Rupert Murdoch and sons reelected to News Corp. board
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Rupert Murdoch and his sons survived a shareholder challenge to their control of News Corp.
Following the company’s annual meeting in Los Angeles on Friday, News Corp. announced that Murdoch, his sons James and Lachlan, and the remainder of the board had been reelected -- despite calls from some shareholders for their ouster.
News Corp. declined to announce the vote tally, saying it would release figures early next week.
The vote 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.
The media company 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 a tabloid cell phone hacking scandal in Britain exploded into front-page headlines in July.
Operatives for News Corp.'s now-defunct News of the World tabloid illegally eavesdropped on cellphone messages left for members of the royal family, celebrities, soccer stars, British soldiers and crime victims.
Murdoch’s critics knew that 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 that nearly every other shareholder would have had to vote against Murdoch to topple him.
On Friday, about a hundred shareholders attended the meeting in a theater on News Corp.-owned 20th Century Fox’s movie studio lot in West Los Angeles. Some expressed support for Murdoch. But several investors demanded that more independent members join the board of directors.
Venture capitalist James W. Breyer, 50, a partner at Bay Area-based Accel Partners, was elected to the board as an independent director.
Investors, who have long been critical of the company’s management structure, were emboldened to lobby for changes in light of the scandal.
‘We have found the board’s response to be inadequate,’ said Julie Tanner, assistant director of Christian Bros. Investment Services Inc., which made a motion on Friday -- which was defeated -- to break up the job of chairman and chief executive. Murdoch serves as both.
Corporate governance experts have long decried News Corp.'s dual-class structure, contending that it provides Murdoch with undue influence to run News Corp. like his own personal fiefdom with little accountability to shareholders.
Although Murdoch and his family alone control 40% of the company’s voting shares, they own only about 13% of all of the shares outstanding.
The dual-class structure -- with Class A and Class B shares -- allows votes only to shareholders who own News Corp. Class B shares. The vast majority of News Corp. investors own Class A shares and do not have a voice in company matters.
‘It’s time to get on the governance high road,’ said Stephen Mayne, an Australian shareholder who said he spent thousands of dollars to travel to Friday’s meeting. Mayne, who previously worked at a Murdoch paper, said: ‘You should get with the program and embrace a board with more independent board members.’
But Murdoch was undeterred.
‘I’m very proud of the culture of this company,’ he told his critics. ‘Have there been mistakes made? Yes, and we are putting them right. We will stop at nothing to get to the bottom of this and make things right.’
-- Meg James, Joe Flint and Dawn C. Chmielewski