21st Century Fox Sets Aside $150 Million for News Corp Phone-Hacking Legal Payments

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Part of that has been expensed, but Rupert Murdoch's entertainment company says "it is not possible at this time" to estimate the full liability under a deal that indemnifies the publishing firm for some of the financial fallout after the conglomerate's recent split.

Rupert Murdoch's entertainment company 21st Century Fox on Monday said it has set aside a total of $150 million for indemnifying the mogul's publishing firm News Corp for legal and related payments tied to the phone-hacking scandal.

But in a regulatory filing, it added that "U.S. regulators and governmental authorities are conducting investigations relating to the U.K. newspaper matters" and that it is "not possible at this time to estimate the liability, if any, of the company relating to these investigations."

Under the terms of the midyear split of News Corp and 21st Century Fox, the two companies agreed that Fox would indemnify News Corp "for payments made after the separation arising out of civil claims and investigations relating to the U.K. newspaper matters, as well as legal and professional fees and expenses paid in connection with the related criminal matters," with certain exceptions.

In Monday's regulatory filing, 21st Century Fox said: "As of June 30, 2013, the company recognized approximately $40 million related to the fair value of amounts accrued by News Corp as of the date of the separation, which are expected to be covered by the indemnity, and has provided an additional $110 million for the fair value of expected future payments to be made under the indemnity."

In other words: Fox already expensed the $40 million as part of its financials for the fiscal year ended June 30 based on expected costs as of midyear. But it wasn't immediately clear when the money would actually be paid out. The remaining $110 million is an estimate of further future indemnity costs.

The filing added: "If additional information becomes available and as payments are made, the company will update the liability provision for the indemnity."

The comment was the first official filing on the firm's expectations for the costs from the indemnity deal since the split.

News Corp previously said in filing that "violations of law may result in criminal fines or penalties, for which we will not be indemnified." Late Friday, Reuters, for example, reported that U.K. police has been looking at possible corporate criminal charges against the company's News U.K. unit, formerly known as News International, after most of its focus previously was on charges against individual journalists.

Also in Monday's regulatory filing, 21st Century Fox said that PR agency Freud Communications, which is controlled by Matthew Freud, the husband of Murdoch daughter Elisabeth, was paid approximately $138,000 in the fiscal year ended June 30 for its services to the company. That compares to $195,000 and $202,000, respectively, in the fiscal years ended June 30, 2012, and 2011.

E-mail: Georg.Szalai@THR.com
Twitter: @georgszalai