Southeastern Asset Management, which worked with Carl Icahn on his tilt at Dell, has become the largest voting shareholder in News Corp after Rupert Murdoch, prompting questions about its intentions towards the newly spun-off publishing and Australian TV business.
The 11.9 per cent stake Southeastern declared late on Tuesday gives it a larger stake in News Corp's voting 'B' shares than Prince Alwaleed bin Talal, who with 6.6 per cent has provided important support for Mr Murdoch and his sons in hostile shareholder meetings since the phone hacking scandal erupted in July 2011.
The Prince's support has given the Murdoch family, with 39.4 per cent of the votes, effective control. However, Southeastern has built the largest non-family position in News Corp's voting shares since John Malone, the Liberty Media chairman, threatened the Murdochs' power with a 16.3 per cent stake in the middle of the last decade.
News Corp earlier this year adopted a "poison pill" provision, letting existing shareholders - including the Murdoch family - buy new shares at half price if anybody were to build a voting stake above 15 per cent.
However, that poison pill is effective for only a year after the company split from the renamed 21st Century Fox entertainment group in June.
News Corp has faced challenges to its corporate governance and some investor questions about the breadth of its portfolio of assets, which include Australian pay television, online property listings, HarperCollins books and newspapers on three continents, from The Times and the Wall Street Journal to The Sun and The Australian.
Mr Murdoch had already answered some shareholders' calls for him to split his twin roles as the company's former chairman and chief executive, but he remains executive chairman of the new News Corp with Robert Thomson as chief executive. Its board has appointed several new directors but his sons Lachlan and James remain directors.
Southeastern's disclosure of its stakebuilding in News Corp came on a form reserved for passive investors, signalling that at least in the short term it will not press for any strategic or governance changes at the company.
The firm, established in Memphis, Tennessee, in 1975 and run by founder Mason Hawkins, emphasises long-term investing in undervalued companies.
It has shown, however, that it is not shy to pressure managements and pushed for corporate governance improvements that ultimately forced out Aubrey McClendon as chief executive of Chesapeake Energy. It was also the first shareholder to approach Michael Dell to suggest he led a management buyout of Dell.
Both classes of News Corp shares rose more than 1.6 per cent in early trading in New York on Wednesday. The stock has risen more than 4 per cent since the split in June.
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