Murdoch family survive push to loosen grip on News Corp, investors reject proposal to change voting structure

News Corp says investors have rejected a proposal to eliminate the dual-class share structure that allows the Murdoch family to effectively control the media group.

Investor Starboard Value proposed breaking the voting structure in a bid to loosen the Murdochs’ grip on the media company.

But, according to a statement issued to Bloomberg, the non-binding resolution was “convincingly” defeated at the annual general meeting on Thursday morning (AEDT).

The Murdoch family controls more than 40 per cent of the voting shares — despite financially winning just 14 per cent of the group — making it a tough battle for Starboard to win from the start.

The activist hedge fund, run by Jeffrey Smith, did not immediately return calls or emails requesting comment, according to Reuters.

Starboard’s proposal won support from powerful proxy advisory firms and a number of other investors who argued that good corporate governance dictates each share should have one vote and no investor should have different voting rights than others.

The proposal to eliminate the dual-class share structure was first filed in September.

“While we can understand how some could see a benefit to a visionary founder retaining outsized control for a limited duration of time, that potential understanding vanishes as super-voting power and the associated protections transition to others,” Starboard co-founder Jeffrey Smith said in a letter to News Corp shareholders in October.

“This transition of power from Rupert Murdoch to his children has allowed for complicated family dynamics to potentially impact the stability and strategic direction of News Corp,” he wrote.

News Corp, however, urged investors to vote against the proposal and argued that the structure promotes stability and that the company has thrived under the current structure.

Last year, Starboard called on News Corp to spin off its digital-real estate unit to unlock value for shareholders.

News Corp’s individual assets — which includes Australian, UK, and American newspapers, a majority stake in real estate portal REA, and television broadcaster Foxtel — would be more in a break-up than they are under the one umbrella.

News Corp is yet to release the final vote on the AGM resolutions from the webcast meeting.

The proposal to loosen the Murdoch’s grip over the company comes as the 93-year-old patriarch locks horns with three of his children over the succession of his media empire.

Rupert Murdoch set the internal drama in motion late last year when he made a surprise move to change the terms of the Murdochs’ irrevocable family trust to ensure that his eldest son and chosen successor, Lachlan would remain in charge of his vast collection of television networks and newspapers.

The trust, as it stands, would hand control of the family business to the four children when Mr Murdoch dies.

But the 93-year-old argues that by only empowering Lachlan to run the company (without interference from his more politically moderate siblings) he can preserve its conservative editorial bent, and thus protect its commercial value for all his heirs.

Those three siblings — James, Elisabeth and Prudence — were caught completely off-guard by their father’s effort to rewrite what was supposed to be an inviolable trust and have united to stop him. Remarkably, the ensuing battle has been playing out entirely out of public view.

— with Reuters