Mumbai : Media baron, Rupert Murdoch has begun the process of reuniting his media empire, according to News Corp and Fox Corp, which announced on Friday that they would consider combining at his request, nearly a decade after the companies split.
Both have formed special committees to review potential merger proposals, they said.
If the merger goes through, Murdoch will have more control over his media assets and the companies will be able to cut costs. Media companies are competing with deep-pocketed social media and content websites for users' attention while experiencing decades-low growth in advertising sales.
After years of global expansion, Murdoch split his empire in 2013, putting the print business under the newly formed public entity News Corp and the TV and entertainment business under 21st Century Fox.
Murdoch stated at the time that his vast media holdings had become "increasingly complex," and that a new structure would make operations easier. The separation also protected Fox's entertainment assets from any potential financial consequences of a phone hacking scandal involving the media conglomerate's now-defunct News of the World publication in the United Kingdom.
According to a person familiar with the decision-making process at the time, the thinking was that separating the companies would ultimately generate value for shareholders. In 2019, Fox sold the majority of its film and television assets to Walt Disney Co for $71 billion.
According to Wall Street analysts, the sale focused Fox on live events such as news and sports rather than "disruptive" scripted entertainment content on streaming platforms. The major streaming services, on the other hand, have begun to breach the protective moat. Apple Inc. and Amazon.com Inc, two tech behemoths with deep pockets, have begun bidding for sports rights, securing the rights to stream major league baseball, soccer, and football games.
Fox recently renewed a long-term contract with the NFL to continue broadcasting Sunday afternoon games, but gave up Thursday Night Football to Amazon. According to a person familiar with the proposal, reuniting Fox and News Corp would give the combined companies greater scale to compete and complement their assets. The combined companies would generate approximately $24 billion in revenue.
Murdoch, currently owns nearly all of the stock in both companies. Lachlan Murdoch is the chairman and CEO of Fox Corporation. Companies that use such arrangements typically require subsequent mergers to be approved by a majority of shareholders who are not related to the controlling shareholder, though it is unclear whether this will be the case in this case.
According to Refinitiv, as of Friday's market close, News Corp. had a market cap of $9.31 billion and Fox Corp. had a market cap of $16.84 billion. In after-hours trading, News Corp shares rose 5 per cent , while Fox rose about 1 per cent.