Rupert Murdoch has withdrawn his proposal to re-combine Fox Corp. and News Corp.
Fox said on Tuesday that its board received a letter from Rupert Murdoch, its chairman, and his son and Fox CEO Lachlan Murdoch that “determined that a combination is not optimal for the shareholders” of either of the companies at the time.
According to a person familiar with the situation, News Corp has been in advanced discussions to sell its stake in Move Inc. to commercial real estate company CoStar Group, the parent company of Realtor.com. The withdrawn proposal comes at the same time.
In a regulatory filing on Tuesday, News Corp. confirmed that it is in talks with CoStar about selling its Move stake.
According to News Corp’s statement in the filing, “Any potential transaction would support News Corp’s strategy to optimize the value of its Digital Real Estate Services segment, while strengthening Realtor.com’s competitive position in the market.” News Corp went on to say that it couldn’t promise a deal would come out of the talks and wouldn’t say anything more at this time.
The company “continuously evaluates M&A opportunities across a broad range of companies to maximize shareholder value,” according to a spokesperson for CoStar Group in a statement released on Tuesday.
Requests for additional information regarding the situation were not met by a spokesperson for News Corp.
News Corp owns assets like HarperCollins and the New York Post, in addition to Dow Jones, the publisher of the Wall Street Journal. News Corp purchased an 80 percent stake in Move in 2014. Move’s remaining 20% was purchased by REA Limited Group, an Australian real estate company in which News Corp owns a 61.6% stake.
A memo reviewed reveals that News Corp. CEO Robert Thomson informed employees on Tuesday that the decision to cancel the proposed deal would have no effect on employees. Additionally, he advised them to remain silent regarding the matter.
“As I advised at the beginning of this process, it is best not to speculate on speculation, and so if you do hear from any media, shareholders, customers or others, please alert the communications team in your business,” Thomson wrote.
The companies announced in October that they had set up a special committee to look into the deal.
At a time when both print and television media’s audiences are declining, combining the two businesses would result in unified leadership within Murdoch’s empire and cost savings. Dow Jones, which publishes the Wall Street Journal, is owned by News Corp. Fox owns the right-wing networks Fox News and Fox Business, which compete with CNBC, with the money that was left over from the sale of Twenty-First Century Fox to Disney in 2019 for $71.3 billion.
In 2013, Murdoch had broken up the businesses. About 40% of both companies’ voting rights are under the control of the Murdoch family trust.
CNBC previously reported that the goal of the merger at the time would have been to simply give the combined company more scale to compete in a time when media companies are competing for digital advertising spending and subscribers.
In recent months, shareholders had voiced opposition to the proposed merger, believing that News Corp.’s true value would not be demonstrated by a merger with Fox.
Independent Franchise Partners and other shareholders held the view that the merger would not have realized News Corp.’s full potential value and that other options, such as News Corp. breaking up, should have been considered. The non-Murdoch company based in London owns one of the largest stakes in both News Corp. and Fox.
Another shareholder opposed the proposed merger, claiming that Fox did not support News Corp’s strategic objectives. Independent Franchise and Irenic are of the opinion that News Corp. shares are undervalued. On Tuesday, Fox’s Class A shares closed at $32.67, while News Corp’s Class A shares closed at $19.53.