UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

or

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

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 check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨x    No  ¨

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

Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨    Smaller reporting company  ¨

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 May 4,November 2, 2009, 1,815,436,4901,821,495,259 shares of Class A Common Stock, par value $0.01 per share, and 798,520,953 shares of Class B Common Stock, par value $0.01 per share, were outstanding.

NEWS CORPORATION

FORM 10-Q

TABLE OF CONTENTS

NEWS CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share amounts)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

NEWS CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share amounts)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

NEWS CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Basis of Presentation

News Corporation, a Delaware corporation, with its subsidiaries (together “News Corporation” or the “Company”), is a diversified global media company, which manages and reports its businesses in eight segments: Filmed Entertainment, Television, Cable Network Programming (which now includes STAR Group Limited (“STAR”) see Note 15—Segment Information), Direct Broadcast Satellite Television (“DBS”), Integrated Marketing Services (formerly Magazines and Inserts, see Note 15 – Segment Information), Newspapers and Information Services, Book Publishing and Other.

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting only of normal recurring adjustments necessary for a fair presentation have been reflected in these unaudited consolidated financial statements. Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2009.2010.

These interim unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 20082009 as filed with the Securities and Exchange Commission (“SEC”) on August 13, 200812, 2009 (the “2008“2009 Form 10-K”).

The consolidated financial statements include the accounts of News Corporation and its subsidiaries. Intercompany transactions and balances have been eliminated. Equity investments in which the Company exercises significant influence but does not exercise control and is not the primary beneficiary are accounted for using the equity method. Investments in which the Company is not able to exercise significant influence over the investee are designated as available-for-sale if readily determinable fair values are available. If an investment’s fair value is not readily determinable, the Company accounts for its investment under the cost method.

The preparation of consolidated financial statements in conformity with GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Because of the use of estimates inherent in the financial reporting process, actual results could differ from those estimates.

Certain fiscal 20082009 amounts have been reclassified to conform to the fiscal 20092010 presentation.

The Company maintains a 52-53 week fiscal year ending on the Sunday nearest to each reporting date. As such, all references to March 31,September 30, 2009 and March 31,September 30, 2008 relate to the three and nine month periods ended March 29,September 27, 2009 and March 30,September 28, 2008, respectively. For convenience purposes, the Company continues to date its financial statements as of March 31.September 30.

In accordance with Statement of Financial Accounting Standards Codification (“SFAS”ASC”) No. 130, “Reporting Comprehensive220 “Comprehensive Income,” total comprehensive income (loss) for the Company consistsconsisted of the following:

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements

On July 1, 2008,2009, the Company adopted Financial Accounting Standards Boardthe provisions of ASC 805 “Business Combinations” (“FASB”ASC 805”) SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which significantly changed the Company’s accounting for its financialbusiness combinations on a prospective basis in a number of areas, including the treatment of contingent consideration, preacquisition contingencies, transaction costs and restructuring costs. In addition, under ASC 805, changes in an acquired entity’s deferred tax assets and liabilities. SFAS No. 157 defines fair value, establishesuncertain tax positions after the measurement period will impact income tax expense.

On July 1, 2009, the Company adopted the new provisions of ASC 810 “Consolidation” (“ASC 810”), which changed the accounting and reporting for minority interests. As a frameworkresult of the adoption of these provisions, minority interests have been recharacterized as noncontrolling interests and classified as a component of equity, with the exception of redeemable noncontrolling interests. In accordance with ASC 810, the presentation and disclosure requirements for measuring fair valueexisting noncontrolling interests were applied retrospectively. All other requirements of these provisions were applied prospectively.

The following table summarizes changes in equity (in millions):

On July 1, 2009, the Company adopted the new provisions of ASC 350 “Intangibles - Goodwill and expandsOther” (“ASC 350”), which set forth the required disclosures about fair value measurements (See Note 7—Fair Value). SFAS No. 157 currently appliesfactors to be considered in developing renewal or extension assumptions used to determine the useful life of a recognizable intangible asset and is intended to improve the consistency between the useful life of a recognizable intangible asset and the period of expected cash flows used to measure the fair value measurements of financial instrumentsthat asset. This adoption changed the Company’s determination of useful lives for intangible assets on a prospective basis.

On July 1, 2009, the Company adopted the additional provisions of ASC 820 “Fair Value Measurement and recurringDisclosure” (“ASC 820”), which apply to non-recurring fair value measurements of non-financial assets and liabilities. In the first quarter of fiscal 2010, SFAS No. 157 will apply to all remaining fair value measurements, including non-recurring measurements of non-financial assets and liabilities, such as measurement of potential impairments of goodwill, other intangible assets, other long-lived assets and non-financial assets held by a pension plan. ItThese additional provisions also will apply to the fair value measurements of non-financial assets acquired and liabilities assumed in business combinations. The Company is currently evaluatingCompany’s adoption of the impact these additional SFAS No. 157 provisions willof ASC 820 did not have a material effect on the Company’s consolidated financial statements.

In August 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2009-05 “Fair Value Measurements and Disclosures (Topic 820) - - Measuring Liabilities at Fair Value” (“ASU 2009-05”). ASU 2009-05 amends Subtopic 820-10 “Fair Value Measurements and Disclosures - Overall” and provides clarification on the methods to be used in circumstances in which a quoted price in an active market for the identical liability is not available.

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

On July 1, 2008,In June 2010, the Company adopted FASB SFAS No. 159, “The Fair Value Option for Financial Assetswill adopt the new provisions of ASC 715 “Compensation – Retirement Benefits,” which expand the disclosure requirements of defined benefit plans. The expanded disclosure requirements include: (i) investment policies and Financial Liabilities—Including an amendmentstrategies; (ii) the major categories of FASB Statement No. 115” (“SFAS No.159”). SFAS 159 permits entities to chooseplan assets; (iii) the inputs and valuation techniques used to measure many financial instruments and certain other items atplan assets; (iv) the effect of fair value withmeasurements using significant unobservable inputs (Level 3) on changes in fair value recognized in earningsplan assets for each reporting period. The Company’s adoptionthe period; and (v) significant concentrations of SFAS No. 159 on July 1, 2008 did not have any effect on the Company’s consolidated financial statements as the Company did not elect the fair value measurement option for any eligible items.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 requires enhanced disclosures related to an entity’s derivative and hedging activities (See Note 7—Fair Value). The Company’s adoption of SFAS No. 161 on January 1, 2009 did not have a material effect on the Company’s consolidated financial statements.risk within plan assets.

