Rupert Murdoch Withdraws Proposal to Merge Fox Corp. and News Corp

Fox Corp. owns Fox News and the Fox broadcast network, along with local TV stations and the Tubi streaming service. News Corp is the parent company of Dow Jones, publisher of The Wall Street Journal, as well as other assets including HarperCollins Publishers and news organizations in the U.K. and Australia.

News Corp has weighed other strategic options besides a merger with Fox Corp., including the sale of its digital real-estate assets, people familiar with the situation said. The company has had advanced discussions about selling its 80% interest in Move Inc., which operates Realtor.com, the people said. News Corp also owns a nearly two-thirds stake in Australian digital real-estate firm

REA Group Ltd.

People familiar with Mr. Murdoch’s thinking about the merits of merging Fox Corp. and News Corp said that the companies could benefit from being bigger and that the combined entity would have had more balance-sheet strength to pursue acquisitions. The companies also could have joined forces in areas such as sports betting, the people said.

Some large investors were skeptical of the proposed transaction. In November, the Journal reported that Independent Franchise Partners, a London-based investment firm and one of the largest non-Murdoch holders of both News Corp and Fox, opposed the recombination, arguing it wouldn’t realize the full value of News Corp.

T. Rowe Price Group Inc.,

a large News Corp shareholder, raised concerns with the company and its board about how such a deal would value News Corp, according to people familiar with the matter.

In a letter to News Corp’s board, shareholder Irenic Capital wrote that “a combination with Fox does not serve News Corp’s strategic goals.” The letter also noted that “Fox is subject to litigation that may result in billions in costs.”

In a statement Tuesday, Irenic Capital co-founder Adam Katz said, “This is the right decision. Looking ahead, News Corp has an opportunity to create substantial value for its owners.”

Special committees of the Fox Corp. and News Corp boards that had been set up to review the proposed merger have been dissolved, the companies said.

Mr. Murdoch is executive chairman of News Corp and chairman of Fox Corp. His son

Lachlan Murdoch

is co-chairman of News Corp and executive chairman and chief executive of Fox. The Murdoch family trust has a roughly 39% voting stake in News Corp and about a 42% voting stake in Fox Corp., according to securities filings from the companies.

For a deal to have moved forward, a majority of the non-Murdoch-family shareholders would have had to approve it.

—Corrie Driebusch contributed to this article.

Write to Jeffrey A. Trachtenberg at [email protected]

Fox Corp. owns Fox News and the Fox broadcast network, along with local TV stations and the Tubi streaming service. News Corp is the parent company of Dow Jones, publisher of The Wall Street Journal, as well as other assets including HarperCollins Publishers and news organizations in the U.K. and Australia.

News Corp has weighed other strategic options besides a merger with Fox Corp., including the sale of its digital real-estate assets, people familiar with the situation said. The company has had advanced discussions about selling its 80% interest in Move Inc., which operates Realtor.com, the people said. News Corp also owns a nearly two-thirds stake in Australian digital real-estate firm

REA Group Ltd.

People familiar with Mr. Murdoch’s thinking about the merits of merging Fox Corp. and News Corp said that the companies could benefit from being bigger and that the combined entity would have had more balance-sheet strength to pursue acquisitions. The companies also could have joined forces in areas such as sports betting, the people said.

Some large investors were skeptical of the proposed transaction. In November, the Journal reported that Independent Franchise Partners, a London-based investment firm and one of the largest non-Murdoch holders of both News Corp and Fox, opposed the recombination, arguing it wouldn’t realize the full value of News Corp.

T. Rowe Price Group Inc.,

a large News Corp shareholder, raised concerns with the company and its board about how such a deal would value News Corp, according to people familiar with the matter.

In a letter to News Corp’s board, shareholder Irenic Capital wrote that “a combination with Fox does not serve News Corp’s strategic goals.” The letter also noted that “Fox is subject to litigation that may result in billions in costs.”

In a statement Tuesday, Irenic Capital co-founder Adam Katz said, “This is the right decision. Looking ahead, News Corp has an opportunity to create substantial value for its owners.”

Special committees of the Fox Corp. and News Corp boards that had been set up to review the proposed merger have been dissolved, the companies said.

Mr. Murdoch is executive chairman of News Corp and chairman of Fox Corp. His son

Lachlan Murdoch

is co-chairman of News Corp and executive chairman and chief executive of Fox. The Murdoch family trust has a roughly 39% voting stake in News Corp and about a 42% voting stake in Fox Corp., according to securities filings from the companies.

For a deal to have moved forward, a majority of the non-Murdoch-family shareholders would have had to approve it.

—Corrie Driebusch contributed to this article.

Write to Jeffrey A. Trachtenberg at [email protected]