Irate News Corp. shareholders confronted CEO and media baron Rupert Murdoch and other officials on Friday at the company's annual general meeting in Los Angeles, the first time he has faced investors since the phone-hacking scandal erupted at his former tabloid in Britain.
Murdoch came under fire on several fronts, but front and centre was the voicemail eavesdropping practised by reporters at the News of the World.
News Corp. shut down the London-based Sunday newspaper in July after evidence emerged that its journalists had hacked into the voicemail messages of British schoolgirl Milly Dowler after she disappeared in 2002 and before she was found murdered.
Murdoch opened the meeting with a statement acknowledging the turmoil but also expressing some defensiveness, saying "some News of the World reporters broke the law" through their work with a lone British private eye, while on the whole, the tabloid held politicians to account and "broke great stories."
He was immediately assailed by a dozen shareholder groups, who presented a resolution to strip him of his position as chairman of the board and require that an independent corporate director occupy the post.
"There's been gross underperformance," Stephen Mayne of investor-advocacy organization the Australian Shareholders' Association said of News Corp.'s financial results over the last decade. "You've treated us like mushrooms for a long time."
The California state pension fund, the Church of England's investment arm and various other pension funds and investment advisory agencies said they were supporting the calls for Murdoch's ouster as chairman. Some investors also advocated voting against the re-election of Murdoch's sons James and Lachlan, as well as other Murdoch allies, to the corporation's board.
British MP Tom Watson, a Labour politician who has confronted Murdoch before in the U.K. Parliament, attended the AGM as a proxy vote holder and lambasted the media baron for seeming to minimize the extent of the phone-hacking scandal. The News of the World dealt with at least three private investigators, Watson said, and over and above the phone hacking was embroiled in corrupt practices that are being investigated for possible bribery and obstruction of justice. "You've not told your shareholders," the MP said.
Other scandals brewing
News Corp. has expressed contrition over the phone hacking, launched an internal inquiry and set aside $32 million to compensate victims, who could number in the hundreds and include celebrities, politicians and members of the British royal family. Detectives have informed more than 450 people that they might have been spied on by the newspaper.
On Friday, the company announced it will pay $3.2 million to Dowler's family as compensation for their ordeal, while Rupert Murdoch will personally donate $1.6 million to charities designated by the family.
"What happened a few years ago was absolutely wrong, and we're all ashamed of it," Murdoch said at the AGM.
It's not the only fiasco facing Murdoch's global media empire, whose holdings include Britain's Sun and Times newspapers, the Wall Street Journal, and the Fox movie studios and TV network.
A company executive resigned last week over a circulation scam involving the Wall Street Journal's European edition, which was paying a Dutch company to buy up copies of the newspaper at a massively discounted price in order to boost circulation figures.
And New York-based shareholder Amalgamated Bank is suing News Corp. over its $682-million acquisition of Murdoch's daughter's TV production house, a deal that gives Elisabeth Murdoch $323 million by greatly overvaluing her company, the bank alleges.
The results of the votes at the AGM will be known later Friday afternoon, but the push to axe Murdoch as chairman and to remove his sons James and Lachlan from News Corp.'s board are unlikely to succeed. The Murdochs control about 40 per cent of the company's Class B voting shares, while an allied Saudi prince holds seven per cent.
The shareholders meeting was a closely controlled affair, held on a Fox studio lot behind tight security. Shareholders and media could only be bused in by News Corp. to evade the 200 or so protesters outside, no recording devices were permitted at the event and the Fox lot's normal Wi-Fi access was cut off.