The Murdoch family’s control over its media empire has long been the subject of intrigue and drama. It is also the latest target of the prominent shareholder activist Jeffrey C. Smith.
Mr. Smith’s hedge fund, Starboard Value, has submitted a nonbinding shareholder proposal that could end the Murdochs’ control, according to a letter to fellow shareholders seen by The New York Times. The plan shines a light on the family’s power over its media holdings as it is about to be subjected to courtroom scrutiny.
The Murdochs own a 14 percent economic stake in News Corp, the parent company of The Wall Street Journal, but control 41 percent of votes at the company through special shares. Starboard owns 3.7 percent of nonvoting News Corp shares and 4.6 percent of the voting shares.
The Murdochs’ shares, as well as similar controlling stock for Fox, are held in a family trust that Rupert Murdoch controls. That control will pass to his four adult children after he dies, but three of them are fighting their father in court over the patriarch’s move to give his son Lachlan Murdoch majority control of the trust when Rupert Murdoch dies.
Starboard argues that dual-class shares should not be passed down. “There are no reasonable arguments to extend super-voting rights and de facto control to the inheritors of a founder,” Mr. Smith wrote in the shareholder letter.
Such structures are relatively common in media companies: It is how the Sulzberger family controls The New York Times Company and the Redstone family have controlled the Paramount media empire. But Mr. Smith argued that political disagreements among Rupert Murdoch’s children “could be paralyzing to the strategic direction” of News Corp.
More broadly, he wrote, “we are not sure why their perspectives should carry greater weight than the views of other shareholders.”
News Corp did not immediately respond to a request for comment.
Activists have sought to shake up News Corp before. In 2022, Irenic Capital Management pushed back against the Murdochs’ plan to merge News Corp and Fox. Rupert Murdoch later abandoned the effort.
Starboard’s proposal faces long odds. The proposal, earlier reported by Reuters, is nonbinding, so the board has no obligation to act on it.
“This kind of proposal is relatively common in public companies with dual-class shares,” said Brian Quinn, an associate professor at Boston College Law School. “Most of the time, the minority shareholders vote in favor by a wide margin, but to no avail.”
A proposal to remove dual-class shares of News Corp in 2015 was supported by 90 percent of non-Murdoch shareholders, equivalent to 49.5 percent of the vote.
There are some examples of families giving up control of companies, including the beer and wine giant Constellation Brands and the equipment distributor MSC Industrial Supply.
Majority support for Mr. Smith’s proposal, he wrote, would “send a clear and direct message” to News Corp’s board.
Starboard’s past activist campaigns, in which it buys a stake in companies it considers undervalued and agitates for changes, include winning board seats and ushering in changes at Yahoo, Darden Restaurants and Bloomin’ Brands, the parent of Outback Steakhouse.
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