Activist investor Starboard Value has made a bold move to dissolve News Corp’s dual-class share structure, presenting a significant challenge to the Murdoch family’s control over the media giant. The push for change was initiated through a non-binding shareholder resolution, signaling Starboard’s determination to shake up the status quo. As of September, Rupert Murdoch held a commanding 40% stake in the company’s voting stock, consolidating his grip on decision-making within the organization. In contrast, Starboard’s own stake stands at around 2% of News Corp’s Class A shares, highlighting the growing tension between the activist investor and the Murdoch family.
Managing member of Starboard Value, Jeff Smith, has been vocal about the need for News Corp to unlock value for shareholders through strategic restructuring. One of the key proposals has been the spin out of the company’s real estate assets, including its interest in the REA Group of Australia. Smith emphasized the importance of exploring alternative paths to maximize shareholder value, hinting at the inefficiencies associated with the current dual-class structure. The activist investor has been actively advocating for change, citing the potential benefits of declassification and a more shareholder-focused approach to governance.
Legal Battles and Leadership Transition within the Murdoch Family
In parallel to the activist pressure from Starboard Value, Rupert Murdoch has been embroiled in a legal battle to secure his son Lachlan Murdoch’s control over the family trust holding News Corp’s stake. Reports from prominent publications such as the New York Times and the Wall Street Journal have shed light on the internal struggles within the Murdoch family. Last year, Rupert Murdoch, aged 93, relinquished his chairmanship positions at both News Corp and Fox Corp, assuming the role of chair emeritus. His son, Lachlan Murdoch, stepped up as the sole chairman of News Corp, while continuing to serve as the executive chair and CEO of Fox Corp. The leadership transition underscores the generational shift within the Murdoch family and its implications for the future direction of the media empire.
Following the news of Starboard’s challenge to News Corp’s dual-class share structure, the company’s shares experienced a slight decline of about 1% during the day. However, there was a marginal rebound in the stock price upon the initial report by Reuters, reflecting the market’s mixed reaction to the unfolding developments. Starboard Value’s track record of mounting successful campaigns at other companies such as Autodesk, Match Group, and Salesforce adds further intrigue to the situation. As News Corp navigates the complexities of corporate governance and activist pressure, the broader media landscape stands witness to the ongoing evolution of one of its key players. Beyond its flagship publication, The Wall Street Journal, News Corp’s diversified portfolio including The Sun and publisher HarperCollins faces a critical juncture in its strategic trajectory.