The Murdoch family is headed to probate court in Nevada on Monday as Rupert Murdoch looks to amend his trust, which holds major stakes in Fox Corp. and News Corp.
The 93-year-old media mogul has been looking to give his son Lachlan control of the family holdings, which include cable news, sports media, newspapers, book publishing and real estate assets. At the company’s annual meeting last year, Rupert transitioned to Chairman Emeritus, while Lachlan became the sole Chair of News Corp. while maintaining his role as executive chair and CEO of Fox Corp.
Under the proposed changes, Lachlan would gain control when Rupert’s voting shares go away, according to the Wall Street Journal. Rupert’s other son James and daughters Elisabeth and Prudence would still remain financial beneficiaries, alongside their two siblings Grace and Chloe from Rupert’s marriage to Wendi Deng. But the proposed change faces pushback from James, who has support from Elisabeth and Prudence, the Journal notes.
A trial to settle the dispute will be closed to the public, barring no successful legal challenges to open the proceedings.
“A family trust like the one at issue in this case, even when it is a stockholder in publicly traded companies, is essentially a private legal arrangement, as the applicable sealing statutes recognize,” probate commissioner Edmund J. Gorman Jr wrote in the 18-page recommendation filed on Thursday.
“In addition to the protection of privacy interests that outweigh the public’s right to access these proceedings, the court also recognizes that several of the parties and witnesses in this case—as even movants concede—are well known to the public and the subjects of intense media and public scrutiny. These parties warrant additional security measures to ensure that their own physical access to the courts is not infringed, and that malicious actors who might wish them harm cannot use their appearances in this probate court to facilitate that harm,” Gorman added. “Certainly, additional court security measures can partially mollify these risks, but closure of hearings is another tool this court can employ to ensure these parties’ safe access to the courthouse. In this particular case, while these considerations do not, by themselves, warrant complete closure of hearings to the public, these considerations weigh in favor of closure when combined with the other privacy factors discussed above.”
According to the Journal, Rupert’s efforts to amend the trust have been prompted by concerns that James, a critic of Fox News, would try to moderate Fox News channel’s content or even push to sell the network and that he and his sisters would team up to block Lachlan’s management of the companies.
The outlet notes that the Murdoch family has made efforts to try to settle the dispute outside of court, with one potential option being James, Elisabeth and Prudence selling their stakes in the trust back to Rupert and Lachlan. Sources told WSJ that the family has explored borrowing money against the trust to finance a buyout, though its possible additional capital would be needed.
The Murdochs’ combined economic interest in Fox and News Corp is worth about $6 billion, with the family holding a roughly 40% voting stake in News Corp. and around a 44% stake in Fox Corp.
The latest development in the legal battle comes after it recently caught the attention of activist investor Starboard Value LP, which argues that the family feud poses a risk to News Corp. shareholders. The firm has submitted a proposal to eliminate the company’s dual class structure.
“The situation at News Corp is a textbook example of one of the worst forms of a dual-class share structure – one that extends beyond any reasonable timeline and one in which super-voting rights are moving from a visionary founder to the founder’s children. The four Murdoch siblings with voting rights within the Trust are reported to have widely differing worldviews, which, collectively, could be paralyzing to the strategic direction of the Company; more importantly, we are not sure why their perspectives should carry greater weight than the views of other shareholders,” the hedge fund wrote in a letter earlier this week. “This is clearly not the appropriate governance structure for a public company, and we believe it has exacerbated News Corp’s valuation discount relative to its inherent value.”
In a statement, News Corp. said that its board believes the dual-class capital structure “promotes stability” and the company has “thrived under the current structure and guidance of the Board and senior leadership despite major changes in consumer behavior amidst the digital revolution of the last decade.”
“During this time, the Company has transformed its revenue and earnings base due to organic digital reinvestment, strategic acquisitions and divestments and on-going cost management initiatives that have delivered record profitability and significant value creation for stockholders,” the statement continued. “With the Board’s long-term vision and support, News Corp has struck landmark, multi-year content licensing deals with major technology platforms, creating new revenue streams and additional growth levers including a significant step to prepare the Company to prosper in the AI age. And over the last five years, News Corp’s stock price has materially outperformed both the S&P 500 and its peer group.”
News Corp. shares have climbed 80% in the past five years, while Fox Corp. shares are up 16% over the same period.
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