Note 2—Acquisitions, Disposals and Other Transactions

Fiscal 2009 Transactions

Acquisitions

In October 2008, the Company purchased VeriSign Inc.’s minority share of the Jamba joint venture for approximately $193 million in cash, increasing the Company’s interest to 100%. During the second quarter of fiscal 2009, the Company recorded an impairment charge relating to Jamba’s goodwill and finite-lived intangible assets. (See Note 8—Goodwill, Intangible Assets and Other Long-lived Assets)

In January 2009, the Company and Asianet TV Holdings Private Limited (“Asianet”) formed a venture (“Star Jupiter”) to provide general entertainment channels in southern India. The Company paid approximately $235 million in cash and assumed net debt of approximately $20 million for a controlling interest in four of Asianet’s channels which were combined with one of the Company’s existing channels. The Company has a majority interest in this new venture and, accordingly, will consolidatebegan consolidating the results beginning in January 2009.

The aforementioned acquisitions were all accounted for in accordance with SFAS No. 141, “Business Combinations”. In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), theASC 805. The excess purchase price that has been allocated or has been preliminarily allocated to goodwill is not being amortized for all of the acquisitions noted above.above in accordance with ASC 350. Where the allocation of the excess purchase price is not final, the amount allocated to goodwill is subject to change upon completion of final valuations of certain assets and liabilities. A future reduction in goodwill for additional value to be assigned to identifiable finite-lived intangible assets or tangible assets could reduce future earnings as a result of additional amortization.

Disposals

In July 2008, the Company completed the sale of eight of its owned-and-operated FOX network affiliated television stations (the “Stations”) for approximately $1 billion in cash. The Stations included: WJW in Cleveland, OH; KDVR in Denver, CO; KTVI in St. Louis, MO; WDAF in Kansas City, MO; WITI in Milwaukee, WI; KSTU in Salt Lake City, UT; WBRC in Birmingham, AL; and WGHP in Greensboro, NC. In connection with the transaction, the Stations entered into new affiliation agreements with the Company to receive network programming and assumed existing contracts with the Company for syndicated programming. TheIn addition, the Company recorded a gain of approximately $232 million in Other, net in the unaudited consolidated statements of operations during the ninethree months ended March 31, 2009 from the sale of the Stations.

In November 2008, the Company sold its ownership stake in a Polish television broadcaster to the remaining shareholders. The Company recognized a net loss of approximately $100 million on the disposal which was included in Other, net in the unaudited consolidated statements of operations during the nine months ended March 31, 2009.

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2008.

Other transactions

OnIn February 5, 2009, the Company, two newly incorporated subsidiaries of funds advised by Permira Advisers LLP (the “Permira Newcos”) and the Company’s then majority owned, publicly heldmajority-owned, publicly-held subsidiary, NDS Group plc (“NDS”), completed a transaction pursuant to which all issued and outstanding shares of NDS Series A ordinary shares, including those represented by American Depositary Shares traded on The NASDAQ Stock Market, were acquired for per-share consideration of $63 in cash.cash (the “NDS Transaction”). As part of the transaction, approximately 67% of the NDS Series B ordinary shares held by the Company were exchanged for $63 per share in a mix of approximately $1.5 billion in cash, which included $780 million of cash retained upon the deconsolidation of NDS, and a $242 million vendor note. As a result of the transaction, NDS ceased to be a public company and the Permira Newcos and the Company now own approximately 51% and 49% of NDS, respectively. The Company’s remaining interest in NDS is accounted for under the equity method of accounting. A gain of $1.2 billion was recognized on the sale of the Company’s interest in NDS and iswas included in Other, net in the unaudited consolidated statements of operations in the three and nine months ended March 31, 2009.

Fiscal 2008 Transactions

Acquisitions

In July 2007, the Company acquired Photobucket, a web-based provider of photo- and video-sharing services, for a total purchase price of approximately $262 million, of which $237 million was in cash and $25 million was in deferred consideration which was paid during the firstthird quarter of fiscal 2009. Additional consideration of up to $25 million may be payable contingent upon the achievement of certain performance objectives.

On December 13, 2007, the Company completed the acquisition of Dow Jones & Company, Inc. (“Dow Jones”) pursuant to the Agreement and Plan of Merger, dated as of July 31, 2007, by and among the Company, Ruby Newco LLC, a wholly-owned subsidiary of the Company (“Ruby Newco”), Dow Jones and Diamond Merger Sub Corporation, as amended (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, each outstanding share of Dow Jones common stock was converted into the right to receive, at the election of the holder, either (x) $60.00 in cash or (y) 2.8681 Class B common units of Ruby Newco. Each Class B common unit of Ruby Newco is convertible into a share of News Corporation Class A common stock, par value $0.01 per share (“Class A Common Stock”). The consideration for the acquisition was approximately $5,700 million which consisted of: $5,150 million in cash, assumed net debt of approximately $330 million and approximately $200 million in equity instruments. The results of Dow Jones have been included in the Company’s consolidated statements of operations from December 13, 2007.

As part of the Dow Jones acquisition, the Company assumed total debt of $378 million which consisted of: 3.875% notes due 2008 in the amount of $225 million, $131 million in commercial paper and a $22 million variable interest rate note.

In addition, in December 2007, the Company issued approximately 8 million Class B common units of Ruby Newco, approximately 7 million stock options and approximately 500,000 restricted stock units (“RSUs”) over Class A Common Stock. The total fair value of these instruments was approximately $200 million. As of March 31, 2009, approximately 7.7 million Class B common units of Ruby Newco had been converted into shares of Class A Common Stock.

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 Newspapers and Information Services segment and across the Company’s other related business segments.

