(UnitedVoice.com) – Ten years ago, in 2013, media tycoon Rupert Murdoch split his empire into two different entities: News Corp. and 21st Century Fox. The move created a situation where Fox News Channel, FX, Fox broadcast network, National Geographic, Fox Sports and 20th Century Fox movie studios became part of 21st Century Fox. Meanwhile, News Corp held onto the New York Post, Wall Street Journal, HarperCollins book publishing, the Australian, the Times of London, and a number of other Australian media organizations.
In 2019, 21st Century Fox was sold to the Disney Corporation, but Fox News Corporation was not part of that deal. Last year, the two companies’ boards revealed they might merge into one corporation again. Just a few months later, the merger is dead in the water.
Merger Dead
According to The New York Times, News Corp released a statement on January 24, announcing Murdoch had decided that merging the companies was “not optimal for shareholders of News Corp and Fox at this time.”
Murdoch had reportedly been interested in the cost-saving possibilities that might be gained by merging the two companies together. For example, they might have been able to save cash by hiring one management team and only having one deal with vendors. The Murdoch Family Trust endorsed the possibility of a merger and agreed with the formation of committees to explore the idea.
However, investors, who were told the companies were better apart in 2013, immediately pushed back against the idea. In 2019, when Murdoch sold 21st Century Fox, he assured investors he had no intention of merging the two entities. Those with a stake in the companies began to question whether it was a good idea or if it would fairly benefit each company, given the size of News Corp’s assets. Ironically, when the companies originally split, News Corp was the smaller of the two, but now it has a significant amount of assets, including a massive real estate business.
Reactions to the News
Business Wire published a statement from Irenic Capital about the end of the merger. The management company owns a 2.6% stake in News Corp. Co-Founder Adam Katz said Irenic Capital was “encouraged” by Murdoch’s announcement that the deal was dead. He said it was “the right decision,” and believes “News Corp has an opportunity to create substantial value for its owners.”
Cowen analyst Doug Creutz told The Hollywood Reporter that investor T. Rowe might have played a part in killing the merger because it indicated it believed combining companies would have undervalued the shares for News Corp.
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