Murdoch braves shareholders opposition to romp home

MUMBAI: Rupert Murdoch has once again proved his critics wrong getting re-elected as the chairman and chief executive officer of News Corporation at the company‘s annual general meeting in Los Angeles Tuesday.

Murdoch overcame opposition from shareholders who were hell bent on cutting him and his members to size by getting both his sons - Lachlan and James Murdoch - re-elected. Shareholders also re-elected the rest of the company‘s returning board members even as angry shareholders criticised Murdoch and the control that he wields on the company.

The Murdochs have been going through the worst phase of their lives ever since the phone hacking scandal broke out at its UK publishing business News International which led to the closure of News of the World and arrest of employees.

The scandal also led to a huge furore in UK and subsequently US about the company‘s corporate governance structure. It also diluted the power that Murdoch once wielded in UK and exposed them to tough action from UK authorities.

While only five per cent of investors voted against re-electing Murdoch during this year‘s meeting which is in sharp contrast to last year‘s when 16 per cent shareholders had voted against his re-election. But last years AGM was held at the height of phone hacking scandal which subsided with the Ofcom giving clean to News Corp‘s broadcast business BSkyB.

However the sons were not as lucky as their father with 17 per cent shareholders voting against James and 21 per cent against Lachlan.

It is News Corps dual class shareholding that helped Murdoch to sail through amidst opposition from powerful pension fund outfits that wanted to curtail the power of Murdoch family and separation of chairman and CEO‘s post.

The Murdoch family holds 12 per cent but its dual class shareholding structure gives it 40 per cent of the voting power. Add to that the backing of second largest investor Prince Al-Waleed bin Talal, who holds seven per cent in the media conglomerate. The dual structure gives Prince Al-Waleed almost 20 per cent voting power.

Meanwhile, 28 per cent shareholders voted in support of eliminating the division between voting and non-voting shares.

During his AGM speech Murdoch asserted that the media conglomerate has strengthened its corporate governance across the globe with modernisation of compliance across the board.

The company has appointed Gerson Zweifach as Chief Compliance Officer and compliance structure has been divided into five groups to cover all the regions.

"We have acknowledged the serious wrongdoing that occurred at some of our publications in the United Kingdom. As a result, we have had to work hard to make amends. But just as important, we seized the moment as an opportunity to strengthen our governance and our organization in key ways.

"Under the guidance of our general counsel Gerson Zweifach -- who now also serves as our Chief Compliance Officer -- we‘ve modernized our entire system of compliance from top to bottom.

"We‘ve organized this new global structure into five compliance groups that together cover every region where we operate and every business within it.

"We‘ve imposed strict, uniform policies with centralized oversight. We‘ve improved employee training. We‘ve also imposed more auditing and testing, so that we can fix any problem by identifying it early. And we‘ve backed it all up by appointing top-notch professionals who have a track record that cannot be questioned-- including a former director of enforcement for the U.S. Securities and Exchange Commission and a former U.S. federal prosecutor."

He also said that there will be special emphasis on UK since the phone hacking scandal took part in that market. He also claimed that the company‘s other publications did not not any sort of wrongdoing.

"Because these problems were based in the United Kingdom, we‘ve put a special emphasis on our operations there. As you might expect, this has meant especially rigorous internal reviews. And we have confirmed that the problems in the United Kingdom were not found at our other publications.

"Our findings were born out by the recent, in-depth report by Ofcom, the United Kingdon‘s independent media regulator. After looking at the evidence related to phone hacking, Ofcom found no basis for concluding that News Corporation acted inappropriately in any way."

Murdoch also acknowledged that the company is going through one of the worst period in its history. He also said that despite all the problems that inflicted the company it has continue to grow.

"This has been a difficult period in our company‘s 50-year history. However, I believe the numbers will bear out that the market likes the work we are doing and has confidence in our future. Since addressing shareholders a year ago, our stock price has risen nearly 45 per cent," he added.

And to take this growth to the next level the company is being split into two separate trading companies which will also help it unlock more value for its media and entertainment unit.

"Let me conclude with what you know is our biggest potential change and opportunity in the coming year: the transformation of one of the world‘s most successful media companies into two separate, publicly-traded companies. One will be focused on news, publishing and education. The other will focus on media and entertainment.

"We are pursuing this for a simple reason. Notwithstanding our success, our company is undervalued. With this separation, we will free up each company to better deliver on its promises to customers across the globe. As we do, it will also mean unlocking more value for our shareholders.

"As we head into this future, the company you know will be replaced by two dynamic new ones with separate names and different missions. But they will be driven by the same ethos of creativity, competition and entrepreneurship that has always been at the heart of our efforts.

"This split will take time, but it is my expectation that by the end of the calendar year, we will be ready to announce more details about the executive management structures and Board memberships. I am deeply excited and energised by this future, and I hope you are as well."