Rupert Murdoch and his News Corp. were sued over claims he is causing the company to pay about $675 million for “nepotism” in its purchase of his daughter’s U.K.-based television production company Shine Group Ltd.
There is no reason for the purchase other than to reward Elisabeth Murdoch and perpetuate the family’s involvement in senior management of the media empire, the Amalgamated Bank of New York and the Central Laborers Pension Fund said in the complaint.
The bank sued as trustee for several funds, through which it holds almost 1 million shares of News Corp., according to a complaint filed today on behalf of the company in Delaware Chancery Court in Wilmington. Central Laborers, an Illinois-based pension fund, also filed a separate complaint seeking to inspect books and records outlining the company’s decision to buy Shine.
“Although the transaction makes little or no business sense for News Corp. and is far above a price any independent, disinterested third party would pay for Shine, it is unsurprising that the transaction was approved by News Corp’s board,” lawyers for the bank said in the complaint.
Murdoch’s daughter is expected to join the board of News Corp. upon completion of the deal, the company said Feb. 21. Elisabeth Murdoch founded Shine, which produces shows such as “MasterChef,” in 2001.
‘Family Candy Store’
The company supplies television content to U.K. TV companies including the British Broadcasting Corp. Shine will be an important part of the company’s expansion strategy for global TV operations, Deputy Chairman Chase Carey said in February.
In its complaint, Amalgamated accused Murdoch of treating the company “like a wholly owned family candy store.” The transaction is the latest attempt to further the “selfish” interests of News Corp.’s controlling shareholder at the expense of the company, according to the complaint.
“The transaction violates the entire fairness standard both on the basis of price and process,” lawyers for Amalgamated said in the complaint.
Amalgamated is seeking unspecified damages.
Jack Horner, a spokesman for New York-based News Corp., declined to comment.
The case is Amalgamated Bank v. Murdoch, CA6285, Delaware Chancery Court (Wilmington).