Murdoch Backtracks on Merging His Media Empire

From a New York Times story by Lauren Hirsch, Katie Robertson, and Benjamin Mullin headlined “Murdoch Backtracks on Plan to Merge His Media Empire”:

Rupert Murdoch has halted his plans to combine the two parts of his media empire.

News Corp, one of Mr. Murdoch’s media companies, said in a statement on Tuesday that he had determined that combining it and the Fox Corporation was “not optimal for shareholders of News Corp and Fox at this time.”

The boards of both media companies disclosed in October that Mr. Murdoch had proposed reuniting the two companies, nearly 10 years after they split up.

Both Fox and News Corp established independent committees of their boards to evaluate a possible deal. But the prospect faced significant investor pushback.

The deal, if it had gone through, would have put a collection of news and entertainment assets including Fox News, The Wall Street Journal, the Fox broadcasting network and TMZ under the same corporate umbrella. When it was initially proposed, Mr. Murdoch was said to be interested in the potential for cost savings and the possibility of integrating some of the companies.

But executives and investors had significant questions about the rationale of the deal. When Mr. Murdoch initially separated the two companies, he argued that Fox’s TV and movie business and News Corp’s digital media business were better off separate. His son Lachlan, the chief executive of Fox, told investors in 2019 that the companies would not reunite.

Some investors questioned whether the deal would equally benefit both companies given News Corp’s valuable assets, like its sizable real estate business. Some also questioned whether Rupert Murdoch’s interests were more aligned with Fox, in which he owns a larger share than in News Corp.

In November, the activist investor Irenic Capital Management sent a letter to News Corp’s special committee questioning whether merging with Fox was a better alternative than other deals, like selling News Corp’s real estate business. Irenic owns about 2 percent of News Corp’s Class B shares. Those shares confer stronger voting rights than the more numerous Class A shares.

Shortly after, one of News Corp’s largest shareholders, T. Rowe Price, said in an interview with The New York Times that the proposed merger would probably undervalue News Corp, which it believed was trading for less than the company was worth.

Rupert Murdoch also faced opposition within his family. After he proposed the merger in the fall, one of his sons, James, wrote letters to the News Corp and Fox boards raising questions about the deal. It is unclear what those objections were.

The Murdoch Family Trust, which Rupert Murdoch controls with his eldest children, commands roughly 40 percent of the vote at both Fox and News Corp through its Class B shares. Any deal would have required the approval of a majority of investors who are not part of the Murdoch trust.

The two special committees for News Corp and Fox Corp have been dissolved, News Corp said in its statement.Robert Thomson, the company’s chief executive, said the withdrawal of the merger proposal would have no impact on current operations.

Robert Thomson, the company’s chief executive, said the withdrawal of the merger proposal would have no impact on current operations.

“We must focus steadfastly on creating the premium publishing, news, entertainment, intelligence and real estate products that were the catalyst for our record profits in the past two fiscal years,” he said.

Lauren Hirsch joined The Times from CNBC in 2020, covering business, policy and mergers and acquisitions. Ms. Hirsch studied comparative literature at Cornell University and has an M.B.A. from the Tuck School of Business at Dartmouth.

Katie Robertson is a media reporter. She previously worked as an editor and reporter at Bloomberg and News Corporation Australia.

Benjamin Mullin is a media reporter for The Times, covering the major companies behind news and entertainment.

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