News Corporation (NWS) is facing pressure from its largest shareholder, Starboard Value LP, to eliminate its dual-class share structure. Starboard, a well-known activist investor, believes that this structure, which gives more voting power to the founder’s heirs, is not in the best interests of shareholders and is detrimental to corporate governance practices.
Starboard argues that extending super-voting rights to a founder’s heirs is unjustifiable and that News Corp’s dual-class share structure, which transfers voting power from a founder to their children, exemplifies the worst aspects of this type of structure. They believe that the Murdoch siblings’ differing views could hinder strategic direction, and it’s unclear why their perspectives should outweigh those of other shareholders.
In their statement, Starboard added, “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.”
News Corp has confirmed that a stockholder has submitted a non-binding proposal for the 2024 Annual Meeting to eliminate the company’s dual-class capital structure through a recapitalization plan. However, the Board of Directors maintains that “the Company’s 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.” They further claim that “The Company has thrived under the current structure and guidance of the Board and senior leadership despite major changes in consumer behavior amidst the digital revolution of the last decade.”
Despite the Board’s defense of the current structure, NWS shares are down 0.69% at $27.45 at the last check Tuesday, reflecting the market’s concern over the ongoing shareholder pressure and potential changes to the company’s structure. It remains to be seen how News Corp will respond to Starboard’s demands and how the shareholder proposal will be received at the upcoming Annual Meeting.
