For those of that watched Succession on HBO.... Amazing how closely the show is tied to real life in the Murdoch family.
From Matt Levine's blog today:
From Matt Levine's blog today:
Rupert Murdoch’s family trust owns about 14% of the stock of News Corp., but News Corp. has dual-class stock, and Murdoch owns about 41% of the voting stock. There is a similar dual-class structure at Fox Corp., where Murdoch controls about 43% of the vote. This is controversial — we talked the other day about an activist News Corp. shareholder trying to get rid of the dual-class stock — but not uncommon. Particularly in the media business, there’s a sense that the founding family ought to have control over the company, insulated from the pressures of the market. The “dual-class capital structure promotes stability and has facilitated the successful implementation of News Corp’s transformational strategy,” says News Corp.
When Murdoch dies, his six children will each inherit a portion of the economic ownership of that stock. Right now four of those children stand to inherit equal voting rights over the trust, and they seem to be at odds with each other about the company’s business strategy and journalistic standards. This arguably undermines the purpose of the super-voting stock: You might want one person to have control of the company, insulated from conflicting pressures, to “promote stability.” Murdoch might want the economic ownership (of his 14% ownership stake) to be divided among his children, but he might want the voting control (of his 41% voting stake) to be concentrated in one of them.
And so the solution is dual-class stock on top of dual-class stock: Give one Murdoch child (Lachlan) super-voting control over the trust that has super-voting control over News Corp. and Fox Corp.:
When Murdoch dies, his six children will each inherit a portion of the economic ownership of that stock. Right now four of those children stand to inherit equal voting rights over the trust, and they seem to be at odds with each other about the company’s business strategy and journalistic standards. This arguably undermines the purpose of the super-voting stock: You might want one person to have control of the company, insulated from conflicting pressures, to “promote stability.” Murdoch might want the economic ownership (of his 14% ownership stake) to be divided among his children, but he might want the voting control (of his 41% voting stake) to be concentrated in one of them.
And so the solution is dual-class stock on top of dual-class stock: Give one Murdoch child (Lachlan) super-voting control over the trust that has super-voting control over News Corp. and Fox Corp.:
Rupert Murdoch, 93 years old, is seeking to amend his trust—which holds big stakes in Fox News owner Fox Corp. and Wall Street Journal parent News Corp—to ensure that when he dies Lachlan will control the family holdings spanning cable news, sports media, streaming, newspapers, book publishing and real estate. James Murdoch is resisting the change, and these days he has Elisabeth and Prudence on his side.
A trial to settle the dispute is set to begin Monday in a probate court in Nevada, where the trust is based. It will be closed to the public unless pending legal challenges to open up the proceedings are successful.
The Murdoch trust exercises considerable influence over Fox and News Corp, with roughly 40% voting stakes in each company. Rupert now controls it, but when he dies, each of his four oldest children will have an equal voting share, people familiar with the matter said.
For Rupert Murdoch, putting more power in Lachlan’s hands is meant to ensure stability at the businesses and avoid a confusing ownership structure in coming years, associates of the mogul said. If he prevails, Lachlan would have the same sweeping authority his father has enjoyed for years, and other shareholders would largely have to accept whatever his plans are for the companies. …
Under the proposed changes, Lachlan would eventually gain control when Rupert’s votes go away. James, Elisabeth and Prudence would still remain financial beneficiaries, alongside two younger siblings from Rupert Murdoch’s marriage to Wendi Deng, Grace and Chloe.
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