Activist Investor Calls Out Murdoch Family Drama

There were just four delicious seasons of HBO’s “Succession,” but the real-life succession battle that inspired it has lasted decades. 

On Monday, the Murdoch family was once again asked the $15 billion question: Who will take over the company after patriarch Rupert, 93, is no longer around? Now, activist investor Starboard Value is raising concerns about News Corp’s dual-class share structure, which it says could turn family squabbles into existential risks for the firm.

WayStarboard ValCo

It’s been roughly one year since ol’ Rupert announced he’d be leaving his dual chairman positions at twin family firms News Corp and Fox Corp, naming eldest son and ideological disciple Lachlan as his replacement. Evidently, not everyone bought into the succession plan. That’s because the Murdochs in sum only control about 14% of News Corp’s total equity, but, due to a dual-class share structure, Rupert and his brood (via a family trust) control around 41% of total voting power.

Starboard — which owns around 4.6% of Class B voting shares and this June increased its Class A stake from 1.9% to 3.7% — finds the hierarchy a little problematic. On Monday, it introduced a non-binding proposal to be voted on at the next shareholder meeting that would put the kibosh on the dual-class structure, stripping power from the founding family. A fresh Murdoch intra-family legal squabble makes it all the more pressing:

• While Lachlan has taken over his dad’s post, his job isn’t exactly secure in a post-Rupert world. As currently constructed, the family trust upon Rupert’s death would split voting power between four ideologically-diverse Murdoch children — Lachlan, James, Prudence, and Elisabeth — but Rupert has recently moved to consolidate power in Lachlan’s hands, triggering a lawsuit from his other offspring, The New York Times reported in July.
• “The four Murdoch siblings with voting rights within the Trust are reported to have widely differing worldviews, which, collectively, could be paralyzing to the strategic direction of the Company,” Starboard wrote in a letter to shareholders, adding, “More importantly, we are not sure why their perspectives should carry greater weight than the views of other shareholders.”

All in the Family: The Murdochs could still ask the SEC to exclude Starboard’s proposal from the agenda of this fall’s shareholder meeting. In the past, they’ve simply soldiered through similar votes, including a 2015 effort that saw just under half of News Corp shareholders supporting a bid to end the dual-class structure. Cue those piano keys.