Fox investors seek to convert voting shares, to Murdoch’s benefit

NEW YORK • Several top investors in Twenty-First Century Fox Inc. are pressing for the right to swap their voting shares for ordinary shares, which are trading at an unusual premium, even though the move could hand even more control of the company to Rupert Murdoch, according to people familiar with the matter.

Fox’s dual-class share structure already gives the 83-year-old media mogul control over 39.7% of voting rights, even though he and his family hold only a 12% equity stake.

Several Fox investors, which collectively own 8% of voting rights, have been unhappy about the relative performance of their shares since the company delisted from the Australian stock exchange last May, the people said.

Historically, the voting shares had traded at a premium. In the five years before the delisting, the Class B shares, which carry voting rights, traded at an average premium of 6.2% over the ordinary Class A shares. But the delisting caused some Australian institutional funds to sell their B shares, which now trade at a 3% discount to the A shares.

Frustrated with the gap, several top Fox shareholders have met with management in recent months to press for amendments to the company’s charter to allow voting shares to be convert-

Once you own the controlling block he does, the vote is not worth a terrible lot

ible into ordinary shares, according to the people, who requested anonymity as the discussions are private.

They said the investors, which include major hedge funds, believe conversion rights would push up the value of the B shares, pointing to CBS Corp. and Comcast Corp. as examples. The voting shares of both companies can be converted and they trade at a premium to ordinary shares.

Fox’s ordinary A shares have risen 3.8 % over the past six months to US$33.58, while the voting B shares have gained 2.7% to US $32.57.

“Once you own the controlling block that he does, the vote is not worth a terrible lot,” said one of the sources.

Some of the Fox investors plan to take their proposals to the next annual general meeting, expected in the fall, said the sources familiar with the matter.

A Fox spokesman declined to comment.

Some shareholders may be wary that conversion would leave Mr. Murdoch with an even bigger share of the remaining voting shares.

In the past, some pension funds and shareholder proxy advisers have criticized Mr. Murdoch’s command over his media empire, and pushed to separate his chairman and chief executive roles.

Fox, which owns the Twentieth Century Fox film studio as well as broadcast and cable television networks, was spun off from News Corp. in 2013 amid shareholder pressure surrounding the phone hacking scandal involving Mr. Murdoch’s newspapers in Britain. (News Corp.’s voting shares are also not convertible into ordinary shares.)