Activist investor Starboard Value is challenging the ownership structure of media empire News Corp, arguing the company’s dual shareholder structure gives the Murdoch family an excessive voice and exacerbates complex interpersonal relationships among its members.
The hedge fund said it had submitted a proposal to eliminate the company’s dual share structure.
The proposal will be voted on at News Corp.’s next annual meeting of shareholders, which took place last year in November but has not yet set a date, according to a letter released by Starboard on Monday.
News Corporation owns influential publications such as The Wall Street Journal, The New York Post, Dow Jones and Investor’s Business Daily.
Starboard said the proposal was prompted by media reports of ongoing internal fighting between founder Rupert Murdoch and his children over the future strategic direction of News Corp. and Fox Corp., the parent companies of Fox News and the Fox Broadcasting Network.
The family’s ownership of the company is tied up in a trust that passes to his four children upon his death, but according to The New York Times, Rupert Murdoch is seeking to amend the trust to allow his eldest son, Lachlan Murdoch, to run the company alone in order to maintain his conservative editorial views.
The paper said the other three children have objected to the change.
News Corp acknowledged it had received a non-binding proposal but said in a statement that the company believes a dual share structure would “promote stability.”
“Despite significant changes in consumer behavior during the digital revolution of the past decade, the company has thrived in its current structure and under the guidance of its board and senior management,” News Corp said in a statement.
As of June, the Murdoch Family Trust owned less than 1% of the company’s outstanding Class A shares and about 40% of its Class B voting shares, according to filings with the Securities and Exchange Commission.
Starboard owns 3.7% of the Class A shares and 4.6% of the Class B shares, the hedge fund said.
“The four Murdoch brothers who hold voting power in the Trust reportedly have significantly different worldviews which, when combined, could paralyze the strategic direction of the company,” Starboard said in the letter. “More importantly, we see no reason why their views should carry more weight than those of other shareholders.”
The hedge fund said supporting the proposal would send a message to the board that the dual shareholder structure should be eliminated, but Starboard said it “may take further action” if the board doesn’t listen.