Rupert Murdoch denied on Thursday that his family was “retreating” from the business as his media empire was broken up by a $52bn (£39bn) sale of 21st Century Fox assets to Disney.
“I know a lot of you are wondering, why have the Murdochs come to such a momentous decision?” the recently married 86-year-old said on a call with investors yesterday. “Are we retreating? Absolutely not. We are pivoting in a pivotal moment.”
Murdoch and his family will own 4.25 per cent of the new Disney, equivalent to about $7bn at Disney’s current market capitalisation. They will also retain control of the spun-out “Fox”, comprising Fox News and Fox Sports, and will hold onto the separate News Corp.
Donald Trump spoke to Murdoch on Thursday, with reports suggesting the divisive US President wanted to make sure Fox News was not being sold.
Under the terms of the deal, shareholders in 21st Century Fox will receive 0.2745 Disney shares for each of their ordinary shares.
But investors in Sky were jittery, as the future of the broadcaster’s ownership was called into doubt. Shares in the company dropped 1.9 per cent to 990p.
While Disney will acquire 21st Century Fox’s 39 per cent stake in Sky, a process to acquire the remaining 61 per cent of shares is still under scrutiny from the Competition and Markets Authority.
Today 21st Century Fox said it was confident it would close the Sky takeover before the Disney merger, allowing Disney to take full ownership of the company. But if the Sky takeover is blocked, it is unclear what would happen next.
Max Gilbert, an analyst at New Street Research, explained: “It's quite negative for the stock at the moment. Investors would have been hoping that Disney would come in and say it intended to bid for the minorities as well, which would have meant if the the Fox Sky bid gets rejected there's another chance.”
However, Ian Whittaker from Liberum was more upbeat. He said: “We believe there is more chance the deal [for Sky] will go through now. It’s a less contentious buyer.”
Questions were also looming over the future of Rupert Murdoch’s younger son James, currently chief executive of 21st Century Fox. Disney’s chief executive Robert Iger told investors yesterday that he would discuss “whether there is a role for him or not at our company” following the transition process.
Despite Murdoch's insistence that the move was not a retreat, Labour's shadow culture secretary Tom Watson – a long-term critic of the Murdochs – said the deal marked "the end of an era" for the family.
“The decision to sell off key assets follows their UK business being engulfed in a phone hacking scandal, and ongoing revelations about sexual harassment at Fox News in the USA – scandals which have been in sharp focus recently thanks to the Murdochs' attempted takeover of Sky," he said.
“It's important for Disney, a highly respected global media brand, that they do not allow the toxic corporate culture we have seen in the Murdoch empire to contaminate their business and tarnish their reputation."
Disney’s acquisition includes 21st Century Fox's film and TV studios, and cable networks. It also brings the rights to major brands including the X-Men, Avatar, and The Simpsons under the Disney umbrella.
Iger said he will stay on at Disney as chairman and CEO through to the end of 2021 in order to oversee the integration of the two businesses, putting to bed rumours that he was planning a run for the White House in 2020.
Meanwhile, banks working on the deal could rake in as much as $175m in fees, according to a Bloomberg report citing estimates from Freeman Consulting Services.
Financial giants Goldman Sachs, JP Morgan and Deutsche Bank are set to gobble up a considerable chunk of the fees. However, successful boutiques Centerview and Guggenheim will also get a piece of the pie.
And as for Rupert Murdoch’s personal wealth – it is expected to jump to around $15bn upon completion of the deal with Disney.