Promises, promises

10 October 2005 By Fiona Maharg-Bravo

Having broken a pledge to put News Corp s poison pill to a vote, the media mogul is suffering a breakdown of trust with investors. They are now taking the fight to BSkyB. And rightly so. Otherwise, Murdoch may feel free to trample on them again.

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UK fund manager Hermes has said it will vote against BSkyB's request for an exemption from UK takeover rules to buy back 5% of its shares. The exemption would allow the UK pay television group to buy its own shares without forcing News Corp, whose 37% stake would climb to 39%, to make a bid for the whole company. News Corp has already agreed to cap its voting rights at its current shareholding.

Hermes is part of a group of 12 large pension and investment funds that are suing News Corp after the media company went back on a pledge to allow a shareholder vote on a poison pill instituted last year. Institutional Shareholder Services is also urging investors to withhold votes on director remuneration packages as well as the reelection of Peter Chernin, chief operating officer, and Rod Eddington, audit committee chairman, at this month's annual meeting.

News Corp had promised to put the poison pill to shareholder vote this year. Instead, the company has unilaterally extended the pill for another two years.

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