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Under the purchase method of accounting, the total Dow Jones purchase price is allocated to Dow JonesNote 3—Receivables, net tangible and intangible assets based upon Dow Jones’ estimated fair value as

Receivables, net consisted of:

Note 4—Restructuring Programs

In fiscal 2009, certain of the date of completionmarkets in which the Company’s businesses operate experienced a weakening in the economic climate which adversely affected advertising revenue and other consumer driven spending. As a result, a number of the acquisition. Based uponCompany’s businesses implemented a series of operational actions to address the purchase priceCompany’s cost structure, including the Company’s digital media properties, which were restructured to align resources more closely with business priorities. This restructuring program included significant job reductions, both domestically and internationally, to enable the businesses to operate on a more cost effective basis. In conjunction with this project, the Company also eliminated excess facility requirements. Several other businesses of the Company implemented similar plans in fiscal 2009, including its U.K. and Australian newspapers, HarperCollins, MyNetworkTV and the valuation performed, the purchase price allocation is as follows (in millions):

The Company allocated approximately $700 million to amortizable intangible assets, primarily consisting of subscriber relationship intangible assets. The pattern of economic benefits to be derived from certain amortizable intangible assets is estimated to be greater in the initial period of ownership; accordingly, amortization expense is recognized on an accelerated basis over the remaining weighted-average useful life of 25 years. The Company also allocated approximately $1,700 million to trade names, which will not be amortized as they have an indefinite remaining useful life based primarily on their market position and the Company’s plans for continued indefinite use. Further, approximately $4,300 million was allocated to goodwill, which represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. The goodwill is not being amortized in accordance with SFAS No. 142, and is not deductible for tax purposes. Upon the completion of the final valuation in December 2008, all of the goodwill was allocated to the Newspapers and Information Services segment.Fox Television Stations. During the second quarter of fiscal year ended June 30, 2009, the Company recorded an impairment charge relating to the Dow Jones goodwill and indefinite-lived intangible assetsrestructuring charges in accordance with ASC 420 “Exit or Disposal Cost Obligations” of $2.8 billionapproximately $312 million which is not reflectedwere included in Other operating charges in the table above. (See Note 8—Goodwill, Intangible Assetsconsolidated statements of operations.

During the three months ended September 30, 2009, the Company recorded approximately $20 million of additional restructuring charges in Other operating charges in the consolidated statements of operations, primarily due to a restructuring to combine the sales and distribution operations of the STAR channels with those of the Company’s other international cable businesses. The restructuring charges during the three months ended September 30, 2009 reflect $18 million recorded at the Cable Network Programming segment for STAR and $2 million recorded at the Other Long-lived Assets)segment related to accretion on facility termination obligations.

Changes in the program liabilities were as follows:

The Company expects to record an additional $77 million of restructuring charges principally related to accretion on facility termination obligations through fiscal 2021. At September 30, 2009, restructuring liabilities of approximately $68 million and $143 million were included in the consolidated balance sheets in other current liabilities and other liabilities, respectively. Facility related costs of $143 million included in other liabilities and additional accretion are expected to be paid through fiscal 2021.

Dow Jones

As a result of the Dow Jones & Company, Inc. (“Dow Jones”) acquisition in fiscal 2008, the Company established and approved plans to integrate the acquired operations into the Company’s Newspapers and Information Services segment. The cost to implement these plans consists of separation payments for certain Dow Jones executives under the change in control plan Dow Jones had previously established prior to the acquisition, non-cancelable lease commitments and lease termination charges for leased facilities that have or will be exited and other contract termination costs associated with the restructuring activities.

Changes in the plan liabilities were as follows (in millions):

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Share Exchange Agreement

In February 2008, the Company closed the transactions contemplated by the share exchange agreement (the “Share Exchange Agreement”) with Liberty Media Corporation (“Liberty”). Pursuant to the terms of the Share Exchange Agreement, Liberty exchanged its entire interest in the Company’s common stock (approximately 325 million shares of Class A Common Stock and 188 million shares of News Corporation Class B common stock, par value $0.01 per share (“Class B Common Stock”)) for 100% of the stock of a wholly-owned subsidiary, whose holdings consisted of the Company’s approximate 41% 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 approximately $625 million in cash (the “Exchange”). The Exchange resulted in the divestiture of the Company’s entire interest in DIRECTV and the Three RSNs to Liberty. The consideration was negotiated between the parties and the Share Exchange Agreement was approved by the disinterested stockholders of the Company. A tax-free gain of $1.7 billion on the Exchange was recognized in Other, net in the consolidated statements of operations in fiscal 2008. Upon the closing of the Exchange, the Company entered 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 were operating on the closing date of the Share Exchange Agreement.

Note 3—Receivables, net

Receivables, net consisted of:

Note 4—Restructuring Programs

In fiscal 2009, certain of the markets in which the Company’s businesses operate have experienced a weakening in the economic climate which has adversely affected advertising revenue and other consumer driven spending. As a result, a number of the Company’s businesses implemented a series of operational actions to address the Company’s cost structure. During the three and nine months ended March 31, 2009, the Company recorded restructuring charges of approximately $54 million and $83 million, respectively, which are included in operating expenses in the unaudited consolidated statements of operations. These charges consist of severance costs, lease termination costs and other associated costs. The severance costs represent approximately 75% of the total restructuring costs for both the three and nine month periods ended March 31, 2009. The restructuring charges primarily relate to $30 million recorded at the Book Publishing segment during both the three and nine months ended March 31, 2008, and $23 million and $51 million recorded at the Newspapers and Information Services segments during the three and nine months ended March 31, 2009, respectively.

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Changes in the plan liabilities were as follows (in millions):

Note 5—Inventories, net

The Company’s inventories were comprised of the following:

Note 6—Investments

The Company’s investments were comprised of the following:

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 6—Investments

The Company’s investments were comprised of the following:

The cost basis, unrealized gains, unrealized losses and fair market value of available-for-sale investments are set forth below:

Fiscal Year 2010 Transactions

During the first quarter of fiscal 2010, the Company acquired additional shares of Sky Deutschland, increasing its ownership from approximately 38% at June 30, 2009 to approximately 40% at September 30, 2009.

Fiscal Year 2009 Acquisitions, Disposals and Other Transactions

Investments in PremiereSky Deutschland

During fiscal 2008, the Company, through a series of transactions, acquired a 25% ownership interest in PremiereSky Deutschland for cash consideration of approximately $666 million. As of April 2008, the Company had acquired an interest in PremiereSky Deutschland of greater than 20% and exercised significant influence over Premiere,Sky Deutschland and, accordingly, the Company accountsbegan accounting for its investment in PremiereSky Deutschland under the equity method of accounting.

