Major shareholder concerned about News Corp-Fox merger

T Rowe Price, which owns about 12 per cent of News Corp, said a merger would probably undervalue News Corp

One of the largest shareholders in News Corp said Friday that it had strong reservations about the plans of its chair, Rupert Murdoch, to combine the two parts of his media business, News Corp and Fox — the biggest indicator yet that Murdoch could face significant opposition.

T Rowe Price, which owns about 12 per cent of News Corp — making it the company’s largest shareholder after the Murdoch family — said in an interview with The New York Times that a merger of the two companies would probably undervalue News Corp, which it believes is trading for less than the company is worth. It also said that because the Murdoch family owns a bigger share of Fox than News Corp, the family’s interests may lie more with Fox.

Both companies have appointed special committees of independent directors to review the proposal, which does not yet include a valuation for either company.

The deal, which could put Fox News under the same corporate umbrella as The Wall Street Journal, would reverse a decision made nearly a decade ago to divide the company’s film and TV holdings from its global portfolio of newspapers. Murdoch has said he sees cost-saving and moneymaking opportunities in joining the companies, including ways to use the company’s assets for emerging business lines across the two companies, such as sports betting.

T Rowe’s decision to raise its concerns publicly is a rarity for the asset manager, which generally prefers to resolve its issues behind the scenes. The most recent instance of T Rowe raising public concerns about a deal was in 2019, when it came out against Occidental Petroleum’s merger with Anadarko Petroleum.

News Corp and Fox declined to comment.

Although the valuation of News Corp is the primary concern, T Rowe has other concerns related to the deal. They include the value that Fox offers News Corp, given the decline of the traditional TV business and the potential financial consequences of litigation against Fox News by the voting machine companies Dominion and Smartmatic. The companies are each suing Fox News for damages exceeding $1 billion, arguing that Fox’s hosts promoted defamatory conspiracy theories related to the 2020 election. Fox has countered that the commentary is inherently newsworthy and protected under the First Amendment.