First Super dumps News shares after investor revolt fails
The $1.7 billion industry fund First Super said it would be instructing its fund managers - where it has a direct mandate - to sell shares in News Corp in an orderly manner over the next few months after the defeat of proposals at last year's News Corp annual meeting for a more independent board. Institutional investors from Australia, Britain and the US put forward resolutions to replace Mr Murdoch with an independent chairman, implement a simple majority vote on all resolutions, and eliminate News's dual-share structure.
The latter has ensured the Murdoch family controls 40 per cent of the company's votes despite owning just 12 per cent of News Corp through its 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 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," Mr O'Connor said.
"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. The manoeuvre is designed to protect News Corp's more valuable film and broadcast assets from the phone-hacking scandal engulfing its newspapers in Britain.
First Super said it was not aware of any other institutions taking this action in relation to News Corp.
Frequently Asked Questions about this Article…
First Super said it will instruct its fund managers to sell News Corp shares after a shareholder revolt failed to force governance changes. The $1.7 billion industry fund’s co‑chair Michael O’Connor said proposals to install an independent chair and more independent directors were defeated, leaving what the fund views as unacceptable governance risks for investors.
First Super said it will ask the fund managers that have a direct mandate to sell the News Corp shares “in an orderly manner” over the next few months, rather than dumping the position immediately.
Institutional investors from Australia, Britain and the US put forward resolutions requesting an independent chairman to replace Rupert Murdoch, a simple majority vote on all resolutions, and the elimination of News Corp’s dual‑share structure. Those proposals were defeated at last year’s annual meeting.
The article explains News Corp’s dual‑share setup gives the Murdoch family control of roughly 40% of the company’s votes through ownership of Class B common stock, even though that family owns about 12% of the company’s economic interest. This structure concentrates voting power and limits influence by ordinary shareholders.
Yes. The article says non‑US owners of Class B shares effectively had their voting rights halved in April to comply with US restrictions on foreign ownership of broadcast licences, further reducing the voting influence of some shareholders.
According to First Super, it was not aware of any other institutions taking the same action in relation to News Corp at the time the statement was made.
News Corp plans to split its publishing business from its film and television business. The company says the move is designed to protect its more valuable film and broadcast assets from fallout related to the phone‑hacking scandal affecting its newspapers in Britain.
Based on the article, everyday investors should be alert to concentrated voting control (for example, a family controlling a large share of votes despite owning a small economic stake), lack of independent directors or an independent chair, and mechanisms that can limit minority shareholders’ influence. First Super said these shortcomings can compromise minority interests and increase investor risk, which prompted its decision to sell.
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