Rupert Murdoch may lose control of News Corp now that Saudi Prince Alwaleed bin Talal has sold most of his stake in the company. Kingdom Holding Company, which invests for the Saudi prince, reduced his investment by selling $188 million of B shares, cutting his share from 6.6% to 1%.
Murdoch has needed Kingdom’s support, as his empire took a hit from a phone-hacking scandal and challenges to News Corp’s dual class structure. Last November, News Corp shareholders protested at News Corp’s company’s annual meeting; 47% wanted to jettison the company’s dual class structure. Laura Campos of the Nathan Cummings Foundation, the News Corp shareholder that pushed for the change, said, “We were only a few percentage points away.” The reason for the closeness of the vote may have been the Saudi prince’s sale of his stake, which occurred before July. In January, the Cummings Foundation contacted News Corp’s lead independent director, Peter Barnes, to urge the board do something about the direction of the company.
The dual class structure of News Corp means that even though the Murdoch family only owns 14% of the company, they retain 39.4% of the voting power.
Kingdom’s 6.6% stake in 21st Century Fox, worth $1.7 billion, will remain constant. Kingdom cut its News Corp stake via “an orderly disposal programme that was predominantly executed in the first half of 2014 and successfully completed by the end of the year.”
The last half of 2015 was brutal for News Corp, as its shares fell 13% compared with the S&P 500’s 4.6 per cent gain.
Prince Alwaleed commented, “We remain firm believers in News Corp’s competent management, led by CEO Robert Thomson, and are fully supportive of Rupert Murdoch and his family. Our investment in Twenty-First Century Fox, constitutes a solid foundation for our longstanding relationship that we expect will endure.”
Although News Corp announced earlier this week that neither it nor Fox would be charged with any corporate wrongdoing, the legal fees the company has had to pay totaled £102.7m in the twelve months concluding in June 2014.