The activist investor Starboard Value has taken a significant step by moving to dissolve News Corp’s dual-class share structure, shaking up the Murdoch family’s control over the Wall Street Journal parent company. This move, according to sources familiar with the matter, was made through a non-binding shareholder resolution. As of September, Rupert Murdoch, the head of the Murdoch family, held sway over approximately 40% of the company’s voting stock. Starboard Value, on the other hand, only owns around 2% of the company’s Class A shares, as per FactSet data.
Starboard Value, led by managing member Jeff Smith, has been vocal about its desire for change within News Corp. The firm had previously expressed its stance on spinning out real estate assets, including an interest in REA Group of Australia. Jeff Smith highlighted the need to address the dual-class structure by stating, “There have been votes to declassify, it’s something to consider as well. But there are easier paths to create a lot of value.” This suggests that Starboard Value is actively challenging the status quo and seeking ways to unlock value within the company.
Apart from facing challenges from activist investors like Starboard Value, the Murdoch family has been embroiled in legal battles over control of the family trust that holds the News Corp stake. Reports from reputable sources such as the New York Times and Wall Street Journal indicate that Rupert Murdoch, aged 93, relinquished his position as board chair at both News Corp and Fox Corp in November. He now serves as chair emeritus of each company. In his place, his son Lachlan Murdoch has taken on the role of sole chair at News Corp and continues to serve as the executive chair and CEO at Fox Corp.
Market Reaction and Starboard Value’s Track Record
Following the news of Starboard Value’s push to dissolve the dual-class share structure, News Corp shares experienced a slight decline of about 1%. It is worth noting that Starboard Value has a history of mounting campaigns at various companies, including Autodesk, Match Group, and Salesforce. While the outcome of their efforts at News Corp remains to be seen, it is evident that the activist investor is poised to drive change and challenge the existing dynamics within the company.
The move by Starboard Value to dissolve News Corp’s dual-class share structure marks a significant development in the ongoing battle for control within the company. With the Murdoch family facing external pressures from activist investors and navigating internal changes in leadership, the future of News Corp hangs in the balance as stakeholders await further developments.
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