Murdoch grilled by investors but vote favors status quo

While the re-election of News Corp.’s existing directors came as no surprise, it was still a disappointment to many irate stockholders in attendance at the company’s annual shareholders meeting Friday.

Wavering between penitence and irritation, News Corp. chairman-CEO Rupert Murdoch tried to strike a balance as shareholders grilled him on corporate governance and urged for changes, sometimes heatedly, to the company’s governance and conduct. That included an ultimately rejected resolution, brought by Christian Brothers Investment Services, to appoint an independent board leader. The proposal would have eventually replaced Murdoch as chairman with an independent director.

“You’ve been treating us like mushrooms for a long time,” said Stephen Mayne, director of the Australian Shareholders Assn. Mayne approached the microphone at least half a dozen times during sometimes-amused, sometimes-heated exchanges with Murdoch.

Though it was held on the 20th Century Fox lot in Los Angeles, the meeting was well attended. News Corp.’s annual GSM normally takes place in New York.

Investors also voiced grievances with the culture of News Corp. — one perceived to have contributed to the phone hacking at the company’s News of the World tabloid. The controversy and ensuing investigations ultimately led News Corp. to shutter the profitable paper and withdraw its bid for BSkyB.

Mayne called investor returns for the past two decades “dreadful” and pointed out that News Corp. stock dropped 10% in Australian trade in the immediate wake of the July scandal, ranking it the third-worst performing stock in the S&P/ASX 50 at the time.

While one shareholder called the phone hacking a “pervasive and value-destroying scandal,” Murdoch came prepared to argue otherwise, showing the audience a chart of the company’s U.S. stock performance compared to other media congloms since July. But many stockholders came concerned about more than just the company’s short-term health.

“It’s time to actually embrace good governance,” Mayne said. He was one of many who spoke at the meeting to criticize what they perceive as lax oversight by a board with too many ties to the Murdoch family, including Viet D. Dinh, chairman of the board’s governance committee and godfather to Lachlan Murdoch’s son.

“I came to this country as a refugee on a boat,” Dinh responded, sounding as though he was choking up. “I will sacrifice my integrity for no one and for nothing.”

And while Dinh emphasized that the British police had instructed News Corp. not to comment on the ongoing investigation into the hacking scandal, he and Murdoch reassured investors that they were cooperating fully with the authorities. Dinh also declined to give specifics on the company’s own internal investigation of the matter.

“I promise you we will stop at nothing to get to the bottom of this and put it right,” Murdoch told the crowd. And while details of the company’s investigation and profitability remained scarce, Murdoch offered general reassurances that the corporation’s media properties remained strong.

“In the era of expanding digital consumption, our content libraries are fast becoming treasure troves,” he said. “Great programs and films are our insurance for the future.”

British MP Tom Watson, who has sparred with Murdoch in the past over News Corp.’s conduct, brought up potential new allegations of computer hacking, but Murdoch said he was unaware of them.

“I find it inconceivable that a company of this size does not know things that I know,” Watson responded.

And while the first half of the meeting seemed dominated by disgruntled shareholders, many satisfied stockholders voiced their satisfaction with Murdoch toward the end. “I’ve never been pressured into doing anything unethical,” one individual investor and Fox employee said.

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