News Corp. Director Met With Pension Funds Over Murdoch Chairman Role
A group representing Australian pension funds calling for Rupert Murdoch to relinquish the dual role of chairman and chief executive officer at News Corp. (NWS) met with independent board director Rod Eddington to discuss their concerns.
The meeting last week sought to ensure that interests of minority shareholders are represented at News Corp. (NWSA), said Ann Byrne, CEO of the Australian Council of Superannuation Investors, whose members have about A$300 billion ($317 billion) of investments.
Murdoch, who controls about 40 percent of the company’s voting stock, has been under pressure from investors since allegations of phone hacking at News Corp.’s U.K. unit led to the arrest of journalists and closure of its News of the World tabloid. The Australian pension funds last year opposed the re- election of Murdoch’s sons Jamesand Lachlan as directors and called for an “independent” chairman ahead of the company’s 2011 annual shareholder meeting.
“Most investors understand that in the Australian and the U.K. market, it’s normal to have those roles separated,” Byrne said. “Having an independent board is the only way for the interests of minority investors to be protected.”
Stephen Browning, a spokesman for News Ltd. in Sydney, declined to comment, referring the request to parent News Corp.’s New York headquarters.
U.K. Police have arrested more than 30 people in three News Corp. investigations related to phone hacking, computer hacking and bribery by journalists. The bribery probe spread to the Sun newspaper, where current and former employees were arrested since last year.
James Murdoch, News Corp.’s deputy chief operating officer, resigned as executive chairman of the U.K. publishing unit News International last month and moved to the company’s New York headquarters.
News Corp. shareholders “are concerned that James’s judgement was faulty and was faulty for a long period of time and this has damaged the company’s reputation,” Claire Enders, CEO of research firm Enders Analysis, said in an interview. “The company wants to make its major shareholders feel that it’s dealing absolutely 100 percent with the issues at hand.”
News Corp. may be facing an even larger shareholder revolt against James Murdoch at its annual meeting as more revelations about the hacking and bribery scandals at the U.K. papers come to light, Enders said.
U.K. lawmakers are preparing a report about James Murdoch’s role in the phone-hacking scandal and may publish their findings in coming weeks.
James Murdoch had told Parliament last year that he wasn’t made aware that phone-hacking was widespread at News of the World before he became head of News International in 2007.
Both former News of the World editor Colin Myler and the tabloid’s lawyer Tom Crone insisted James Murdoch was told about the message in 2008. Myler in 2008 sent James Murdoch an e-mail, showing that voice-mail interception went beyond a single reporter at the tabloid.
James Murdoch wrote to Parliament saying he was confident he didn’t review the full e-mail at the time.
The scandal also prompted News Corp. to drop a bid for 100 percent control of British Sky Broadcasting Group Plc (BSY), the pay- TV company of which James Murdoch is still chairman.
The meeting between Eddington, News Corp.’s lead independent board member, and the pension funds was reported earlier today by the Australian Financial Review.
“We had a constructive meeting and will continue to discuss the issues with News Corp. in the lead up to the company’s annual general meeting later this year,” Byrne said by phone from Melbourne today.
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