After more than 20 years backing Rupert Murdoch’s control of his media empire, arrested Saudi Prince Alwaleed bin Talal has dumped his entire $US1 billion-plus voting stake in 21st Century Fox, raising further questions about family control of the company.

The share sale only became public at lunch time today after 21st Century Fox contacted the ABC seeking to correct comments I’d made in this story which was broadcast on The World Today yesterday.

The Fox representative revealed that the prince no longer held any shares in the company, but this has not been previously disclosed.

This gave Nick Grimm from The World Today the global exclusive, which will potentially trigger speculation of further sales across the prince’s $US20 billion portfolio that includes key stakes in Twitter, Citi, Apple, Time Warner, a variety of hotels,  banks and other assets.

The prince’s Kingdom Holdings website provides no clue of the Fox sale, as this page still asserts that it has a major stake in News Corp, but then describes the company’s assets from before the 2013 demerger of 21st Century Fox.

After worldwide press coverage about the prince’s arrest and his ongoing interest in 21st Century Fox, I had asserted that Murdoch family control of Fox was in question because it was unclear what the arrest of the prince would mean for how his 5% stake would be voted at next Thursday’s Fox annual meeting in Los Angeles.

The company is battling a hostile shareholder resolution from the Nathan Cummings Foundation seeking to end the dual class voting structure which cements family control. The prince has backed Murdoch family control for many years, but sold down his News Corp stake in 2014.

Crikey has previously reported the prince selling down his Fox stake from 6.6% to 4.9% in February last year, which coincided with a trading high in the share price at the time.

The most recent Bloomberg disclosures showed that the prince still controlled 39.3 million Fox shares earlier this year. Given that the stock has ranged between the low of $US24.12 on September 4, 2016 and a high of $US31.78 on March 26 this year, the liquidation sale will have brought in between $US948 million and $US1.25 billion ($A1.62 billion).

It is possible the prince could still provide one last piece of support for the Murdochs next Thursday because the record date for the Fox AGM is September 18. If he sold after that, he still gets to vote, although that might be difficult whilst under house arrest inside the Ritz-Carlton in Riyadh.

Despite the prince’s loyal support, the shareholder revolts have been coming thick and fast against the Murdochs in recent years and more are expected next week.

The Murdochs are control freaks so the sell-down by the prince might also help explain why they have reportedly been exploring a sale of their entertainment assets to Disney.

Murdoch biographer Michael Wolff told CNBC yesterday this was about Rupert and Lachlan Murdoch trying to torpedo the James Murdoch vision to buy the rest of Sky Plc. Succession is in play, apparently.

The Disney sale reports did send shares in Fox soaring 9% this week after they had drifted to an 18 month low despite the soaring US market.

Who would have thought that Rupert Murdoch, at the age of 86, would be the first major media mogul to sue for peace and reverse decades of acquisitions and empire building?

The upshot could very well see the smaller News Corp taken back into the fold by the rump of 21st Century Fox to recreate the old Murdoch empire, albeit with much firmer family control.

The bottom line is that the Murdochs appear to have blinked in the face of the rise of Netflix, Apple, Amazon, Facebook and Google, plus the likes of CBS and its aggressive All Access streaming service, and the prospect of streaming businesses from Disney and ESPN.

The question now is if Fox and the Murdochs go back to basics with Fox News channels, the two Fox Sports channels and their local operations, plus Fox TV, how long will it be before they bid to buy back News Corp, which still houses the world’s biggest listed newspaper business.

Giving up the 39.1% of Sky would hurt, especially after two bids which have gone nowhere except to underline the immense distrust for the Murdochs in Britain.

UK reports this morning say Sky Plc has even threatened to shut down Sky News, one of Britain’s major TV news operations (after the BBC and ITV/ITN) if it proves to be an obstacle to Fox getting control of the satellite TV operator. 

Sky’s threat was contained in a submission to the Competition Markets Authority, which is scrutinising the deal. It warned that the continued operation of Sky News should not be assumed in light of concerns that the Fox takeover could harm media plurality in the UK. Sky said it would “review” its position in the event that the “continued provision of Sky News” impeded the Fox deal or “other corporate opportunities”.

Underlying all this is the succession – Michael Wolff suggests the Sky takeover is all about James Murdoch’s vision for the company which is resisted by Lachlan and Rupert.

The strategy and tactics certainly seem to be all over the place at the moment.

The entertainment assets bring prestige, but no so much political power.

If the entertainment assets brought in $US30 billion-plus and the Sky takeover was aborted, the Murdochs might even have enough cash to take the whole show private.

All of this will make for two very interesting AGMs at Fox Studios in Los Angeles next Thursday.

 

Peter Fray

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