By Stephen Mayne
January 10, 2008
Sixteen straight questions for Rupert Murdoch in 1999 was a a major change from previous years. This was first published on November 4, 1999 in jeffed.com.
Well, Rupert Murdoch arguably spoiled my Melbourne Cup day but after the exhilarating events of the News Corp AGM it was absolutely worth it.
Instead of heading out to the Birdcage at Flemington and gossiping like a good gossip columnist should, I spent several hours on Cup Day holed up in Fitzroy's Standard Hotel practising Rupert questions on my disinterested girlfriend.
After that it was back into the office to tap out a detailed email to John Safran and Hugo Kelly about the questions they should ask as proxy at the Channel Seven and Pacific Dunlop AGMs in Melbourne.
Thankfully, a friendly media analyst sent me three different reports on News Corp so I was better prepared for this meeting than any other.
Having worked for Rupert for almost eight years also helped. Strangely, I was more experienced at this game than Rupert because he has had only one question from his shareholders in seven years and has probably been to 20 AGMs this decade.
I've been to about 150 AGMs this decade and asked several hundred questions as a shareholder at about 35 AGMs over the past 14 months.
Even so, asking questions of arguably the most powerful man in the world was a daunting prospect. Like most of his editorial minions, I was terrified of bumping into Rupert when he visited one of the newspapers.
The only time I'd seen him speak previously was as a cadet when he merged The Herald with The Sun News Pictorial in September 1990 as his debt crisis worsened.
After a surprisingly uninterrupted six hour sleep it was up at 6am and then a 7.15am meeting on a street corner with another journalist armed with a cabcharge and the odd News Corp document who was also heading to Adelaide.
Given that Fairfax's Sydney Sunday paper The Sun-Herald had written up my planned questioning of Rupert, a no-show would have been a disaster.
As someone who'd missed his last two flights out of London, missing Ansett flight 101 to Adelaide would not have been out of character. Hence, the early arrival at the terminal at 7.35am for an 8.45am flight.
Rupert's brother-in-law John Calvert-Jones strode past to sit in the front row of the earlier flight at 7.55am. Clearly, he'd not made the shortlist to travel across with the Murdoch family in the private Gulfstream 4 after a relaxing day at the Melbourne Cup where Rupert backed the winner with Kerry Packer's favourite bookie Michael Eskander.
Some conspiracists had jokingly suggested Ansett, which is half owned by News Corp, might cancel the flight due to some mysterious localised Adelaide fog. I actually got on the 7.55am flight but then got off again when the seat was double booked and the flight was choc full of Melbourne Cuppers and Murdoch followers not on the private jet.
So it was back to plan A and sure enough, sitting in the front row on the 8.45am flight was Clive Little, a man I'd crossed at the AGM of Solly Lew's lagging outfit Housewares International, which he chairs (see separate page). Clive is also known for being one of the guardians of Rupert's personal $9 billion forture which is tied up in Cruden Investments, the vehicle which holds about 30 per cent of News Corp.
Meanwhile, back in economy on flight 101 it was time for some last minute preparation and a quick squizz of the papers. Rupert had given a detailed 45-minute interview to two business journalists from The Australian on Monday afternoon, which provided enough copy for four stories in Wednesday's paper and changed the focus of some of my questions.
Rupert really opened up in The Australian which was a good sign for what was to come. After dropping into the John Fairfax Adelaide office, it was down to the meeting in the ballroom at the Hyatt Regency just a few three irons from where Rupert inherited that single afternoon paper on the death of his father Keith way back in October 1952.
Unlike the Packers, the Murdochs chatted and mingled with shareholders before the meeting and Lachlan even said a brisk hello as he walked past.
Unfortunately, it was very difficult to see the name tags of the directors from anywhere but the front two rows, which were reserved for Murdoch family, friends and colleagues anyway.
Given that Lachlan Murdoch and Ken Cowley are the only Australian-based directors of News Corp, it was not surprising that five directors were a no show, including Geoffrey Bible, the Australian-born Rupert mate who now lives in New York and is chairman of Phillip Morris, the world's biggest consumer products and cigarette company.
Now this is the color piece on the meeting, so check out the separate page posted later today for the news story. The procedure for the meeting was a little unusual. Journalists were set up with tables and water jugs at the rear of the room and photographers had the run of the place before the meeting, but were thrown out once official proceedings started.
And rather than giving his chairman's address at the beginning of the meeting, Rupert saves it for the end. Therefore, after introducing the board it's straight into the adoption of the accounts.
This is usually the motion where a chairman fields all questions as changes to the Corporations Law last year require boards to give shareholders a reasonable opportunity to comment on the management and operations of their company.
