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As Fox and News Corp Weigh Merger, an Activist Has Its Own Vision

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An activist investor wants a say in the proposed Newscorp-Fox merger.

Investor Irenic Capital Management hopes News Corp will consider spinning off its online real estate listings unit from its other businesses, including The Wall Street Journal, HarperCollins and The New York Post. One of Irenic’s founders, Adam Katz, said the company requested a meeting with a special committee set up by the company to evaluate Murdoch’s proposal.

The fund is one of the 10 largest holders of News Corp.’s class B shares, giving it stronger voting power than more class A shares, Katz said. News Corp has a market capitalization of approximately $9 billion.

“Irenic looks forward to working with the company’s special committee to ensure that all avenues for maximizing value are explored, including the separation of outstanding digital media and digital real estate assets,” said Irenic. Katz said.

News Corp’s real estate listing business includes a 61.4% stake in REA Group worth approximately $5.7 billion. The Australian publicly traded company employs over 3,000 people.Operates a residential real estate website real estate website and shared property sites

News Corp’s digital real estate business generated about $1.7 billion in revenue last year. That’s roughly 16% of News Corp’s roughly $10 billion in revenue.

Newscorp declined to comment.

Founded by Katz and Andy Dodge, Irenic prefers to keep its media and real estate businesses separate. With a foothold in information services and digital subscriptions, News Corp claims it has grown into a diversified business that is underappreciated by investors. Newscorp’s stock fell about 33% last year.

Irenic’s push follows Murdoch’s proposal to merge the company about a decade after it split. Murdoch sees new ways to integrate the two companies’ media assets, including Fox News, The Wall Street Journal and Fox Broadcasting Network, as well as opportunities to reduce costs.

The companies confirmed last week that they had received Mr. Murdoch’s proposal, and each said they had appointed a task force to review the potential deal. News Corp Chief Executive Officer Robert Thomson told employees that any deal was “not a certainty.”

News Corp shares rose about 6% in aftermarket trading on Friday. Fox’s stock price fell 0.5% to a market capitalization of about $17 billion.

Without the support of the Murdoch family, Irenic may face an uphill battle. Lachlan, the son of Rupert Murdoch, is co-chairman of News Corp with his father and chairman and CEO of Fox. The Murdoch Family Trust, which Rupert Murdoch manages with his eldest son, owns his 39.5% of the company. Family control is largely due to ownership of Class B shares.

Irenic’s Katz is a former senior analyst at hedge fund Elliott Management, one of the most prominent activist investors. Another activist fund, ValueAct, published a position in The New York Times this year asking the company to sell subscription bundles more aggressively.

News Corp would still be a media giant without its real estate business. The company’s other divisions include Dow Jones, which generated about $2 billion in revenue last year from assets such as The Wall Street Journal, and information services, which includes information provider Factiva. Dow Jones generated approximately $433 million in earnings before interest, taxes, depreciation and amortization last year.

Remaining media businesses include the New York Post, Times of London and HarperCollins publishing operations, which generated approximately $2.2 billion in revenue last year.

Benjamin Marin contributed to the report.

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