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Rupert Murdoch considers combining Fox, News Corp

Oct 14 (Reuters) – Rupert Murdoch has started a process that could reunite his media empire, News Corp ( NWSA.O ) and Fox Corp ( FOXA.O ) disclosed on Friday, saying they would consider combining at his behest, almost a decade after the companies split.

Both have formed special committees to consider proposals for a potential combination, they said.

If a deal goes through, the combination would give Murdoch greater control over his media assets and help the companies cut costs. Media companies are battling decade-low growth in ad sales and for user attention toward deep-pocketed social media and content sites.

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After years of global expansion, Murdoch split his empire in 2013, placing the print business into the newly created public entity News Corp and television and entertainment under 21st Century Fox.

Murdoch said at the time that his vast media holdings had become “increasingly complex” and that a new structure would simplify operations. The split also shielded Fox’s entertainment assets from potential financial fallout from a phone-hacking scandal involving the media conglomerate’s now-defunct News of the World publication in the UK.

The thinking at the time was that separating the companies would ultimately generate value for shareholders, according to a person familiar with the decision-making process. That vision was realized when Fox sold the bulk of its film and television assets to Walt Disney Co ( DIS.N ) for $71 billion in 2019.

The sale allowed Fox to focus on live events such as news and sports, rather than “interruptible” scripted entertainment content on its streaming platforms, Wall Street analysts observed at the time.

However, the major streaming services have begun to breach the protective moat. Apple Inc ( AAPL.O ) and Inc ( AMZN.O ), two technology giants with vast financial resources, have begun bidding on sports, securing rights to stream major league baseball, football and soccer games.

Fox recently renewed a long-term deal with the National Football League to continue broadcasting Sunday afternoon games, but relinquished Thursday Night Football to Amazon.

Reuniting Fox and News Corp would give the combined companies greater scale to compete and complement their assets, the person familiar with the proposal said. The combined companies will have around $24 billion in revenue.

Murdoch, 91, currently holds near-controlling stakes in both companies. His son Lachlan Murdoch is chairman and CEO of Fox Corp. Companies that adopt such arrangements typically make subsequent mergers subject to the approval of a majority of shareholders unrelated to their controlling shareholder, although it is not clear whether this will be the case in this case.

As of Friday’s market close, News Corp had a market capitalization of $9.31 billion and Fox Corp had a market capitalization of $16.84 billion, according to Refinitiv. News Corp shares rose 5% and Fox rose about 1% in after-market trading.

The development was first reported by the Wall Street Journal earlier in the day.

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Reporting by Yuvraj Malik in Bengaluru; Editing by Krishna Chandra Eluri, Grant McCool and Shri Navaratnam

Our standards: Thomson Reuters Trust Principles.

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