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21st Century Fox has nominated to its board Jeffrey Ubben, the chief executive of activist investment fund ValueAct Capital Management LP, part of a broader agreement in which ValueAct agreed not to launch a proxy fight or other hostile action against the company for the length of the board term, the company announced Tuesday.

ValueAct, a hedge fund known to be on the friendlier end of the spectrum of investor activism, disclosed in August 2014 that it had made a sizable investment in Fox. ValueAct currently owns 5.9% of 21st Century Fox's Class B voting stock, according to regulatory filings.

Mr. Ubben will go up for election to Fox's board at the company's annual shareholders' meeting later this year. With his nomination, the company would expand its board from 12 to 13 members. The length of the board term is one year.

21st Century Fox, owner of the Fox broadcast network, several cable channels including Fox News and the Twentieth Century Fox film and television studio, was until 2013 part of the same company as Wall Street Journal-owner News Corp.

Unlike more aggressive activist investors, ValueAct hasn't laid out publicly any specific things it is seeking to change about Fox's management. Over the past year, Mr. Ubben has met frequently with members of the family of media mogul Rupert Murdoch, which controls the company, and has grown close to management, people familiar with the matter say. Last week, for example, he was one of the guests the Murdochs invited to meet with Indian Prime Minister Narendra Modi, the people said.

Mr. Ubben believes that James Murdoch, who succeeded his father as CEO of 21st Century Fox in July, is doing the right things, and just believes he can add value as an adviser, according to people familiar with the matter.

Fox abandoned its bid for Time Warner—a deal that would have reshaped the media landscape—after the companies failed to agree on price and Fox's stock fell, making it a less valuable currency. Some on Wall Street cheered Fox's discipline because it didn't keep raising its bid. In the wake of the failed bid, Mr. Ubben told Reuters that Fox should "retain the opportunity later to revisit the deal," though he supported the company's decision to walk away.

Mr. Ubben believes a challenge for Fox and the whole media industry is how to deal with the rise of Netflix Inc., according to a recent letter to ValueAct investors. Some media analysts believe the streaming giant is undermining the ad-supported TV ecosystem, helping to accelerate "cord-cutting"—pay TV disconnections—and drag down ratings.

The letter to ValueAct investors suggested Netflix's impact on media stock valuations is a catalyst for "fundamental change in strategy."

The letter, reviewed by The Wall Street Journal, said James Murdoch has demonstrated a "facility for technology that we have not witnessed among other industry leaders" and suggested Fox could "pull an Adobe." The letter didn't elaborate on the reference, but ValueAct helped the software maker Adobe Systems Inc. turn to a subscription model, which the fund has held up as a way to transform investor sentiment and defend the company's content against piracy.

James Murdoch hinted at a Goldman Sachs conference last week that Fox had been rethinking its dealings with such services. While Netflix remains an important partner, he said, Fox has done more deals of late with rival Hulu. (Fox co-owns Hulu with Walt Disney Co. and Comcast Corp.)

"I think certainly the business rules around how we sell to [streaming video] providers are changing and our thinking is evolving," Mr. Murdoch said at the conference.

Fox shares are down 34.4% so far this year, amid broad losses for media companies as investors fret about cord-cutting.

"Jeff will bring our board a great perspective as a global investor and a shared belief in building long-term value for shareholders," said Rupert and Lachlan Murdoch, executive chairmen of 21st Century Fox, in a statement. "Our board and senior management team have developed a highly-valued relationship with Jeff and we are pleased he has accepted the board's invitation to stand for election."

"I have been extremely impressed with 21st Century Fox's senior leadership team and directors and their collective vision for the company's continued growth in a dynamic industry," Mr. Ubben said in a statement. "The rapidly changing media landscape presents significant opportunities, and I believe 21st Century Fox is uniquely positioned to leverage its global presence and market leadership to create further long-term value for shareholders."

Write to Keach Hagey at keach.hagey@wsj.com and David Benoit at david.benoit@wsj.com

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(END) Dow Jones Newswires

September 29, 2015 09:15 ET (13:15 GMT)

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