What happened
Blockbuster mergers between major companies can often get investors excited. But that certainly wasn't the case Monday with the potential tie-up of Fox Corporation (FOX 2.05%) (FOXA 2.02%) and its close corporate relative, News Corp (NWS -0.12%). Although the latter's share price bumped up modestly on the scuttlebutt, market participants traded both classes of Fox's stock down at rates approaching 10%.
So what
Following a report published after market hours Friday in The Wall Street Journal that company founder and chairman Rupert Murdoch was contemplating a merger between the two companies, Fox essentially confirmed this. It said its board of directors had formed a special committee to explore such a move. This was triggered by the receipt of letters from Murdoch and his affiliated organization, the Murdoch Family Trust.
The tersely worded Fox press release added only that the special committee is to "thoroughly evaluate" a potential merger of Fox and News Corp; the former is anchored by the TV properties of the Murdoch empire, while the latter is primarily its legacy print and online journalism business. Somewhat ironically, one of the latter's prize assets is The Wall Street Journal.
As it's very early days in this process, Fox cautioned in its press release that it "has not made any determination at this time, and there can be no certainty that the Company will engage in such a transaction." It added that it doesn't intend to comment further on the matter until and unless it deems this necessary or appropriate.
Now what
The Murdoch properties always feel like works in progress. Management -- likely with the very heavy input of Murdoch himself -- frequently reconfigures Fox and its associated properties to help them stay atop the ever-shifting media business. Outside of both Fox and News Corp being top names in the sector, they aren't necessarily an ideal fit for each other, which is likely why investors traded out of the Fox titles.
