Dissident Investors Admonish Murdoch

Dissident News Corp. shareholders on Friday protested the renewal of a so-called poison pill provision without their approval but failed to block the reelection of four directors, including President Peter Chernin.

At their annual meeting in New York, about 16% of News Corp.’s shareholders withheld their votes for the reelection of four directors. Typically, directors are reelected with the approval of 90% or more of shareholders.

“You broke your promise and the shareholders’ trust in you,” Andrew Clearfield of London’s International Corporate Governance Network told News Corp. Chairman Rupert Murdoch.

Clearfield, whose firm advises investors, said he represented several of the dissident shareholders, some of whom are suing the company.

News Corp. adopted a poison pill takeover defense last November to discourage media mogul John Malone, who had unexpectedly doubled his company’s stake in News Corp., from buying more shares.

Liberty Media Corp., the cable programming company controlled by Malone, now holds about 18% of News Corp. shares, making it the second-largest shareholder after the Murdoch family, which controls 30%.

Worried that Malone could challenge the family’s control, the News Corp. board ratified a one-year provision allowing Murdoch to acquire stock at discount prices if Liberty increased its stake, effectively blocking any unsolicited takeover attempt.

In August, News Corp. extended that provision, although it had previously told shareholders it would not renew it without their approval.

Shortly before the annual meeting, Institutional Shareholder Services, a major investor advisory firm, recommended that large investors withhold approval of the four directors in protest.

One shareholder at Friday’s meeting said the provision hurt News Corp.’s stock price by preventing a takeover.

Murdoch, however, defended the renewal of the poison pill, which he said protected News Corp. shareholders from being “tricked” by someone seeking to seize control. He said someone could effectively take over the company at a discount by buying shares in the open market rather than by making a formal bid at a premium price.

Murdoch said putting the provision to a vote might have derailed discussions with Malone that were underway in August that would have reduced his stake. Murdoch said those discussions had continued over the last few months.

Besides Chernin, the three other directors who were re-elected were Chase Carey, chief executive of News Corp.’s DirecTV, the nation’s leading satellite provider; Roderick I. Eddington, a former CEO of British Airways; and Andrew S.B. Knight, an investor and former editor of the Economist magazine.

The annual meeting was News Corp.’s first since moving its home base to New York from Murdoch’s native Australia. The conglomerate owns TV stations, newspapers, the Fox television network, Fox News Channel, 20th Century Fox studios and satellite broadcasters in the United States, Europe and Asia.

News Corp.’s Class A nonvoting shares fell 21 cents to $14.52, while its Class B shares fell 18 cents to $15.35.