Governance Issues
Murdoch has effective control over Fox through a dual-class share structure. Owners of its more widely traded Class A shares have no say on board elections, executive pay or large-scale acquisitions. Only the company’s Class B shares, which don’t trade as heavily, have voting rights. Murdoch owns 38 percent of that stock through his family trust, while his close friend and ally Prince Alwaleed bin Talal is the second-largest holder at 6.6 percent.
Time Warner, on the other hand, has one share class, and all investors vote on corporate matters. Bewkes likes running a public company where all its investors have a say, according to those who know him. He also appreciates the daily public record of the company’s achievements through its share price, the people said. That’s one reason he doesn’t welcome Murdoch’s offer, which doesn’t include any voting stock in Fox.
Facing the takeover threat, Time Warner recently tightened its control, eliminating a provision in its bylaws that let shareholders call special meetings. Under the old rules, investors representing at least 15 percent of Time Warner’s shares could have called for a meeting as soon as February. As much as 14 percent of the stock has changed hands since Murdoch’s offer was announced last week.
A takeover by Fox means it’s likely that someone named Murdoch will eventually be in charge. Murdoch has always said he wants his children to take over the company one day, and he recently elevated two of his sons into higher positions. James Murdoch, 41, was named co-chief operating officer and Lachlan Murdoch, 42, has returned to the company as non-executive co- chairman of Fox.
Murdoch Family
“Rupert Murdoch is 83 years old — if you’re a long-term shareholder like we are, you’re probably signing up for control by the rest of the Murdoch family at some point,” Chris Marangi, a money manager at Gamco Investors Inc., said in an interview on Bloomberg Television this week. Gamco owns shares in both companies, and Marangi added that the deal makes strategic sense, especially following cost cuts.
Banker Friends
The two companies share a few connections that could be deployed to help lubricate any deal.
Bewkes and Fox COO Chase Carey know each other well, having crossed paths in the media business for decades, according to people familiar with them.
Murdoch enlisted Carey to broach the bid with Bewkes in early June, signaling a strategic sensitivity on the part of Murdoch.
The most keyed-in person arguably is Ginsberg, who’s worked for both companies. He was head of communications and marketing at News Corp., Fox’s predecessor company, for 10 years until he left in 2010 to join Time Warner, where he’s since acted as an important strategic adviser to Bewkes.
Ginsberg left on good terms with Murdoch, according to several people familiar with both executives. Murdoch, who greatly respects the 51-year-old’s skills as an executive, has on occasion taken to calling Ginsberg on industry matters even after he left the company.
Ginsberg is also close friends with Blair Effron of Centerview Partners LLC, one of the bankers advising Murdoch on his takeover strategy of Time Warner. In 2007, when Ginsberg was with News Corp., he suggested to Murdoch that he hire Effron as the banking adviser for its acquisition of Wall Street Journal publisher Dow Jones & Co.
Keith Cocozza, a spokesman for Time Warner, declined to comment on Ginsberg’s connection to Murdoch.
Outspoken Views
Murdoch and Bewkes themselves share few traits. Even after more than three decades in media, Bewkes has few, if any, close friends in the business and remains closest to some of his former classmates at Yale.
Murdoch, famous for his swashbuckling manner and outspoken views on topics from climate change to immigration, has developed many company friendships. He has become a little less visible since a hacking scandal erupted at his U.K. newspapers in July 2011. He shut down one of his papers and came before a government committee, where he apologized.
The Australian-born billionaire has nonetheless been fairly active on Twitter in the last few years and also has a revealing Tumblr account. The blog is often lighthearted, showing the mogul in both work and play modes. In one picture he appears to casually be playing a board game with friends. The caption reads: “He is ruthless at Monopoly. Seriously.”
