Almost two years have passed since Rupert Murdoch completed the master stroke of his career: selling most of his 21st Century Fox business to Disney for $71bn at the absolute peak of its value.
Many media barons have excelled at hoarding assets. Murdoch is one of a handful who managed a greater feat. He relinquished some of his empire at a time when he could hook a buyer ready to overpay.
So as he reflects on that deal anniversary, Murdoch should enjoy the glow of satisfaction — and then call his bankers about the remnants of Fox, which includes news and sports cable offerings, a broadcast network and about 30 television stations.
For the moment may have come to sell parts of it, or to take the whole of Fox Corporation private. Even if that does not manage to defuse the looming battle between Murdoch’s children over his corporate legacy, it would unlock some value, and help re-engineer Fox for the future.
Amid the cacophony of controversy around Fox News, it is easy to lose sight of what Fox Corporation has become: the grizzled rump of a company that throws off steady profits, but is a pale imitation of what Murdoch stood for as a mould-breaking media pioneer.
On air, much has been made of how Fox News is worried about its right flank, seemingly hostage to the post-presidential afterlife of Trumpism. As John Ellis, a former Fox consultant, wrote last year: “the audiences programme the network, not the other way around”.
Viewed as a commercial enterprise, the contrast is more stark. The Fox group has lost the edgy, stuff-your-conventions mentality that made Murdoch the supreme challenger to established US networks starting in the 1980s, and indeed in every media market he has ever entered.
Far from a change maker, the core of Fox today is a classic defensive incumbent, hoping sports and news will help the lucrative pay-TV model endure against the odds.
Fox’s strongest parts are reliant on a shrinking cable subscriber base, serving an audience heavy with retirees. It boasts of pricing power to maintain sky-high profit margins (in excess of 50 per cent for Fox News). It prides itself on low capital investment. In short, it is principally in the business of managing decline.
Murdoch’s son Lachlan, Fox’s chief executive, talks with enthusiasm about the company’s bets on the future: sports gambling, and an advertising reliant video-streaming service called Tubi. These are distinct strategies that might work. But so far investors are unconvinced.
Even though its performance regularly beats Wall Street estimates, Fox’s share price has fallen badly behind rivals such as Discovery and ViacomCBS, which laid out streaming strategies late last year. They have each doubled since November, while Fox has risen 15 per cent.
To change the conversation, the Murdochs have three main options. One is to follow the advice of analysts at Moffett Nathanson and try to sell Fox’s broadcasting assets, such as the Fox network. While the analysts estimate proceeds would be modest, perhaps $1bn to $2bn dollars, it would prune what investors see as deadweight.
The second bolder option would be to sell all of Fox’s legacy TV and cable businesses, or its most valuable asset, Fox News. This would raise a tidy sum, perhaps near $20bn, and might lower the temperature of an unrelenting family power tussle over Murdoch’s legacy.
Murdoch’s younger son James has developed trenchant and increasingly critical views about the news channel. He is unlikely to let the matter lie when he and his siblings take over control of the family trust.
Selling Fox News might quell some family strife when its value is high. But it raises a tricky question: what would that leave? Moffett Nathanson expects Fox News to account for more than 100 per cent of Fox’s total operating profits by 2024.
It might make more sense for Murdoch to take Fox private. Shareholders would have to back such a move — the Murdochs have outsized influence over the company but not full voting control. But it has clear advantages. Lachlan Murdoch could restructure with more gusto, incubate the sports-betting and Tubi businesses, and take advantage of the other assets — including a US tax shelter — that the company believes are underpriced by the market.
Such a deal may be a tall order for Murdoch in his 90th year. But he has a record of shrewd gambles, and rivals have mistakenly written him off before. Just recall that Robert Maxwell, the late newspaper tycoon, dismissed Murdoch as a “moth-eaten kangaroo” — in 1969.