Rupert Murdoch's control over Fox News empire hangs by a thread — here's why

Rupert Murdoch's fate is in the hand of voting machine company Smartmatic after paying out a whopping $787.5 million settlement to Dominion Voting Systems.

The Fox News boss controls his empire through ownership of a special class of stock that gives him an outsized voting stake in the Fox Corporation and News Corp., and his leadership has survived recent challenges from so-called Class B shareholders, but a defamation lawsuit could finally topple him, reported the New York Times.

"The drama we’re watching play out at the Fox Corporation is an extreme example of how companies with a controlling shareholder can suffer — the stock is down almost 18 percent in the past five years — but it isn’t the only one," wrote columnist William D. Cohan. "To a lesser degree, I see problems occurring at companies such as Comcast (controlled by the Roberts family) and Paramount Global (controlled by Shari Redstone), among others. When dual classes of stock are involved, a family’s voting power often far outstrips its economic ownership, leading to financially foolish, and even bizarre, behavior."

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American corporations turned to professional management a century ago to insulate shareholders from dynastic owners, and the Smartmatic defamation suit may finally break Murdoch's grip on the conservative media empire he controls.

"One way to rein in Mr. Murdoch may lie with Smartmatic," wrote Cohan. "If it emerges victorious in its lawsuit, it could insist, as part of any settlement, on governance changes at Fox or even demand that the CEO succession process include candidates outside the Murdoch family. Smartmatic, or even the recently filed shareholder lawsuit against Fox, could end up pressuring Fox, and indirectly News Corp, to scrap their dual-class stock structures."

Murdoch may be 92 years old, but his control of Fox and other media entities remains absolute.

"Rupert Murdoch has had absolute power at both Fox and News Corp for far too long," Cohan wrote. "That’s dangerous under any circumstances, but it’s especially troubling at a national news organization, such as Fox, where disinformation and lies, apparently, are the coin of the realm. And there doesn’t seem to be any way that will change if the Murdochs maintain their absolute power and absolute control. That fact alone further imperils what has become America’s fragile democracy."