Rupert Murdoch and other board members of News Corporation could submit to annual election, as part of a plan to mollify independent shareholders after the company's damaging two-year stand-off against its rival Liberty Media.
News Corp said yesterday that it would consider reforming its staggered board elections and would also rescind a controversial "poison pill" takeover defence, after a deal to buy out Liberty's 16.3 per cent stake in the company. Liberty, controlled by Mr Murdoch's friend turned rival John Malone, is swapping its stake for News Corp's controlling stake in the satellite broadcaster DirecTV, plus three regional sports TV networks and $550m in cash, the companies confirmed yesterday.
At a time when best practice dictates annual board elections, News Corp directors currently serve for three-year terms, with only one-third up for election at each annual shareholder meeting. Corporate governance campaigners argue this staggered system makes it impossible for shareholders to force changes and entrenches a powerful board, which includes Rod Eddington, former chief executive of British Airways, and Jose Maria Aznar, the former Spanish prime minister, plus Mr Murdoch's son Lachlan.
The buy-back of Liberty Media's shares will increase the Murdoch family's hold over News Corp, raising its stake from 30 per cent to around 36 per cent - a fact which had threatened to unsettle independent shareholders.
Relations between Mr Murdoch and the independent shareholders have been strained since Liberty Media secretly amassed its shareholding in October 2004, threatening to weaken Mr Murdoch's control of the business and complicate his ambition of eventually handing it on to his five children. The "poison pill" defence was introduced without consultation a month later, allowing News Corp to issue new shares to dilute the Liberty stake should it fear a hostile takeover.
The plan will be rescinded and the board will consider introducing annual elections at the end of next year, when the deal with Liberty is expected to close. Furious independent shareholders had sued News Corp to demand a vote on the poison pill and only narrowly voted this year to extend it until 2008.