Rupert Murdoch, chairman of News Corp and co-chairman of 21st Century Fox, arrives at the Sun Valley Resort from the annual Allen & Company Sun Valley Conference, July 10, 2018 in Sun Valley, Idaho.
Drew Anger Getty Images
Rupert Murdoch has withdrawn his proposal to reunite Fox Corp and News Corp.
Fox said Tuesday that the board had received a letter from Murdoch, the chairman, and his son and Fox CEO Lachlan Murdoch that “determined that the combination was not optimal for the shareholders” of one of the companies at the time.
The proposal was withdrawn because News Corp has been in advanced discussions to sell its stake in Move Inc., the parent company of Realtor.com, to a commercial real estate company. CoStar Groupaccording to a person familiar with the matter.
News Corp confirmed in a regulatory filing Tuesday that it is in discussions with CoStar about a potential sale of its stake in Move.
“Any potential transaction will support News Corp’s strategy to maximize the value of its Digital Real Estate Services segment, while strengthening Realtor.com’s competitive position in the marketplace,” News Corp said in the filing. News Corp added that there was no guarantee a deal would result from the talks and would not comment on the matter at this time.
A CoStar Group spokeswoman said in a statement Tuesday the company “continually evaluates M&A opportunities at various companies to maximize shareholder value.”
A News Corp spokesman did not respond to requests for comment on the matter. Reuters first reported the deal talks.
In addition to Wall Street Journal Publisher Dow Jones, News Corp also owns assets such as book publishers HarperCollins and the New York Post. In 2014, News Corp acquired an 80% stake in Move. REA Limited Group, an Australian real estate business in which News Corp has a 61.6% interest, acquired the remaining 20% stake in Move.
News Corp CEO Robert Thomson told employees Tuesday that the decision to reject the proposed deal will not affect employees, according to a memo seen by CNBC. He also urged them to keep a close eye on the matter.
“As I said at the beginning of this process, it is better not to speculate on speculation, and if you hear from the media, shareholders, customers or others, please alert the communications team in your business,” Thomson wrote.
In October, the company said it had formed a special committee to consider the deal.
A merger of the two companies would have a joint lead in Murdoch’s empire and cut costs as audiences shrink for print and TV media. News Corp owns Wall Street Journal publisher Dow Jones. Fox, with leftovers from the $71.3 billion sale of Twenty-First Century Fox to Disney in 2019, owns the right-wing networks Fox News and Fox Business, which are competitors to CNBC.
Murdoch had split the company in 2013. The Murdoch family trust controls about 40% of the voting rights of both companies.
At the time, the thinking behind the reunion was simply to give the combined company a bigger place to compete as media companies competed for customers and digital ad spend, CNBC previously reported.
The potential merger has faced opposition from shareholders in recent months, who don’t believe the merger will reflect News Corp’s true value. if it joins Fox.
Some shareholders, like Independent Franchise Partners, believe that the merger will not realize the potential value of News Corp, and that other alternatives, such as breaking up News Corp, should be considered. The London firm is one of the largest non-Murdoch shareholders of News Corp and Fox.
Irenic Capital Management is another shareholder that has rejected the proposed merger, saying Fox does not serve News Corp.’s strategic goals. Franchise Irenic and the Independent believe that News Corp stock is undervalued. Fox Class A shares closed at $32.67 on Tuesday, while News Corp Class A shares closed at $19.53.
– CNBC’s Gabrielle Fonrouge contributed to this article.