* Shareholders call for his resignation as chairman
* British MP: News of the World reporters hacked computers
* Company's ethical practices questioned
By Lisa Richwine
LOS ANGELES, Oct 21 News Corp
shareholders reelected the media conglomerate's board of
directors on Friday and failed to approve a proposal to oust
Rupert Murdoch from his chairman post.
News Corp did not disclose the specific results, including
how many investors withheld their shares from voting or how
many voted against the directors, among them Murdoch and his
sons. The company said in a press release that it would file
the numbers with the U.S. Securities and Exchange Commission
early next week.
Murdoch proved adept at crisis management during News
Corp's annual shareholder meeting earlier on Friday, striking
contentious and comedic tones to disarm legions of angry
investors who showed up looking to draw corporate blood.
Inside, Murdoch began the meeting with perfunctory comments
about being "personally determined" to right News Corp's
wrongs, saying it "must be an ethical company" and that it has
been subject to "fair criticism and unfair attack." But that
was as conciliatory as Murdoch would get during the meeting.
Unlike sons Lachlan and James, who sat quietly during the
75-minute meeting, Murdoch stood defiant in the face of tough
questioning about News Corp's corporate governance, a proposal
to strip him of the long-held chairman role that goes along
with his CEO title, and fresh allegations of computer hacking
that piggyback off the phone hacking charges that are
responsible for putting Murdoch in his precarious position.
In addition to the roughly 150 people crowded into the
Zanuck Theatre on the Fox Studios lot in Hollywood, about 100
others remained outside to voice their opposition to the
company, with signs reading, "Murdoch isn't above the law" and
"Big Media, Big Money, Get Out."
Murdoch was more lucid and feisty than he was during
questioning by a special committee of Parliament in July.
British member of parliament Tom Watson, Australian pension
fund representative Stephen Mayne and Julie Tanner of the
Christian Brothers Investment Service were among those who
sparred with Murdoch. Mayne, a longtime News Corp antagonist,
and Murdoch, who employed his familiar tactic of pounding the
table to stress a point, circled each other like familiar
"It is time to get on the governance high road. You've been
treating us like mushrooms," said Mayne, who has been to more
than a decade's worth of these meetings.
Later, in response to Mayne's comment that he wasn't sure
how he planned to vote his shares, Murdoch shot back, "I hate
to call you a liar, but I don't believe you. I know how you're
going to vote."
THE REAL FIREWORKS
But the real fireworks were supplied by Watson, who flew to
Los Angeles to attend the meeting as the representative for
1,669 shares of nonvoting stock held by the AFL-CIO. At his
first opportunity to speak, Watson noted the "deep irony" of
News Corp using images of Prince William and Kate Middleton
during its presentation since both were alleged phone hacking
He then said that News Corp could face new
investigations in the UK by the country's Serious Organised
Crime Agency stemming from the actions of at least three
private investigators employed by News International, News
Corp's UK newspaper publishing unit. Murdoch has failed to warn
shareholders of the possibility of new civil lawsuits, Watson
"I promise you absolutely that we will stop at nothing to
get to the bottom of this," Murdoch said in response to
Despite the animosity between the two, Murdoch jokingly
defended News Corp's democratic voting process by pointing out
that its Fox News channel featured Watson earlier in the day.
"We're fair and balanced," he said, using Fox News'
After the meeting, Watson told reporters he was pleased to
have the chance to bring the issues to the attention of
investors, even if board members "didn't choose to acknowledge
the points I made."
"I made my serious points ... the board can choose to
ignore me if they like," he said.
Watson said he was sure the issues brought up during the
meeting would be put to James Murdoch when returns to
Parliament for more questioning next month.
Murdoch had some supporters in the crowd, among them Haim
Saban, the billionaire creator of the "Teenage Mutant Ninja
Turtles" franchise. Saban said he was shocked at investors'
focus on corporate governance and said they should instead be
looking at News Corp's strong operating performance. He also
asked Murdoch if he had plans to revisit the abandoned $12
billion BSkyB deal.
In the wake of the phone hacking scandal, a group called
Avaaz campaigned against News Corp's bid to take full control
of UK satellite operator BSkyB .
Murdoch responded that the company doesn't have plans to
put the deal back on the table, but added "never say never,
Another independent investor made a point of thanking
Murdoch for creating "thousands of jobs across the world."
Since Murdoch controls 40 percent of News Corp's voting B
shares and is supported by the next largest holder, Saudi
Prince Alwaleed bin Talal, it was unlikely that Murdoch, his
sons James and Lachlan or any other long-time serving director
would have been voted off the board.
News Corp board chairman Viet Dinh took pains to defend the
company's dual class stock structure by pointing out that
Comcast, Warren Buffett's Berkshire Hathaway and others feature
the same structure. He also noted that shareholders voted to
approve the structure as recently as 2007. Dave Devoe, News
Corp's chief financial officer, pointed out that the company
has not bought a single Class B share with the $1.6 billion it
has spent on stock buybacks.
Separately on Friday, News International, the division
which housed the News of the World newspaper and was closed as
a result of the phone hacking revelations, said it will pay the
family of murdered British schoolgirl Milly Dowler 2 million
pounds ($3.17 million). Murdoch will personally donate another
million pounds to charities chosen by the Dowler family.
Dowler was abducted in 2002 and found murdered six months
later. News this year that the tabloid had hacked into her
phone after she disappeared caused widespread revulsion in
Britain and elevated the hacking into a national scandal.
Among the many concerns for Murdoch aides is the
possibility of further reputation damage and embarrassment.
Former News Corp executive Les Hinton, who was forced to
resign this summer, is due to reappear before Parliament for
additional questioning on Monday.