News Corp Extends "Poison Pill," Sets First Dividend Since Fox Split
The dividend "is a sign of confidence in the state of our business and faith in our prospects for the future," says CEO Robert Thomson.
Rupert Murdoch's News Corp said Thursday it plans to start paying a dividend and would extend a shareholder rights plan, also known as a "poison pill" or defense against hostile takeovers.
The semi-annual dividend will amount to about 10 cents per share and is scheduled to be finalized during the company's fiscal first quarter, which starts on June 29. The first payment will be made in the following quarter, the company said.
The anticipated dividend would mark the first time the company has paid a dividend since the "new" News Corp was established as a separate, publicly traded company in mid-2013 after its split from 21st Century Fox. News Corp's stock is down 17 percent over the past year.
“This decision by the board is a sign of confidence in the state of our business and faith in our prospects for the future,” said CEO Robert Thomson. “The planned dividend, combined with our ongoing buyback and strategy of balancing capital returns with prudent reinvestment, puts News Corp firmly on track for long-term growth and value creation."
Meanwhile, the amendment to the company's stockholder rights plan, which was scheduled to expire on Thursday, moves the expiration date to June 18, 2018, unless changed earlier by the company. It is a sign that Murdoch wants to continue avoiding hostile takeover attempts. At Fox, he will leave his CEO title to son James Murdoch as of July, but he will remain actively involved in the business as chairman, a role he also holds at News Corp.
The poison pill issue has been a topic of debate among shareholders since it was first announced in 2004 when John Malone's Liberty Media raised its stake in then-News Corp. to 17.1 percent, and in response, the company set a 15 percent limit for shareholders looking to build their stake in the company. In 2005, the conglomerate extended it for two additional years. Stockholders then sued the company, and the parties worked out a settlement that limited the company's ability to maintain a rights plan for longer than one year without first obtaining stockholder approval.
In 2013, when the conglomerate split its entertainment and publishing businesses, the board of the new News Corp adopted a stockholder rights plan with a 15 percent threshold for a year. Just before its expiration, the company's board approved an extension for an additional year without stockholder approval. Murdoch recently beat a resulting lawsuit.