Rupert Murdoch’s News Corp. and John Malone’s Liberty Media hardened their positions Friday as News Corp. extended its poison-pill provision for up to three years.
At its annual meeting in Gotham, News Corp. extended the controversial measure through October 2008, with the board given the option to extend it for a third year. The board can still end the provision at any time.
A poison pill inhibits a hostile takeover by, in essence, making the purchase of additional shares highly expensive.
Notably, 42% of shareholders voted against the measure, a higher margin than in past years. About half of the dissenting shares were held by Liberty.
Malone company also dug in its heels: In a turnaround from last year, company withheld its support for News Corp.’s board of directors. All the directors, which include Rupert Murdoch’s son Lachlan and former Spanish leader Jose Maria Aznar, were still approved overwhelmingly.
Liberty and News Corp. have been in a complicated tango for several years. In 2004, the News Corp. board instituted a poison-pill plan after company heard the footfalls of Malone, who had snapped up nearly 20% of News Corp. shares in preparation for what some predicted would be a hostile takeover.
Recently, Liberty CEO Greg Maffei has suggested that Liberty would be willing to swap its 19% stake for News Corp.’s 38% piece of DirecTV. He’d earlier hinted that Liberty would also be interested in a stake in MySpace.
But Murdoch played his cards close at the meeting, deflecting several questions about a swap by saying, “If we can believe Liberty, we’re very close to closing a deal.”
Pressed about how he felt, Murdoch said, “Time will tell. We’re not in any rush or hurry.”
Murdoch also upped the rhetoric against Malone, telling the press in reference to Liberty’s stock buys, “If someone wants to buy an asset of the company or the whole company, we expect them to come in through the front door and negotiate properly.” The poison pill, he said, is simply meant “to stop a backdoor cheap entrance.”
News Corp. was also put on the spot over ramifications of Google’s purchase of YouTube.
But the company maintained Friday that it was in no rush to sign a content deal with Google to allow clips on YouTube. Site is likely to come under increasing legal scrutiny now that it’s owned by Google; on Friday it pulled down 30,000 Japanese links because of legal concerns.
News Corp. was also cautious about plans to expand its Google-MySpace pact to include video. Instead, execs at the meeting focused on the ongoing success of the youth-themed site, with chief operating officer Peter Chernin emphasizing that, unlike YouTube, MySpace has no copyright issues and continues to generate high traffic numbers.
Company also said it remained wary of a competitive threat to MySpace from Google-YouTube. “They don’t see it as a community site that might compete with us, though we see every chance that might develop that way,” Murdoch said.
But News Corp. doesn’t have complete leverage when it comes to YouTube — a big factor in MySpace’s popularity lies in users’ ability to link to the site.
In other news at the meeting, company estimated that worldwide ad revenue will come in about 6% higher this year, with gains concentrated on the broadcast, not the print, side of its biz.
Company was mum about future deals for carriage of Fox News, instead stressing a recent victory to extract an average of 75¢ per subscriber from Cablevision over five years.
Fox’s programming and reporting were also taken to task by a number of watchdogs in the audience, who deemed FX series “smutty” and said that News Corp. outlets were not sufficiently pro-American.
With the FCC cracking down on indecency, Murdoch went into the audience after the meeting to seek out Leon Weil, a rep for the Parents Television Council who had criticized the adult material on FX skeins; Murdoch invited Weil to visit executives involved in net’s programming decisions.
Finally, on the subject of his decision to host a Hillary Clinton fund-raiser earlier this year, Murdoch downplayed the event as a “courtesy,” saying that “if her opponent had asked, we would have done the same thing.”
He said he didn’t “learn anything new (from the event) other than that she’s a very intelligent and smart, charming politician.”