News Corp investors raise concerns about proposed Fox merger

But any deal requires the approval of a majority of investors who are not part of the Murdoch trust.

Irenic isn’t the only News Corp investor raising questions. Will Granger of Airlie Funds Management said in an interview that he wasn’t convinced the two companies would be better together.

“We don’t see much of a commercial rationale for the deal,” Granger said. “Does The Wall Street Journal gain by having Fox attached to it? That’s not obvious to me.”

Airlie owns a small stake in News Corp’s total share base, Granger said. His argument was similar to Irenic’s, saying Airlie would not support a merger unless Fox paid a significant premium to News Corp’s stock price or did another deal at the same time, like selling off News Corp’s real estate business.

News Corp’s largest minority shareholders, T. Rowe Price and Vanguard Group, which collectively own about 20 per cent of the company’s Class A shares, did not respond to a request for comment.

News Corp declined to comment.

The deal between News Corp and Fox, if it goes through, could put a collection of news and entertainment assets including Fox News, The Wall Street Journal, the Fox broadcasting network and TMZ under the same corporate umbrella.

Murdoch has said he sees cost-saving and moneymaking opportunities in joining the two companies, including ways to use the company’s assets for emerging business lines across the two companies, such as sports betting.

Since the two companies split in 2007, the industry has gone through a wave of consolidation to compete with streaming giants like Netflix and combat the decline of the traditional TV business.

“Scale is important,” Lachlan Murdoch, CEO of Fox and Rupert Murdoch’s oldest son, said in November. “Scale lends flexibility in many ways.”

The proposal would split ownership among stockholders based on the market value of each company, though it did not suggest a proposed valuation for the companies.

The move took some in the media industry by surprise, since Rupert Murdoch had once argued that his assets were better off in separate companies.

In a note to investors last month, analyst firm MoffettNathanson said that it expected Fox might sell someday, “just not like this!” The note said MoffettNathanson was concerned that the collection of assets could confuse investors, affecting the value they place on a combined company.

Shares of News Corp are down about 20 per cent over the past year, giving it a market valuation of $US10 billion. Shares of Fox are also down about 20 per cent, giving it a market valuation of $US16 billion.

This article originally appeared in The New York Times.

Benjamin Mullin contributed reporting.