Failure of shake-up at News Corp leads to super fund share dump
A MAJOR Australian super fund is dumping its shares in News Corp after a shareholder revolt failed to trigger any change at Rupert Murdoch's media group.
The $1.7 billion industry fund First Super said it would be instructing its fund managers - where it has a direct mandate - to sell News Corp shares in an orderly manner over the next few months after the defeat of proposals made at last year's News Corp annual meeting for a more independent board.
Major institutional investors from Australia, Britain and the US proposed replacing Mr Murdoch with an independent chairman, implementing simple majority votes on all resolutions, and eliminating the company's dual-share structure.
The latter has ensured the Murdoch family controls 40 per cent of company votes despite owning just 12 per cent of News Corp through the ownership of Class B common stock, which hold the voting rights.
It was further enhanced in April by the fact that non-US owners of Class B shares have effectively had their voting rights halved to comply with US restrictions on foreign ownership of broadcast licences.
First Super's co-chairman, Michael O'Connor, said that the failure of proposals to introduce an independent News Corp chairperson - in place of Mr Murdoch - and more independent directors meant that the inadequacies of the company's governance structure would continue. He said the risks for investors were unacceptable.
"Open, transparent, representative governance is not only overdue but essential for improved risk management within the company. Further, the interests of minority shareholders have too often been compromised," said Mr O'Connor. "But these issues are apparently of no concern to Rupert Murdoch, so our board decided to take his advice and sell down our shareholding."
Mr O'Connor is also the national secretary for the Construction, Forestry, Mining and Energy Union, which is a member of First Super.
News Corp will split its publishing business from its film and television business this year in a move designed to protect News Corp's more valuable film and broadcast assets from the phone hacking scandal engulfing its British newspapers.
First Super said it was not aware of any other institutions taking this action on News Corp but Mr O'Connor added that he would not be surprised if others were considering their options. First Super's decision is expected to affect $7 million worth of News Corp shares.
News Corp did not comment on the announcement from First Super.
At its annual meeting, it said: "The board believes that [Rupert Murdoch], the company's chairman and chief executive, and his family have pursued stockholder value enhancing strategies throughout the company's history and have been the primary source of the strategic vision that has made the company's success up to this point possible."