Rupert Murdoch has a long history of wrong footing his rivals with unexpected business manoeuvres. With some notable exceptions (he famously blew billions on embryonic social media platform MySpace), the 91-year-old entrepreneur is master corporate tactician with a track record of deftly timing the markets.
That’s why his latest unexpected move – to explore the re-unification of News Corp and Fox Corp, the two companies he tore apart less than a decade ago – should be significant for all investors.
Even though it has been talked about for years, the announcement late last week that News Corp and Fox Corp are exploring a tie-up has raised more than a few eyebrows on Wall Street.
“This is not exactly how we envisioned the Fox endgame playing out,” wrote analysts at research firm Moffett Nathanson. “[W]e do not believe Fox investors will be happy with this outcome as currently announced.”
Back in 2013, when Murdoch decided to split his multi-billion dollar corporate empire News Corp was reeling from a phone hacking scandal at its UK tabloids and the print media business globally was deeply challenged. News Corp’s exposure to print was dragging down its overall valuation and weighing on its fast-growing US film and television assets.
A lot has changed since then for both the Murdochs, and the broader media business. Newspaper companies that have transformed their operations through digital subscriptions are no longer unloved by the market. And the Murdoch line of succession is settled with the eldest son Lachlan now firmly in charge, after the acrimonious departure of younger brother James.
The two Murdoch businesses that have emerged over the ensuring period are also very different to what they were nine years ago. News Corp still owns a vast array of global and local newspapers (including the Wall Street Journal, The Times and The Australian) but now makes most of its money from digital real estate.
Meanwhile, Fox Corp is also a different beast. Murdoch famously sold his entertainment assets to Disney for $80 billion, a top of the market deal now considered a masterstroke. It was timed just before Netflix and streaming shattered the economics of Hollywood. Fox Corp is now focused on live news – it owns the top-rated US cable channel Fox News – and live sport (and the adjacent, booming business of US sports betting).