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25 Nov 2017 20:39
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  •   Home > News > Business

    Saudi Prince Alwaleed bin Talal's arrest could spell disaster for Rupert Murdoch's 21st Century Fox plans

    Rupert Murdoch's business empire may have just lost a crucial ally in colourful Saudi Prince Alwaleed bin Talal, who's been rounded up as part of an anti-corruption crackdown in the desert kingdom.


    Rupert Murdoch's business empire could lose a crucial ally with this week's arrest of one of the world's richest men.

    Billionaire Saudi Prince Alwaleed bin Talal is one of 11 princes, four government ministers, and dozens of ex-ministers rounded up in an anti-corruption crackdown in the desert kingdom.

    The Saudi investor has been crucial in the past to Mr Murdoch's efforts to fend off bids from institutional shareholders to wrest control of the business empire.

    "Prince Talal, for about 20 years has been the biggest non-Murdoch voting shareholder in News Corp, now 21st Century Fox," shareholder activist Stephen Mayne said.

    "His 5 per cent voting stake has regularly backed the Murdoch control of the company."

    The timing of the Prince's arrest could prove disastrous for the Murdoch family, with another attempt to loosen its grip on its company likely within days.

    21st Century Fox's annual shareholder meeting is due to be held next Thursday.

    "Next week at the annual meeting in Los Angeles, there's another hostile shareholder resolution proposing to get rid of the gerrymander, the two-class voting system," Mr Mayne said.

    "Whether the Prince's 5 per cent stake will be voted opposing that resolution next week will be an interesting one to watch.

    "It's hard to direct your votes if you're [under] arrest, I would have thought."

    Murdoch family control vulnerable to rebellion

    The Murdoch family owns just 14 per cent of the company, but under a dual-class share structure controls more than a third of its voting stock.

    At that level, the family's control is still vulnerable to a shareholder rebellion.

    In the past, Prince Alwaleed's 5 per cent stake has been crucial to maintaining the family's grip over the business empire.

    This is despite close to half the company's shareholders voting in favour of unwinding the dual-class share structure.

    Mr Mayne said there have been a number of incidents over the years where more than 40 per cent of voters have voted against the Murdochs to unwind the gerrymander or to de-couple the roles of CEO and chairman, both Mr Murdoch himself.

    "The Saudi prince has always loyally stuck by Rupert to the very last," Mr Mayne said.

    "If that 5 per cent voting block falls into different hands or it's sold to normal, institutional investors, the control that the family has over the company would be reduced."

    Editor's note: A day after this story was published the ABC learned that Prince Alwaleed bin Talal had offloaded his 21st Century Fox Shares.

    © 2017 ABC Australian Broadcasting Corporation. All rights reserved


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