Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Shareholders take aim at Murdochs with Fox voting rights push

Published 15/11/2017, 11:24
Updated 15/11/2017, 11:24
© Reuters. FILE PHOTO: Murdoch, executive chairman of News Corporation, reacts during a panel discussion at the B20 meeting of company CEOs in Sydney

© Reuters. FILE PHOTO: Murdoch, executive chairman of News Corporation, reacts during a panel discussion at the B20 meeting of company CEOs in Sydney

By Ross Kerber

NEW YORK (Reuters) - A shareholder proposal calling for Twenty-First Century Fox Inc to do away with its dual-class share structure may inflict a symbolic black eye on the media company's founder Rupert Murdoch and his family at its annual meeting on Wednesday.

Strong fund manager support for the measure, which is advisory and would not force the company to change anything, would nevertheless signal investor dissatisfaction with the Murdoch family's grip on the company as filings show Fox has lost a longstanding shareholder ally in Saudi Arabia's Kingdom Holding.

At the same time, its Fox News division is recovering from a series of costly sexual harassment settlements, an issue that has slowed Britain's regulatory review of the company's bid to take over broadcaster Sky Plc (L:SKYB).

To add to the turmoil, Fox has recently talked to Walt Disney Co (N:DIS) about selling much of itself, according to a CNBC report.

The proposed new voting structure is aimed at beefing up investor oversight over Murdoch and his sons Lachlan and James, who are all Fox board members. The proposal has the support of influential proxy advisory firm Institutional Shareholder Services but is opposed by Fox.

The shareholder meeting is scheduled for 10 a.m. (1800 GMT) on Wednesday in Los Angeles.

The majority of Fox shares traded publicly are class A shares (O:FOXA), which have no voting rights. The Murdoch family owns about 39 percent of the class B voting shares, according to the company's proxy.

Major mutual fund firms have been pushing the importance of equal voting rights as a way to improve the way companies are run, a shift that may give the reform proposal at Fox a boost, according to corporate governance experts.

"I would expect the large institutions would support it," said Charles Elson, a professor at the University of Delaware who follows corporate governance, of the shareholder resolution.

A Fox spokesman referred to the board's opposition statement in its proxy which says the current voting structure helps focus on long-term business strategy and helps attract and retain employees. It also says the board is sufficiently independent.

Mario Gabelli, a top 25 holder of Fox voting shares, feigned snoring at the Reuters Global Investment Summit on Wednesday in New York when asked if he expected the reform to pass.

"The guy (Rupert Murdoch) has 40 percent of the vote and the ISSs of the world are going to do absolutely nothing," said Gabelli.

TOO MUCH POWER

A similar proposal calling for a single share class came close to getting a majority in 2015 at Fox’s sister company News Corp (O:NWSA).

Fund executives worry technology initial public offerings like that of Snap Inc (N:SNAP), which offered outside investors no voting rights, concentrate too much power in the hands of insiders.

Among big fund shareholders of Fox, representatives of BlackRock Inc (N:BLK), State Street Corp (N:STT) and T. Rowe Price Group Inc (O:TROW) declined to comment on how they planned to vote at Fox. Each backed a similar measure at News Corp in 2016, according to researcher Proxy Insight. Each has expressed concerns about voting rights in general.

The Murdoch family will not be able to count on a traditional ally in the vote, Saudi Arabia's Kingdom Holding Co, listed as having 6.6 percent of the Class B shares in a 2015 proxy, but not listed as a major shareholder in the current proxy.

The company said in a 2016 press release that its previous chief executive, billionaire Prince Alwaleed Bin Talal, had a "strategic alliance" with Rupert Murdoch. But the prince is among dozens of top Saudis detained recently by the country's Crown Prince Mohammed bin Salman. Kingdom Holding did not respond to e-mailed questions this week.

Elson and others cautioned that even if the advisory measure received a majority of shares voted it might not lead to a restructuring, a sign of Murdoch's control.

Laura Campos, a director at the Nathan Cummings Foundation, which sponsored the motion for revamped voting rights, said even though the measure is advisory, it would pressure Fox leaders if it won a majority.

© Reuters. FILE PHOTO: Murdoch, executive chairman of News Corporation, reacts during a panel discussion at the B20 meeting of company CEOs in Sydney

"Scandals tend to make investors more supportive of proposals asking for improved corporate governance," Campos said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.