As previously disclosed, in December 2008,During fiscal 2009, the Company entered into an agreement with PremiereSky Deutschland and the bank syndicate of PremiereSky Deutschland to provide PremiereSky Deutschland with a new financing structure and additional capital through two equity capital increases. The first and second equity capital increases were structured asAs a result of the rights issues and were completedother transactions, the Company invested an aggregate of approximately $300 million in Januaryshares of Sky Deutschland during fiscal 2009 and, Aprilas of June 30, 2009, respectively. In the first equity capital increase, the Company purchased additional shares of Premiere for approximately $33 million. In the second equity capital increase, the Company purchased additional shares of Premiere for approximately $150 million, increasing the Company’shad an approximate 38% ownership percentageinterest in Premiere to 30.5%. Upon the completion of the second capital increase, the Company has no further financial commitments to Premiere.Sky Deutschland.

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Impairment of Investments in PremiereSky Deutschland

On October 2, 2008, PremiereSky Deutschland announced guidance on its earnings before interest, taxes, depreciation and depreciationamortization (“EBITDA”) indicating results substantially below prior guidance for calendar 2008. PremiereSky Deutschland also announced that it had adopted a new classification of subscribers at September 30, 2008. The day after this announcement, PremiereSky Deutschland experienced a significant decline in its market value. As a result of this decline, the Company’s carrying value in PremiereSky Deutschland exceeded its market value based upon Premiere’sSky Deutschland’s closing share price of €4.38 on October 3, 2008. The Company believesbelieved that this decline was not temporary based on the assessment described below and, accordingly, recorded an impairment charge of $422 million representing the difference between the Company’s carrying value and the market value whichvalue. The impairment charge was included in Equity earnings (losses) earnings of affiliates in the Company’s unaudited consolidated statements of operations forduring the ninethree months ended March 31, 2009.September 30, 2008.

In determining if the decline in Premiere’sSky Deutschland’s market value was other-than-temporary, the Company considered a number of factors: (1) the financial condition, operating performance and near term prospects of Premiere;Sky Deutschland; (2) the reason for the decline in Premiere’sSky Deutschland’s fair value; (3) analysts’ ratings and estimates of 12 month share price targets for Premiere;Sky Deutschland; and (4) the length of time and the extent to which Premiere’sSky Deutschland’s market value had been less than the carrying value of the Company’s investment.

Due to the volatility of Premiere’s common stock, the Company will continue to monitor this investment for possible future impairment.

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Other

In August 2008, the Company entered into an agreement providing for the restructuring of the Company’s content acquisition agreements with Balaji Telefilms Ltd (“Balaji”). As part of this restructuring agreement, the Company no longer has representation on Balaji’s board of directors and does not have significant influence in management decisions; therefore, the Company believes that it no longer has the ability to exercise significant influence over Balaji. Accordingly, the Company accounts for its investment in Balaji under the cost method of accounting and the carrying value is adjusted to market value each reporting period as required under SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.ASC 320 “Investments.”

OnIn February 5, 2009, the Permira Newcos and NDS Transaction was completed, a transaction resulting in the Permira Newcos and the Company owning approximately 51% and 49% of NDS, respectively. The Company’s remaining interest in NDS is accounted for under the equity method of accounting. (See Note 2—Acquisitions, Disposals and Other Transactions for further discussion)

The Company regularly reviews cost method investments for impairments based on criteria that include the extent to which the investment’s carrying value exceeds its related market value, the duration of the market decline, the Company’s ability to hold its investment until recovery and the investment’s financial strength and specific prospects. In the nine months ended March 31, 2009 and 2008, the Company wrote down certain cost method investments by approximately $110 million and $125 million, respectively, which are included in Other, net in the unaudited consolidated statements of operations. The write-down in the nine months ended March 31, 2009 included a $58 million impairment related to an investment in a sports and entertainment company and a $38 million impairment related to a television content production company. The write-down in the nine months ended March 31, 2008 included a $115 million impairment related to an Asian premium movie channel. The above write-downs were taken as a result of either the deteriorating financial position of the investee or due to a permanent impairment resulting from sustained losses and limited prospects for recovery.

Fiscal Year 2008 Acquisitions, Disposals and Other Transactions

In March 2008, the Company and its joint venture partner completed a series of transactions and sold its entire interest in the cable systems in Taiwan, in which the Company maintained a minority interest ownership, to third parties for aggregate cash consideration of approximately $360 million. The Company recognized pre-tax gains totaling approximately $133 million on the sales included in Other, net in the consolidated statements of operations in fiscal 2008, of which $23 million and $125 million was recognized in the three and nine months ended March 31, 2008, respectively.

Effective September 30, 2007, National Geographic Television gave the Company control over National Geographic Channel US (“NGC US”) in which the Company has a 67% equity interest. Accordingly, the results of NGC US have been included in the Company’s consolidated results of operations since October 2007.

During the nine months ended March 31, 2008, the Company acquired an additional 27% stake in NGC Network (UK) Limited (“NGC UK”) in exchange for a 23% interest in NGC Network International LLC (“NGC International”) and a 14% interest in NGC Network Latin America LLC (“NGC Latin America”). As a result of this transaction, the Company owns 52% of NGC International, NGC Latin America and NGC UK. In January 2007, the Company obtained operating control over NGC International and NGC Latin America and has included their results in the Company’s consolidated results of operations since January 2007. The Company has included the operating results of NGC UK in the Company’s consolidated results of operations in the nine months ended March 31, 2008.

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 7—Fair Value

In accordance with SFAS No. 157,ASC 820, fair value measurements are required to be disclosed using a three-tiered fair value hierarchy which distinguishes market participant assumptions into the following categories: (i) inputs that are quoted prices in active markets (“Level 1”); (ii) inputs other than quoted prices included within Level 1 that are observable, including quoted prices for similar assets or liabilities (“Level 2”); and (iii) inputs that require the entity to use its own assumptions about market participant assumptions (“Level 3”). Additionally, in accordance with SFAS No. 161, we haveASC 815 “Derivatives and Hedging” (“ASC 815”), the Company has included additional disclosures about the Company’s derivatives and hedging activities (Level 2 and 3 items)2).

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The table below presents information about financial assets and liabilities carried at fair value on a recurring basis as of March 31,September 30, 2009:

The fair value of the minority shareholder’s put rightredeemable noncontrolling interest in the Company’s RSN was determined by using a discounted earnings before interest, taxes, depreciation and amortizationEBITDA valuation model, assuming a 10% compounded annual growth rate and an 8%9.5% discount rate.

The fair value of the minority stockholders’ put rightredeemable noncontrolling interest in MSS was determined using an operating income before depreciation and amortization multiple.

