Home World Rupert Murdoch rejects the proposed merger of Fox and News Corp

Rupert Murdoch rejects the proposed merger of Fox and News Corp

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Rupert Murdoch, chairman of News Corp and co-chairman of 21st Century Fox, arrives at Sun Valley Resort for the annual Allen & Company Sun Valley Conference on July 10, 2018 in Sun Valley, Idaho.

Drew Ungerer | Getty Images

Rupert Murdoch withdrew his reunification proposal Fox Corp and News Corp.

Fox said Tuesday his board received the letter from Murdoch, its chairman, and his son and Fox CEO Lachlan Murdoch, who “determined that the combination was not optimal for the shareholders” of either company at the time.

The potential of unification had faced opposition from shareholders in recent months who did not believe the merger would show the true value of News Corp. if it merged with Fox.

News Corp CEO Robert Thomson told employees on Tuesday that the decision to cancel the proposed deal would not affect employees, according to a memo seen by CNBC. He also urged them to remain silent on the issue.

“As I advised at the beginning of this process, it is best not to speculate, so if you receive information from the media, shareholders, customers or others, please notify your business communications team,” Thomson wrote.

In Octoberthe companies said they had formed a special committee to review the deal.

A merger of the two companies would unify leadership in Murdoch’s empire and cut costs at a time when audiences for both print and television media are shrinking. News Corp owns the Wall Street Journal publisher Dow Jones. Fox, with what’s left of the 2019 sale of Twenty-First Century Fox to Disney for $71.3 billion, owns the right-wing networks Fox News and Fox Businesswhich is a competitor of CNBC.

Murdoch split the companies in 2013. The Murdoch family trust controls about 40% of the voting rights in both companies.

At the time, the idea behind the merger was simply to give the combined company more scale to compete at a time when media companies are fighting for subscribers and digital ad spend, CNBC previously reported.

However, some shareholders, such as Independent Franchise Partners, believed that a merger would not realize the full potential value of News Corp and that other alternatives, such as breaking up News Corp, should be considered. The London-based firm is one of the largest shareholders in both News Corp and Fox, but not Murdoch.

Irenic Capital Management was another shareholder that rejected the proposed merger, saying Fox did not fit News Corp.’s strategic goals. Both Irenic and Independent Franchise believe News Corp’s stock is undervalued. Fox Class A stock closed at $32.67 on Tuesday, while News Corp Class A stock closed at $19.53.

In addition to Dow Jones, News Corp also owns properties such as realtor.com, book publisher HarperCollins and the New York Post.

— CNBC’s Gabrielle Fonrouge contributed to this article.

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