The two parts of Rupert Murdoch’s media empire discuss the merger after nearly a decade of division.
Merger will bring Murdoch together Fox News and TMZ’s assets with News Corp. and online news operations, including The Times and the Sun in the UK, The Wall Street Journal and The New York Post in the US, and The Australian.
In a press release, News Corp confirmed that, following instructions from Murdoch and the Murdoch Family Trust, the companies formed a special committee “comprising of independent, disinterested members of the Board of Directors” to begin exploring a potential combination.
The Murdoch-owned Wall Street Journal reported on Friday that News Corp’s CEO, Robert Thompson, has informed employees about the potential merger.
“At News Corp, we are constantly pursuing ways to improve our performance and expand our business, and disruptions in the media present challenges and opportunities,” he wrote in a note. “However, I would like to stress that the Special Committee has not made any decision at this time, and it cannot be certain that any transaction will result from its evaluation.”
After years of global expansion, Murdoch He divided his empire in 2013and put the printing business into a newly created public entity, News Corp, and television and entertainment under 21st Century Fox.
Murdoch said at the time that his massive media holdings had become “increasingly complex” and that the new structure would streamline operations. The split also protected Fox’s entertainment assets from any potential financial fallout from a phone hacking scandal involving News of the World, which is now no longer based in the United Kingdom.
The thinking at the time was that segregation of companies would eventually generate shareholder value, according to a person familiar with the decision-making process. This vision came true when Fox sold the bulk of its film and television assets Walt Disney for $71 billion in 2019.
The sale left Fox focusing on live events like news and sports, rather than “disrupted” written entertainment content on streaming platforms, Wall Street analysts noted at the time.
However, the main streaming services began to break through the protective trench. Apple and Amazon, two tech giants with significant financial resources, have started bidding for sports, securing the rights to broadcast major baseball, soccer and soccer games.
Fox recently renewed a long-term deal with the NFL to continue broadcasting Sunday afternoon games, but ditched Thursday Football on Amazon.
The person familiar with the proposal said a reunification of Fox and News Corp would give the combined companies greater scope to compete, and complement their assets. The combined companies will generate revenues of about $24 billion.
Murdoch, 91, currently owns semi-controlling stakes in both companies. His son Lachlan Murdoch is the Chairman and CEO of Fox Corp. Firms adopting such arrangements make subsequent mergers subject to approval by a majority of shareholders not affiliated with the controlling shareholder, although it is not clear whether this is the case in this case.
As of the market close on Friday, News Corp had a market capitalization of $9.31 billion and Fox Corp was $16.84 billion. News Corp shares rose 5 percent and Fox shares rose nearly 1 percent in after-market trading.
Reuters contributed to this story
