A big New York property deal has outlined the future shape of the Murdoch family’s media empire’s key companies News Corp and Fox Corp – amid all the speculation about a merger idea, the two will continue together in some way or another for another two decades or more.
That’s despite the ructions being caused by the current proposal to recombine the two companies that is driving much of the speculation about the future of the world’s best known media empire and family.
The two companies have revealed the biggest leasing deal in the huge New York property market for some years.
News Corp owned Wall Street Journal revealed the renewal deal which had an important message for outside investors in both companies – that whatever the decision about the recombination, the head office of the two companies will continue, as it has since the split in mid-2013, to operate out of the same New York office tower.
Both companies have renewed their leases for at least the next 20 years. The renewals came years ahead of time and push the expiry of the two arrangements out past 2040, when many current players in the empire will either be dead, gone or infirm.
Both companies and the Murdochs themselves – especially dad Rupert and son Lachlan – are sending a message that regardless of what happens to the recombination idea, News and Fox will remain separate but equal and in each other’s arms, in their long-time HQ building on the Avenue of the Americas, in the heart of New York’s Midtown.
For 91-year-old Rupert, a 20-year renewal would be “forever” (which is how long he once famously said he plans to live), given his age and the current uncertain state of play inside the family and both companies, as detailed in a long article in the Financial Times this week.
The article raised questions about relationships between the sons and daughters of Rupert Murdoch and his various wives.
The office space at 1211 Avenue of the Americas covers more than a million square feet combined. The new leases run through to 2042, and carry further extension options. Fox Corp has almost 670,000 square feet and its lease extension takes effect in December 2025. News Corp’s lease for 486,000 square feet will be extended at the end of 2027.
The new lease agreements with Ivanhoé Cambridge – the real estate subsidiary of a Canadian-based investment firm – total 1.2 million square feet of office space. Together, they represent the largest commercial lease deal of 2022 as well as the biggest in Manhattan since 2019.
Along with the interior space, the renewals call for renovations of the plaza and outdoor spaces where Fox Sports and Fox News have hosted broadcasts in recent years. There will also be a new tenant lobby on 47th Street. Renovation work is due to start later this year.
That both companies and their supposedly separate managements saw the need to renew long term leases confirms they are not really independent of each other – either now or in the future – after all each will be ‘just down the hall’ from each other at 1211 Avenue of The Americas for years to come. It’s as though the split in 2013 never happened, except in accounting and regulatory terms.
Both companies are due to release their December quarter and half year financial reports early next month and analysts are expecting an update on any progress on the recombination proposal which is being assessed by two independent board committees of both companies.
From public comments, there seems to be more opposition to the proposal among some shareholders in News Corp than in Fox.
Some US analysts wonder if the future of the Australian and UK newspapers, along with the 65% owned Foxtel pay TV business in Australia, will survive any merger as the Murdochs retreat to a US-based rump built on the increasingly successful Dow Jones Co and Fox News, the right-wing cable channel.
News Corp’s future ownership of 61% of REA is also being questioned, along with News’s US real estate listings business, Move. But REA and Move are business triumphs for Lachlan Murdoch, particularly REA.
The US quoted shares in News Corp fell more than 18% in 2022, the shares of Fox fell 18%. Both are up 3% so far in 2023.
