By Ross Kerber
(Reuters) - Media company Fox can avoid a shareholder vote on a measure asking it to consider different labels for its news and opinion shows, the top U.S. securities regulator said.
The Securities and Exchange Commission wrote in a Thursday letter seen by Reuters News that it agreed with Fox's argument that the proposal from activist investors related to "ordinary business." That is one of the criteria the agency uses to judge company requests to leave investor proposals off their proxy statements.
The decision marks a win for the parent of conservative-leaning Fox News Media ahead of its annual meeting, traditionally held in the fall.
A Fox representative did not immediately respond to a request for comment.
The proposal was filed by private investor John Chevedden and is similar to one from 2023, which was withdrawn before last year's meeting. Both cited Fox's $787.5-million settlement of a defamation lawsuit by Dominion Voting Systems over Fox's coverage of false vote-rigging claims in the 2020 election.
The suit "highlights the risk of a news organization inadequately differentiating its news reporting from its opinion and entertainment programming," stated this year's proposal text. Proponents asked Fox to consider some type of "public differentiation" between news and other programming, as well as a Fox board report on the matter.
In addition to arguing the matter related to ordinary business, Fox told the SEC the proposal could be excluded for being misleading.
"By its nature, journalism can encompass both news and opinion, news broadcasts can incorporate elements of opinion, and opinion broadcasts can incorporate elements of news. Consequently, the Proposal’s implication that differentiation between journalism and opinion is possible is materially false and misleading," an attorney for Fox, Lyuba Goltser of law firm Weil Gotshal & Manges LLP wrote the agency on July 2.
The SEC said it was not necessary to address that argument.
Luke Morgan, an attorney for activist shareholder group As You Sow, which represented Chevedden, said proponents were disappointed.
"There can hardly be a more significant issue for Fox than its misinformation problem," Morgan said via email. "This is precisely the sort of issue that is appropriate for shareholder input."