Rupert Murdoch has started a process that could bring his media empire back together, News Corp (NASDAQ:NWSA) and Fox Corp said on Friday. They said that at his request, they would look into merging, which is almost a decade after the companies split.
Both have put together special committees to look at ideas for a possible merger, they said.
If the deal goes through, Murdoch will have more control over his media assets, and the companies will be able to cut costs. Media companies haven’t seen growth in ad sales in decades, and social media and content websites with lots of money are competing for users’ attention.
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After years of growing his business around the world, Murdoch split his empire in 2013. He put the print business in a new public company called News Corp. and the TV and entertainment business in another company called 21st Century Fox.
Murdoch said at the time that his large media holdings had become “increasingly complex” and that a new structure would make things easier. The split also protected Fox’s entertainment assets from any possible financial fallout from a phone hacking scandal at the now-defunct News of the World newspaper in the UK, which was owned by the same media company.
At the time, the idea was that separating the companies would create value for shareholders in the long run, according to someone who knew how the decision was made. In 2019, Fox sold most of its film and TV assets to Walt Disney (NYSE:DIS) Co. for $71 billion, making this dream come true.
Wall Street analysts at the time said that the sale meant that Fox would focus on live events like news and sports instead of “disruptable” scripted entertainment on streaming platforms.
The big streaming services, on the other hand, have started to get through the moat. Apple Inc. (NASDAQ:AAPL) and Amazon.com Inc. (NASDAQ:AMZN), two tech giants with a lot of money, have started bidding on sports, getting the rights to stream baseball, soccer, and football games from the major leagues.
Fox just renewed a long-term deal with the National Football League to keep showing games on Sunday afternoons. However, Fox gave Amazon the rights to Thursday Night Football.
A person familiar with the proposal said that bringing Fox and News Corporation back together would give the new company a bigger market share and make its assets more useful. If the two companies worked together, they would make about $24 billion.
At the moment, Murdoch, who is 91, has nearly controlling shares in both companies. Fox Corp. is run by his son, Lachlan Murdoch, who is the chairman and CEO. When a company makes this kind of deal, future mergers usually have to be approved by a majority of shareholders who are not related to the controlling shareholder. It’s not clear if this will be the case here, though.
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Refinitiv says that when the market closed on Friday, News Corp. was worth $9.31 billion and Fox Corp. was worth $16.84 billion. After the market closed, shares of News Corp went up 5%, and shares of Fox went up about 1%.
The Wall Street Journal was the first to report on the news earlier in the day.
