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Fox Sets Sights on Merger Opps After Axing News Corp Combination

”We do expect that M&A will be a more important part of our toolkit as we deploy capital, but we have nothing on the table in front of us today,“ Fox CEO Lachlan Murdoch told analysts

Fox Corporation is setting its sights on opportunities in the merger and acquisitions space after reversing course on a potential combination with News Corporation last month.

“We are, I think, in a strong position to capture opportunities when they present themselves. And obviously there are other companies in our sector that are in not as great a position and will be things that we will cast our eyes over,” Fox CEO Lachlan Murdoch told analysts on the company’s second quarter earnings call on Wednesday. “We do expect that M&A will be a more important part of our toolkit as we deploy capital, but we have nothing on the table in front of us today.”

Fox, which sold its entertainment assets to The Walt Disney Company in 2018, currently oversees the Fox broadcast network, Fox News and Fox Sports. In addition to scaling its business, Murdoch emphasized the importance of the “depth” of its business and noted that the company would be “investing equally in both.”

Discussions between Fox and News Corp. began back in October, nine years after they were split into separate entities, with each company’s board of directors creating a special committee to explore a potential combination.

However, Fox released a statement last month that it would withdraw the the proposal, calling it “not optimal for shareholders.” The decision followed investor pushback from several firms, including T. Rowe Price, Irenic Capital Management and London-based Independent Franchise Partners.

“I have said in the past that I think scale provides flexibility and that it’s important to be prepared when opportunities present results,” Murdoch said Wednesday. “The rationale behind considering a combination with News Corp. was about that. Scale, flexibility, synergies, opportunities, great IP and above all creating value for all shareholders.”

The comments on M&A come as Worldwide Wrestling Entertainment is preparing to begin negotiations for its domestic media rights, which expire in 2024. Currently, NBCUniversal is home to “Monday Night Raw,” while Fox is home to “Smackdown.”

Additionally, the company is undergoing a strategic review, which could include a possible sale.

“Though still early in the strategic alternatives review, we intend to consider a broad range of options via thorough process,” WWE CEO Nick Khan told analysts on the company’s earnings call last week.

Khan emphasized that the company is looking for a partner who “has more than simply deep pockets.”

“So a partner that understands the media business, that’s in the media business that understands how to further monetize the media business, that certainly understands our product, our intellectual property, what we’re doing with it, what can be done with it, media rights both domestically and internationally,” he added.

In addition to Fox, other potential WWE suitors that have been floated include NBCUniversal parent Comcast and Disney.