Rupert Murdoch’s succession plan at News Corp is facing scrutiny from a significant shareholder as hedge fund Starboard Value publicly challenges the company’s dual-class share structure.
The fund’s push for change comes at a pivotal moment, coinciding with Lachlan Murdoch’s upcoming address to investors.
In a recent letter to News Corp shareholders, Starboard Value, led by Jeffrey C. Smith, urged the company to eliminate its dual-class share system. This structure, which allows the Murdoch family to maintain control despite holding a relatively small economic stake, is seen by Starboard as a governance issue exacerbated by current family dynamics.
The dual-class share system has been a long-standing feature of News Corp, providing the Murdoch family with super-voting rights. However, Starboard contends that this system is no longer justified, especially in light of recent internal conflicts within the Murdoch family. Reports have highlighted ongoing legal disputes over the Murdoch Family Trust, which governs the family’s shareholding and is central to the power struggle between Rupert Murdoch, his son Lachlan, and his three other children.
Starboard’s letter emphasizes that the transition of power from Rupert Murdoch to his children could destabilize the company due to conflicting strategic visions among the siblings. The hedge fund argues that the dual-class structure amplifies this risk by giving disproportionate influence to the Murdoch family, potentially at the expense of other shareholders.
In response, News Corp defended its dual-class system, arguing that it has provided stability and facilitated successful strategic initiatives. The company maintains that this structure has been beneficial in navigating the digital transformation and has contributed to its long-term performance.
Starboard has proposed a vote on this issue at News Corp’s 2024 annual meeting, asserting that the time has come to reconsider the dual-class structure. The proposal seeks to align the company’s governance with broader shareholder interests and address concerns about the impact of family disputes on the company’s future.
With input Fortune, Deadline, and the Hollywood Reporter.
