Rupert Murdoch, co-chairman of Twenty-First Century Fox Inc., left, and Lachlan Murdoch, co-chairman of Twenty-First Century Fox Inc., arrive for a morning session during the Allen & Co. Media and Technology conference in Sun Valley, Idaho, U.S.(Photographer: David Paul Morris/Bloomberg)

Disney's Deal for Fox Gives Rupert Murdoch a $4 Billion Victory

(Bloomberg) -- Rupert Murdoch spent a lifetime building an empire that started with a single Australian newspaper and grew into one of the world’s most powerful media companies. A deal with the largest has made him one of the 100 richest people on the planet.

Murdoch had a net worth of about $11 billion at the start of November, as news emerged that the Walt Disney Co. was looking to buy some of the entertainment assets of his 21st Century Fox Inc. That added more than $2 billion, lifting him to No. 92 on the Bloomberg Billionaires Index, a daily ranking of the world’s 500 richest people. His fortune, now $13.8 billion, is set to increase by another $2 billion when the deal with Disney is completed.

“The value we’re unlocking is plain to see,” Murdoch, 86, said Thursday during a call to discuss the $52.4 billion deal.

Disney's Deal for Fox Gives Rupert Murdoch a $4 Billion Victory

The mogul has been frustrated that the market was undervaluing his media assets and is selling some of the most prized of them, including the Fox film studio, stakes in broadcaster Sky and streaming video service Hulu, as well as cable channels that include National Geographic and FX.

Murdoch controls a 16.8 percent economic interest in Fox, which he holds through family trusts. The family’s Disney shares would be worth more than $9 billion at the current share price.

His interest in Fox today is worth $10.3 billion. The assets he is keeping, including Fox News, Fox Business, FS1 and the Fox broadcast network, will have a value of $11 to $12 a share, according to a person familiar with the matter. At the low end of that range the stake could be worth $3.4 billion, making the value of both stakes $2 billion higher than it is today.

In breaking off his Hollywood holdings, Murdoch is distancing himself from an industry with diminishing upside, according to Hal Vogel, an analyst and author of “Entertainment Industry Economics: A Guide for Financial Analysis.” With production costs climbing and ticket sales stagnating in recent years, movie-making has become an expensive gambit for any company without deep pockets. With their established theme parks, streaming channels and iconic characters, Disney can squeeze more profits and benefits out of owning these assets than Fox can do by itself, he said.

“Rupert Murdoch will come out richer in the long run,” Vogel said. “He’ll have a percentage of a Disney that’s a much stronger company with these Fox assets and he’ll grow his net worth faster if he owns them through Disney than if owns them himself. That’s why he’s so smart.”

©2017 Bloomberg L.P.