Hedge Fund Starboard Value Files Shareholder Resolution Against News Corp’s Dual-Class Structure

(Reuters) – Hedge fund Starboard Value confirmed on Monday it had filed a shareholder resolution to eliminate the dual-class share structure that allows Rupert Murdoch to control News Corp (NASDAQ:NWSA), the publisher of the Wall Street Journal.

Starboard announced its move only days after Reuters exclusively reported that it had filed the proposal to abolish the stock structure, which gives Murdoch 40% of News Corp’s voting stock despite owning an equity stake of about 14%.

“This is clearly not the appropriate governance structure for a public company, and we believe it has exacerbated News Corp’s valuation discount relative to its inherent value,” the hedge fund said in a statement.

It claims there is no reason to extend super-voting rights to Murdoch’s children and that it has negatively impacted News Corp’s stock.

News Corp disagrees and stated that the company has thrived under the current structure, allowing transformation of revenue and earnings amid digital reinvestment, strategic acquisitions, and divestments.

The “dual-class capital structure promotes stability and has facilitated the successful implementation of News Corp’s transformational strategy and long-term outperformance for all News Corp stockholders,” the company said on Monday in a statement.

Starboard indicated that it will provide more information in the coming weeks and warned the News Corp board to address concerns about its structure.

“If the Board refuses to listen, we can then take further action,” Starboard added.

Starboard’s move comes as 93-year-old media tycoon Murdoch is engaged in a legal dispute with some of his children to ensure that his son Lachlan will control News Corp and broadcasting giant Fox Corp after his death.

News Corp mentioned last month that it was considering options for Foxtel, its Australia-based subscription television provider, in response to interest from a third party.