(Reuters) - Activist investor Irenic Capital Management, which holds 2% of News Corp (NASDAQ:NWSA)'s Class B shares, has suggested a spin-off of the media company's digital real estate business or Dow Jones as an alternative to its merger with Fox Corp.
The Fox combination does not serve News Corp's strategic goals and a joint venture or a sale of parts of its news media unit to Fox would be a "far better approach", Irenic said in a letter to News Corp's board on Sunday.
Shares of News Corp, which has a market value of $10.34 billion, were down 1.7% in morning trade.
"Every investor I've spoken to in the last 10 years on News Corp has expressed that they think the company is way too complicated and should be simplified by selling assets or spinning off assets," said Craig Huber, media analyst at Huber Research Partners.
"Putting the two (News Corp and Fox) together makes no sense to us."
In October, media mogul Rupert Murdoch proposed to reunite his media empire by combining News Corp and Fox Corp nearly a decade after the companies split. The companies said they had formed special committees to evaluate the proposal.
"Fox Business may benefit from greater integration with the Wall Street Journal and some of Dow Jones' other properties, but it is highly debatable whether the benefits from such an association flow both ways," Irenic said in the letter.
After years of expansion globally, Murdoch split his empire in 2013, placing the print business in newly created public entity News Corp and the TV and entertainment businesses under 21st Century Fox.
Murdoch said at the time that his vast media holdings had become "increasingly complex," and that a new structure would simplify operations.
"The problem is they did not go far enough after they separated out News Corp in 2013," Huber added.
(This story has been refiled to remove extraneous words from first paragraph and dateline)