The fair value of the minority stockholders’ put right in Star Jupitermajority–owned outdoor marketing subsidiary was determined using a discounted cash flow analysis.analysis assuming a 5% terminal growth rate and a 15% discount rate.

The fair value of the redeemable noncontrolling interest in the Asian general entertainment television joint venture was determined using discounted cash flow analysis assuming a multiple of eight times terminal year EBITDA.

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table reconciles the beginning and ending balanceschanges in fair value of liabilities classified as Level 3 measurements and identifies the net income (losses) the Company recognized during the three and nine months ended March 31,September 30, 2009 on such liabilities:were as follows:

Note 8—Goodwill, Intangible Assets and Other Long-lived AssetsFinancial Instruments

In accordance with SFAS No. 142,The carrying value of the Company’s goodwillfinancial instruments, including cash and indefinite-lived intangible assets, which primarily consist of Federal Communications Commission (“FCC”) licenses, are reviewed annually for impairment or earlier if events occur or circumstances change that would more likely than not reduce thecash equivalents, receivables, payables and cost investments, approximate fair value.

The aggregate fair value of the Company’s goodwillborrowing at September 30, 2009 was approximately $16.0 billion compared with a carrying value of $15.3 billion and indefinite-lived intangible assets below theirat June 30, 2009 was approximately $13.5 billion compared with a carrying amount. Duringvalue of $14.3 billion. Fair value is generally determined by reference to market values resulting from trading on a national securities exchange or in an over-the-counter market.

Concentrations of Credit Risk

Cash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the second quarteramount of fiscalinsurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit and, therefore, bear minimal credit risk.

The Company’s receivables do not represent significant concentrations of credit risk at September 30, 2009 or June 30, 2009 due to the wide variety of customers, markets and geographic areas to which the Company’s products and services are sold.

The Company monitors its positions with, and the credit quality of, the financial institutions which are counterparties to its financial instruments. The Company is exposed to credit loss in the event of nonperformance by the counterparties to the agreements. At September 30, 2009, the Company performeddid not anticipate nonperformance by the counterparties.

Note 8—Goodwill and Other Intangible Assets

During the three months ended September 30, 2009, the changes in the carrying value of goodwill and intangible assets were primarily due to foreign currency translation adjustments.

Note 9—Borrowings

On August 25, 2009, News America Incorporated (“NAI”), an interim impairment review becauseindirect wholly-owned subsidiary of the Company, believed events had occurredentered into an indenture, with the Company, as Guarantor, and circumstances had changed that would more likely than not reduceThe Bank of New York Mellon, as Trustee (the “Indenture”). The following notes were sold pursuant to the fairIndenture:

Notes due 2020 and 2039

In August 2009, NAI issued $400 million of 5.65% Senior Notes due 2020 and $600 million of 6.90% Senior Notes due 2039. The net proceeds received of approximately $989 million will be used for general corporate purposes. These notes were issued under the Indenture.

Note 10—Equity

Dividends

During the three months ended September 30, 2009, the Company declared a dividend of $.06 per share on both its Class A common stock, par value of the Company’s goodwill and indefinite-lived intangible assets below their carrying amounts. These events included: (a) the continued decline of the price of the $0.01 per share (“Class A Common StockStock”) and its Class B common stock, par value $0.01 per share (“Class B Common Stock; (b) the reduced growthStock”), which was paid in advertising revenues; (c) the declineOctober 2009 to stockholders of record on September 9, 2009. The related total aggregate dividend paid to stockholders in the operating profit margins in some ofOctober 2009 was approximately $157 million.

Note 11—Equity-Based Compensation

The following table summarizes the Company’s advertising-based businesses; and (d) the decline in the valuations of other television stations, newspapers and advertising-based companies as determined by the current trading values of those companies.equity-based compensation transactions:

The Company’s goodwill impairment review is determined using a two-step process. The first step of the process is to compare the fair value of a reporting unit with its carrying amount, including goodwill. In performing the first step, the Company determines the fair value of a reporting unit by primarily using a discounted cash flow analysis and market-based valuation approach methodologies. Determining fair value requires the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates, relevant comparable company earnings multiples and the amount and timing of expected future cash flows. The cash flows employed in the analyses are based on the Company’s estimated outlook and various growth rates have been assumed for years beyond the long-term business plan period. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting units. In assessing the reasonableness of its determined fair values, the Company evaluates its results against other value indicators, such as comparable public company trading values. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired and the second step of the impairment review is not necessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment review is required to be performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment review compares the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. That is, the estimated fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the estimated fair value of the reporting unit was the purchase price paid. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

The Company performed an impairment review consisting of a comparison of the estimated fair value of the Company’s FCC licenses with their carrying amount on a station-by-station basis using a discounted cash flow valuation method, assuming a hypothetical start-up scenario for a broadcast station in each of the markets the Company operates in. The significant assumptions used were the discount rate and terminal growth rates and operating margins, as well as industry data on future advertising revenues in the markets where the Company owns television stations. These assumptions are based on actual historical performance in each market and estimates of future performance in each market. These assumptions take into account the weakening of advertising markets that have affected both the national and local markets in which the Company’s stations operate.

The assumptions noted above take into account the weakening of the economies in the markets where the Company’s businesses operate, which the Company expects will continue through at least the remainder of 2009. The assumptions have been adjusted since the Company’s annual impairment review conducted in fiscal 2008 to reflect the weakened global economies and, in particular, the advertising markets. Accordingly, the market growth rates and operating profit margin assumptions were lowered to reflect the current general economic trends in the markets where the Company’s businesses operate. The potential increase in the goodwill impairment charge resulting from a 10% adverse change in the estimated value of the impaired reporting units would be

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approximately $900 million. The potential increase in the FCC licenses impairment charge resulting from a 10% adverse change in the assumptions above would be approximately $480 million.

As a result of this impairment review, the Company recorded a non-cash impairment charge of approximately $8.4 billion in the nine months ended March 31, 2009. The charge consisted of a write-down of the Company’s indefinite-lived intangibles (primarily FCC licenses) of $4.6 billion, a write-down of $3.6 billion of goodwill and a write-down of Newspapers and Information Services fixed assets of $185 million in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” As a result of the continued adverse economic conditions in the markets in which the Company conducts business, the Company will continue to monitor its goodwill, indefinite-lived intangible assets and long-lived assets for possible future impairment.

