Fox Class A shares closed Oct. 14 at $31.55, down 15 percent for the year, while News Corp. down 34 percent to US$15.60.
Venkateshwar compared the deal to that of the Redstone family the re-merger of Viacom and CBSwhich he said did not add much value.
“There is likely to be some investor consternation about the thought process behind any combination of the two companies, and investor reaction is likely to be negative,” Venkateshwar wrote.
At MoffettNathanson, analysts Robert Fishman and Michael Nathanson said they were also left “scratching their heads” over the plan. “We don’t believe in one-size-fits-all stories, and combining Fox with News Corp.’s assortment of assets is unlikely to reset the valuation and is even more likely to complicate the narrative for investors,” they wrote. They wrote that Fox as a separate asset has a clear focus.
The power of the patriarch
Rupert Murdoch, 91, usually gets his way in the business he started building seven decades ago. He is chairman of Fox and executive chairman of News Corp. He also has the largest voting share in the family trust, including voting rights for his four eldest children, Lachlan; James; and two daughters, Prudence and Elizabeth.
Special committees of the independent directors will explore possible terms and there is no assurance that a transaction will be completed.
Fox and News Corp have expanded their digital offerings in recent years, and Lachlan believes he can use both traditional and new media to launch and promote the business in the future.
The family feud that inspired the HBO series Continuitywere well chronicled.
James and his wife Catherine have been critical of the media empire’s coverage of issues such as climate change. Catherine sits on the board of directors of 19th, a news organization focused on women’s issues and public policy, and they helped fund Bulwark, an anti-Trump conservative news outlet. They are also big donors to Democratic candidates.
Lachlan, meanwhile, defended the split of the two companies in a presentation to investors in 2019. He said the spat allowed the company to return to its roots as a “nimble, creative, entrepreneurial, sometimes controversial company.” He even went so far as to say that he “sees no logic in revoking the benefits of these defining actions.”
His thinking has changed, according to people familiar with the company’s plans. The media landscape has shifted with more consumers viewing content online. Fox and News Corp have expanded their digital offerings in recent years, and Lachlan believes he can use both traditional and new media to launch and promote the business in the future.