Rupert Murdoch’s charm offensive with the Bancroft family, controllers of Dow Jones, has now extended to offering them a News Corp board seat if the $US6 billion takeover proceeds.

Forgetting that News Corp is a public company, Rupert’s letter to the Bancrofts declares that “I would appoint a member of the family to the board”.

Rupert hopefully rediscovered overnight that shareholders have to elect directors when he received my fax nominating for the News Corp board at this year’s AGM in New York. Rupert himself will be up for re-election for the first time in decades, so it will be historic to have a contest.

I’ve also submitted a shareholder resolution that reads as follows:

That the News Corporation board of directors submit a proposal to holders of class A and B shares within the next 12 months which, if approved, would create a company with just one class of share.

These are some of the arguments in the 500-word supporting statement I have written, a document that must be sent to all News Corp shareholders in this year’s proxy statement:

Standard & Poors only allows one class of share from each company to be included in the S&P500 index on the New York Stock Exchange.

Given this has to be the most populous share on issue, News Corp’s B Class voting shares are not included in the S&P500 index. Therefore, many index funds are compelled to buy non-voting A Class shares and holders of the B Class voting shares suffer a lower than necessary share price.

Having a single class of share would add almost 1 billion News Corp shares into the S&P500 index, lifting the total to more than 3 billion shares.

Creating a single class of share would also serve the purpose of diluting Murdoch family control from approximately 39% of the voting stock to less than 15% of the total stock. This would likely trigger a re-rating of the stock as investors build in a potential takeover premium and allow the independent shareholders to appoint a majority of directors and determine key future issues such as a succession management.

As News Corporation discovered when it first approached Dow Jones, a two-tier voting system can appear highly undemocratic and discourage attractive takeover bids. News Corp’s suite of strategic assets would be highly attractive to private equity bidders.

News Corp is a company which passionately promoted the idea of spreading democracy to places like Iraq, so it seems inappropriate that our own system of democracy is severely gerrymandered with almost 70% of the shares on issue not having voting rights.

Given that Rupert completely censored my platform when I ran for the board in 2002, it will be interesting to see if he tries to wriggle out of this example of corporate democracy and free speech.

Crikey invites Rupert Murdoch to respond. Send your thoughts to [email protected]