Rupert Murdoch has abandoned his attempt to reunite the two halves of his media empire.
Facing resistance from major investors, the 91-year-old tycoon and his son Lachlan notified the respective boards of Fox Corp. and News Corp. on Tuesday that the family was withdrawing its earlier request to explore a combination of the two companies. Such a merger would have brought Fox News and the Wall Street Journal under the same corporate roof.
A merger would also have consolidated the power of Lachlan Murdoch, Fox’s current chief executive, as he would have run the combined company.
The Murdochs did not detail their reasons for scrapping the merger talks less than three months after instigating them. A company statement said Rupert and Lachlan Murdoch “have determined that a combination is not optimal for the shareholders of News Corp and Fox at this time.”
Major investment firms, including T. Rowe Price and Independent Franchise Partners, were skeptical that a merged entity would increase shareholder value. Winning enough shareholders to pass the deal was increasingly problematic for the Murdoch family, which owns about 39% of the voting shares but less than 15% of the economic value of the two companies.
Another wrinkle emerged more recently. News Corp. has begun talks to sell one of its most prized assets: its 80% stake in Move Inc., operator of the successful Realtor.com website business, according to insiders who were not authorized to speak publicly. News Corp. wanted to focus on maximizing that potential multibillion-dollar deal, these people said. On Tuesday night, News Corp. confirmed the sale talks in a regulatory filing in Australia, saying it was “engaging in discussions with CoStar Group, Inc. regarding a potential sale of Move, Inc.”
Rupert Murdoch had wanted to bring back together the company that he spent more than 50 years building.
A decade ago, investors successfully lobbied Murdoch to dissolve the company, arguing that its print publications, including dozens of newspapers in Murdoch’s native Australia, were reducing the company’s value. The break came in the wake of the British cellphone hacking scandal at Murdoch-owned tabloids in London, which tarnished the family’s reputation and led to hundreds of millions of dollars in legal costs, including payments to victims.
Now, it is the television company that potentially has significant legal exposure. Dominion Voting Systems filed a $1.6 billion defamation lawsuit against Fox Corp., alleging Fox News perpetuated former President Trump’s false claims about election “theft” to placate viewers who were alienated by early call but ultimately precise of the chain that Biden had won Arizona, putting him on the path to victory.
At a hearing last month, a Dominion lawyer revealed some of the testimony Fox News hosts and executives have given in statements acknowledging skepticism about the claims put forward by Trump representatives. The attorney quoted Fox News host Sean Hannity as saying under oath that he “didn’t believe it for one second.”
The Dominion case heads to trial this spring.
Fox News has maintained that its reporting on allegations of voter fraud during the 2020 election, as alleged by Trump and his lawyers, were newsworthy and protected by the First Amendment.
Murdoch’s empire is smaller than it once was. In 2019, the mogul sold much of Fox’s entertainment properties to the Walt Disney Co. for $71 billion. That left Fox Corp. with Fox News, Fox Business News, the Los Angeles-based Fox network, two cable sports channels and streaming service Tubi. Publishing titles, including the Dow Jones, the New York Post, the Times of London and the Sun tabloid, reside with News Corp., which also has Australian television assets.
In the statement, the companies said their board committees reviewing the proposed merger have been dissolved.
Times Staff Writer Stephen Battaglio contributed to this report.