The carrying values of the Company’s intangible assets and related accumulated amortization were as follows:

Intangible assets, net decreased $5.6 billion during the nine months ended March 31, 2009, primarily due to non-cash impairment charges of $4.6 billion related to FCC licenses and newspaper mastheads at the Company’s Television and Newspapers and Information Services segments of $4.2 billion and $400 million, respectively. In addition, FCC licenses at the Television segment decreased an additional $430 million due to the sale of the Stations in July 2008. Also contributing to the decreases were unfavorable foreign currency translation adjustments of $378 million. (See Note 2 – Acquisitions, Disposals, and Other Transactions for further discussion on the sale of the Stations)

The changes in carrying value of goodwill, by segment, were as follows:

Goodwill balances decreased $4.1 billion during the nine months ended March 31, 2009. This decrease was primarily due to non-cash impairment charges taken during the nine months ended March 31, 2009 of $3.6 billion. The impairments at the Television and Newspapers and Information Services segments were due to a decline in the advertising-based businesses and lower projected

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growth. The Other segment impairment was due to higher valuations assigned to recent acquisitions, principally IGN, Photobucket and Jamba, that can no longer be sustained due to the decline in advertising-based businesses and the expected decline in future revenues. Also contributing to this decrease was foreign currency translation adjustments of $600 million and a reduction of $217 million at the Television segment due to the sale of the Stations in July 2008. The finalization of purchase price allocations and new acquisitions offset the decrease in goodwill by $339 million, primarily due to the formation of the Star Jupiter venture in January 2009.

Note 9—Borrowings

Notes due 2019 and 2039

In February 2009, the Company issued $700 million of 6.90% Senior Notes due 2019 and $300 million of 7.85% Senior Notes due 2039. The net proceeds received of approximately $993 million will be used for general corporate purposes. These notes were issued under the Amended and Restated Indenture, dated as of March 24, 1993, as supplemented, among News America Incorporated, the guarantor named therein and The Bank of New York Mellon (formerly The Bank of New York), as Trustee.

BUCS

As of March 31, 2009, $1,592 million of the 0.75 % BUCS was classified as current borrowings. The holders of the BUCS have the right to tender the BUCS for redemption on March 15, 2010 for payment of the adjusted liquidation preference plus accrued and unpaid distributions and any final period distribution in, at the Company’s election, cash, BSkyB ordinary shares, the Class A Common Stock or any combination thereof. The Company may redeem the BUCS for cash, BSkyB ordinary shares or a combination thereof in whole or in part, at any time on or after March 20, 2010, at the adjusted liquidation preference of the BUCS plus any accrued and unpaid distributions and any final period distribution thereon.

Notes due 2038

The Company’s $250 million 6.75% Senior Debenture due January 2038 may be put, at the option of the holder, to the Company in January 2010 at par and was classified as current borrowings as of March 31, 2009.

Note 10—Stockholders’ Equity

The Company declared a dividend of $0.06 per share on both its Class A Common Stock and its Class B Common Stock in the three months endedAt September 30, 2008, which was paid in October 2008 to stockholders of record on September 10, 2008. The total aggregate dividend paid to stockholders in October 2008 was approximately $154 million.

The Company declared a dividend of $0.06 per share on both its Class A Common Stock and its Class B Common Stock in the three months ended March 31, 2009, which was paid in April 2009 to stockholders of record on March 11, 2009. The total aggregate dividend paid to stockholders in April 2009 was approximately $160 million.

Note 11—Equity Based Compensation

The following table summarizes the Company’s equity-based compensation transactions:

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based compensation; and $72 million and $73 million in intrinsic value of stock option exercised. In February 2009, Company sold a portion of its investment in NDS. (See Note 2 – Acquisitions, Disposals and Other Transactions)

At March 31, 2009, the Company’s total compensation cost related to non-vested stock options, RSUsrestricted stock units (“RSUs”) and stock appreciation rights not yet recognized for all equity-based compensation plans was approximately $230$227 million, the majority of which is expected to be recognized over the next three fiscal years. Compensation expense on all equity-based awards is generally recognized on a straight-line basis over the vesting period of the entire award.

Stock options exercised during the ninethree months ended March 31,September 30, 2009 and 2008 resulted in the Company’s issuance of approximately 0.21.8 million and 4.20.2 million shares of Class A Common Stock, respectively. The Company recognized a tax benefit on stock optionsintrinsic value of the shares exercised of $0.3 million and $12.2 million forduring the ninethree months ended March 31,September 30, 2009 and 2008 respectively.was not material.

During the ninethree months ended March 31,September 30, 2009, the Company issued 10.25.4 million RSUs. These RSUs will be settled in shares of Class A Common Stock upon vesting, except for approximately 1.90.9 million RSUs that will be settled in cash. RSUs granted to executive directors and certain awards granted to employees in certain foreign locations are settled in cash. At March 31,September 30, 2009 and June 30, 2008,2009, the liability for cash-settled RSUs was $32$36 million and $80$52 million, respectively.

During the ninethree months ended March 31,September 30, 2009 and 2008, approximately 8.79.2 million and 5.47.8 million RSUs vested, respectively, of which approximately 6.97.0 million and 4.76.2 million, respectively, were settled in Class A Common Stock, before statutory tax withholdings, and the remaining RSUs were settled in cash.

The Company recognized a tax benefitexpense on vested RSUs and stock options exercised of $4$12 million and $5 million for both the ninethree months ended March 31,September 30, 2009 and 2008.2008, respectively.

Note 12—Commitments and Guarantees

Commitments

During the three months ended September 30, 2009, the Company renewed its rights to broadcast Italy’s National League Football matches through fiscal 2012. The Company expects to pay approximately $1.7 billion over the term of the agreement.

Other than as previously disclosed in these notes to the Company’s unaudited consolidated financial statements, the Company’s commitments have not changed significantly from disclosures included in the 20082009 Form 10-K.

Guarantees

Other than as previously disclosed in these notes to the Company’s unaudited consolidated financial statements, theThe Company’s guarantees have not changed significantly from disclosures included in the 20082009 Form 10-K.

