Hedge fund Starboard Value is urging shareholders of News Corp to join it in smashing the Murdoch family’s control of the media group.
The activist investor is seeking stockholder approval to eliminate News Corp’s dual-class capital structure which gives preference to the family of the company’s founder, Rupert Murdoch.
The family has about 40% of shareholder votes in the company, through a system of A and B shares, despite owning about only 14% of the equity.
“We have had constructive dialogue with the company on numerous topics over the past year,” said Jeff Smith, the CEO of Starboard Value, on Friday in a filing to the US Securities and Exchange Commission.
He is proposing a vote at News Corp’s annual general meeting.
“We have expressed our view that eliminating the dual-class share structure would be in the best interests of all News Corp stockholders and would align the company with market standard corporate governance practices.
“We firmly believe in the foundational corporate governance principle of ‘one-share, one-vote’, and we believe eliminating the dual class share structure will improve accountability to all stockholders.
“We believe this proposal provides a forum for stockholders to make their voices heard and to communicate to the Board that the time for News Corp’s dual-class share structure has long passed.”
News Corp, responding to media reports earlier this month, said the dual-class capital structure promotes stability and has facilitated the successful implementation of News Corp’s transformational strategy and long-term outperformance.
“The company has thrived under the current structure and guidance of the board and senior leadership despite major changes in consumer behaviour amidst the digital revolution of the last decade,” News Corp told the ASX.
“During this time, the company has transformed its revenue and earnings base due to organic digital reinvestment, strategic acquisitions and divestments and on-going cost management initiatives that have delivered record profitability and significant value creation for stockholders.”
The push to change the dual class share system comes as the Murdoch family goes to court to determine who gets to control the company.
Rupert Murdoch wants to change a trust which gives four of his children control of the shareholding in News Corp so that his eldest son, Lachlan, takes the reins when he dies.
The other three -- James, Elisabeth and Prudence -- are opposing the move.
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