKY Italia derives revenues principally from subscriber fees. The Company believes that the quality and variety of video, audio and interactive programming, quality of picture, access to service, customer service and price are the key elements for gaining and maintaining market share. SKY Italia’s competition includes companies that offer video, audio, interactive programming, telephony, data and other information and entertainment services, including broadband Internet providers, digital terrestrial transmission (“DTT”) services, wireless companies and companies that are developing new media technologies.

DuringIn fiscal 2005, competitive DTT services in Italy expanded to include pay-per-view offering of soccer games previously available exclusively on the SKY Italia platform. The Company is currently prohibited from providing a pay DTT service under regulations of the European Commission. In addition, the Italian government previously offered a subsidy on the purchase of DTT decoders.

SKY Italia’s most significant operating expenses are those related to acquiringthe acquisition of entertainment, movie and sports programming and subscribers and the production and technical expenses related to operating the technical facilities. Operating expenses related to sports programming are generally recognized over the course of the related sport season, which may cause fluctuations in the operating results of this segment.

Magazines and Inserts

The Magazine and Inserts segment derives revenues from the sale of advertising space in free standingfree-standing inserts, in-store marketing products and services, promotional advertising, subscriptions and production fees. Adverse changes in general market conditions for advertising may affect revenues. Operating expenses for the Magazine and Inserts segment include paper costs, promotional, printing, retail commissions, distribution expenses and production costs. Selling, general and administrative expenses include salaries, employee benefits, rent and other routine overhead.

Newspapers

The Newspapers segment derives revenues from the sale of advertising space and the sale of published newspapers. Competition for circulation is based upon the content of the newspaper, service and price. Adverse changes in general market conditions for advertising may affect revenues. Circulation revenues can be greatly affected by changes in competitors’ cover prices and by promotion activities. Operating expenses for the Newspapers segment include costs related to newsprint, ink, printing costs and editorial content. Selling, general and administrative expenses include salaries, employee benefits, rent and other routine overhead.

The Newspapers segment’s advertising volume, circulation and the price of newsprint are the key uncertainties whose fluctuations can have a material effect on the Company’sCompany���s operating results and cash flow. The Company has to anticipate the level of advertising volume, circulation and newsprint prices in managing its businesses to maximize operating profit during expanding and contracting economic cycles. Newsprint is a basic commodity and its price is sensitive to the balance of supply and demand. The Company’s costs and expenses are

affected by the cyclical increases and decreases in the price of newsprint. The newspapers published by the Company compete for readership and advertising with local and national newspapers and also compete with television, radio, Internet and other media alternatives in their respective locales. Competition for newspaper circulation is based on the news and editorial content of the newspaper, service, cover price and, from time to time, various promotions. The success of the newspapers published by the Company in competing with other newspapers and media for advertising depends upon advertisers’ judgments as to the most effective use of their advertising budgets. Competition for advertising among newspapers is based upon circulation levels, readership levels, reader demographics, advertising rates and advertiser results. Such judgments are based on factors such as cost, availability of alternative media, circulation and quality of readership demographics.

In recent years, the newspaper industry has experienced difficulty increasing circulation volume and revenues. This is due to, among other factors, increased competition from new media formats and sources, and shifting preferences among some consumers to receive all or a portion of their news from sources other than a newspaper. The Company believes that competition from new media formats and sources and shifting consumer preferences will continue to pose challenges within the newspaper industry.

Book Publishing

The Book Publishing segment derives revenues from the sale of general and children’s books in the United States and internationally. The revenues and operating results of the Book Publishing segment are significantly

affected by the timing of the Company’s releases and the number of its books in the marketplace. The book publishing marketplace is subject to increased periods of demand in the summer months and during the end-of-year holiday season. Each book is a separate and distinct product, and its financial success depends upon many factors, including public acceptance.

Major new title releases represent a significant portion of the Company’s sales throughout the fiscal year. Consumer books are generally sold on a fully returnable basis, resulting in the return of unsold books. In the domestic and international markets, the Company is subject to global trends and local economic conditions.

Operating expenses for the Book Publishing segment include costs related to paper, printing, authors’ royalties, editorial, art and design expenses. Selling, general and administrative expenses include promotional expenses, salaries, employee benefits, rent and other routine overhead.

