Media tycoon, Rupert Murdoch is proposing to merge his two media behemoths, American mass media and publishing company News Corp. (NASDAQ:NWSA) and American media behemoth Fox Corp. (NASDAQ:FOXA) (NASDAQ:FOX). The Murdoch family has a 39% stake in NWSA and a 42% ownership in FOX.
Following the news, all three stocks jumped in after-hours trading on Friday, October 14.
The two companies were split in 2013 from their then-parent News Corp. in an effort to separate and streamline the print and media businesses. Following this, Fox Corp. sold most of its media assets to The Walt Disney Co. (DIS) in 2019 and is a much more efficient empire now.
Meanwhile, News Corp.’s physical publications and digital offerings struggle to gain traction as social media companies attract maximum viewership. Moreover, media companies are earning lower advertising revenues as corporates cut down their advertising budgets to ward off inflation. Murdoch suggests that a stronger combined media house would have a wider moat to compete in the industry. The combined entity would especially target the lucrative sports streaming and betting businesses.
Both companies have formed a special committee to thoroughly study the pros and cons of combining the businesses. If merged, the Murdoch family will get greater control of the merged entity and will try to implement cost-saving measures. Lachlan Murdoch, executive chair and CEO of FOX, plus the co-chairman of NWSA, will probably head the combined entity.
The possibility of a merger is still a far-fetched thought as both special committees will have to agree on a valuation metric for the share exchange. The merger could also require the approval of the next major shareholders of both companies.
Is News Corp. a Good Company?
On TipRanks, News Corp. stock has a Moderate Buy consensus rating. This is based on two buys versus one Hold rating in the past three months. The average News Corp. price target of $25.70 implies 64.7% upside potential to current levels. Meanwhile, NWSA stock has lost 30.8% so far this year.
Is FOXA a Good Stock to Buy?
On TipRanks, FOXA stock has a Moderate Buy consensus rating. This is based on five Buys, two Holds, and two Sells. The average Fox News stock prediction of $40.67 implies 28.9% upside potential to current levels. Year to date, FOXA stock has lost 15.1%.
