Morgan Stanley is leading a charge to end the two-class share system that gives one family effective control of a major media organisation despite only owning a fraction of the total capital. And it’s a campaign that seems to be gaining traction with proxy advisory firms.
But, no, it’s not News Corp. Rupert’s dynastic ambitions remain intact – as long as the company continues to grow. Should it falter, then the Murdochs could well face the same sort of revolt that’s brewing on the New York Times share register.
As Marketwatch.com reports, the Ochs-Sulzberger family is facing a large protest vote at the NYT annual general meeting tonight. Last year Morgan Stanley led a group that withheld votes on 30 per cent of the company’s “Class A” directors and this year the influential Institutional Shareholder Services and Glass Lewis are also recommending investors “withhold”.
It doesn’t directly mean much as the Class A shareholders can only elect four directors. The Class B shares predominantly owned by the family elect nine.
In News Corp’s case, the gerrymander is more blatant. The second-class News shares don’t get a vote at all, while the Murdochs’ 36 per cent of the voting stock comfortably controls the board.
And while there might be the occasional rumble about fairness, there’s no real shareholder complaint – as long as the company is moving forward. If you don’t like the racket, don’t buy the shares.
The New York Times has run into shareholder grief because its share price is not performing. The Morgan Stanley ginger group wants to shake up the board and management.
The NYT CEO Janet Robinson counters that the gerrymander “underscores the editorial independence and integrity of the news product we produce each and every day”. Just as well News Corp’s share price is up as Rupert could hardly use that defence.
The Washington Post Co does though, as does Dow Jones. It looks like it’s only a lack of democracy that is protecting journalists from shareholders.