Portions of this exhibit have been deleted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment. The redacted portions are identified by brackets with the character
"*" indicating deleted information.
[*] CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT 10.49
June 11, 1997
VIA FACSIMILE
-------------
Xxxxx X. Xxxxxxx, Esq.
Senior Vice President
and General Counsel
International Family Entertainment, Inc.
X.X. Xxx 0000
Xxxxxxxx Xxxxx, Xxxxxxxx 00000-0000
RE: Affiliation Agreement dated as of December 28, 1989 (the "Agreement"), by
and between Satellite Services, Inc. ("Affiliate") and The Family Channel
("FAM"), a division of International Family Entertainment, Inc. ("IFE"), as
amended by an Amendment dated as of January 1, 1994 (the "First Amendment")
and a Letter of Amendment dated May 16, 1996 (the "Second Amendment")
Dear Xxx:
This Letter of Amendment (the "Third Amendment") shall amend the above-
referenced Agreement. Terms not defined in this Third Amendment shall have the
definitions given to them in the Agreement or the Second Amendment, as
appropriate. In consideration of the mutual promises herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, FAM and Affiliate agree as follows:
1. Carriage Guarantee. Section 3(a) of the Agreement is hereby amended
------------------
by deleting the language that begins with the words "Notwithstanding the
foregoing. . ." and continuing through the end of Section 3(a) as it appears in
the Agreement (but not deleting the language added to Section 3(a) by means of
the Second Amendment) and adding in lieu thereof the following:
Notwithstanding the foregoing and Section 7(g) hereof, during the Term,
Affiliate shall meet the following penetration requirements for carriage of
the FAM Service:
(1) The total number of FAM Subscribers shall be no less than
[*]% of the number of Basic Subscribers (as defined below) in
cable television systems that meet, as of the time
compliance is tested, the System
[*] CONFIDENTIAL TREATMENT REQUESTED
qualifications of Exhibit A hereto and either: (A) are
carrying the FAM Service on the date hereof; or (B) are
acquired by Affiliate or an affiliate of Affiliate after the
date hereof and are carrying the FAM Service on the date of
acquisition. "Basic Subscribers" shall mean, with respect to
each System, the total number of subscribers receiving video
programming services in such System, excluding any
subscriber receiving solely the "lifeline" level of service
and/or pay or pay-per-view services. "Lifeline" shall have
the definition set forth in Exhibit B to the Second
Amendment. Affiliate may exclude from the foregoing
calculation any System that is sold or divested by Affiliate
or an affiliate of Affiliate after the date hereof or ceases
to meet the System Qualifications of Exhibit A hereto.
(2) The penetration of the FAM Service in any System that meets
the System qualifications of Exhibit A hereto and is
carrying the FAM Service shall, during the Term, be no less
than [*]% of the number of Basic Subscribers in such System;
provided, however, that if the penetration of the FAM
Service in any System is less than [*]% on the date hereof,
Affiliate shall not be obligated to reposition the FAM
Service in such System during the Term. In addition, if the
penetration of the FAM Service in any System hereafter
acquired by Affiliate or an affiliate of Affiliate is less
than [*]%, Affiliate shall not be obligated to reposition the
FAM Service in such System during the Term, and such System
will be excluded from the [*]% calculation set forth in
subparagraph (1) above.
(3) Notwithstanding the foregoing, nothing herein shall obligate
Affiliate or any affiliate of Affiliate to launch or carry
the FAM Service in any System that fails, now or in the
future, to meet the System qualifications of Exhibit A
hereto, or that meets the System qualifications of Exhibit A
hereto and is not carrying the FAM Service on the later of
the date hereof or the date of acquisition of the System.
(4) The Systems shall distribute the FAM Service on a full-time
basis only; provided, however, that any System which
distributes the FAM Service on a part-time basis as of the
date hereof or on the date of acquisition of such System,
whichever is later, shall have the right to continue
distributing the Service on a part-time basis during
2
[*] CONFIDENTIAL TREATMENT REQUESTED
the Term of this Agreement.
2. Combining Satellite and Cable Distribution. Section 3(c) of the
------------------------------------------
Agreement shall be amended by adding at the end thereof the following:
FAM and Affiliate expressly agree that, notwithstanding any other provision
of this Agreement to the contrary, Affiliate may deliver the FAM Service to
its Subscribers by any of the technologies provided for herein and/or in
more than one such technology. Without limiting the foregoing and
notwithstanding the second sentence of Section 2(a) hereof, Affiliate is
expressly authorized to distribute the FAM Service to customers who receive
the FAM Service and other video programming services from a combination of
satellite and terrestrial distribution modalities. The Fees set forth in
Section 7(a)(1) hereof shall apply to any such FAM Subscriber and Affiliate
shall be required to pay only one Fee for any FAM Subscriber, even if that
FAM Subscriber receives the FAM Service via more than one technology.
Notwithstanding the foregoing, if a subscriber receives the FAM Service via
a distribution modality for which the subscriber pays a separate fee from
any fee paid to a distribution modality affiliated with Affiliate, the
foregoing provision shall not eliminate Affiliate's obligation to pay Fees
for such subscriber under this Agreement.
3. Content Restrictions. The words "sports series and specials," shall
--------------------
be deleted from Section 2(e) and Section 6(b) of the Agreement and a new Section
6(d) shall be added to the Agreement, as follows:
(d) Notwithstanding any other provision hereof, in particular
Section 2(e) hereof and the foregoing provisions of this
Section 6, the FAM Service shall not contain [*]
3
[*] CONFIDENTIAL TREATMENT REQUESTED
[*]
4. Effective Date. This Agreement shall be effective on the earlier to
--------------
occur of (i) the Closing of the Contribution under the Contribution and Exchange
Agreement by and among Liberty Media Corporation, Liberty IFE, Inc., and Fox
Kids Worldwide, Inc., dated June 6, 1997, and (ii) the Effective Time of the
Merger (as defined in the Merger Agreement by and among Fox Kids Worldwide,
Inc., Fox Kids Merger Corporation, and International Family Entertainment, Inc.,
dated June 6, 1997.) If not effective prior to such time, this Amendment shall
terminate upon the expiration or termination of the Merger Agreement in
Accordance with its terms.
If the foregoing accurately reflects your understanding, please so indicate
by executing this Third Amendment in the space indicated and returning it to me.
Very truly yours,
/s/ Xxxx X. Xxxxxx
PRESIDENT, SATELLITE
SERVICES, INC.
ACCEPTED AND AGREED TO
FOR THE FAMILY CHANNEL AND FOR
INTERNATIONAL FAMILY ENTERTAINMENT, INC.
4
THIS 11TH DAY OF JUNE, 1997:
By: /s/ Xxx Xxxxxxxxx
------------------------------
Name: Xxx Xxxxxxxxx
----------------------------
Title:
---------------------------
5
