An activist investor, Starboard Value, has recently taken steps to dissolve News Corp’s dual-class share structure, marking a significant challenge to the long-standing control of the Murdoch family over the media giant. This move, made through a non-binding shareholder resolution, has raised eyebrows in the financial world. As of September, Rupert Murdoch had control over approximately 40% of the company’s voting stock, giving him a strong grip on decision-making within News Corp.
Starboard, with its ownership of roughly 2% of the company’s Class A shares, according to FactSet data, is not a major shareholder in News Corp. However, the firm has been vocal about its push for change within the company. Last year, Managing member Jeff Smith highlighted the potential benefits of spinning out News Corp’s real estate assets, including an interest in the REA Group of Australia. This suggests that Starboard sees opportunities for unlocking shareholder value by restructuring News Corp’s business.
In addition to the challenge from Starboard, the Murdoch family is embroiled in a legal battle over control of the family trust that holds the News Corp stake. Reports from reputable sources like the New York Times and Wall Street Journal have shed light on this internal struggle for power within the media empire. Rupert Murdoch’s decision to step down as board chair at both News Corp and Fox Corp last year, leaving his son Lachlan in charge, has added a new dynamic to the leadership structure of the companies.
Following the news of Starboard’s move to dissolve the dual-class share structure at News Corp, the company’s shares saw a slight decline of about 1% for the day. However, there was a modest uptick in share price when the Reuters report on Starboard’s push first emerged. This mixed market response reflects the uncertainty surrounding the potential impact of Starboard’s activism on News Corp’s future performance.
Starboard Value has a history of mounting campaigns at various companies, including Autodesk, Match Group, and Salesforce. The firm’s reputation for challenging entrenched management and pushing for strategic changes precedes it. Given Starboard’s track record, it remains to be seen how far the investor will go in its efforts to dismantle News Corp’s dual-class share structure and drive value for shareholders.
News Corp, the parent company of iconic publications like The Wall Street Journal, The Sun, and HarperCollins, is facing a pivotal moment in its corporate governance. The challenge from Starboard Value, combined with internal power struggles within the Murdoch family, is shaping the company’s future trajectory. As stakeholders watch closely, the outcome of this battle over control and governance at News Corp will have far-reaching implications for the media industry and the broader financial landscape.