Rupert Murdoch was forced to cave in yesterday to shareholder pressure, promising to put to a vote a controversial "poison pill" scheme that prevents his rival John Malone upping his stake in News Corp.
The company made the concession to settle a US lawsuit brought by a group of international shareholders.
The group - pension funds from the US, UK and Australia - had been furious that Mr Murdoch went back on an apparent promise to give shareholders a vote on the poison pill which it created when transferring its listing from Australia to New York in 2004. The case was due to be heard in a Delaware court in the next few weeks.
Stuart Grant, whose firm Grant & Eisenhofer is counsel for the shareholder group, said: "This case was not about the poison pill, but was about securing the shareholders' right to vote on the matter.
"This is a great victory for shareholder rights."
The provisions of the poison pill allow News Corp to issue new shares to keep Mr Malone's percentage holding down at its current level of 18 per cent. That would make it prohibitively expensive for Mr Malone, who controls the rival Liberty Media, to mount a hostile bid for News Corp.
If the settlement is approved by the US courts, there will be a vote in October to extend the pill for two more years, with a third year extension possible if Mr Malone is seen to be plotting an increase in his holding.
Mr Malone is News Corp's largest shareholder after Mr Murdoch, whose family controls 30 per cent. While the two men profess respect for each other and trumpet their cordial relations, the stakebuilding in News Corp comes amid uncertainty over the longer-term future of the group - whose assets include The Times, The Sun, the Fox network and a controlling stake in BSkyB. Lachlan Murdoch, who had been groomed as a successor to 75-year-old father, stormed out of the business last year.
News Corp's first annual meeting in the US last October was an angry affair, and some 16 per cent of shareholders protested by withholding support for the re-election of the board.
Mr Murdoch said he decided not to call for a vote by News Corp's shareholders on the poison pill, which prevents any shareholder from increasing their holding, because he "didn't want to poison those waters".Reuse content