News Corp, the parent company of the Wall Street Journal, is facing a challenge to its control by activist investor Starboard Value. Starboard has made a move to dissolve News Corp’s dual-class share structure, which gives the Murdoch family control over the company. This challenge comes in the form of a non-binding shareholder resolution.
As of September, Rupert Murdoch, the head of the Murdoch family, had control over approximately 40% of News Corp’s voting stock. Starboard, on the other hand, owns around 2% of the company’s Class A shares. The firm has been pushing for News Corp to spin out its real estate assets, including its interest in REA Group of Australia.
Starboard’s managing member, Jeff Smith, has been vocal about his concerns regarding the dual-class structure. He has suggested that there are easier paths to create value for the company. Smith’s comments suggest that he believes dismantling the dual-class structure is a necessary step in unlocking the company’s full potential.
This challenge to News Corp’s control comes at a time when Rupert Murdoch is also facing a legal battle over the family trust that holds the News Corp stake. The New York Times and the Wall Street Journal have reported that Murdoch is fighting to give his son, Lachlan Murdoch, control over the trust.
Last year, Rupert Murdoch stepped down as chair of the board at both News Corp and Fox Corp. He is now the chair emeritus of each company. Lachlan Murdoch has taken over as the sole chair of News Corp and continues to serve as the executive chair and CEO of Fox Corp.
News of Starboard’s push to dissolve the dual-class share structure caused News Corp shares to drop about 1% initially, but they gained slightly throughout the day. Starboard is known for mounting campaigns at various companies, including Autodesk, Match Group, and Salesforce.
In addition to owning the Wall Street Journal, News Corp also owns other media properties such as The Sun and publisher HarperCollins. The company’s diverse portfolio could be a factor in Starboard’s push for change.
Representatives for News Corp and Starboard have not yet commented on the matter. It remains to be seen how this challenge will play out and what impact it will have on News Corp’s future. However, the move by Starboard highlights the growing influence of activist investors in today’s corporate landscape and the ongoing struggle for control in media conglomerates.
