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April 5, 2011 6:07 PM

Family Business: News Corp. Acquires Media Company Founded by Elisabeth Murdoch

Posted by Brian Baxter

News Corporation announced on Tuesday that it has completed a $674 million acquisition of television production company Shine Group, a deal first announced by the media giant in February.

There's some Murdoch family history in the deal--Shine was founded in 2001 by Elisabeth Murdoch, the daughter of News Corp. chairman and CEO Rubert Murdoch. She is expected to become a member of News Corp.'s board of directors.

Hogan Lovells corporate partner Stephen Kay and tax partners Ira Sheinfeld, Philip Altman, and Jason Kaplan are leading a team from the firm advising News Corp. on the deal. Predecessor firm Hogan & Hartson was longtime outside counsel to New York-based News Corp. (The firm advised News Corp. on a $580 million bid for Newsday in 2008 that was later withdrawn, and it represented portfolio company MySpace in a 2008 music venture with three record labels.)

Wachtell, Lipton, Rosen & Katz corporate partner Andrew Nussbaum, litigation partner Paul Rowe, and associate Lisa Schwartz are representing News Corp.'s board of directors on the Shine acquisition. According to a statement issued by News Corp., an audit committee composed entirely of independent directors approved the transaction on Tuesday. Wachtell helped draft the fairness opinion blessing the deal.

Last month New York-based Amalgamated Bank sued News Corp. in Delaware's Chancery Court over its purchase of Shine. The bank, which owns almost 1 million shares of News Corp. common stock and is acting as lead plaintiff for shareholders, claims that the deal overvalues Shine, a company that produces televsion shows such as MasterChef and The Biggest Loser. News Corp has called the suit "meritless." (Click here for a copy of the complaint filed by Grant & Eisenhofer, courtesy of Courthouse News.)

Citing from statements made by News Corp. officials, the Los Angeles Times reports that certain Shine shareholders, including Elisabeth Murdoch, will receive a total of $472 million in "aggregate proceeds" from the acquisition. The amount represents what is left after retiring Shine's debt and other liabilities, according to the L.A. Times. The article further notes that Elisabeth Murdoch owns 53 percent of the company. (Other owners of Shine include Sony Pictures Entertainment, with a 20 percent stake, and British Sky Broadcasting, which News Corp. is seeking to acquire, with a 13 percent stake.)

Sean Monroe, an M&A partner at O'Melveny & Myers in Los Angeles, led a team from the firm serving as U.S. counsel to London-based Shine. The firm represented Shine in 2008 on its $125 million purchase of Reveille, an independent production company behind hit shows like The Office, The Tudors, and Ugly Betty.

Mark Devereaux, a senior partner at British firm Olswang, led a team from the firm also advising Shine on the deal. He was assisted by corporate partners Paul Guite and Stephen Hermer, competition head Howard Cartlidge, tax head Mark Joscelyne, employee benefits head Michael Deeks, employment partner Gary Henderson, finance partner Charles Kerrigan, and senior associate Nick Crosbie.

Olswang associate Donall Crehan, who was on secondment to Shine as its solicitor for legal and business affairs, also had an important role advising on the deal.

News Corp.'s general counsel is Lawrence "Lon" Jacobs, who ascended to the position in October 2004 after the retirement of longtime legal chief Arthur Siskind, now an adjunct professor at the Georgetown University Law Center.

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