Activist investor Starboard Value is challenging the ownership structure of media empire News Corp., arguing that its dual-class share arrangement gives outsize say to the Murdoch family and amplifies members’ complicated interpersonal dynamics.
The hedge fund said it has submitted a proposal to eliminate the dual-class share structure of the company.
That proposal would be voted on at News Corp.’s upcoming annual shareholder meeting, according to a letter released Monday by Starboard. The date has not yet been set, though last year’s meeting took place in November.
News Corp. owns influential publications, including the Wall Street Journal, the New York Post, Dow Jones and Investor’s Business Daily.
Starboard said its proposal was prompted by media reports of an ongoing internal struggle among founder Rupert Murdoch and his children over the future strategic direction of News Corp. and Fox Corp., parent company of Fox News and the Fox broadcast network.
The family’s ownership of the company is tied up in a trust, which hands over control after Murdoch’s death to his four children. But Rupert Murdoch is attempting to amend his trust to ensure that his eldest son, Lachlan Murdoch, solely runs the company to maintain its conservative editorial viewpoint, according to the New York Times.
The other three children are disputing this change, the newspaper reported.
News Corp. confirmed that it received the nonbinding proposal but said in a statement that the company believes its dual-class share structure “promotes stability.”
“The company has thrived under the current structure and guidance of the Board and senior leadership despite major changes in consumer behavior amidst the digital revolution of the last decade,” News Corp. said.
The Murdoch Family Trust owned less than 1% of the company’s outstanding Class A shares and about 40% of its Class B voting shares as of June, according to a filing with the U.S. Securities and Exchange Commission.
Starboard owns 3.7% of the Class A shares and 4.6% of the Class B stock, the hedge fund said.
“The four Murdoch siblings with voting rights within the Trust are reported to have widely differing worldviews, which, collectively, could be paralyzing to the strategic direction of the Company,” Starboard said in its letter. “More importantly, we are not sure why their perspectives should carry greater weight than the views of other shareholders.”
The hedge fund said support for the proposal would send a message to the board of directors that it should eliminate the dual-class structure. But if the board does not listen, Starboard said, “We can then take further action.”