In a bold move, activist investor Starboard Value has set its sights on breaking News Corp’s dual-class share structure. This strategic maneuver is a direct challenge to the Murdoch family’s long-standing control over the media conglomerate. The dual-class share structure has, until now, allowed media mogul Rupert Murdoch to wield significant influence over around 40% of the company’s voting stock. Starboard Value, despite holding only roughly 2% of the company’s Class A shares, is making waves with its non-binding shareholder resolution.
Led by Managing Member Jeff Smith, Starboard Value has been unabashed in its efforts to shake up News Corp’s operations. Last year, Smith openly advocated for News Corp to divest its real estate assets, a move that could potentially unlock substantial value for shareholders. The firm’s vocal stance on News Corp’s dual-class structure is part of a broader push for increased transparency and accountability within the company. The message is clear: there are alternative paths to maximizing shareholder value, and Starboard Value is determined to explore them.
The Murdoch family, long synonymous with News Corp’s leadership, is facing mounting challenges on multiple fronts. Aside from Starboard Value’s push to dissolve the dual-class share structure, Rupert Murdoch finds himself embroiled in a legal dispute regarding the transfer of control to his son Lachlan Murdoch. Reports from reputable sources like the New York Times and Wall Street Journal suggest that a power struggle within the family trust is playing out in a public and contentious manner. This internal strife adds another layer of complexity to an already tumultuous period for the Murdoch family.
The recent resignation of Rupert Murdoch as chair of the board at both News Corp and Fox Corp further underscores the shifting landscape within the media empire. At 93 years old, Murdoch has taken on a less active role, assuming the honorary title of chair emeritus at both companies. In his place, Lachlan Murdoch has stepped up as the sole chair of News Corp, while continuing to fulfill his duties as executive chair and CEO of Fox Corp. These leadership changes, coupled with Starboard Value’s intervention, signal a period of transition and potential upheaval for News Corp.
News Corp’s share price reacted modestly to the news of Starboard Value’s challenge, with a slight decline followed by a minor recovery. This tepid response suggests that investors are cautiously observing the unfolding developments within the company. As Starboard Value continues to exert pressure on News Corp, the outcomes of its efforts remain uncertain. Whether the Murdoch family can weather this storm and maintain their grip on News Corp’s governance structure is a question that looms large over the media industry. The future implications of this power struggle are far-reaching and could reshape the dynamics of News Corp’s leadership for years to come.