The world’s media have completely missed the story, but Saudi billionaire Prince Alwaleed bin Talal voted for the first time in 17 years against Rupert Murdoch’s wishes at the News Corp AGM in Los Angeles on Friday.
The nephew of King Abdullah is twice as wealthy as Murdoch, with an estimated fortune of $20 billion. He has staunchly backed the Murdoch interests over many years as shareholder protest votes over governance and board independence issues steadily rose.
For instance, when a News Corp shareholder proposed to unwind the dual class voting structure in 2012 before the Fox demerger, bin Talal helped Murdoch fend off the move. The result was 148 million votes (28.8%) in favour, with 365.4 million against.
Two years later, the demerged News Corp is a much smaller and more vulnerable concern with its declining print businesses and a market capitalisation of only US$8.7 billion.
To get the nominal News Corp share price up, there was a four-for-one consolidation as part of the demerger.
However, it seems that Murdoch’s latest governance breaches at News Corp after the demerger from 21st Century Fox have proved too much for even his biggest supporter.
Page 31 of the 2014 News Corp proxy statement discloses that Rupert now controls 78.72 million votes, while bin Talal has 13.18 million votes, or some 6.6%.
Their combined holding of 92 million votes is more than the 87.6 million votes that followed the advice of the board and rejected a shareholder resolution (see p65 of proxy statement) put up by the Nathan Cummings Foundation to eliminate the dual-class voting gerrymander.
Given that a whopping 79 million votes supported the hostile proposal, it would appear that even the rather undemocratic Saudi Royal Family wants to see one vote, one value at News Corp.
The Prince clearly linked up with hostile investor, Memphis-based Southeastern Asset Management, to fire a shot across Rupert’s bows. After the 2013 Fox demerger, Southeastern quickly accumulated 25.3 million votes, or some 12.7%, to become the second largest voting News Corp shareholder.
Southeeastern knew it would be initially prevented from going above 15% because News Corp controversially swallowed a poison pill as a temporary measure as part of the demerger.
The idea was to prevent anyone from repeating the canny John Malone move in 2004, when he swooped on nearly 20% of the voting stock amid a flood of Australian selling when News Corp was moving its domicile from Adelaide to Delaware.
The latest poison pill was scheduled to expire on June 28 this year, but on June 18 the News Corp board controversially announced it was extending the “stockholder rights plan” until June 18, 2015.
Such a move is a major affront to the principle of investor property rights. Indeed, when News Corp adopted a similar ruse in 2004 to fend off John Malone, it was sued by a coalition of aggrieved institutional investors and eventually dropped the structure once Malone had been removed from the register in exchange for securing News Corp’s lucrative DirecTV business satellite business in the US.
DirecTV has since prospered and now has a market capitalisation of US$44 billion, so this deal cost News Corp shareholders billions just to secure Murdoch family control.
Rupert went out of his way to avoid scrutiny and avoid public discussion of last week’s protest vote, but even The Australian’s Darren Davidson eventually covered it in today’s paper. However, the online headline — “News Corp shareholders vote Murdochs, Thomson to board” — missed the point somewhat. It was actually Rupert who voted his family and Robert Thomson onto the board because the sweeping protest votes would have defeated 11 of the 12 directors, but for Rupert’s 39.4% voting stake.
Stripping out those 78.72 million Murdoch votes for the directors, 83-year-old Rupert Murdoch himself only received 38% support, with 33.06 million votes in favour and 53.74 million against. For all we know, bin Talal could have voted against Rupert, too.
Even the most popular director, John Elkann, would have only squeaked over the line with 44.16 million votes in favour and 43.7 million against.
These are huge votes of no-confidence in the entire board. No wonder Rupert waited until 8.28am this morning to release this announcement to the ASX detailing the results. The News Corp AGM finished at 5.40am on Friday morning AEST time, so it is clear he deliberately withheld the release to reduce media coverage.
There were much more modest protest at the 21st Century Fox AGM on Thursday, and these results were publicly resulted within two hours of the meeting finishing.
That’s Rupert for you — manipulating democracy all over the place, even when running his own elections.
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