December 10, 2022

Rupert Murdoch Considers Fox, News Corp Merger

Oct 14 (Reuters) – Rupert Murdoch has begun the process of reassembling his media empire, News Corp. (NWSA.O) and Fox Corp (FOXA.O) The companies announced on Friday that they are considering a merger at his behest, nearly a decade after the split.

The two have set up special committees to review proposals for a possible merger, they said.

If a deal goes through, the combination would allow Murdoch greater control over his media assets and help the companies cut costs. Media companies are battling decades of low growth in ad sales and competing against deep social media and content websites to capture users’ attention.

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After years of global expansion, Murdoch split his empire in 2013, placing the print business under the newly created public company News Corp and TV and entertainment under 21st Century Fox.

Murdoch said at the time that his wider media had become “increasingly complex” and a new system would simplify operations. The split protects Fox’s entertainment assets from potential financial fallout from a phone-hacking scandal involving the current News of the World publication in the United Kingdom.

The thinking at the time was that it was the opinion of someone familiar with the decision that separating companies would ultimately create value for shareholders. That vision was realized as Fox sold most of its film and television assets to the Walt Disney Company (DIS.N) $71 billion in 2019.

The sale allowed Fox to focus on live events, such as news and sports, rather than scripted entertainment content that could be “disruptive” to streaming platforms, Wall Street analysts noted at the time.

However, major streaming services are beginning to breach the security moat. Apple Inc (AAPL.O) and Amazon.com Inc (AMZN.O)Two tech giants with deep financial resources have begun bidding for the games, acquiring the rights to stream major league baseball, football and soccer games.

Fox recently renewed a long-term deal with the National Football League to continue airing Sunday afternoon games, but relinquished Thursday Night Football to Amazon.

Reuniting Fox and News Corp would make the combined companies more competitive and complement their assets, a person familiar with the plan said. Revenue of the combined companies is approximately $24 billion.

Murdoch, 91, now has almost a controlling stake in both companies. His son Lachlan Murdoch is chairman and CEO of Fox Corp. He is the chairman and chief executive officer of the companies making such arrangements. He is the chairman and chief executive officer of companies following such arrangements. Usually subsequent mergers are subject to the approval of the majority of shareholders who are not affiliated with their controlling shareholder, although it is unclear whether this will happen in this instance.

At the market close on Friday, News Corp was worth $9.31 billion and Fox Corp was worth $16.84 billion, according to Refinitiv. Shares of News Corp rose 5% and Fox rose 1% in after-market trading.

The development was first reported by The Wall Street Journal.

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Yuvraj Malik reports in Bangalore; Editing by Krishna Chandra Eluri, Grant McCool & Sri Navaratnam

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