In a bold move to challenge the Murdoch family’s control over News Corp, activist investor Starboard Value has put forward a non-binding proposal. This proposal takes direct aim at the Murdoch family’s overwhelming voting power within the media conglomerate, which includes major assets such as The Wall Street Journal and various newspapers worldwide.
Here are some key points regarding the current situation and the proposed changes:
- The Murdoch family, led by 93-year-old patriarch Rupert Murdoch and four of his six children, maintains control over News Corp through a family trust. Despite owning just 14% of the company’s equity, their dual-class shares give them a whopping 41% of the voting power.
- Starboard, with a 4.6% stake in class B voting shares and 3.7% in class A non-voting shares, has steadily increased its influence. The recent proposal to end the Murdoch family’s control is a significant move, although its binding nature remains uncertain.
- Pressure for change has been mounting since 2015, when nearly half of voters supported the elimination of dual-class shareholding. However, no changes were implemented then. More recently, Starboard and another activist hedge fund, Irenic Capital Management, have been advocating for different strategic directions for News Corp, including the spin-off of real estate assets.
- The News Corp board, in response to these pressures, has defended the dual-class stock structure as a stabilizing force that facilitates long-term goals. They argue that the company has flourished under this arrangement, dismissing calls for change.
- Concerns over the transfer of control to the next generation have been raised, particularly as Rupert Murdoch reportedly plans to hand over the reins to his eldest son, Lachlan, who shares his conservative beliefs. Starboard’s CEO, Jeff Smith, has criticized this transition, emphasizing the risks of prolonging supervoting rights within a founder’s family lineage.
In conclusion, the battle for control at News Corp signifies a critical juncture in its corporate governance. The struggle between entrenched family control and activist investor pressure underscores the need for transparency, accountability, and adaptability in corporate structures. It prompts stakeholders to reflect on the balance between tradition and innovation, legacy and progress, as they navigate the evolving landscape of media ownership.
