The "Murdoch Media Empire" that has been split for more than 10 years is about to merge again?

　　On October 16, local time, the Wall Street Journal reported that the 91-year-old "media giant" Rupert Murdoch is trying to merge News Corp (NWS.US), one of the world's largest media groups. And News Corp. Fox Inc (FOX.US), a plan that will help cement the position and power of its eldest son, Lachlan Murdoch, in the family business.

Eldest son Lachlan may be heir

　　Both News Corp and Fox have formed special board committees to explore the possibility of a merger deal and evaluate potential financial terms, people familiar with the matter said.

The merger, which may be an all-stock merger, requires approval from a majority of non-family shareholders, and the stock exchange ratio will be negotiated by a board committee.

　　If the transaction is completed, the combined company is likely to retain the "News Corporation" name, the people said.

The merger deal may be to save costs or to promote new businesses such as sports betting in media channels such as publishing and television.

　　In a memo to employees, News Corporation CEO Robert Thomson confirmed that the company had formed a special committee to consider whether to merge with Fox.

"News Corporation has been pursuing improved performance and business expansion, and the current situation presents both challenges and opportunities," he wrote. It is also uncertain whether any transactions will take place.”

　　According to securities filings by the two companies, Murdoch's family trust has significant voting power in each company -- about 39 percent in News Corp. and about 42 percent in Fox Corp.

　　Murdoch, 91, controls the family trust and has six children, four of whom have voting rights and a big say in the company's future.

The remaining 2 daughters have no voting rights and are only beneficiaries of the trust.

　　No family member of Murdoch has spoken publicly about the deal so far, but The Wall Street Journal said the merger could cement the power of his eldest son, Lachlan Murdoch.

　　After Murdoch's death, Lachlan, who is currently co-chairman of News Corp and executive chairman and chief executive of Fox, could be the man to control the entire "Murdoch empire."

Murdoch's youngest son, James Murdoch, was once seen as one of the heirs, but he resigned from the News Corp board in 2020, leaving the family business altogether.

　　After the merger, News Corp. CEO Robert Thomson, who has maintained a good working relationship with Lachlan, may continue to play a key role, people familiar with the matter said.

　　"The Wall Street Journal" also pointed out that some people in the industry who are good at brokering deals said that Murdoch's media assets may have been targeted for fat.

A merger to create a larger company can help fend off any unpopular takeover attempts.

Analysts are mixed, shareholders are not optimistic about merger

　　Rupert Murdoch is the executive chairman of News Corporation and chairman of Fox.

He started with a newspaper in Australia and single-handedly built a "media empire" that spanned publishing, entertainment and television news.

　　In 2013, Murdoch spun off News Corporation's film and television and publishing businesses, and the higher-yielding film and television entertainment business formed 21st Century Fox, whose publishing business still retains the "News Corporation" name.

　　With the rise of streaming video, Murdoch doesn't think Fox can compete with platforms like Netflix.

In 2019, he sold most of Fox's entertainment assets to The Walt Disney for $71.3 billion, with the remainder not owned by Disney to form Fox.

　　At present, News Corporation owns "Wall Street Journal" publisher Dow Jones (Dow Jones), a number of British and Australian news organizations, and one of the world's largest English-language book publishers, HarperCollins (HarperCollins).

Fox, which owns Fox News, Fox radio and television stations, and streaming service Tubi TV, focuses on television, live news and sports.

　　UBS Group AG points out that News Corp.'s U.S. operations, such as The Wall Street Journal and The New York Post, and Fox's broadcast and television business can cross-operate and benefit from each other.

Barclays (Barclays Plc) analyst Kannan Venkateshwar does not endorse the transaction, he believes that the two companies do not have fully complementary businesses, the transaction is unlikely to change the status quo of "Murdoch's media empire".

It said in a research note that the proposed merger was "puzzling".

　　Analysts at Wells Fargo said the merger of the two companies could create "synergies" in terms of content and programming, that is, a combined "1+1>2" effect.

　　However, Morgan Stanley analyst Benjamin Swinburne said that for Fox, the "synergies" from the merger would be largely offset by the complexities it would create.

Another analyst, Andrew McLeod, said there was "strategic value in a merger" for News Corp, but the company needed to see when an asset sale or spin-off would occur.

　　It is worth noting that the success of the merger transaction is not entirely determined by the Murdoch family, but also requires the approval of most non-family shareholders.

Irenic Capital Management, one of News Corp's shareholders, does not appear to approve of the merger, saying it prefers to spin off News Corp's media and real estate businesses.

Irenic holds a $150 million stake in News Corp and is one of the 10 largest shareholders in its Class B shares.

　　Irenic and its partners have approached the Murdoch family, arguing that breaking up News Corp could add value to the company, people familiar with the matter said.

According to News Corp.'s financial report, the company achieved revenue of $10.4 billion in fiscal 2022, an increase of 11% year-on-year, of which real estate revenue was $1.741 billion, a year-on-year increase of 25%.

　　In addition to the business changes it would bring, a merger with Fox could also bring legal risks.

Fox is facing two lawsuits -- voting systems company Smartmatic filed a lawsuit against Fox News in February 2021 for up to $2.7 billion; another voting systems company Dominion the same year accused the media of knowingly disseminating some unrecognized information during the 2020 U.S. election. Verified "conspiracy theory" claiming $1.6 billion.

　　As of the close of U.S. stocks on October 17, News Corp. rose 3.40% to close at $16.13 per share, with a market value of about $9.4 billion; Fox fell 8.09% to close at $26.80 per share, with a market value of about $15.1 billion.

According to the Forbes Rich List, as of October 17, Murdoch ranked 91st on the world's richest list with a net worth of $16.8 billion.