Activist investor Starboard Value has recently taken a bold step by moving to dissolve News Corp’s dual-class share structure. This move directly challenges the Murdoch family’s longstanding control over the Wall Street Journal parent company. The push was made through a non-binding shareholder resolution, indicating Starboard’s determination to make significant changes within News Corp’s corporate governance.
Rupert Murdoch’s Control
As of September, Rupert Murdoch held control over approximately 40% of News Corp’s voting stock due to the existing dual-class share structure. In contrast, Starboard owns only about 2% of the company’s Class A shares, according to FactSet data. This power dynamic highlights the uphill battle that Starboard faces in its quest for change within News Corp.
Managing member Jeff Smith of Starboard has been vocal in advocating for News Corp to spin out its real estate assets, including its interest in the REA Group of Australia. Last year, Smith expressed concerns about the dual-class structure and the need to explore alternative avenues to create shareholder value. His strategic approach and tenacity indicate a persistent effort to challenge the status quo at News Corp.
Rupert Murdoch’s ongoing legal battle to grant his son, Lachlan Murdoch, control over the family trust holding the News Corp stake adds another layer of complexity to the situation. Reports from reputable sources such as the New York Times and Wall Street Journal have shed light on this internal struggle for succession within the Murdoch family. Despite Rupert Murdoch stepping down as chair of the board at both News Corp and Fox Corp, his influence remains palpable as chair emeritus of each company.
The market reaction to Starboard’s push for change within News Corp was evident, with News Corp shares experiencing a slight decline following the news. However, Starboard’s track record of mounting successful campaigns at companies like Autodesk, Match Group, and Salesforce indicates a history of instigating meaningful transformations in corporate governance. News Corp, renowned for its ownership of prestigious publications such as the Wall Street Journal, The Sun, and publisher HarperCollins, now faces a pivotal moment in its history as it navigates through potential structural changes.
Starboard Value’s challenge to the Murdoch family’s control over News Corp signals a critical juncture in the company’s trajectory. With competing interests at play and shareholders advocating for change, News Corp must carefully navigate through this period of transition to uphold its reputation and create sustainable value for all stakeholders.