NY [US]Jan 25 (ANI) – New York News Corp, one of Rupert Murdoch’s media companies, said in a statement Tuesday that it had determined that combining it with Fox Corporation was “not optimal for the shareholders of News Corp and Fox in this moment”. ”, according to the New York Times.
The boards of both media companies revealed in October that Murdoch had proposed bringing the two companies together, nearly 10 years after they parted ways, the NYT said, adding that both Fox and News Corp have established committees independent of their boards to assess a possible deal. However, the outlook faced significant pushback from investors.
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The deal, if it had gone through, would have brought a collection of news and entertainment assets including Fox News, The Wall Street Journal, the Fox broadcast network and TMZ under the same corporate umbrella. When initially proposed, Murdoch was said to be interested in the potential for cost savings and the possibility of integrating some of the companies, the NYT reported.
Since the companies broke up, the media industry has gone through a wave of consolidation to compete with streaming giants like Netflix and combat the decline of the traditional TV business, he said.
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“Scale is important,” Lachlan Murdoch, Fox’s chief executive and Rupert Murdoch’s eldest son, said in November. “Scale provides flexibility in many ways.”
But executives and investors had important questions about the logic of the deal, according to the report. When Rupert Murdoch initially separated the two companies, he argued that Fox’s television and movie business and News Corp’s digital media business were better separated. Lachlan Murdoch had told investors in 2019 that the companies would not meet.
Some investors questioned whether the deal would equally benefit both companies given News Corp’s valuable assets, such as its significant real estate business. Some also questioned whether Rupert Murdoch’s interests were more aligned with Fox, in which he owns a larger stake, than News Corp, the newspaper said.
In November, activist investor Irenic Capital Management sent a letter to News Corp’s special committee questioning whether merging with Fox was a better alternative to other deals, such as selling News Corp’s real estate business, the NYT reported Tuesday night. Irenic owns about 2 percent of News Corp’s Class B shares. Those shares carry stronger voting rights than the more numerous Class A shares.
Class B shares have approximately 10 times the voting power of Class A shares and are not traded on public exchanges. These shares are called “supervoting shares” because they give key members of the company greater control over the company, including its board of directors and is often the deciding factor for corporate actions.
Soon after, one of News Corp’s largest shareholders, T Rowe Price, said in an interview with the NYT that the proposed merger would likely undervalue News Corp, which he believed was trading for less than the company was worth, the newspaper said.
According to NYT, the proposal raised questions about what it would mean for succession at the companies, with many believing a merger would give Lachlan, his father’s handpicked heir, more power. Murdoch’s other son, James, wrote letters to the boards of News Corp and Fox raising questions about the deal. It is not clear what those objections were, the NYT said. The newspaper said a spokesman for Rupert Murdoch had no further comment. (AND ME)
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