Necks in the News
Rupert Murdoch still gets a kick out of the “fair and balanced” slogan used by his Fox News channel. He had a good laugh about it only last week at News Corp’s annual shareholder meeting. The results of a vote conducted at that gathering, released Monday, show that everyone’s now equally in on the joke about the company’s shameful corporate governance as they are the conservative bias of his TV news operation.
A majority of stockholders who don’t share the media mogul’s last name snubbed the nomination of his children, James and Lachlan, to the board. Without the support of Rupert’s nearly 40 percent control, three more directors also would have received less than a majority vote, meaning minority holders strongly rebuked a full third of the News Corp board. Strip out another 7 percent backing from Murdoch pal Prince Al-Waleed bin Talal, and the sons, each of whom has at one time been considered a potential heir apparent, suffered a roughly two-to-one defeat.
Thanks to News Corp’s skewed governance, the vote is only symbolic. Murdoch, despite his stated humility over a British newspaper hacking scandal that has put a cloud over his $46 billion empire, retains a firm grip. He will be emboldened by the strong support from other investors for his presence on the board and their unequivocal rejection of a plan to split the chairman and chief executive roles. But there’s little comfort Murdoch and other board members can take from these votes.
News Corp investors – like those at Viacom, CBS, The New York Times, Washington Post, Comcast and other U.S. media groups – signed up for the cold shoulder when they bought into a company with a lopsided dual-share structure and a board packed with the chairman’s cronies. Yet while their voices can be disregarded on technical grounds, they have spoken too loudly even for Murdoch to ignore.
Whether on his own or because of the influence of his closest advisers, Murdoch has slowly come around on the use of News Corp’s capital, distributing more of it these days to shareholders instead of on reckless acquisitions. He may be a stubborn and cagey tycoon. But the old newsman also has rolled the presses on enough exposés to know when the jig is up. That time has come for Murdoch’s board.