DEFC14A: News Corp Board Urges Stockholders to Reject Starboard's Dual-Class Proposal

News Corp's Board of Directors recommends stockholders vote against a proposal from Starboard Value to eliminate the company's dual-class capital structure at the upcoming annual meeting.

Summary

• News Corp's Board of Directors is soliciting proxies for its upcoming Annual Meeting of Stockholders on November 20, 2024.
• The Board is recommending stockholders vote for the election of its director nominees, the ratification of Ernst & Young LLP as the company's independent auditor, and the advisory vote to approve executive compensation.
• A key point of contention is a non-binding proposal from Starboard Value requesting the Board to eliminate News Corp's dual-class capital structure.
• The Board unanimously recommends voting against the Starboard proposal, arguing that the dual-class structure has enabled the company's long-term business strategy and facilitated value creation.
• The notice details how stockholders can vote, attend the virtual meeting, and pre-register.
• The document also highlights News Corp's corporate governance practices, including director independence, board committees, and stockholder engagement.
• Fiscal year 2024 saw News Corp report revenues of $10.09 billion, a 2% increase, and net income of $354 million.
• Total Segment EBITDA was $1.54 billion, and free cash flow increased to $602 million.
• The company also announced a multi-year global partnership with OpenAI.

Sentiment

Score: 8

Explanation: The document presents a positive outlook for News Corp, highlighting strong financial performance, strategic partnerships, and a commitment to corporate governance. While there is a disagreement with Starboard Value, the overall tone is optimistic and confident.

Positives

• Digital revenues continue to grow, accounting for over half of total revenues.
• News Corp's stock price has outperformed the S&P 500 and its peer group over the last five years.
• Dow Jones, REA Group, and Book Publishing showed strong financial performance.
• The company has secured significant partnerships with OpenAI and Google.
• News Corp is committed to corporate governance best practices, including an annually elected Board and majority voting.
• The company has a strong balance sheet and robust free cash flow generation.
• The company has increased transparency of its environmental, social and governance (ESG) mission, goals and progress through an annual standalone ESG report.

Negatives

• Starboard Value is pushing for the elimination of the dual-class capital structure, indicating potential disagreement on the company's governance.
• The company faces headwinds and disruption in the media industry.

Risks

• The company faces risks and uncertainties that could cause actual results to differ materially from forward-looking statements, as detailed in the Annual Report on Form 10-K.
• The company is navigating a rapidly changing digital media landscape.
• The company is exposed to cybersecurity and data protection risks.

Future Outlook

The company is confident in its long-term prospects as it enters fiscal 2025 from a position of strength.

Management Comments

• Fiscal 2024 was another outstanding year for our Company.
• News Corp has continued to thrive and transform into a global media and information services company.
• We are confident in the Company's long-term prospects as we enter fiscal 2025 from a position of strength.

Industry Context

The document notes that dual-class capital structures are prevalent among media and technology companies, such as Comcast Corporation, The New York Times Company, Meta Platforms, Inc. and Alphabet Inc.

Comparison to Industry Standards

• News Corp's stock price outperformed both the S&P 500 and its designated peer group over the last five years.
• The document mentions several comparable companies with dual-class structures, including Berkshire Hathaway, Comcast Corporation, The New York Times Company, Meta Platforms, Inc. and Alphabet Inc.

Corporate Governance

Related Party Transactions

• News Corp Australia purchases advertising from NOVA Entertainment, in which Mr. L.K. Murdoch holds an indirect 100% interest.
• News Corp Australia receives advertising revenue from NOVA purchases and through production arrangements.
• News Corp Australia, NXE Australia Pty Limited (Foxtel), REA Group Limited and NOVA were holders of equity interests in ScaleUp MediaFund 3.0 Trust.

Stakeholder Impact

• The Board believes the dual-class capital structure benefits all stockholders through the creation of sustainable, long-term value.
• The company is committed to fostering an environment where all employees can feel valued and included.
• The company engages with readers, audiences, and customers in ways that reflect and respect a rich diversity of viewpoints.

Next Steps

• Stockholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will hold its Annual Meeting of Stockholders on November 20, 2024.
• The Board will continue to evaluate the company's capital structure and corporate governance practices.

Key Dates

Keywords

proxy statement, annual meeting, Starboard Value, dual-class capital structure, corporate governance, executive compensation, financial performance, digital revenue, board of directors, stockholders