Bloomberg News

Murdoch Spars With Shareholders Ahead of Report on Vote

October 21, 2011

(Updates with closing stock price.)

Oct. 21 (Bloomberg) -- Rupert Murdoch, chairman and chief executive officer of News Corp., jousted with shareholders at the annual meeting, parrying charges of lax oversight and employing wit as he sought to disarm critics.

“I hate to call you a liar but I don’t believe you,” Murdoch said to Australian investor Stephen Mayne, who told assembled shareholders in Los Angeles today he was undecided how to vote and was seeking a debate over governance proposals and board nominations. “I know how you’re going to vote,” Murdoch said, drawing chuckles from the crowd.

Murdoch, 80, ended the meeting without reporting the results of a board election and a shareholder bid to split the CEO and chairman’s roles. The company will provide the tallies today. Investors including Calpers, the largest U.S. pension fund, called on Murdoch and his sons James and Lachlan to leave the board to bolster oversight after a phone-hacking scandal.

News Corp. Class A shares, those most widely held, rose 2.1 percent to $17.20 at the close in New York. The shares, which represent about 70 percent of the economic interest, have no voting rights. The company has repurchased $1.71 billion worth since announcing a buyback in July.

Murdoch displayed his wit when he interrupted Edward Mason, secretary of the Ethical Investment Advisory Group at the Church of England’s fund, who spoke in favor of a proposal to separate the roles of chairman and CEO.

“Your investments haven’t been that great, but go ahead,’ Murdoch said.

‘‘I’m sorry Mr. Chairman?,” Mason asked. “It’s OK,” Murdoch replied. “I’ll let it pass.”

Watson Allegations

British lawmaker Tom Watson, who has led Parliament’s inquiry into phone hacking, drew attention to police investigations of computer hacking and the activities of a private investigator, Jonathan Rees.

In response to Watson’s questions, Murdoch said he wasn’t aware of computer hacking in the U.K.

“These rumors you speak of are being addressed,” Murdoch said. “We will put this right.”

The elder Murdoch went into the meeting with at least 47 percent of the voting shares on his side, including Saudi Prince Alwaleed Bin Talal, who has voiced support.

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information, and is a business partner of Alwaleed.

Shareholder Proposal

Christian Brothers Investment Services Inc. introduced the resolution to separate the chairman and CEO roles held by Murdoch, who has run the New York-based media company for more than five decades, citing the U.K. phone hacking scandal.

“The pervasive and value-destroying scandal at our company requires stronger, independent leadership on the board and a more thorough response from the entire board,” Julie Tanner, director of socially responsible investing for New York-based Christian Brothers, said at the meeting, reading from prepared remarks.

The California Public Employees’ Retirement System, the California State Teachers’ Retirement System and Institutional Shareholder Services all took stances aimed at loosening Murdoch’s control.

The furor over the hacking led New York-based News Corp. to close the News of the World and drop a bid to acquire full ownership of British Sky Broadcasting Group Plc, in which it holds a 39 percent stake. The company also owns the Wall Street Journal, the Fox television network and the Twentieth Century Fox movie studio.

Police Arrests

Police have arrested at least 16 people, including Andy Coulson, Prime Minister David Cameron’s former communications chief and an ex-News of the World editor.

The events have raised questions about News Corp.’s management and the board’s independence. The company formed a management and standards committee to aid outside inquiries.

The company also said it is investigating other U.K. publications. The testimony of James Murdoch, who once led the News International unit, concerning when he learned of the hacking was contradicted by former employees, and he has been asked to testify again in Parliament.

Investor Mayne, a former News Corp. employee, sparred numerous times with Murdoch, as he has previously.

“I did eight years working for you, Rupert,” Mayne said. “I did self-censor a bit and talk up your interests and never criticized you when I worked for you. That was the culture of the newspapers.”

“You’ve made up for it since,” Murdoch quipped.

--With assistance from Ronald Grover in Los Angeles. Editors: Rob Golum, Anthony Palazzo

To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Edmund Lee in New York at elee310@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Peter Elstrom at pelstrom@bloomberg.net


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