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SEC Response Letter

875 THIRD AVENUE

NEW YORK, NY 10022

TEL (212) 918-3000
FAX (212) 918-3100

WWW.HHLAW.COM

 December 2, 2004

 VIA EDGAR AND FAX

 Mr. Michael Fay

 Branch Chief

 Division of Corporation Finance

 Securities and Exchange Commission

 450 Fifth Street, N.W.

 Washington, DC 20549-0305

Re:
Fox Entertainment Group, Inc.

Form 10-K for the year ended June 30, 2004

Form 8-K filed November 3, 2004

Commission File Number 1-14595

 Dear Mr. Fay:

 We have reviewed the comments of the Staff, as set forth in its letter dated November 18, 2004, with respect to the above-referenced filing. Enclosed herewith are the Staff’s comments followed by our responses on
behalf of Fox Entertainment Group, Inc. (the “Company”).

 Form 10-K for the Year Ended June 30, 2004

 Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview of Our Business Filmed Entertainment, Television Stations, Television Broadcast Network and Cable Network Programming, page 25

 Comment:

1.
You disclose here that the transition of local television ratings system to the use of Local People Meters in certain large markets has adversely impacted the ratings of the
O&O’s in the markets where the transition has occurred. This appears to be a known trend or uncertainty that has had or that is reasonably expected to have a material unfavorable impact on your advertising revenues, in accordance with Item
303(A)(3)(ii) of Regulation S-K. Please expand to discuss the impacts this has had and is expected to have on the advertising revenue of, or other material impacts on, the operations of your O&O’s.

 Response:

 As requested, the Company will expand its disclosure on this topic in future filings. The Company proposes to include the following disclosure:

 “In April 2004, Nielsen Media Research (“Nielsen”) began to transition the
existing local television ratings system to the use of Local People Meters (“LPMs”) in certain large markets. This transition to LPMs has adversely impacted the ratings of the O&Os in the markets where the transition has occurred. The
fiscal 2004 transition adversely impacted the revenue of the television segment by less than 1% and the Company anticipates revenue of the television segment could be adversely impacted by 1% to 2% in fiscal 2005.”

 Notes to the Consolidated Financial Statements

 Note 5. DIRECTV Transaction, page 59

 Comment:

2.
We noted that you have adjusted your 34% share of DTV’s results for the six months ended June 30, 2004 to reflect the allocation of the purchase price of DTV. Please reconcile
for us the amount of DTV’s reported results for the six months ended June 30, 2004 of a loss of $652.1 million as disclosed in its Form 10-Q for that quarter ended to your share of the amount thereof that you recognize of $54 million. In this
regard, please explain to us the effect these adjustments had on your accounting in DTV and the amount of your underlying net assets of DTV. In your explanation, please provide a schedule that presents the components of the difference, the
adjustments to these components, and the continuing accounting for the components as adjusted.

 Response:

 As requested, attached as
Exhibit I is a schedule that reconciles the net loss as reported by DTV for the six months ended June 30, 2004 to FEG’s adjusted share of those DTV results. FEG accounts for its investment in DTV under the equity method. As such, its
preliminary allocation of excess cost over its share of the underlying net assets of DTV (“Preliminary Purchase Price Allocation”) as well as its accounting treatment for several other transactions, as described below, are applied as if
DTV were a consolidated subsidiary in accordance with APB No. 18, paragraph 19(b) and SFAS No. 141. The following commentary describes each significant transaction included in the attached reconciliation, its accounting by DTV, its treatment by FEG
in recording FEG’s equity in the results of DTV for the year ended June 30, 2004 and its impact on the Preliminary Purchase Price Allocation together with the continuing accounting for such transactions.

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a)
PanAmSat – Divestiture

 After a process that formally commenced in February, 2004, DTV announced the signing of a definitive agreement on April 20, 2004 that, subject to the satisfaction of
certain customary conditions, provided for the sale of DTV’s approximately 80.4% interest in PanAmSat to an affiliate of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) for approximately $2.84 billion in cash. DTV recorded a $502
million loss from the discontinued operations of PAS in the six months ended June 30, 20041.

 Due to the proximity of the commencement and completion of the PanAmSat sale to the date of
FEG’s acquisition of a 34% interest in DTV (“Acquisition Date”), the sales price negotiated with KKR provided appropriate and persuasive evidence of the fair value of PanAmSat as a whole. Under paragraph 34 of SFAS No. 144,
“Accounting for the Impairment or Disposal of Long-Lived Assets,” FEG reduced DTV’s carrying value of the net assets of PanAmSat by $495 million in its Preliminary Purchase Price Allocation to reflect PanAmSat at its fair value as of
the Acquisition Date. Accordingly, in determining its equity in the results of DTV for the period, FEG eliminated its proportionate share of the impact of the PanAmSat discontinued operations in the amount of $170 million.

