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Shares of News Corp. rose while Fox Corp. shares fell Monday as investors weighed the possibility of Rupert Murdoch’s media companies recombining nearly a decade after they split.
The companies announced Friday that they were exploring a merger, with each saying it formed a special committee to consider the possibility.
The deal would consolidate Murdoch’s leadership over Fox’s news, sports and business channels with his control of News Corp.’s properties, which include The Wall Street Journal, Barron’s, the New York Post and HarperCollins.
News Corp. has a market capitalization of around $9.45 billion, while Fox Corp. is worth about $14.76 billion.
A source familiar with the proposal who was not authorized to comment publicly told CNBC that a merged company could be in a better position to pursue acquisitions and that the scale of its combined properties could help it compete for digital ad dollars with the likes of Google, Apple and Amazon. The deal would need a majority approval of shareholders who are not part of the Murdoch family trust, the source said.
Alphabet has a market cap of $1.32 trillion, Apple’s market cap is $2.29 trillion and Amazon’s market cap is $1.15 trillion.
The Wall Street Journal also reported skepticism from media executives — including some close to Fox and News Corp. — that the recombination would have strategic benefits.
An activist investor, Irenic Capital Management, is also pushing for News Corp. to split its online real estate listings unit from its other businesses. News Corp. owns several publications in the category including Realtor.com and REA Group.
A source familiar with the matter told CNBC that Irenic is one of the 10 largest holders of News Corp.’s Class B shares, which come with stronger voting rights than its Class A shares. The source said Irenic would oppose the combination of News Corp. with Fox if the real estate arm remained undervalued.
Representatives from Fox and News Corp. did not immediately respond to requests for comment.
Fox’s Class A shares closed down more than 9% on Monday. News Corp.’s Class A shares closed up more than 3%.