Skip to main content

Fox and the voting shares discount



When does the right to vote have a negative value, and why?

Shares in one of Rupert Murdoch's concerns, Twenty-First Century Fox Inc., are divided into voting and non-voting classes. Both represent an equity interest, so both are inferior to debt in the event of a restructuring or litigation.

The reason for the division is that Murdoch and his family want to maintain control, yet they don't want to have to own as large an equity share as they would need in order to do so. The two class share structure allows him effective control of the company, with 39.7% of the voting rights, even though he (and his family) have a total of only 12% of the equity. Twelve percent is still a large chunk of a corporation, but dissidents could conceivably challenge Murdochian control if both classes of stock were equity, challenges that are cut short since he controls almost 40% of the shares that count for purposes thereof.

My curiosity is piqued, though, by the fact (a recent turn of events) that the voting shares are selling at a considerable discount to the non-voting shares. Major investors apparently are demanding the opportunity to turn their voting shares in for non-voting shares, as a simple arbitrage play in the face of the discrepancy. Reuters reporters are citing unnamed "people familiar with the matter"  who say that certain investors, including representatives of "major hedge funds," have met with Fox management in recent years to discuss convertibility. In effect, they are trying to convince Murdoch to accept an even larger share of the voting rights than he already has.

I don't blame hedge fund managers for seeking a quick risk-free profit when an opportunity for doing so, untainted by public subsidy, presents itself. But, not having researched the situation properly yet, I am eager for a good explanation as to how this opportunity arose. How did voting rights in this company come to have literally negative value?
Labels:

Comments

Post a Comment

Popular posts from this blog

A Story About Coleridge

This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge.   We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a majesti
9 comments
Read more

Searle: The Chinese Room

John Searle has become the object of accusations of improper conduct. These accusations even have some people in the world of academic philosophy saying that instructors in that world should try to avoid teaching Searle's views. That is an odd contention, and has given rise to heated exchanges in certain corners of the blogosphere.  At Leiter Reports, I encountered a comment from someone describing himself as "grad student drop out." GSDO said: " This is a side question (and not at all an attempt to answer the question BL posed): How important is John Searle's work? Are people still working on speech act theory or is that just another dead end in the history of 20th century philosophy? My impression is that his reputation is somewhat inflated from all of his speaking engagements and NYRoB reviews. The Chinese room argument is a classic, but is there much more to his work than that?" I took it upon myself to answer that on LR. But here I'll tak
17 comments
Read more

Five Lessons from the Allegory of the Cave

  Please correct me if there are others. But it seems to be there are five lessons the reader is meant to draw from the story about the cave.   First, Plato  is working to devalue what we would call empiricism. He is saying that keeping track of the shadows on the cave wall, trying to make sense of what you see there, will NOT get you to wisdom. Second, Plato is contending that reality comes in levels. The shadows on the wall are illusions. The solid objects being passed around behind my back are more real than their shadows are. BUT … the world outside the the cave is more real than that — and the sun by which that world is illuminated is the top of the hierarchy. So there isn’t a binary choice of real/unreal. There are levels. Third, he equates realness with knowability.  I  only have opinions about the shadows. Could I turn around, I could have at least the glimmerings of knowledge. Could I get outside the cave, I would really Know. Fourth, the parable assigns a task to philosophers
Post a Comment
Read more