Rupert Murdoch’s transfer of power at News Corp to his son Lachlan is being challenged by the media company’s major shareholders.
Hedge fund Starboard Value released a letter to shareholders at the newspaper giant that owns The Wall Street Journal and The New York Post, urging the company to end its dual-share structure and citing growing tensions with the Murdoch family. The letter came a day before Lachlan is scheduled to speak to investors at a Goldman Sachs conference on Sept. 10.
“The transition of power from Rupert Murdoch to his children creates complex family dynamics that could potentially affect the stability and strategic direction of News Corporation,” the letter, signed by Starboard’s Jeffrey C. Smith, said. “The Murdoch family’s ownership interest in News Corporation is controlled by the Murdoch Family Trust…The Trust is reportedly controlled by Rupert Murdoch and his four children. Recent reports have suggested that a legal battle is ongoing pitting Rupert and Lachlan Murdoch against three other children of Rupert Murdoch over control of the Trust.”
Smith added: “We believe one of the root causes of this conflict, highlighted in the reports, is differences of opinion regarding the future strategic direction of News Corp and Fox Corp. This uncertainty represents a risk to shareholders and is only exacerbated by the Murdoch family’s super-voting shares and weak governance and oversight resulting from the dual share structure.”
Last September, Murdoch, 93, announced he would step down as chairman of the companies he founded, Fox and News Corp, and take on the title of chairman emeritus.
Following the sale of most of 21st Century Fox’s assets to Disney for more than $71 billion in 2019, Lachlan Murdoch became CEO of “New Fox” (the Fox broadcasting network, television stations, Fox News and Fox Sports) and also serves as chairman of News Corp, which also owns publishing giant HarperCollins.
The move comes ahead of a high-profile legal battle being played out in Nevada over how Rupert’s empire should be managed and who should be the key decision makers, a fight that will reportedly put Lachlan at odds with the other Murdoch siblings, James, Elizabeth and Prudence. (James led 21st Century Fox from 2015 to 2019 before the Disney deal was closed and has since run his own private investment firm, Rupa Systems, which invests in media and entertainment.)
Starboard Value issued the letter following a July 24 article in The New York Times that obtained sealed court documents detailing a feud between the Murdochs over the structure of the trust. Rather than allowing the dispute over political views (Lachlan is seen as more conservative, while James recently signed a letter endorsing Kamala Harris’ presidential bid), the hedge fund argues that eliminating the dual-class structure would avoid that dispute as well.
“The four Murdoch brothers who hold voting power in the Trust reportedly have significantly different worldviews which, combined, could paralyze the strategic direction of the company. More importantly, it is unclear why their perspectives should carry more weight than those of other shareholders,” Starboard’s Smith wrote in the letter.