The book publishing business operates in a highly competitive market and has been affected by consolidation trends. This market continues to change in response to technological innovations and other factors. Recent years have brought a number of significant mergers among the leading book publishers. The book superstore remains a significant factor in the industry contributing to the general trend toward consolidation in the retail channel. There have also been a number of mergers completed in the distribution channel. The Company must compete with other publishers such as Random House, Penguin Group, Simon & Schuster and Hachette Livre, for the rights to works by well-known authors and public personalities. Although the Company currently has strong positions in each of its book publishing markets, further consolidation in the book publishing industry could place the Company at a competitive disadvantage with respect to scale and resources.

Other

NDS

NDS supplies open end-to-end digital technology and services to digital pay-television platform operators and content providers. NDS technologies include conditional access and microprocessor security, broadcast stream management, set-top box and residential gateway middleware, electronic program guides, digital video recording technologies and interactive infrastructure and applications. NDS provides technologies and services supporting standard definition and high definition televisions and a variety of industry, Internet and Internet protocol standards. NDS’ software systems, consultancy and systems integration services are focused on

providing platform operators and content providers with technology to help them profit from the secure distribution of digital information and entertainment to consumer devices which incorporate various technologies supplied by NDS.

News Outdoor

The Company sells, through its News Outdoor businesses, outdoor advertising space on various media, including billboards, street furniture and transit shelters, unique boards, airport transit advertising and in-store point of sale displays in shopping malls and supermarkets. It has outdoor advertising operations primarily in Russia and Eastern Europe.

Fox Interactive MediaFIM

The Company sells, through its Fox Interactive Media (“FIM”)FIM division, advertising, sponsorships and subscription services on the Company’s various Internet properties. WebThe Company’s Internet properties include the social networking site MySpace.com, IGN.com, AmericanIdol.com, Scout.com and Foxsports.com. The Company also has a distribution agreement with Microsoft’s MSN for Foxsports.com.

Other Recent Business Developments

During fiscal 2006, the Company broadened its international video distribution agreement with Metro-Goldwyn-Mayer (“MGM”) into a worldwide home video distribution arrangement, commencing September 1, 2006 for most territories. The Company released approximately 350 MGM home entertainment theatrical, catalog and television programs internationally in fiscal 2006.

In January 2006, CBS Corporation, owner of the UPN network (“UPN”), and Time Warner Inc., owner of the WB network (the “WB”), announced that UPN and the WB would combine to form a new network, which is expected to launch in September 2006. The Company owns nine major-market television stations that are currently affiliated with UPN. In February 2006, the Company announced it would launch MyNetworkTV, a new primetime program network in September 2006. MyNetworkTV will provide primetime programming to the Company’s nine stations that had been affiliated with UPN, the Company’s independent station, as well as to numerous affiliate stations. To the extent MyNetworkTV is not successful, the Company’s operating results in the Television segment may be adversely impacted.

In May 2006, the Company acquired a regional cable sports channel for approximately $375 million. This channel has rights to the National Hockey League’s (the “NHL”) Atlanta Thrashers and shares rights to MLB’s Atlanta Braves and the National Basketball Association’s (the “NBA”) Atlanta Hawks with one of the Company’s existing regional sports networks.

In July 2006, the Company and an independent third party agreed to acquire TGRT, a national, general interest broadcast television station in Turkey, for approximately $100 million from Ilhas Yahin Holding and other individual shareholders. The closing of this transaction is subject to customary closing conditions, including Turkish regulatory approval.

In August 2006, the Company announced that its FIM division entered into a multi-year search technology and services agreement with Google, Inc. (“Google”), pursuant to which Google will beis the exclusive search and keyword targetedkeyword-targeted advertising sales provider for a majority of FIM’s web properties. Under the terms of the agreement, Google will beis obligated to make guaranteed minimum revenue share payments to FIM of $900 million, of which the $50 million that was due was paid as of June 30, 2007. These guaranteed minimum revenue share payments, which are based on FIM’s achievement of certain traffic and other commitments. These guaranteed minimum revenue share paymentscommitments, are expected to be made over the period beginning the first quarter of calendar 2007 and ending inthrough the second quarter of calendar 2010.

