Rupert Murdoch has scrapped plans to re-unite News Corp and Fox Corp, according to a regulatory filing on Tuesday. The development suggests that he and his son Lachlan Murdoch, Fox Corp’s head, probably realised that a combination of the companies was “not optimal” for the shareholders.
The fact that News Corp is exploring the sale of its stake in Move Inc, the company that operates the Realtor.com website, might have played a role in ending the merger talks with Fox, sources say.
The deal talks over the sale of Move Inc, would weaken the rationale for a merger with Fox, one source said.
If the merger had happened, it would have brought together the media empire Murdoch split nearly a decade ago.
Much of the synergies in a News Corp-Fox combination would have hinged on merging News Corp’s digital operations with Fox’s complimentary assets.
News Corp and Fox Corp had not exchanged any offer before merger deliberations were abandoned, reports suggest. A source familiar with the matter told Reuters that the pushback from News Corp shareholders played a key role in merger plans being scrapped.
Murdoch, who believed that combining the publishing and entertainment would give them greater scale in news, live sports and information, had come up with the idea last fall. Notably, the two companies were split apart in 2013.
People close to Murdoch believe that the merger was part of Murdoch’s efforts to consolidate power behind Lachlan. The company had described the notion of Lachlan holding the reins as “absurd” in November.
Some of News Corp’s larger shareholders, including Independent Franchise Partners and T Rowe Price TROW.O, did not back the idea.
In a letter to News Corp employees on Tuesday, News Corp Chief Executive Robert Thomson said, “In my note to you in October, I said the Special Committee assessment would have no impact on our current operations; that was indeed the case, and remains so following today’s announcement.”