For the first time, Rupert Murdoch faces a serious challenge to his control of News Corp, and that of his family.
On Friday, at the company's annual meeting in New York, shareholders will vote on whether News Corp should renew the "poison pill" — an anti-take-over device it adopted two years ago to thwart efforts by one of its big American investors, John Malone, to seize control of the media conglomerate.
Should the "pill" be overturned, Malone's company, Liberty Media, which owns just under 20 per cent of the News Corp stock, could again be a serious threat to Murdoch's control of the company — especially if Malone should, as he has threatened, buy more stock. At best, the Murdoch family owns about 30 per cent of the voting stock, which some say is marginally thin.
A vote against killing the "poison pill" would please Murdoch, but could result in the whole issue landing in the US courts, which could weaken Murdoch's negotiating powers.
At the heart of the matter is how voters view the Murdoch family — and how they rate the company.
While many have indicated they prefer Murdoch over Malone — whose company's track record in recent years has disappointed many shareholders — there is the question of Murdoch's age (75) and the question of who would succeed him in the event of his death.
Murdoch has indicated he would prefer someone in the family to take his place. A vote to uphold the poison pill would help protect the Murdoch family from any threats to their long-term control.
But as observers to the company drama on Wall Street have lately put it, the whole future of News Corp could be imperiled. There has been a lot of talk — especially among shareholders in Australia — of taking the issue to court.
Still, with one third of the votes, Murdoch does have the edge. He is also reported to have the support of Prince Alwaleed bin Talal of Saudi Arabia, who owns just under six per cent of the company stock. However, there is widespread disapproval in the US financial world against anything smacking of anti-shareholder tactics such as "poison pills".
Meanwhile, Murdoch has also been accused of becoming "soft" — at least journalistically and politically.
Political observers have been somewhat surprised and have commented on what has been called Murdoch's "leftward drift". They cite his apparent new "cosiness" with Hillary Clinton — he has even helped her raise funds for her likely upcoming challenge for the American presidency.
The big question is who will the New York Post, Murdoch's flagship in the US, endorse should she be an official candidate in 2008. The Post's support could help swing the election.