First Super will sell down its News Corp holdings after proposals for a more independent board were shot down at News Corp's latest annual general meeting.
First Super co-chair and investment committee chair Michael O'Connor said the failure to impose a more independent board at News Corp would lead to continuing issues in its governance structure.
He said the resulting risks for investors were unacceptable.
"Open, transparent, representative governance is not only overdue but essential for improved risk management within the company.
"Further, the interests of minority shareholders have too often been compromised.
"But these issues are apparently of no concern to Rupert Murdoch, so our board decided to take his advice and sell down our shareholding," O'Connor said.
He said poor governance at the company meant News Corp executives were among the highest paid in the world and received "outrageous" amounts of money.
"The aggregate cash pay of their top six executives last year was US$65.5m, more than three times the amount received by the top nine executives of BHP Billiton, and they are by no means underpaid.
"Our board doesn't believe that any senior executive is worth four or five hundred times the average salary paid to their employees," he said.
The $1.7 billion industry fund has requested its fund managers dispose of its News Corp shares over the coming months.