 The sale of PanAmSat closed on August 20, 2004 and resulted in a purchase price reduction
from the initially agreed upon sales price which FEG was required to reflect – see response to Comment 3a) below for this impact. Beyond the purchase price adjustment discussed below and the results of discontinued operations recognized through
the date of closing, there is no continuing accounting impact for this component.

b)
Cumulative effect of accounting change for Subscriber Acquisition Costs

 Effective January 1, 2004, DTV changed its method of accounting for subscriber acquisition, retention and upgrade costs (“SAC”).
Previously, for new DTV subscribers which were acquired by DTV before the Acquisition Date, a portion of these SAC costs were deferred. Subsequent to the Acquisition Date, DTV now expenses all SAC as incurred. As a result of the change, the deferred
subscriber acquisition cost balance of $504 million that was included in “Prepaid expenses and other” in DTV’s Consolidated Balance Sheets as of December 31, 2003, and attributable to pre-Acquisition Date subscribers, was expensed by
DTV as a cumulative effect of accounting change on January 1, 2004. The amount of the cumulative effect of accounting change recorded by DTV was $311 million, net of taxes.

 As the SAC costs were reflected as deferred charges at the Acquisition Date, no ongoing fair value was attributed to this asset by FEG.
Accordingly, FEG reduced the carrying value of the net assets of DTV in the Preliminary Purchase Price Allocation by $504 million. In connection with the Preliminary Purchase Price Allocation, FEG has initially allocated a portion of its purchase
price to subscriber lists as a finite lived intangible asset

 1 See Note 12 to the Consolidated Financial Statements contained in DTV’s Form 10-Q for the period ended June 30, 2004.

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which is being amortized over its estimated lives (see response to Comment 2(e) below). Therefore, in determining its equity in the results of DTV for the
period, FEG eliminated its proportionate share of the cumulative effect of accounting change in the amount of $106 million.

 FEG has, and will continue to record its proportionate share of DTV’s SAC costs in all periods subsequent to the Acquisition Date without adjustment.

c)
Gain on the sale of XM Satellite Radio Holdings, Inc.

 In the quarter ended March 31, 2004, DTV sold approximately 15,000,000 shares of XM Satellite Radio Holdings, Inc. (“XM”), resulting in an after-tax gain to DTV
of $238 million. FEG, in connection with its Preliminary Purchase Price Allocation, allocated fair value to DTV’s basis in XM of $437 million which was based on XM’s publicly quoted market price on the Acquisition Date. FEG concluded that
the fair market value of DTV’s interest in XM at the Acquisition Date was appropriately measured and evidenced by the publicly quoted market price of XM. This fair value adjustment represented an increase to DTV’s original cost basis in XM
of $347 million. Therefore, because of its higher basis in XM Satellite, FEG was required to reduce the gain reflected in DTV’s results by $347 million ($213 million after tax) in determining its equity in the results of DTV for the period.
This adjustment represented the appreciation in the market value of the XM shares during the period prior to the Acquisition Date. FEG’s 34% share of this after tax reduction was $72 million. As a result of this adjustment, the after-tax gain
included in FEG’s results represents only FEG’s share of the appreciation in the XM shares from the Acquisition Date through the date of DTV’s sale of the shares.

 The sale of these shares represented DTV’s entire interest in XM. Therefore, there is no continuing accounting for this component.

d)
Settlement of DTV Latin America liabilities in bankruptcy

 On March 18, 2003, prior to the Acquisition Date, DTV Latin America LLC (“DLA”), a subsidiary of DTV, filed a voluntary petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. On February 13, 2004, the Bankruptcy Court confirmed DLA’s Plan of Reorganization, which became effective on February 24, 2004. In connection with the Court’s approval of the reorganization plan, DTV
recorded a $28 million after-tax gain representing the reduction of outstanding liabilities related to certain pre-Acquisition Date contracts restructured in connection with the completed DLA bankruptcy proceedings. Due to the proximity of the
effective date of the restructuring to the Acquisition Date, FEG concluded that the fair value of these contractual liabilities at the Acquisition Date were appropriately measured and evidenced as the amounts confirmed by the Bankruptcy Court.
Accordingly, FEG reduced the DTV carrying amount of these liabilities by $45 million to their fair value in the Preliminary Purchase Price Allocation and eliminated the $28 million after-tax gain recognized by DTV in determining its equity in the
results of DTV for the period. FEG’s share of this

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adjustment was $9 million, net of tax. As a result, none of the gain recorded by DTV is included in FEG’s results.

