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LOS ANGELES (Reuters) - 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 Theater 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 opponents.
"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."
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 victims.
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 said.
"I promise you absolutely that we will stop at nothing to get to the bottom of this," Murdoch said in response to Watson's claims.
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' tagline.
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, though."
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.
Reporting by Lisa Richwine in Los Angeles and Yinka Adegoke in New York. Writing by Peter Lauria. Editing by Robert MacMillan