* Murdoch and his sons reelected to board
* Shareholders had called for his resignation as chairman
* Company's ethical practices questioned
By Lisa Richwine
LOS ANGELES, Oct 21 Using contentious barbs and
comedic relief, Rupert Murdoch deflected attempts by angry
investors to remove him as chairman of his News Corp
empire at the company's annual meeting on Friday.
The 80-year-old media baron survived what was effectively a
no-confidence vote and also managed to get his sons James and
Lachlan reelected as directors.
The octogenarian 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 had
been subject to fair criticism and unfair attack. But that was
as conciliatory as he got.
Unlike his 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
responsible for putting Murdoch in his precarious position.
In addition to the roughly 150 people inside the Zanuck
Theatre on the Fox Studios lot in Hollywood, about 100 others
stood outside, voicing opposition to the company and carrying
signs that read, "Murdoch isn't above the law" and "Big Media,
Big Money, Get Out."
Murdoch was feistier than he had been 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 attended more
than a decade's worth of these meetings.
Later, in response to Mayne's comment that he was not 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 were supplied by Watson, who flew to Los
Angeles to attend the meeting as the representative of 1,669
shares of nonvoting stock held by labor group 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 said 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 Business channel had featured Watson earlier in
"We're fair and balanced," he said, referencing to the
company's familiar slogan.
After the meeting, Watson told reporters that he was
pleased to have had the opportunity 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 he 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 said the company does not have plans to put the
deal back on the table, but added "never say never, though."
Another independent investor thanked 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, there was little chance that
Murdoch, his sons James and Lachlan or any other long-time
serving director would have been voted off the board.
Shareholders reelected the media conglomerate's board of
directors on Friday and failed to approve a proposal to oust
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, saying in a press statement
that the company would file the numbers with the U.S.
Securities and Exchange Commission early next week.
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.
News Corp shares closed up 2 percent to $17.20 on the
Nasdaq on Friday.
"The News Corp recovery in line with the market at the
close would indicate that the Street approves of this status
quo," said Collins Stewart analyst Thomas Eagan.
Separately on Friday, News International, the News Corp
division that housed the News of the World newspaper at the
center of the phone hacking scandal, said it would pay the
family of murdered British schoolgirl Milly Dowler 2 million
pounds (US$3.17 million). Murdoch will personally donate
another million pounds to charities chosen by the Dowler
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 to 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 resigned this
summer, is due to reappear before Parliament for additional
questioning on Monday.