Three years after selling much of 21st Century Fox to Walt Disney, Rupert Murdoch is exploring reuniting his U.S news companies, bringing titles like the Wall Street Journal and Fox News under one umbrella.
News Corp., owner of the Journal and the New York Post, and Fox Corporation — which was spun off after Murdoch’s $52.4-billion deal with Disney in 2017 — said they had formed a special committee to explore a combination.
In 2013, Murdoch divided his media holdings into two separate companies: News Corp., a publishing group that includes the New York Post and the Journal; and 21st Century Fox, former owner of 20th Century Fox.
The Murdoch Family Trust control both through its ownership of 39% of the companies’ voting shares. The separation was a move to appease Wall Street which had agitated for Murdoch to sell his newspapers — something he refused to do.
But the current media landscape has made it tough for the two entities to remain apart. They will be able to unite their news, sports and digital real estate listings businesses and amass scale as competitors like Warner Bros Discovery and tech platforms such as Amazon have bulked up their offerings.
For Murdoch, the hope is that the combination will put the companies in a stronger financial position, to improve cash flow that can be used for acquisitions or returns of capital to shareholders, said a person familiar with the family’s thinking who was not authorized to speak publicly. The Wall Street Journal first reported the news.
“The Special Committee, consistent with its fiduciary duties and in consultation with its independent financial and legal advisors, will thoroughly evaluate a potential combination with News Corp,” the companies said in statements. “The Special Committee has not made any determination at this time, and there can be no certainty that the Company will engage in such a transaction.”
Since Murdoch’s sale of his movie and TV studio assets to Disney, Fox News has taken on an outsized importance in Fox Corporation. The conservative-leaning cable news channel accounts for 80% of the company’s profits.
While Fox News is number one in cable news and is often the most watched cable news network overall, it faces challenges . Fox News is highly dependent on cable subscriber fees, which are under pressure as more consumers go without without pay TV.
The controversial nature of its top rated host, Tucker Carlson, has scared away some advertisers who don’t want to face a boycott over being associated with his program. Fox News also faces possible significant legal exposure over two defamation suits filed by voting software and equipment companies Smartmatic and Dominion.
Both firms are seeking billions in damages, claiming the network’s hurt them by airing false claims of voter fraud perpetuated by former president Donald Trump and his lawyers.
Fox has a new contract to carry the National Football League, which will double the current costs. Sports rights are likely to skyrocket going forward as deep-pocketed tech companies such as Amazon and Apple are showing a willingness to bid up properties.
Amazon’s Prime Video is already demonstrating that it can attract large audiences with its first of its kind exclusive deal to carry “Thursday Night Football” — a package Fox gave up one year earlier than scheduled because it was unprofitable.
Investor reaction to the news was mixed.
News Corp shares rose $1, or 6.5%, in after-hours trading Friday on the Nasdaq stock exchange . Shares of Fox Corp. were down less than 1% after the market closed.
