First Super dumps News shares after investor revolt fails
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 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.