Rupert Murdoch abandons News Corp-Fox merger after investors back out

January 24, 2023 0 Comments

Rupert Murdoch has given up on his attempt to reunite the two parts of his media empire.

Facing resistance from major investors, the 91-year-old mogul and his son Lachlan informed the respective boards of Fox Corp and News Corp on Tuesday that the family was withdrawing its earlier request to explore a combination of the two companies. . Such a merger would have brought Fox News and The Wall Street Journal under one corporate roof.

A merger would also consolidate the power of Lachlan Murdoch, who is currently Fox’s chief executive, as he would manage the combined company.

Murdoch did not detail his reasons for dumping the merger talks less than three months after instigating them. A company statement said Rupert and Lachlan Murdoch “have determined that a combination is not optimal for the shareholders of News Corp and Fox at this time.”

Major investment firms including T. Rowe Price and Independent Franchise Partners were reportedly skeptical that a merged entity would increase shareholder value. Winning over enough shareholders to approve the deal was increasingly problematic for the Murdoch family, which holds about 39% of the voting shares but less than 15% of the economic value of both companies.

Rupert Murdoch wanted to rejoin the company he had spent more than 50 years building.

A decade ago, investors successfully pressured Murdoch to break up the company, arguing that its print publications, including dozens of newspapers in Murdoch’s native Australia, were dragging down the company’s value. The breakup came in the wake of the British cellphone hacking scandal at the Murdoch-owned tabloids in London, which tarnished the family’s reputation and cost hundreds of millions of dollars in legal costs, including payments to victims.

Now, it’s the television company that has potentially significant legal exposure. Dominion Voting Systems has filed a $1.6 billion defamation lawsuit against Fox Corp, alleging Fox News “stolen” false claims about former President Trump’s election to entice viewers That detracted from an early but ultimately accurate call to Biden’s network. Arizona won, putting it on its way to victory.

At a hearing last month, a lawyer for Dominion disclosed some statements from Fox News hosts and executives in which they expressed doubt about the claims presented by Trump’s representatives. The attorney quoted Fox News host Sean Hannity as saying under oath that he “didn’t believe it for a second.”

The Dominion case goes to trial this spring.

Fox News has said that its reporting on allegations of voter fraud during the 2020 election, as alleged by Trump and his lawyers, was newsworthy and protected by the First Amendment.

Murdoch’s empire is smaller than before. In 2019, the mogul sold Fox’s entertainment holdings to The Walt Disney Company for $71 billion. That left Fox Corp with Fox News, Fox Business News, the Los Angeles-based Fox network, two cable sports channels and the Tubi streaming service. Publication titles – including the Dow Jones, New York Post, Times of London and Sun tabloids – remain in News Corp, which also has Australian TV assets.

In the statement, the companies said that their board committees considering the merger proposal have been dissolved.

Times Staff Writer Stephen Battaglio contributed to this report.

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