A key ally of Rupert Murdoch has sold his stake in 21st Century Fox, leaving the company more vulnerable to a rebellion by shareholders unhappy at the dominance of the Murdoch family.

Prince Alwaleed bin Talal, who controls the investment firm Kingdom Holding and is one of the world’s richest men, at one stage owned more than 6% of Fox and has consistently backed the Murdochs in shareholder votes about the family’s control of the company.

He has been a shareholder in Murdochcompanies – including Fox and News Corp, the owner of the Sun, Times and Wall Street Journal – for two decades and expressed public support for the family after the phone-hacking scandal at the News of the World in 2011.

Regulatory filings in New York show Prince Alwaleed reduced his stake to 4.98% in December 2015, and an analysis of Bloomberg data shows the stake has fallen to zero since the end of the last financial quarter, on 30 September.

It is not clear why he sold the stake or to whom. The sale represents the loss of an ally for the Murdochs and adds an extra twist to reports this week that Fox held talks with Disney about selling most of the company.

The Murdochs control about 39% of the voting rights in Fox, in effect giving them control of the key decisions, but own only about 17% of the shares.

Fox is run by Rupert Murdoch and his sons Lachlan and James, the latter of whom is chief executive. The company is trying to buy the 39% of Sky that it does not own in an £11.7bn deal, but the deal is being investigated by the Competition and Markets Authority on the grounds of media plurality and commitment to broadcasting standards.

Fox’s proposed takeover of Sky suffered another setback this week when the media regulator Ofcom ruled that two Fox News programmes that discussed the Manchester Arena bombing and Donald Trump’s travel ban breached UK broadcasting standards.

On Wednesday night Fox reported better than expected quarterly results, with its cable assets helping the company beat analysts’ expectations. The company reported revenues of $7bn (£5.3bn) for the three months ending 30 September 2017.

The Murdochs declined to comment on the Sky deal beyond any already published statements but said they remained confident the deal would be completed by the middle of 2018.

Lachlan Murdoch, the executive co-chair of 21st Century Fox, also said the company would also not comment on any talks with Disney. But he dismissed speculation that the Murdochs had decided Fox lacked the scale to compete with rivals including Amazon, Google and Netflix, which has been seen as one of the prime reasons the company might consider a sale.

“Fox has the required scale,” Murdoch said. “We are excited about all our brands and the opportunities they offer the company.”

Fox is facing a rebellion at its annual meeting next Thursday from shareholders who are unhappy with the company’s performance and how it handled a sexual harassment scandal at Fox News. The Nathan Cummings Foundation, a small Fox shareholder, has tabled a proposal to eliminate the shareholding structure that allows the Murdochs to control the company despite their limited shareholding.

The foundation has been pushing for change at Fox and News Corp for several years. Fox has recommended that shareholders oppose the motion.

CtW Investment Group, which represents pension funds, wrote to Fox last month calling for an overhaul of the board, including the departure of Sir Rod Eddington as a non-executive and the replacement of “insiders” with independent directors.

It also called for the creation of a corporation responsibility and compliance committee and said the board of Fox had been slow to respond to the scandal at Fox News, which led to the departure of the channel’s boss, Roger Ailes – who has since died – and the presenter Bill O’Reilly.

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The CtW letter said: “The board stands at a critical juncture. The cultural crisis that has been exposed over the last 15 months at Fox News is a clear illustration of corporate control problem at 21st Century Fox. We would like to see the board take steps to minimise the risk of such a crisis in the future.

“We sincerely believe these governance changes are critical to ward off future corporate crises at Fox.”

Fox declined to comment. Kingdom Holding did not respond to a request for comment.

Prince Alwaleed was among 11 princes arrested – along with four ministers and dozens of former ministers – over the weekend by the Saudi government in what was described as an anti-corruption crackdown.