Published January 14, 2015
News Corp. (NWS), the media conglomerate controlled by Rupert Murdoch, announced Monday that it was adopting a "poison pill" defense following an unexpected maneuver by media investor John Malone last week that could nearly double his voting control in the company to 17 percent.
The moves come just as News Corp. is moving its legal home from Murdoch's native Australia to the United States, where it holds many entertainment assets including the Fox broadcast network, the Fox News Channel (search) and the Twentieth Century Fox (search) movie studio.
News Corp. is the parent company of the Fox News Channel, which operates FOXNews.com.
Last week Malone's investment vehicle, Liberty Media Corp. (L), made a transaction with Merrill Lynch that could allow Liberty to increase its voting stake in News Corp. from 9 percent to 17 percent in the next six months. Under the deal, Liberty would be able to convert some of its non-voting stock in News Corp. to voting shares.
News Corp. said in a statement Monday that it had adopted a defense strategy called a shareholder rights plan (search), commonly known as a "poison pill," that would allow the Murdoch family and other shareholders besides Malone to acquire News Corp. stock at half-price in the event that a shareholder other than the Murdochs acquires 15 percent or more of the company's voting stock.
The Murdochs already own nearly 30 percent of News Corp. Murdoch has been grooming his sons, James and Lachlan, to take over leadership in News Corp. one day.
The announcement from Liberty came on Wednesday, the same day that News Corp. reported earnings for its first fiscal quarter and also announced that it had received court approval in Australia for its plan to reincorporate in the United States. News Corp. said Monday that Liberty's action "was taken without any discussion with, or prior notice to, News Corporation."
The moves indicate a cooling in relations between Murdoch, who built up News Corp. into a major global media empire starting with a newspaper in Australia, and Malone, a pioneer of the cable television industry who is now a formidable media investor. His Englewood, Colo.-based Liberty owns the home shopping network QVC as well as stakes in Discovery Communications Inc. (search) and Court TV, along with other properties.
Concerned that the moves could be expensive to Murdoch, investors sent the company's shares down 4 percent in Australia. In New York, News Corp.'s shares were down 52 cents at $17.24 in mdday trading on the New York Stock Exchange, where they are currently trading on what's called a "when-issued" basis ahead of their formal listing on the exchange this Friday. Liberty's shares were off 12 cents at $9.51, also on the NYSE.