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Rupert Murdoch and sons reelected to News Corp. board

At News Corp.'s shareholders meeting, Rupert Murdoch spends 90 minutes hearing, arguing with and at times ridiculing some of his critics.

October 22, 2011|By Dawn C. Chmielewski and Meg James, Los Angeles Times
  • A man in a Rupert Murdoch mask and others demonstrate in front of the Fox studio lot, where News Corp.s shareholders meeting took place. Murdoch and his sons were reelected to the board.
A man in a Rupert Murdoch mask and others demonstrate in front of the Fox studio… (Jay L. Clendenin, Los Angeles…)

Media mogul Rupert Murdoch survived calls for his removal as News Corp. chairman in the wake of a damaging phone hacking scandal at his British tabloid that critics said revealed lax oversight.

After a contentious shareholders meeting in Los Angeles on Friday, News Corp. said a majority of shareholders supported his reelection to the company's board, as well as the reelection of his sons, James and Lachlan, and the rest of the directors.

News Corp. did not disclose the vote tallies, saying it would do so early next week.

The vote, however, is expected to be a referendum on Murdoch's stewardship of the $33-billion-a-year conglomerate that owns the Fox broadcast network, Fox News Channel, the 20th Century Fox movie studio, HarperCollins publishing house and such newspapers as the Wall Street Journal.

News Corp. has been under increasing pressure to make dramatic changes to its management structure. Some investors have lobbied to reduce the influence of the 80-year-old Murdoch and his family since July, when the phone hacking scandal in Britain exploded into front-page headlines.

Murdoch's critics knew they faced an uphill battle to unseat Murdoch and others on the board. Murdoch and his family control about 40% of the voting shares. A close ally holds an additional 7%. That meant nearly every other shareholder would have had to vote against Murdoch to topple him.

Some investors had urged News Corp.'s board to adopt changes to inoculate the company from future scandals. One shareholder proposal called for the naming of a new, independent chairman to replace Murdoch at the helm of the media conglomerate he built over six decades.

"The pervasive and value-destroying scandal … requires more independent leadership," said Julie Tanner of Christian Brothers Investment Services Inc., which proposed splitting Murdoch's dual roles of chairman and chief executive.

Murdoch sought to reassure the 100 or so investors gathered Friday at the annual meeting at the Darryl F. Zanuck Theatre on the Fox studio lot that he and other directors take the scandal seriously, and he promised repeatedly to rectify the problems.

"If we hold others to account, then we must hold ourselves to account," Murdoch said in his opening remarks. "I am personally determined to right whatever wrong has been committed and ensure that it does not happen again."

Murdoch initially attempted to limit the time shareholders were given to address the board, but he ultimately relented. Over the next 90 minutes, he argued with — and at times ridiculed — some of his critics.

Stephen Mayne, an activist shareholder who flew in from Australia to attend the meeting, called for more independent board members — and for Murdoch to surrender the chairman title he has held since 1991.

"It's time to get on the governance high road," said Mayne, who once worked as a business writer for one of Murdoch's papers. "You should get with the program and embrace a board with more independent board members."

Tom Watson, the British lawmaker who has been leading Parliament's investigation into the alleged improprieties, also traveled to Los Angeles to discuss the purported misconduct with investors. During the meeting he said News Corp. potentially faces civil suits stemming from computer hacking — conduct that goes beyond eavesdropping on cellphones.

"You haven't told your investors of what is to come," Watson said. "With all of the resources you're putting to clearing up the scandal, you must know about this too."

Murdoch said News Corp. is cooperating with London's Metropolitan Police Service.

Edward Mason, a representative of the Church Commissioners, which manages the Church of England's investment portfolio, added to the calls for greater accountability, saying executives "should have been aware" of the misconduct by reporters at the now-defunct News of the World tabloid in London.

"We believe ethical conduct should be at the heart of News Corp.," Mason said.

Shareholders also decried the company's dual class structure, which critics contend provides Murdoch with undue influence. He and his family control nearly half of the company's voting stock, but they own only about 13% of the outstanding shares in the company.

"If you are truly proud and having nothing to fear about this company, why do you still have dual class stock?" asked Marguerite Young of the Service Employees International Union fund.

Viet Dinh, an independent News Corp. board member, defended the practice, saying corporations including New York Times Co., Comcast Corp. and Berkshire Hathaway Inc. have similar structures.

Annual meetings always provide a forum for disgruntled investors to air their grievances. However, allegations of phone hacking and bribery in Britain set the stage for these more pointed exchanges.

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