News Corp suspends voting rights by foreigners to comply with US law

MUMBAI: Global media conglomerate News Corporation has suspended the voting rights of a portion of Class B Common Stock owned by foreigners in order to comply with U.S law that restricts foreign holdings and voting powers to be within 25 per cent.

The company asserted that the suspension of voting rights will not impact the rights of Non-U.S. Stockholders to receive dividends and distributions.

The decision to curtail voting rights was taken as the company discovered that foreign investors held a total of 36 per cent Class B Common Stock well above the permissible limit. The voting rights of 50 per cent of the Class B Common Stock held by Non-U.S. Stockholders was suspended immediately.

The remedial measure comes as the company, which owns and operates the popular Fox network channels, seeks to renew licenses for its 27 TV stations.

The company‘s 27 owned-and-operated stations and the Fox Broadcasting Company together generated $4.8 billion in revenue and $681 million in operating profit in fiscal 2011.

Accordingly, after the suspension of voting rights, the aggregate percentage vote of the Murdoch Family Interests will remain initially at 39.7 per cent of the outstanding shares of Class B Common Stock not subject to the suspension of voting rights.

According to Wall Street Journal, News Corp.‘s largest foreign investor is Saudi prince Alwaleed bin Talal, who has about 7 per cent of the voting stock.

Station owners are required to file biannual reports to the FCC that provide information on ownership interests, including foreign owners with a significant stake.

The disclosure comes in the backdrop of the multiple scandals that rocked the company in UK. Television regulator Ofcom is scrutinising whether James Murdoch and News Corp. are "fit and proper" persons to be in control of BSkyB, the company that runs Sky TV.