Hedge Fund Aims To Break-Up Rupert Murdoch's Grip On News Corp

Hedge fund Starboard Value has filed a shareholder resolution to do away with the dual-class shares that allow Rupert Murdoch to control News Corp, the publisher of the Wall Street Journal, according to Reuters citing people familiar with the matter.

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

The move represents a direct challenge to Murdoch's grip on the media conglomerate. While he has overcome such challenges in the past, it is the first he faces since he stepped away from an active role at the company by standing down as board chair last year.

Rupert Murdoch

Starboard called in October for News Corp to spin off its digital-real estate unit to unlock value for shareholders, a few days after Reuters was first to report that the activist investor had amassed a stake in the company.

Now, Starboard has filed privately for a shareholder resolution that calls for the abolition of News Corp's dual-class stock structure, which gives Murdoch 40% of the company's voting stock despite owning an equity stake of about 14%, the sources said.

Starboard Value, run by Jeffrey Smith, is one of the world's most prominent activist investors and has recently been pushing for changes at firms including online-dating company Match Group, design software maker Autodesk, and business software provider Salesforce.

As of June 30, Starboard owned 7.2 million Class A shares of News Corp equivalent to a 1.9% stake, as well as 8.7 million Class B shares, according to a regulatory filing.

Since launching News Corp in 1980 as a holding company for his media empire, Murdoch has maintained a tight grip on the company's governance.

Companies are not obliged to heed the outcome of shareholder resolutions, though many do so if they attract a large number of votes.

News Corp is valued at roughly $15.3 billion and its stock price has climbed 25.5% over the last 52 weeks. The company owns a real estate listing business, book publisher Harper Collins, and a range of newspapers including the Wall Street Journal, the New York Post, Britain's Times, Sunday Times and Sun, and The Australian.

Murdoch's other big media property, Fox News, is held separately by Fox Corp, since the publishing and broadcast assets were split into separate companies in 2013.