December 7, 2022

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As Fox and News Corp weigh in on the merger, the activist has his own vision

As Fox and News Corp weigh in on the merger, the activist has his own vision

An activist investor is pushing for a say in the proposed merger of News Corp and Fox, a deal floated by Rupert Murdoch, the president of both companies.

The investor, Irenic Capital Management, wants News Corp to explore separating its online real estate listings unit from its other businesses, which include The Wall Street Journal, HarperCollins and The New York Post. Adam Katz, co-founder of IRINIK, said the company had requested a meeting with the special committee set up by the company to evaluate Mr. Murdoch’s proposal.

Katz said the fund is one of News Corp’s ten largest owners of Class B shares, which give stronger voting rights than the more numerous Class A shares. News Corp. has a market capitalization of about $9 billion.

“Irenec looks forward to partnering with the company’s special committee to ensure it explores all paths to maximize value, including separating high-profile digital media and digital real estate assets,” said Mr. Katz.

News Corp’s real estate listings business includes a 61.4% stake in REA Group, valued at approximately $5.7 billion. The company, which is publicly traded in Australia, employs more than 3,000 people. Manage residential real estate website realestate.com.auCommercial real estate website realcommercial.com.au and co-ownership site flatmates.com.au.

News Corp’s digital real estate business generated about $1.7 billion in revenue last year, or about 16% of News Corp’s roughly $10 billion in revenue.

News Corp declined to comment.

Irenic, founded by Mr. Katz and Andy Dodge, believes that the media and the real estate business would be better off as separate companies. It maintains that News Corp has grown into a diversified company, with a foothold in information services and digital subscriptions, which has not been properly valued by investors. News Corp’s shares have fallen about 33% over the past year.

Push Irinich follows Mr. Murdoch Proposal to merge companies Almost a decade after they split up. Mr. Murdoch sees new ways to integrate corporate media properties, which include Fox News, The Wall Street Journal and Fox Broadcasting Network, as well as cost-saving opportunities.

The two companies confirmed last week that they had received Mr. Murdoch’s offer, and both said they had appointed a special committee to review any potential deal. Robert Thompson, CEO of News Corp., told employees there was “no certainty” about any deal.

News Corp shares rose about 6 percent in aftermarket trading on Friday. Fox shares fell half a percent, giving it a market capitalization of about $17 billion.

Without the support of the Murdoch family, Ireneich could face an uphill battle. Rupert Murdoch’s son Lachlan is the co-chairman of News Corp, along with his father, as well as the CEO and CEO of Fox. The Murdoch Family Trust, controlled by Rupert Murdoch with his two eldest children, owns 39.5 percent of the company. The family’s control largely stems from its ownership of its Class B shares.

Mr. Katz of Irenic is a former senior analyst at hedge fund Elliott Management, one of the most prominent active investors. Another activist fund, ValueAct, has revealed a position in The New York Times this year And it is lobbying for the company to sell its subscription packages more aggressively.

News Corp would still be a media giant without its real estate business. The company’s other units include Dow Jones, which generated nearly $2 billion in revenue last year from real estate including The Wall Street Journal, and its Information Services unit, which includes intelligence firm Factiva. Dow Jones generated an estimated $433 million in earnings before interest, taxes, depreciation and amortization last year.

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The remaining media businesses will include the New York Post, The Times of London and HarperCollins Publishing, which generated approximately $2.2 billion in revenue last year.

Benjamin Mullen Contribute to the preparation of reports.