Murdoch’s REA Group Abandons Takeover Bid for Rightmove

The Murdoch family empire hit a stubborn point of resistance yesterday. For once, it didn’t stem from the Shakespearean drama pitting patriarch Rupert and his anointed favorite son against a litigious band of mutineering children.

News Corp subsidiary REA Group has abandoned its monthlong quest to take control of UK property portal Rightmove, which steadfastly rejected four “unattractive” bids and demanded a final offer Monday. It didn’t get one.

Like Son, Like Father

When the credits roll in the Murdoch dynasty’s real-life succession battle, real estate will get top billing. 

It was Rupert Murdoch’s eldest son, Lachlan, who convinced his magnate father to take out a stake in REA, the owner of an Australian property portal, in 2001. The family-controlled News Corp would go on to be majority owner, using the lucrative property business to subsidize the declining revenues at Rupert’s beloved Australian media properties. More real estate portals were added in North America and abroad, adding cash flow to offset underperforming media assets.

That seemed to be the plan with Rightmove: It’s the most popular property website in the UK, with an 80% market share. News Corp — now with Lachlan, the favorite son, as chair — would hitch its struggling media properties to another real estate business. Its tabloid The Sun has bled £515 million ($689 million) in losses in the last five years as print sales have cratered, and News Corp’s UK business has had to pay out tens of millions to victims of illegal phone hacking by its journalists. But the negotiations rapidly collapsed:

• Rightmove rejected REA’s fourth offer and asked it to submit a final put-up-or-shut-up bid by 4 p.m. UK time Monday. The demand came just four weeks after REA’s first bid was revealed.
• REA chose to walk away before the deadline, leaving its final bid at £6.2 billion ($8.3 billion), up from an initial offer of £5.6 billion ($7.5 billion). Rightmove pilloried the final offer as “unattractive,” asserting News Corp “continues to materially undervalue” the UK property firm, which analysts say could benefit from lower interest rates.

Not to be outdone, News Corp CEO Robert Thomson shot back, stating, “We applaud REA’s financial discipline as it is foolhardy to overpay for an asset, even if it patently had positive potential.”

Family Feud: The success of the Murdoch venture into real estate helped cement the more conservative-leaning Lachlan as Rupert’s chosen heir over siblings Prudence, Elisabeth, and James. Rupert is currently engaged in a legal battle against his three politically moderate children to hand Lachlan sole control of the family’s empire — which, in addition to their Australian and UK media properties, includes Fox News, Dow Jones, The Wall Street Journal, and the New York Post.