Activist Shareholder Shakes Up News Corp's Status Quo

Activist shareholder Starboard Value has acquired a significant stake in News Corp NWSA, aiming to instigate strategic and governance reforms at the media conglomerate. 

The move is part of a broader strategy to enhance the company's market value, which Starboard believes is undervalued due to its complex corporate structure, The Wall Street Journal reports.

Starboard's intervention will likely advocate for the spin-off of News Corp's digital real estate division, including its interests in REA Group and Realtor.com parent Move Inc. 

The activist shareholder believes that separating these assets will unlock significant value for the company, enhancing shareholder returns. The Murdochs, who hold considerable voting power in the company, have historically resisted such changes. WSJ writes.

Also Read: Rupert Murdoch To Step Down As Chairman Of Fox, News Corp

Previous reports indicated Chairman Rupert Murdoch weighing the merger of News Corp and Fox Corp FOXA nearly a decade after the companies split.

The activist firm, led by founder and CEO Jeff Smith, is also pushing to eliminate News Corp's dual-class share structure. 

This structure currently grants the Murdoch family disproportionate voting rights, a scenario that has often been a point of contention among other shareholders. 

The exact size of Starboard's stake remains undisclosed but is described as "sizeable," the WSJ noted.

Efforts to instigate change at News Corp met with resistance. The Murdoch family's significant voting stake has often hindered major structural changes. 

Earlier this year, an attempt to sell Move Inc. to CoStar was unsuccessful, highlighting the challenges faced by those seeking to alter the company's course.

Starboard estimates News Corp's entire portfolio at over $20 billion, with REA Group alone accounting for about $8 billion. 

The activist firm contends that the Dow Jones business, including renowned publications like the Wall Street Journal, Barron's, and MarketWatch, is worth more than $7 billion.

News Corp is on the cusp of a significant leadership change. Rupert Murdoch looks to step back from executive and board duties, with his son, Lachlan Murdoch, taking the reins as the sole chair of the company. 

Price Action: NWS shares closed higher by 0.51% at $21.62 on Friday. 

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.