Rupert Murdoch has begun a process that could reunite his media empires, News Corp and Fox Corp revealed on Friday, saying they would consider combining at his behest, nearly a decade after split company.
The two have formed special committees to consider proposals for a potential combination, they said.
If a deal is successful, the combination will give Murdoch greater control over its media assets and help companies cut costs. Media companies are fighting decades of low ad sales growth and user attention-grabbing against deep-pocketed social media and content sites.
After years of global expansion, Murdoch spun off his empire in 2013, placing the print business in the newly formed public organization News Corp and the TV and entertainment division of 21 Century Fox.
Murdoch said at the time that his massive media ownership had become “increasingly complex” and that a new structure would simplify operations. The split also protects Fox’s entertainment assets from any potential financing resulting from a phone hacking scandal involving the now-defunct UK publication News of the World. Older brother.
The thinking at the time was that separating the companies would eventually create value for shareholders, according to a person familiar with the decision-making. That vision was realized when Fox sold most of its film and television assets to Walt Disney Co for US$71 billion in 2019.
The sale led Fox to focus on live events like news and sports, rather than “interruptible” scripted entertainment content, Wall Street analysts said at the time. streaming platforms.
However, the major streaming services have begun to breach the protective moat. Apple Inc and Amazon.com Inc, two tech giants with huge financial potential, have begun a sports bid, securing the rights to stream baseball, soccer and soccer league games. great.
Fox recently renewed its long-term contract with the National Football League to continue broadcasting Sunday afternoon games, but gave up Thursday Night Football to Amazon.
The merger of Fox and News Corp would give the combined companies greater scale to compete and supplement their assets, a person familiar with the proposal said. The combined companies will have about $24 billion in revenue.
Murdoch, 91, now has a quasi-controlling stake in both companies. His son Lachlan Murdoch is the chairman and chief executive officer of Fox Corp. Companies applying such arrangements often make mergers that are then subject to approval by a majority of shareholders not affiliated with their controlling shareholder, although it is unclear whether this is the case. out or not.
As of Friday’s market close, News Corp had a market capitalization of $9.31 billion and Fox Corp’s $16.84 billion, according to Refinitiv. Shares of News Corp were up 5% and Fox was up about 1% in after-market trading.
The development was first reported by the Wall Street Journal earlier in the day.
(Reporting by Yuvraj Malik in Bengaluru; Editing by Krishna Chandra Eluri, Grant McCool & Shri Navaratnam)