Note 13—Contingencies

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’s former Chief Executive Officer, and certain entities affiliated with VantagePoint Venture Partners (“VantagePoint”), 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. TheFriedmannandSheppardlawsuits 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 sought various forms of declaratory relief, damages, disgorgement and fees and costs. On 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 filed demurrers seeking dismissal of all claims in theIntermix Media Shareholder Litigationand the severed Greenspan claims. On 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. Greenspan and plaintiffs in theIntermix Media Shareholder Litigationfiled notices of appeal. The Court of Appeal heard arguments on the fully briefed appeal on October 23, 2008. On November 11, 2008, the Court of Appeal issued an unpublished opinion affirming Judge Kuhl’s dismissal on all counts. On December 19, 2008, shareholder appellants filed a Petition for Review with the California Supreme Court. After the

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lower court sustained the demurrers in theIntermix Media Shareholder Litigation, co-counsel for certain of plaintiffs moved for an award of attorney’s fees and costs under a common law substantial benefit theory. On October 4, 2007, the court granted the motion and denied defendants’ application to tax costs. After defendants filed a notice of appeal, the matter was resolved.

In November 2005, plaintiff in a derivative action captionedLeBoyer v. Greenspan et al.pending against various former Intermix Media, Inc. (“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’s restatement of quarterly financial results for its fiscal year ended March 31, 2003. 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 addedmade various allegations and purported class claims arising out of the FIM Transactiontransaction whereby Intermix was acquired by Fox Interactive Media, an indirect wholly-owned subsidiary of the Company (the “FIM Transaction”), which are substantially similar to those asserted in theIntermix Media Shareholder Litigation. The Amended Complaintwas consummated on September 30, 2005. Plaintiff also addednamed as defendants all of the individuals and entities named inmembers of theIntermix Media Shareholder Litigationthat were not already defendants inboard of directors incumbent at 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 is precluded from relitigating demand futility. At the same time the court asked for further briefing regarding plaintiffs’ standing to assert derivative claims based onof the FIM Transaction, including for alleged violation of Section 14(a) of the Exchange Act, the effect of the state judge’s dismissal of the claims in theGreenspancaseMr. Rosenblatt, Intermix’s former Chief Executive Officer, and thecertain entities affiliated with VantagePoint Venture Partners (“VantagePoint”), a former major Intermix Media Shareholder Litigationon the remaining direct class action claims alleging breaches of fiduciary duty and other common law claims leading upshareholder. With respect to the FIM Transaction. The parties filedTransaction, the requested additional briefingAmended Complaint alleged violations of Section 14a of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that defendants breached their fiduciary duties to Intermix shareholders by, among other things, engaging in whichself-dealing and an unfair process for the defendants requested that the court stay the direct LeBoyersale of Intermix resulting in an unfair price to shareholders. Direct and derivative claims pending the resolution of any appeal in theGreenspancase and theIntermix Media Shareholder Litigation.were alleged. By order dated May 22, 2007, the court granted defendants’ motion to dismiss the derivative claims arising out ofasserted in the FIM Transaction, and denied the defendants’ request to stay the two remaining direct claims.Amended Complaint. As explained in more detail in the next paragraph, the court subsequently consolidated this case with theBrown v. Breweraction also pending before the court. On July 11, 2007, plaintiffsplaintiff filed the consolidated first amended complaint under theBrowncase title. See the discussion ofBrownfor the subsequent developments in the consolidated case.

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 asserted claims for alleged breaches of fiduciary duty and violations of Section 14a ofand Rule 14a-9 promulgated under the Exchange Act, and SEC Rule 14a-9, as well as

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control person liability under Section 20a.20a of the Exchange Act. The plaintiff alleged 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, and another on August 25, 2005 in connection with the shareholder vote on the FIM Transaction. The complaint named as defendants certain VantagePoint related entities, the former general counsel of Intermix and the members of the Intermix Boardboard of directors who were incumbent on the dates of the respective proxy statements. Intermix was not named as a defendant, but Intermix has certain indemnity obligations to the former officer and director defendants in connection with these claims and allegations. 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. Plaintiff amended his complaint again on September 27, 2006, which defendants moved to dismiss. On February 9, 2007, the case was transferred to Judge George H. King, the judge assigned to theLeBoyeraction, on the grounds that it raises substantially related questions of law and fact asLeBoyer, and would entail substantial duplication of labor if heard by different judges. action. On June 11, 2007, Judge King ordered, among other things, theBrowncase be consolidated with theLeBoyeraction, ordered plaintiffs’ counsel to file a consolidated first amended complaint, and further ordered the parties to file a joint brief on defendants’ contemplated motion to dismiss the consolidated first amended complaint. action. On July 11, 2007, plaintiffs filed the consolidated first amended complaint, which defendants moved to dismiss. By order dated January 17, 2008, Judge King granted defendants’ motion to dismiss the 2003 proxy claims (concerning VantagePoint transactions) and the 2005 proxy claims (concerning the FIM Transaction), as well as a claim against the VantagePoint entities alleging unjust enrichment. The court found it unnecessary to rule on dismissal of the remaining claims, which are related to the 2005 FIM Transaction, because the dismissal disposed of those claims. On February 8, 2008, plaintiffs filed a consolidated Second Amended Complaint,second amended complaint, which defendants moved to dismiss on February 28, 2008. By order dated July 15, 2008, the court granted in part and denied in part defendants’ motion to dismiss. The 2003 proxy claims and the claims against the Investment Banks were dismissed with prejudice. Subsequently, plaintiff voluntarily dismissed the VantagePoint-related entities and Intermix’s former general counsel. The Section 14a and Section 20a claims, as well as the breach of fiduciary duty claims related to the FIM Transaction, remain against the officer and director defendants and the VantagePoint defendants. On June 22, 2009, the court granted plaintiff’s motion for class certification, certifying a class of all holders of Intermix common stock, from July 18, 2005 through consummation of the FIM Transaction, who were allegedly harmed by defendants’ improper conduct as set forth in the complaint. Fact and expert discovery have been completed. On October 6, 2008,19, 2009, defendants filed a partial motion for summary judgment seeking dismissal of the Section 14a, Section 20 and state law disclosure claims. On November 10, 2008, Judge King denied the motion without prejudice. On November 14, 2008, plaintiff filed a motion for class certification to which defendants filed their opposition on January 14, 2009. No hearing has been set on this motion. The judge indicated in his scheduling order that he would be taking the matter under submission unless he gave further notice. Discovery is proceeding.summary adjudication. No trial date has been set yet.

