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In a major turning point, Rupert Murdoch and Lachlan Murdoch have decided that the two companies controlled by their family will no longer seek to reunite.
News Corp., which owns the Wall Street Journal, the New York Post and other newspapers, and Fox Corp., which oversees Fox News and Fox Sports, said Tuesday night that the media mogul and his eldest son have concluded that the proposed recombination “currently not optimal for shareholders”.
The special committees formed by both companies to evaluate the possible merger have been dissolved. The move came after several shareholders objected to the deal.
A Murdoch trust owns about 40 percent of the voting rights in both companies, which shared a governing structure until a scandal involving Murdoch’s London tabloids hacking into the voicemails of public figures prompted the family to dump them a decade ago Concern about separating government investigations and civil lawsuits could threaten their entire empire.
But the companies have a structure that gives certain shareholders – notably the Murdochs – far more voting power than others, and since the fall they had been exploring a reunion at the request of Rupert Murdoch.
Nonetheless, each transaction would have required the approval of a majority of the companies’ other investors with Supervoting shares. And even within the Murdoch family, dissent lurked: younger son James, who has stepped down from senior roles in the family business but remains a beneficiary of the family trust, opposed a merger and wrote letters to both boards in the fall asking questions about the deal posed – a move first reported by the New York Times.
According to a person familiar with the discussions, merger talks have also been complicated by an expression of interest from an outside company holding News Corp’s $3 billion stake. in the digital real estate business Move. Jim Kennedy, a spokesman for News Corp., declined to comment.
At the time of the split in 2013, the elder Murdoch promised that it would “enable each company and its division to realize their full potential — and unlock even greater long-term shareholder value.” As recently as 2019, Lachlan Murdoch told Fox investors that the family had no plans to combine the companies. But his father raised the possibility with his older son and various advisors last fall, according to people who spoke to him and spoke to the Washington Post on condition of anonymity to discuss private calls.
In November, Irenic Capital Management, an activist investor, sent a letter to News Corp.’s special committee objecting to the merger. T. Rowe Price, a major shareholder of News Corp., told the New York Times that the proposed re-combination would depress the value of the company, which was already trading below its true value.
On Tuesday night, Irenic said she had reviewed a letter from the senior Murdoch informing them of the withdrawal of the proposed combination. Adam Katz, co-founder of Irenic, said he was “encouraged” by the move.