Oct 14 (Reuters) – Rupert Murdoch has launched a lawsuit that could reunite his media empire, News Corp (NWSA.O) and Fox Corp (FOXA.O) announced on Friday and said they were considering splitting up at his behest for nearly a decade after the companies separated.
Both have formed special committees to consider proposals for a possible combination, they said.
If a deal goes through, the combination will give Murdoch greater control over its media holdings and help companies cut costs. Media companies are battling decades of sluggish ad revenue growth and user attention from deep-pocketed social media and content sites.
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After years of global expansion, Murdoch split his empire in 2013, placing the printing business under the newly formed public entity News Corp and television and entertainment under 21st Century Fox.
Murdoch said at the time that its vast media holdings had become “increasingly complex” and that a new structure would simplify operations. The split also protected Fox’s entertainment assets from the potential financial fallout of a phone-hacking scandal involving the media conglomerate’s now-defunct UK publication News of the World.
The rationale at the time was that the separation of the companies would ultimately generate value for shareholders, according to a person familiar with the decision-making process. That vision was realized when Fox sold the majority of its film and television assets to Walt Disney Co (DIS.N) for $71 billion in 2019.
The sale kept Fox focused on live events like news and sports, rather than “interruptible” scripted entertainment content on the streaming platforms, as Wall Street analysts were observing at the time.
However, the major streaming services have started to breach the protective moat. Apple Inc (AAPL.O) and Amazon.com Inc (AMZN.O), two tech giants with extensive financial resources, have started bidding for sports offerings and acquiring rights to stream major league baseball, soccer and football games to back up.
Fox recently renewed a long-term deal with the National Football League to continue broadcasting Sunday afternoon games, but ceded Thursday Night Football to Amazon.
The reunification of Fox and News Corp would give the combined companies greater competitive scale and complement their assets, said the person familiar with the proposal. The combined companies would have sales of approximately $24 billion.
Murdoch, 91, currently holds near-controlling interests in both companies. His son Lachlan Murdoch is Chairman and CEO of Fox Corp. Companies entering into such arrangements usually make subsequent mergers conditional on the approval of a majority of shareholders unrelated to their controlling shareholder, although it is not clear if that will be the case in this case.
As of Friday’s close, News Corp had a market cap of $9.31 billion and Fox Corp was $16.84 billion, according to Refinitiv. News Corp’s shares were up 5% and Fox was up about 1% in after-market trading.
The development was first reported by the Wall Street Journal earlier in the day.
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Reporting by Yuvraj Malik in Bengaluru; Edited by Krishna Chandra Eluri, Grant McCool & Shri Navaratnam
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