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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 failed 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 asserted 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’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 asserted various claims for breach of fiduciary duty related to the FIM Transaction and substantially mirrored the allegations in theIntermix Media Shareholder 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 theIntermix Media Shareholder Litigation. Mr. Greenspan asserted a seventh cause of action against Intermix for indemnification. In his amended complaint, Mr. Greenspan sought compensatory and consequential damages, punitive damages, fees and costs, injunctive relief and other remedies. Motions to dismiss the first six causes of action were filed and, on October 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’s October 6, 2006 ruling. The Court of Appeal heard arguments on the fully briefed appeal on October 23, 2008. On November 11, 2008, the Court of Appeal issued an unpublished opinion affirming Judge Kuhl’s dismissal on all counts. As noted above, the shareholder-plaintiffs, but not Greenspan, filed a Petition for Review with the California Supreme Court on December 19, 2008. On February 18, 2009, the California Supreme Court denied the Petition for Review.

News America Marketing

On January 18, 2006, Valassis Communications, Inc. (“Valassis”) filed a complaint against News America Incorporated,NAI, News America Marketing FSI, LLC and News America Marketing Services, In-Store, 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 is attempting to monopolize the purported FSI market by leveraging its alleged monopoly power in the purported in-store market, 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 Act. Additionally, Valassis alleges that News America is predatorily pricing its FSI products in violation of Section 2 of the Sherman Act. Valassis also asserts that News America violated various state antitrust statutes and has tortiouslytortuously 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. On September 28, 2006, the Magistrate Judgemagistrate judge issued a Report and Recommendation granting the motion. On October 16, 2006, Valassis filed an Amended Complaint,amended complaint, alleging the same causes of action. On November 17, 2006, News America answered the three federal antitrust claims and moved to dismiss the remaining nine state law claims. On March 23, 2007, the Courtcourt granted News America’s motion and dismissed the nine state law claims. The parties are engagingengaged in discovery, which has beenwas combined with the California and Michigan state cases discussed below.

Discovery has been completed in the federal action.below, and is now completed. The parties have exchanged expert reports and have filed summary judgment motions. No hearing date has been set for the summary judgment motions. The assigned judge recused himself in February 2009

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resultingmotions in the previously set April 2009federal action, which were denied on September 4, 2009. The trial date being taken off calendar. No new trial date has been set, and the new judge has said that the pending summary judgment motion will not be decided until after the trial in the Michigan state case.is scheduled to begin on February 2, 2010.

On March 9, 2007, Valassis filed a two-count complaint in Michigan state court against News America. That complaint, which was based on the same factual allegations as the federal complaint discussed above, alleged that News America tortiouslytortuously interfered with Valassis’ business relationships and that News America unfairly competed with Valassis. The complaint sought 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 Courtcourt denied the motion. On July 7, 2008, Valassis filed an Amended Complaintamended complaint alleging the same causes of action, based on essentially the same factual allegations and seeking the same relief. News America moved to dismiss the Amended Complaint and on October 10, 2008, the Courtcourt denied the motion. The parties have completed discovery, which was combined with the federal case discussed above and the California state case discussed below. The trial scheduled to begin on January 12, 2009 was postponed.below The court denied News America’s motion for summary judgment in January 2009. Trial is scheduled to commencecommenced on May 27, 2009. On July 23, 2009, a jury in the Michigan state court returned a verdict

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in the amount of $300 million for Valassis. News America filed a motion for new trial on August 28, 2009. If that motion is denied, News America intends to appeal and post a bond for $25 million, the maximum bond required under Michigan law. Based on the Company’s review of the record in this case, including discussion with and analysis by counsel of the bases for News America’s appeal, the Company has determined that News America has a number of strong arguments available on appeal and, although there can be no assurance as to the ultimate outcome, the Company is confident that the judgment against News America will ultimately be reversed, or remanded for a new trial in which, the Company believes, News America would prevail. As a result, the Company has concluded that it is not probable that Valassis will ultimately prevail in this matter; therefore, the Company has not recorded any liability for this judgment.

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 issued a tentative ruling denying the motion and reassigned the case to the Complex Litigation Program. On July 19, 2007, the court denied the motion. The parties are engaging in discovery, whichCalifornia state court case was stayed pending the outcome of Michigan state court trial and has been combined with the federal case and Michigan state cases discussed above. The trial is set to begin August 17,further stayed until December 2, 2009.

News America believes that all of the claims in each of the complaints filed by Valassis are without merit and it intends to defend itself vigorouslyvigorously. As noted above, the Company is confident that the judgment against News America in the three matters.Michigan state court litigation will ultimately be reversed, or remanded for a new trial in which, the Company believes, News America would prevail.

Other

Other than as previously disclosed in the notes to the Company’s unaudited consolidated financial statements, the Company is party to several purchase and sale arrangements which become exercisable over the next ten years by the Company or the counter-party to the agreement. In the next twelve months, none of these arrangements that become exercisable are material.material to the Company.

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. During the three months ended March 31, 2009 certain audits were completed. Due to the completion of these audits, certain tax matters were resolved, including the amounts of certain deductions. As a result, the Company has reduced its accrual for uncertain tax positions, net of an increase in current liabilities, by approximately $1.2 billion as of March 31, 2009 and has recognized a non-cash tax benefit of approximately $1.2 billion and $1.1 billion for the three and nine months ended March 31, 2009, respectively. The Company will make payments of approximately $300 million with respect to adjustments from these audits which are reflected in the unaudited consolidated balance sheets in current liabilities. The Company believes it has appropriately accrued for the expected outcome of all other pending tax matters that it can estimate at this time and does not currently anticipate that the ultimate resolution of other pending tax matters will have a material adverse effect on its consolidated financial condition, future results of operations or liquidity.

Note 14—Pension Plans and Other Postretirement Benefits

The Company sponsors non-contributory pension plans and retiree health and life insurance benefit plans covering specific groups of employees. As of January 1, 2008, the Company’s major pension plans are closed to new participants (with the exception of groups covered by collective bargaining agreements). The benefits payable for the Company’s non-contributory pension plans are based primarily on a formula factoring both an employee’s years of service and pay near retirement. Participant employees are vested in the pension plans after five years of service. The Company’s policy for all pension plans is to fund amounts, at a minimum, in accordance with statutory requirements. Plan assets consist principally of common stocks, marketable bonds and government securities. The retiree health and life insurance benefit plans offer medical and/or life insurance to certain full-time employees and eligible dependents that retire after fulfilling age and service requirements.

NEWS CORPORATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The components of net periodic benefit costs were as follows: