Starboard Value Takes Position in News Corp, Eyes Strategic Changes

Activist hedge fund Starboard Value has acquired a position in News Corp., aiming for strategic and governance changes within Rupert Murdoch’s media empire.

The $8 billion New York-based fund, led by Jeff Smith, “believes News Corp., one of the two arms of Rupert Murdoch’s media empire, trades at a significant discount to its fair market value due to its conglomerate structure,” according to The Wall Street Journal, citing people familiar with the matter. 

The people said Starboard’s stake in News Corp. is “sizeable” but provided no additional information on how large. Reuters first reported Starboard’s stake last Friday. 

Starboard began building a stake in News Corp. over the summer, before Murdoch, 92, announced on Sept 21 that he would step down as chairman, leaving his son Lachlan as sole chair, the sources said. -Reuters 

WSJ said Starboard would ask News Corp. to spin off its digital real estate division, which includes a stake in Australian online property site operator REA Group and Realtor.com parent Move Inc. 

Starboard argues that News Corp.’s Dow Jones business, the publisher of the Journal, Barron’s, and MarketWatch, is worth upwards of $7 billion.  

Smith also plans to push News Corp. to do away with its dual-class share structure, which ultimately gives the Murdoch family more voting power in excess of their actual ownership. 

Reuters said Smith will present his ideas of reshaping News Corp. at two investor conferences this week, including Tuesday’s 13D Monitor Active-Passive Investment Summit. 

Last month, Murdoch, News Corp.’s executive chairman, said he would formally resign at a shareholder meeting in November. His elder son, Lachlan Murdoch, who has served as co-chair of News Corp, will become sole chair of that company and continue as Fox Corp. executive chair and CEO. 

Earlier this year, News Corp. CEO Robert Thomson reduced headcount by 5% or around 1,250 positions.

There has been another activist fund, Irenic Capital Management, in News Corp., which has also been pushing the company to separate the digital media business from its digital real estate assets. 

Besides News Corp., Starboard Value took a stake in Salesforce one year ago, calling for the cloud software company to increase its margins. 

News Corp shares are down about a quarter since peaking around $27.44 in May 2021. 

And Starboard Value believes shares trade at a significant discount due to its structure.