Media mogul Rupert Murdoch is in a mood to deal.
Reports in the Wall Street Journal and CNBC indicate that Comcast and Verizon have approached Murdoch's 21st Century Fox about buying its entertainment properties such as the 20th Century Fox film studio and the U.K.'s Sky pay TV business. These are the same assets that Walt Disney considered purchasing before talks between the companies recently broke down.
As I argued before, this represents a huge change for the 87-year-old Murdoch, who spent tens of billions over the decades cobbling together one of the biggest media companies in the world, with some missteps on the way. In 2014, the tycoon made an unsolicited offer for rival Time Warner, which is now being acquired by AT&T, that was quickly shot down. He spent $5 billion in 2007 on Dow Jones, the parent of the Wall Street Journal, and in 2005 bought MySpace for $580 million in one of the worst transactions in the history of corporate America.
If the media reports are to believed, Murdoch and his sons James and Lachlan, who are top executives at his companies, have decided that the original content business has gotten too expensive for them. With Netflix planning to spend $8 billion in 2018 on original programming, Amazon.com's $4.5 billion spending plan, and Apple's $1 billion budget, it's easy to understand their misgivings, particularly given the underperformance of 20th Century Fox in both TV production and at the box office this year.
The Murdochs appear eager to retain the Fox broadcast network, which has valuable sports broadcast rights; Fox News, by far the most popular cable news channel; and its local television stations, among other things. I am not sure if antitrust regulators, who are leery about the AT&T-Time Warner deal, would bless any of the other transactions that may be in the works. Regardless, Murdoch's deal-making is far from over.
When Tribune was for sale in 2015, Murdoch was forced to take a pass on a chance to buy the bankrupt publisher of The Los Angeles Times, Baltimore Sun and Orlando Sentinel because of the FCC's rule limiting the ability of companies to own newspapers and television stations in the same market. At the time, the mogul, who started his career in the newspaper business in his native Australia, denounced the decades-old policy designed to ensure that diverse viewpoints were represented in the media as “laws from another age."
Murdoch has a kindred spirit in the new FCC Chairman Ajit Pai, who Thursday succeeded in getting a divided commission to relax the agency's ownership rule. Variety wasn't exaggerating when it called the move "the most significant changes to media ownership regulations in a generation." It will lead to a wave of mergers among television station owners and may even spur renewed interest in newspaper publishers.
Murdoch's publishing assets are now housed in the family's News Corp company, which confusingly is the name that the entire Murdoch media portfolio traded under for years. The Murdochs spun off their slow-growing publishing businesses such as the New York Post and Wall Street Journal from their more profitable broadcasting and entertainment properties Other media conglomerates with publishing and broadcasting assets including Gannett and Tribune did the same thing.
Tribune's newspaper division is now called Tronc, which sounds like the name of a creepy clown. The company, like other newspaper publishers, continues to muddle along as a rise in digital subscription and advertising revenue doesn't quite make up for the decline in its print business. Chicago-based Tronc, which recently acquired the New York Daily News, earned a whopping $2.1 million in the most recent quarter. Its market cap is about $542 million, a rounding error for the Murdochs should they wish to acquire it.
In fact, it wouldn't surprise me if once the smoke clears from all these deals, all the Murdochs' publishing and broadcast assets are under one corporate umbrella once again.
