Rupert Murdoch’s decision to scrap a proposal to reunite his media empire puts the long-term future of the financially stretched titles owned by the newspaper baron at risk.Murdoch has scrapped a decade-long ambition to reunify News Corp – home to the Times, Sun, Wall Street Journal and the Australian, with Fox, broadcaster of Fox News and crown jewel NFL games – after opposition from investors and youngest son James.The 91-year-old, forced to split his empire against his will almost a decade ago after the phone-hacking scandal, had argued that an enlarged business would better compete in an era of digital publishing and streaming.A born-and-bred newspaper man, Murdoch aimed to ensure long-term financial security for his publishing empire, which spans the UK, US, Australia and Canada, through the protection offered by the $3bn-plus profits made by Fox each year.News Corp posted a $1.6bn profit last year – however, it is driven primarily by its US operation, and to a lesser extent its companies in the UK – and there is also a significant reliance on its digital real-estate businesses.For parts of his newspaper empire the transition to a digitally led, sustainable future is far from certain, with under-pressure Silicon Valley giants such as Google and Facebook unlikely to strike advertising deals on such lucrative terms when they come up for renewal.“The justification for the transaction was paper thin but it had the merit of forming a long-term financial umbrella over publications that are vulnerable,” said Claire Enders, founder of Enders Analysis and a longtime Murdoch watcher.“Protecting the future of titles of great sentimental and political value might have been a motivation shared by few of those involved. Rupert Murdoch did not have convincing arguments for value add. Breaking up the News Corp stable is likely to release more value for shareholders in due course. We are always sympathetic to protecting plurality but it isn’t an argument the stock market has any time for.”In November, Irenic Capital Management said in a letter to News Corp that it might vote to oppose the merger, arguing the proposed deal was likely to undervalue News Corp.Irenic values News Corp at potentially as much as $23bn, with the Wall Street Journal publisher worth as much as $10bn in its own right.However, the underperforming parts of the News Corp drag down its current market value to $12bn.Murdoch sent a letter to News Corp and Fox withdrawing his proposal to reunite the companies, according to a regulatory filing. He indicated that he and his son, Fox Corp chief executive Lachlan Murdoch, had determined that the combination is “not optimal” for shareholders.The Murdoch family commands roughly 40% of the vote at Fox and News Corp but any deal requires the approval of a majority of investors.The special committees of the Fox and News Corp boards that were reviewing the proposed merger have now been dissolved, the companies said in statements.“In withdrawing the proposal, Mr Murdoch indicated that he and Lachlan K. Murdoch have determined that a combination is not optimal for shareholders of News Corp and FOX at this time,” News Corp said in a statement.“As a result of this action, the special committee of the board of directors of News Corp has been dissolved. The board would like to express its appreciation for the special committee’s efforts on this matter.”The proposal has now been abandoned as the company looks at the potential sale of Move Inc, owner of Realtor.com, to CoStar Group, for up to $3bn.“Any potential transaction would support News Corp’s strategy to optimise the value of its Digital Real Estate Services segment, while strengthening Realtor.com’s competitive position in the market,” News Corp said.
© 2023 Guardian News & Media Limited.