 As these liabilities represent fair value, there will be no continuing accounting impact for
this component.

e)
Amortization of excess basis

 FEG, in connection with its Preliminary Purchase Price Allocation, has identified certain intangible assets with both finite and indefinite lives. As required by SFAS No.
142, “Goodwill and Other Intangible Assets,” FEG is amortizing the excess cost allocated to the identifiable intangible assets with finite lives over their estimated useful lives. FEG recorded $29 million of such amortization as a
component of its equity in the earnings of DTV for fiscal year 2004.

 FEG
expects to finalize the Preliminary Purchase Price Allocation in the quarter ended December 31, 2004, and will continue to amortize finite-lived intangibles in future periods.

 Comment:

3.
In regard to the above, please explain to us the impact of the adjustments to your share of the results of DTV that you recorded in the quarter ended September 30, 2004 with respect
to DTV’s loss on the sale of PanAmSat and impairment charge for the Spaceway program as disclosed in Exhibit 99 to your Form 8-K filed November 3, 2004.

 Response:

a)
Loss on the sale of PanAmSat

 As noted in 2a) above, DTV recorded an after-tax loss on PanAmSat of $502 million for the period ended June 30, 2004. Under paragraph 34 of SFAS No. 144, FEG used
the sales price agreed with KKR as the basis for the fair value allocated to PanAmSat as a whole, in connection with the Preliminary Purchase Price Allocation as of the Acquisition Date.

 On August 3, 2004, the primary propulsion system on a PanAmSat satellite experienced an unexpected shutdown that the manufacturer determined
was a permanent failure. Under the terms of the agreement for the sale of the DTV’s interest in PanAmSat, the shutdown and permanent failure determination constituted a material adverse change which would have permitted KKR to not consummate
the acquisition of PanAmSat.

 On August 12, 2004, DTV reached an agreement with
KKR relating to the sale of PanAmSat, which included resolving the impact of the failed satellite and other issues. The agreement reduced the purchase price payable to DTV for its interest in PanAmSat

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by $200 million to approximately $2.6 billion. The sale subsequently closed on August 20, 2004. DTV recorded a $204 million after-tax loss in the quarter
ended September 30, 2004 primarily reflecting the incremental loss on the sale of PanAmSat resulting from the sales price reduction2.

 The reduction in the sales price was caused by a
post-Acquisition Date event – the occurrence of a material adverse change in August 2004. As a result, under paragraph 37 of SFAS No. 144, FEG cannot consider this post-Acquisition Date event in its Preliminary Purchase Price Allocation.
Therefore, the additional loss recorded by DTV in the quarter ended September 30, 2004 of $204 million was not adjusted by FEG and, as a result, FEG recorded its proportionate share of this incremental loss in the quarter ended September 30, 2004.

 As the August 2004 closing represented the final DTV accounting for PanAmSat,
there will be no continuing accounting for PanAmSat after FEG’s quarter ended September 30, 2004

b)
Impairment charge for the SPACEWAY Assets

 In its third quarter ended September 30, 2004, DTV recorded a pre-tax charge against income from continuing operations of $1.466 billion under SFAS No. 144 to write-down
the historical cost basis of certain long-lived assets related to its SPACEWAY project (the “SPACEWAY Assets”) to their estimated fair value of approximately $393 million. The write-down was triggered by DTV’s decision to formally
abandon the SPACEWAY project from their original intended use and repurpose its assets (primarily satellites currently being constructed) for use in DTV’s core satellite television business.

 FEG’s Preliminary Purchase Price Allocation reflects the SPACEWAY Assets at their
estimated fair value. The Preliminary Purchase Price Allocation is being completed consistent with the requirements of APB No. 18, Paragraph 19(b) and SFAS No. 141. The fair value allocated to the SPACEWAY Assets was determined, in accordance with
APB No. 18 and SFAS No. 141, using the DTV business plan for the SPACEWAY Assets as of the Acquisition Date and appropriate risk adjusted discount rates.

 FEG’s assessment of fair value included a thorough analysis of the prospects for, and risks associated with, the proposed SPACEWAY business as well as related
valuations of the SPACEWAY Assets derived from fairness opinions rendered by several leading investment banks retained by FEG and News Corporation. The resulting fair value of the SPACEWAY Assets, as determined by FEG as of the Acquisition Date, was
significantly lower than DTV’s carrying value and FEG’s proportionate share of such fair value as of the Acquisition Date approximated FEG’s proportionate share of DTV’s reduced carrying value of $393 million after the $1.466
billion write-down described above.

2
See Note 4 to the Consolidated Financial Statements contained in DTV’s Form 10-Q for the period ended September 30, 2004.

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 In determining its equity in the results of DTV for the period ended September 30, 2004, FEG therefore eliminated the
$1.466 billion charge to write-down the historical cost basis of the SPACEWAY Assets because FEG had independently determined that the