On December 22, 2006, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Liberty Media Corporation (“Liberty”). Under the terms of the Share Exchange Agreement, Liberty will exchange its entire interest in the Company’s common stock (approximately 325 million shares of Class A Common Stock and 188 million shares of Class B Common Stock) for 100% of a News Corporation subsidiary (“Splitco”), whose holdings will consist of an approximately 39% interest (approximately 470 million shares) in The DIRECTV Group, Inc. (“DIRECTV”) constituting the Company’s entire interest in DIRECTV, three of the Company’s RSNs (FSN Northwest, FSN Pittsburgh and FSN Rocky Mountain (the “Three RSNs”)) and $588 million in cash, subject to adjustment. The transaction contemplated by the Share Exchange Agreement was approved by the Class B common stockholders on April 3, 2007, but remains subject to customary closing conditions, including, among other things, regulatory approvals, the receipt of a ruling from the Internal Revenue Service and the absence of a material adverse effect on Splitco. If these conditions are satisfied, the transaction is expected to be completed in the fourth quarter of calendar 2007. The Company will enter into a non-competition agreement with DIRECTV and non-competition agreements with each of the Three RSNs, in each case, restricting its right to compete for a period of four years with DIRECTV and the Three RSNs in the respective regions in which such entities are operating on the date the Share Exchange Agreement is consummated.

In January 2007, the Company and VeriSign, Inc. (“VeriSign”) formed a joint venture to provide entertainment content for mobile devices. The Company paid approximately $190 million for a controlling interest in VeriSign’s wholly-owned subsidiary, Jamba, which was combined with certain of the Company’s Fox Mobile Entertainment assets. The results of the joint venture have been included in the Company’s consolidated results of operations since January 2007. The Company and VeriSign have various call and put rights related to VeriSign’s ownership interest including VeriSign’s right to put its share of the joint venture to the Company for $150 million and $350 million, in fiscal 2010 and 2012, respectively.

In June 2007, the Company announced its plan to sell nine of its FOX-affiliated television stations. No agreement has yet been entered into with respect to the sale of any of these stations.

In June 2007, the Company announced that it intends to explore strategic options for News Outdoor in connection with News Outdoor’s continued development plans. The strategic options include, but are not limited to, exploring the opportunity to expand News Outdoor’s existing shareholder group through new strategic and private equity partners. No agreement has yet been entered into with respect to any transaction.

In July 2007, Gemstar-TV Guide International, Inc. (“Gemstar-TV Guide”) announced that its board of directors authorized Gemstar-TV Guide and its advisors to explore strategic alternatives intended to maximize stockholder value, which may include a sale of the company. The Company currently holds an approximate 41% interest in Gemstar-TV Guide. For more information on Gemstar–TV Guide, please see its reports filed with the SEC.

On July 31, 2007, the Company entered into a definitive merger agreement (the “Merger Agreement”) with Dow Jones & Company (“Dow Jones”), pursuant to which the Company will acquire Dow Jones in a transaction valued at approximately $5.6 billion. Under the terms of the Merger Agreement, Dow Jones Stockholders will be entitled to receive $60 in cash for each share of Dow Jones stock they own, and up to 250 holders of record and not more than 10% of the shares of Dow Jones may elect to have their shares of Dow Jones converted into a number of units of a newly formed subsidiary of the Company (each unit of which will be exchangeable for one share of the Company’s Class A Common Stock in accordance with the terms and conditions of such subsidiary’s operating agreement). The Merger Agreement is subject to customary closing conditions, including, among other things, adoption of the Merger Agreement by the affirmative vote of Dow Jones stockholders holding a majority of the voting power of Dow Jones’ outstanding common stock and Class B common stock voting together, the execution of an editorial agreement, the establishment by the Company of a special committee as contemplated under such editorial agreement and regulatory approvals. The transaction is expected to be completed in the fourth quarter of calendar 2007. The Company believes that this acquisition will position it as a leader in the financial news and information market and will enhance its ability to adapt to future challenges and opportunities within the Company’s Newspapers segment and across the Company’s other related business segments.

RESULTS OF OPERATIONS

Results of Operations—Fiscal 2007 versus Fiscal 2006

The following table sets forth the Company’s operating results for fiscal 2007 as compared to fiscal 2006.