That resistance creates a delicate balancing act for the Murdoch family, said Eric Talley, a professor at Columbia Law School who specializes in corporate law and governance. The decision to raise concerns about the merger among News Corp investors may be aimed at securing a higher price for their shares. At the same time, Fox shareholders would probably object to an overly favorable deal for News Corp investors.
“There is a breaking point here, where the game becomes unworthy of the gamble,” Mr. Talley said.
Fox and News Corp have declined to make their executives available to discuss the merger on the record. But in November, Fox’s chief executive, Lachlan Murdoch, said on an earnings conference call that a series of recent mega-mergers in the media industry have underscored the importance of size.
“Scale is important,” Lachlan Murdoch, Rupert Murdoch’s oldest son, said. “Scale lends flexibility in many ways.”
Robert Thomson, the News Corp chief executive, acknowledged the deal-making process in an October note to employees, adding that the company has had two consecutive years of record profits.
Like some other News Corp shareholders, Mr. DeAugustino said he thought that confusion among investors had led them to undervalue shares of News Corp, in part because it owns a varied collection of properties, including a stake in the real estate listings business REA Group worth roughly $5.7 billion. Irenic argues that shares of News Corp, now trading at $18 a share, could be worth $34.
Mr. DeAugustino said he agreed with other investors that there could be merit to spinning off its real estate or Dow Jones businesses. T. Rowe wants the special committee to consider all of its options.
But, he added, “For a patient investor willing to wait out temporary pressures, maybe doing nothing is the best option.”