Starboard Value, an activist investor, has made a bold move to dissolve News Corp’s dual-class share structure, which has long been a source of control for the Murdoch family over the Wall Street Journal parent company. This challenge comes in the form of a non-binding shareholder resolution, indicating the seriousness of Starboard’s intentions. With Rupert Murdoch holding around 40% of the company’s voting stock as of September, the push from Starboard represents a significant threat to the existing power dynamics within News Corp.
Despite owning only roughly 2% of the company’s Class A shares, Starboard’s influence is substantial. Managing member Jeff Smith has been vocal about the firm’s desire for News Corp to spin out its real estate assets, such as its interest in REA Group of Australia. This suggests that Starboard is not only interested in challenging the dual-class structure but also in unlocking additional value for shareholders through strategic initiatives. Smith’s comments about easier paths to create value hint at a broader strategy that goes beyond simply challenging the existing corporate governance framework.
Complicating matters further is the legal battle within the Murdoch family, with Rupert Murdoch fighting to give his son Lachlan Murdoch control over the family trust holding the News Corp stake. This internal strife, combined with external challenges from activist investors like Starboard, paints a picture of a company in transition. Rupert Murdoch’s decision to step down as chair of both News Corp and Fox Corp last year, handing over the reins to Lachlan Murdoch, further underscores the shifting power dynamics within the organization.
News Corp’s shares saw a slight dip following reports of Starboard’s push, indicating investor uncertainty about the implications of potential changes to the company’s structure. Starboard’s track record of mounting campaigns at other companies, including Autodesk, Match Group, and Salesforce, suggests that their intentions are serious and their influence should not be underestimated. Beyond the immediate impact on News Corp, this development raises broader questions about the role of activist investors in shaping corporate decision-making and governance practices within the media industry.
Starboard’s challenge to News Corp’s dual-class share structure represents a significant turning point for the company and the broader media landscape. The implications of this move go beyond immediate governance changes and touch on issues of shareholder value, strategic direction, and family dynamics within one of the most influential media conglomerates in the world. As News Corp navigates these challenges, it will need to carefully consider its response to Starboard’s demands and the evolving expectations of its stakeholders in an increasingly complex and competitive media environment.