The two parts of Rupert Murdoch’s media empire are discussing a merger nearly a decade after they split.
Merger would combine Murdoch’s businesses FoxNews and TMZ assets with News Corp newspapers and online news operations, including The Times and Sun in the UK, The Wall Street Journal and New York Post in the US, and the Australian .
In a press release, News Corp confirmed that, at the direction of Murdoch and the Murdoch Family Trust, the companies have formed a special committee “composed of independent and disinterested members of the Board of Directors” to begin exploring a potential combination. .
The Murdoch-owned Wall Street Journal reported on Friday that News Corp chief executive Robert Thomson briefed staff on the potential merger.
“At News Corp, we are constantly looking for ways to improve our performance and grow our business, and the media upheaval presents both challenges and opportunities,” he wrote in a note. “However, I would like to emphasize that the special committee has not made any decision at this stage, and there can be no certainty that a transaction will result from its assessment.”
After years of global expansion, Murdoch split his empire in 2013placing the printing business under a newly created public entity, News Corp, and television and entertainment under 21st Century Fox.
Murdoch said at the time that his vast media holdings had become “increasingly complex” and that a new structure would simplify operations. The split also shielded Fox’s entertainment assets from any potential financial fallout from a phone-hacking scandal involving the media conglomerate’s now defunct News of the World publication in the UK.
The thinking at the time was that splitting the companies would ultimately generate shareholder value, according to a person familiar with the decision-making. This vision came to fruition when Fox sold most of its film and television assets. to Walt Disney for $71 billion in 2019.
The sale left Fox to focus on live events such as news and sports, rather than “disruptive” scripted entertainment content on streaming platforms, Wall Street analysts observed at the time.
Major streaming services, however, have started to bridge the protection gap. Apple and Amazon, two tech giants with deep financial resources, began bidding for sports, securing the rights to broadcast Major League Baseball, soccer and football games.
Fox recently renewed a long-term deal with the NFL to continue showing Sunday afternoon games, but dropped Thursday Night Football from Amazon.
Reuniting Fox and News Corp would give the combined companies greater scale to compete and complement their assets, the person familiar with the proposal said. The combined companies would have about $24 billion in revenue.
Murdoch, 91, currently holds quasi-controlling stakes in both companies. His son Lachlan Murdoch is chairman and CEO of Fox Corp. Companies that adopt such arrangements generally subject subsequent mergers to the approval of a majority of shareholders unaffiliated with their majority shareholder, although it is not clear whether this will be the case in this case.
As of Friday’s market close, News Corp had a market capitalization of $9.31 billion and Fox Corp was $16.84 billion. Shares of News Corp jumped 5% and Fox about 1% in aftermarket trade.
Reuters contributed to this story