Starboard Recommends News Corp Abolish Dual-Class Shares

Hedge fund Starboard Value committed on Monday that it had presented a shareholder decision to put an end to the dual-class share structure, which authorizes Rupert Murdoch to control News Corp, the publisher of the Wall Street Journal. This statement came shortly after Reuters expressly reported on Starboard’s proposal to remove the stock structure, which grants Murdoch 40% of News Corp's voting power in spite of holding only about 14% of the company's equity.

"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.

Starboard argues that there is no justification for extending super-voting rights to Murdoch's children and claims that the current structure has negatively impacted News Corp's stock. In response, News Corp contends that the company has prospered under its existing structure, which has facilitated significant revenue and earnings growth through 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 stated it will provide more details in the coming weeks and urged the News Corp board to heed concerns regarding its current structure.

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

Starboard's action concur with a legal dispute involving 93-year-old media tycoon Rupert Murdoch and some of his children, as he looks to make sure to take control of News Corp and broadcasting giant Fox Corp for his son Lachlan after his death.

Last month, News Corp stated it was about discussing the options for Foxtel, its Australia-based subscription television service, due to interest from a third party.