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Murdochs drop proposal to recombine Fox and News Corp, say 'not optimal'

The move was widely seen as a way for Lachlan Murdoch to cement his control over the family media empire.

Rupert Murdoch | Fox News | News Corp

Christopher Palmeri & Liana Baker | Bloomberg 

Rupert Murdoch. Photo: Bloomberg
Rupert Murdoch. Photo: Bloomberg

said he was abandoning plans to explore a recombination of Fox Corp and News Corp, two media he controls.

Fox said Tuesday that it had received a letter from Murdoch saying that he and his son Lachlan, the chief executive officer of Fox, had determined a combination was “not optimal” for the shareholders at this time. issued a similar release. Special committees of the boards that were examining the merger have been dissolved.

The deal, first announced in October, promised to reunite the parents of and the Fox broadcast business with the print news operation that includes the Wall Street Journal, the New York Post and HarperCollins book publishing. The recombination, coming a decade after the had first split up, was a controversial one, however.

A number of investors publicly opposed the merger saying it undervalued company assets, including its online real estate operation. The move was widely seen as a way for Lachlan Murdoch to cement his control over the family media empire.

James Murdoch, Rupert’s other son, wrote letters to the boards of both raising questions about the proposed deal, according to a person familiar with the correspondence, who asked not to be identified because the letters haven’t been made public. James Murdoch resigned from the board in 2020 due to disagreements over editorial content and strategy.

Irenic Capital Management LP, one of the outside investors opposed to the merger, lauded the decision in statement Tuesday. The investor, which owns about 2.6% of News Corp’s Class B shares, said the company is worth more than its current share price and that the Murdochs should take other steps to unlock value. Irenic had previously argued for a spin off of the company’s REA Group online real estate business in Australia.

Shares of News Corp. rose about 23 per cent after the recombination was first suggested. Fox’s stock rose just 3%, making the idea of a merger harder to justify, according to two people familiar with the matter.

Bloomberg also reported Tuesday that News Corp. is in talks to sell its Move Inc. online real estate business to CoStar Group Inc. for approximately $3 billion, people familiar with the transaction said.

News Corp and Fox shares each rose more than 2 per cent in after-hours trading after the proposal was scrapped.

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First Published: Wed, January 25 2023. 09:24 IST