Future
Hedge Fund Pushes for End of Murdochs’ Control at News Corp
Starboard Value, a fund that takes stakes in companies and agitates for changes, said that political disagreements among Rupert Murdoch’s children could be “paralyzing” for the media firm.
The Murdoch family’s control over its media empire has long been the subject of intrigue and drama. It is also the latest target of the prominent shareholder activist Jeffrey C. Smith.
Mr. Smith’s hedge fund, Starboard Value, has submitted a nonbinding shareholder proposal that could end the Murdochs’ control, according to a letter to fellow shareholders seen by The New York Times. The plan shines a light on the family’s power over its media holdings as it is about to be subjected to courtroom scrutiny.
The Murdochs own a 14 percent economic stake in News Corp, the parent company of The Wall Street Journal, but control 41 percent of votes at the company through special shares. Starboard owns 3.7 percent of nonvoting News Corp shares and 4.6 percent of the voting shares.
The Murdochs’ shares, as well as similar controlling stock for Fox, are held in a family trust that Rupert Murdoch controls. That control will pass to his four adult children after he dies, but three of them are fighting their father in court over the patriarch’s move to give his son Lachlan Murdoch majority control of the trust when Rupert Murdoch dies.
Starboard argues that dual-class shares should not be passed down. “There are no reasonable arguments to extend super-voting rights and de facto control to the inheritors of a founder,” Mr. Smith wrote in the shareholder letter.
Such structures are relatively common in media companies: It is how the Sulzberger family controls The New York Times Company and the Redstone family have controlled the Paramount media empire. But Mr. Smith argued that political disagreements among Rupert Murdoch’s children “could be paralyzing to the strategic direction” of News Corp.
