Inside News Corp.’s contentious, comical shareholder meeting

Dylan Stableford
October 21, 2011

News Corporation chairman Rupert Murdoch convened what was expected by executives and media rivals to be a contentious annual meeting with the company's shareholders Friday in Los Angeles.

"Irate News Corp. Shareholders to Take Murdoch to the Woodshed" the New York Times blared in its preview of the meeting. Shareholders were expected to air grievances about the handling of the phone-hacking scandal by News Corp.'s board of directors, and to vote against the re-election of chairman Rupert Murdoch and his sons James and Lachlan to the board.

Murdoch opened the proceedings by condemning the phone-hacking that took place under his watch. "We cannot just be a profitable company, Murdoch said. "We must be a principled company."

He said the 15,000 people employed by News Corp. must be "beacons of ethical behavior."

"Some of our journalists have broken the law," he said. "There is no excuse. [...] We could not be taking this more seriously or listening more intently to criticisms."

The 80-year-old mogul was both contrite and combative. "The company has been the subject of both the understandable scrutiny and unfair attack," he said.

Murdoch said that closing News of the World was not easy, as it employed "many fine journalists who never broke the law. The only thing they broke were stories."

"Still, it was the right thing to do."

Murdoch then opened the floor to comments. The proceedings were combative, but since it was open to all shareholders--not just those concerned about phone hacking and the Murdoch family's overabundance of control--they were at times comical, too.

There was the shareholder who wanted to know what Murdoch and News Corp. were doing to protect animals in Australia. Then there was the 7th grade teacher who wanted to know what Murdoch, who gave a speech about education last week in San Francisco, said in that speech. "I was busy teaching," she said. "You should read the Wall Street Journal," Murdoch told her.

But the open floor was dominated by those seeking "radical" changes to News Corp's executive structure.

Julie Tanner, assistant director of socially responsible investing firm Christian Brothers Investment Services, proposed splitting the job of chairman and CEO in two and ousting Murdoch as chair. The result, she proposed would be appointment of a "truly independent chairman who is free to challenge management when needed." Tanner then proposed a "truly independent investigation" into the phone hacking, noting that Joel Klein, who is leading the company's inquiry, is a News Corp. employee.

Stephen Mayne, an Australian shareholder, asked Murdoch how Viet Dinh, who rejected to Tanner's proposal on behalf of the board, could do so as a "quasi-blood relative" to Murdoch; Dinh is the godfather of Rupert's son Lachlan, who is himself a board member. Dinh later responded to Mayne himself: "I came to this country as a refugee on a boat. This country gave me everything. I will sacrifice my integrity for no one and for nothing and I will leave it at that."

Tom Watson, the member of parliament who questioned Murdoch earlier this summer in front of the select committee in London, bought nonvoting shares and flew to Los Angeles so he could confront Murdoch about phone hacking again. "If I know about this," Watson challenged Murdoch, "with all the resources you are putting into clearing up this scandal, you must know this, too." (When Watson was told to limit his questioning of Murdoch to a minute, he fired back: "I gave Mr. Murdoch two and a half hours to answer my committee.")

A member of the Church of England, which apparently has a investment in News Corp., spoke in favor of Tanner's motion. Murdoch interrupted him: "Well, your investments haven't been that great."

Haim Saban, a noted News Corp. investor and producer of the children's television series "Mighty Morphin' Power Rangers," interrupted the grilling to praise Murdoch. "My money's on you," Saban said.

Mayne, who continued to press Murdoch at the meeting, was largely dismissed. But as the Guardian noted, he did manage to force Murdoch to admit he mismanaged MySpace after acquiring it in 2005: "We proceeded to mismanage it in every possible way and all the people involved with it are no longer with the company."

After the discussion, Tanner's proposal was set for a vote. Murdoch said that the results would be announced in a matter of hours.

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