Murdoch comes under fire from News Corp investors
Shareholders revolt over media baron's dual role as chairman and chief executive
Thursday 04 October 2012
Rupert Murdoch is facing a fresh wave of pressure from influential investment firms which have clubbed together to challenge his dual role as chairman and chief executive of News Corporation.
Britain's Local Authority Pension Fund Forum (LAPFF) and US-based Christian Brothers Investment Services have tabled a resolution demanding that News Corp appoint an independent chairman in the wake of the phone-hacking scandal.
The shareholder advisory groups Hermes Equity Ownership Services and Glass Lewis have also swung their support behind the resolution ahead of News Corp's annual meeting on 16 October in Los Angeles.
Mr Murdoch has made a raft of changes at News Corp, including a move to split the faster-growing television and movie business from the publishing arm, and he has also ordered tighter rules on internal compliance.
But the 81-year-old media mogul has also courted controversy with plans to give his son, deputy chief operating officer James Murdoch, a bigger role in charge of Fox's TV networks in America, despite the UK media regulator, Ofcom, criticising his handling of the hacking scandal.
Ian Greenwood, the LAPFF's chairman, said: "Whilst we recognise the efforts the company has made to clear up the mess left by the hacking scandal, we continue to believe that News Corp and its shareholders would benefit from the appointment of an independent chair."
Hans Hirt, global head of corporate engagement at Hermes, said: "News Corp has still not sufficiently addressed the significant shareholder concerns about its board structure and corporate culture highlighted at last year's annual meeting. The time is right for the company to appoint an independent chair in order to rebuild trust, and ensure that the interests of all investors are more properly represented."
Both the LAPFF and Hermes demanded change at the 2011 annual meeting, when 35 per cent of votes were cast against the re-election to the board of James Murdoch and 14 per cent opposed Rupert Murdoch.
However, the Murdoch family continues to control 40 per cent of the voting shares in News Corp, meaning that it is difficult for dissident investors to push for change.
The older Mr Murdoch has resisted calls for him to relinquish his dual role in the main TV and movie business, but he intends to be only chairman of the publishing arm following its planned demerger next year.
The phone-hacking scandal, the closure of the News of the World and the subsequent ongoing investigation have already cost News Corp more than £250m. The threat of litigation in the US also remains a possibility.
But many on Wall Street remain reasonably happy with News Corp's performance, with shares up 66 per cent in the last year to their highest level in half a decade.
James Murdoch quit as chairman of BSkyB, 39 per cent owned by News Corp, in April ahead of a highly critical report by Ofcom.
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