With the Murdoch family trust dispute coming to an end, Lachlan Murdoch said the resolution will give Fox strategic clarity going forward.
“It shows that our strategy will be consistent. It’s clear and it’s very sustainable. So I think it’s great news for investors,” the chief executive said during an investor conference hosted by Goldman Sachs on Wednesday. “We can be very focused on returning capital to investors, driving our profitability and, really importantly, investing in our core brands and especially in our great journalism.”
He noted that the company has increased its revenue by nearly $5 billion since selling its entertainment assets to Disney in 2019, with around $2 billion from advertising and about $2 billion from distribution. The company has also increased its earnings before interest, taxes, depreciation and amortization (EBITDA) by nearly a billion dollars and that the company has returned $8.5 billion to Fox’s investors.
The company acquired Tubi back in 2019, which has surpassed 100 million monthly active users. It also recently launched Fox One, which offers its news, sports and entertainment programming to 60 million households in the U.S. who currently don’t subscribe to pay TV. Murdoch said the streamer has “already exceeded expectations” since launching a few weeks ago.
“The interplay between Fox One and Tubi really gives us more distribution opportunities to reach consumers and customers and viewers where we wouldn’t ordinarily be able to reach,” Murdoch said. “Tubi has really hit it out of the park in addressing them. It’s also on the path to profitability in the near future. We’re reinvesting that capital in Fox One.”
Additionally, Murdoch said the resolution of the family trust will simplify the sports betting licensing process required to exercise its option to take an 18.6% stake in FanDuel before 2030.
“That investment today, if you take the median sell side analysts’ valuations, we are $3.1 billion in the money in that option and then we have 2.5% of its parent company Flutter and that’s worth on the market $1.1 billion. If I add the two of those together, it’s worth about $9 to $10 per share on our stock price,” he explained. “We are very committed to them and we are committed to becoming a licensed company so that we can exercise that option. We’ve already engaged with 26 states for licensing.”
The Murdoch Family Trust (MFT), which was established by Rupert in 1999 following his divorce from Anna Torv, gave Lachlan, Elisabeth, Prudence and James equal voting control over Fox Corp. and News Corp. upon Rupert’s death. Murdoch’s two youngest daughters with Wendi Deng, Chloe and Grace, did not have voting rights in the trust, but were also listed as beneficiaries.
Under the terms of the Murdochs’ settlement, new trusts are being established for Lachlan, Grace and Chloe. A holding company will be established for the trio, which will hold 36.2% of Fox’s Class B common stock, 31% of News Corp Class B common stock and less than 0.1% of the two companies’ Class A common stock.
Meanwhile, Prudence, Elisabeth and James will cease to be beneficiaries in any trust holding shares in News Corp. or Fox. The departing beneficiaries will get $1.1 billion each for their shares, which will be funded from the proceeds of a sale of 14.2 million shares of News Corp. Class B common stock and approximately 16.9 million shares of Fox Corporation Class B common stock previously held by the MFT.
In the six-month-period following the transactions, Prudence, Elisabeth and James will also sell their “de minimis personal holdings” in Fox and News Corp. to ensure they have no direct or indirect interest in the companies and will be subject to a long-term standstill agreement preventing them and their affiliates from acquiring shares of Fox and News Corp. and taking certain other actions with respect to the companies.
Lachlan will have sole voting control of LGC Holdco through his appointed managing director. The term of the trust will be extended through 2050. Rupert will continue in his role as chairman emeritus.
