Is Rupert Murdoch About To Lose Control of News Corp?

One of the most fascinating things about humanity is it's ability to ignore it's past and learn from the mistakes. This is especially true in business and one only needs to look no further than the 1980s and 1990s to see companies rise and fall through their greed and lack of planning. Companies like Exxon, BondCorp and Qintex - just to name a few.

One of the biggest success stories to come out of Adelaide - and Australia for that matter - is Rupert Murdoch's News Corp. From it's minor beginnings back in 1952 when he inheritted the "News" and "Sunday Mail" newspapers in Adelaide, Rupert turned his small company into one of the largest media conglomerates in the world half a century later. His insatiable appetite for more and more power has made Rupert and his company into a media and political power to be reckoned with.

However, this is where the issue arises. Has Rupert, in his search for more wealth and power, driven him into a position of losing control of his own company?

The Murdoch family control 30% of News Corp, making them the largest shareholders in the company. Whilst based in Adelaide [Australia], Rupert was able to run the company as if it was his personal business. What Rupert wanted, Rupert got and very very few people and shareholders here in Australia would even consider challenging him. However, Rupert and News Corp begun to run into a tricky situation.

Expansion was becoming restricted as the world's biggest prize - the USA media market - considered News Corp as a "foreign" company. His decision to move News Corp's headquarters from Adelaide to Delaware in the USA, thus becoming a USA company, was made to allow him to expand his media interests.

All fine and good to this stage. But this is where the problem arises and the issues of Rupert losing control of News Corp comes into play.

Whilst News Corp was based in Australia, the company was "the big fish in the little pond" and was protected by Australia's foreign ownership laws and a compliant shareholder base. However, relocating to the USA, News Corp is now playing in an environment where other media companies [like John Malone's Liberty Media which owns 17% of News Corp] are just as big if not bigger than News Corp.

Further, the USA shareholders are not so "accommodating" to Rupert's style of leadership, thus the legal proceedings against Rupert and News Corp by disgruntled shareholders over the so-called "poison pill" issue. And there are already rumblings by some major shareholders to try and ensure that the News Corp board is made up of predominantly "independent" directors.

Personally, I think this is the beginning of a very turbulent period for Rupert Murdoch and his family. His style of management is not conducive to what the USA considers "appropriate", and this will eventually see him lose his position.

Shareholders like Liberty Media do not need to increase their shareholdings in News Corp to overthrow Rupert. They simply need to combine their votes to elect a replacement, for the Murdoch family only controls 30% - the remaining 70% is owned by other shareholders.

Maybe Rupert should have listened to his son Lachlan, and not moved News Corp to Delaware. Time will tell but somehow I can not see News Corp being run by Rupert Murdoch [or any Murdoch for that matter] five years from now.

James