However, Rupert decided he would limit it to the accounts and field general questions later so I had to word each question to make it somehow relevant to the accounts.
After raising the blue shareholder card to ask a question, I stayed sitting down until the Sun King said: ''Stand up so I can see where you're coming from.''
At this point I was a nervous wreck and everyone could see the microphone shaking violently. The notes penned on Rupert's Ansett plane for the introduction were partly ignored in my terror but I managed to stutter something about being a happy shareholder who owns $8000 worth of stock. It's always good to keep it light-hearted and I wanted to discourage Rupert from shutting me down after four or five questions. Therefore, I mentioned having spent $490 on the Ansett flight from Melbourne and that a few good answers from Rupert would justify a claim for this air fare as a tax deduction.
I also managed to get the line in about Rupert having only been asked one question in seven years but didn't get to the planned rev up for other shareholders telling them this was their day and the men in front of them had flown half way around the world to answer their questions.
The opener was a relatively neutral question on BSkyB's reported $2.5 billion bid for a three year extension of its British soccer rights. Now at this point I must confess that my tape didn't work and with the adrenalin pumping it is hard to remember exactly what Rupert said until a friendly journalist gives me access to a tape.
I think Rupert picked me up on this one because it did not relate to the accounts but up went the blue card again, the microphone came back and Rupert allowed another five questions over about 10 minutes. This covered News Corp's tiny dividends, its rising tax rates, losses on rugby league which Rupert would not quantify, the value of Ansett in the accounts which was put at $350 million and the recent dip in Fox Entertainment's performance which had seen its shares slip to $US19.
Rupert then politely closed down questioning on the accounts with not a murmer from the 200 shareholders in attendance. Last year Rupert rattled through the agenda in 20 minutes so moving right along to item two he put it that five directors - Chase Carey, Peter Chernin, Rod Eddington, Dr Aatos Erkko and Andrew Knight - be re-elected. Just like James Packer did, comment was invited on all of the elections at once and only one vote was taken. The obvious question was why Rupert paid his number two, 48-year-old chief operating officer Peter Chernin, about $18.5 million last year. As no-one else was interested, I asked about it and Rupert quite rightly talked about the global market in the world's most exciting industry and how hard it was to hang on to good people like Pete.
Item three on the issuance of 12,000 options each to six non-executive directors was waved through without an utterance from the floor but item four could not go unmentioned. This proposed issuing a total of 20 million options over $210 million worth of News Corp stock to six executive directors at $10.45 a pop, a slight discount to the present price. Borrowing from the Australian Shareholders' Association guidelines - clearly they don't yet have an active Adelaide office - I suggested these six gents should have performance hurdles in their options like many other Australian executives. Rupert patiently defended this one with a reasonable argument about the stock having to go up - ie perform - for the lads to hit serious paydirt.
With these items out of the way it was back to general questions so up went the blue card and out came another eight questions over the next 15 minutes. Rupert kindly answered them all and even suggested he'd quickly bring back page three girls on his London Sun newspaper if removing them hit the cash flows. Afterall, Rupert bought The Sun 30 years ago for about 250,000 quid and his potent mix of sex, sensationalism, scandal, parochialism and sport has seen it generate almost $5 billion of free cash for us shareholders in today's dollars.
Rupert built his empire on The Sun's cash but is under pressure from family and colleagues alike to do away with the tits and bums formula. As a shareholder, it's reassuring to know this won't happen if it hits cash flow. Hang tough on this one, Rupe. Look after number one and your other 50,000 shareholders first.
After question 16, Rupert closed it down despite requests for only two more. I piped up that Telstra's meeting went for five hours last year and Rupert responded with a smile that ''ours usually goes for 10 minutes''.
He then moved on to his formal address which shareholders said was more cautious than last year. If there was a prepared text, Rupert had to adapt it so as to not repeat earlier answers to questions and to address some of the questions he deferred until the end.
After the meeting, about six shareholders immediately came up with good wishes and a similar number of journalists requested a chat after the meeting.
More than 20 journalists then gathered around Rupert for his regular post-AGM door stop press conference, which did not yield a great deal of insights. Hearteningly from my point of view, he publicly welcomed the questioning from the floor of the meeting.
''We had a good meeting,'' he said. ''I thought it was informative, we welcome it.''
While this was going on I popped into the room set aside for shareholders to have a cup of tea and a sandwich. Interestingly, Rupert bans the press from this room so shareholders can mingle unhindered. Some took the opportunity to get photographed with the great man.
Rupert's general counsel, Arthur Siskind, came up and ''put to bed'' the issue I'd raised about a dispute with the Israeli tax office which he said was resolved three years ago and involved false allegations by a former employee who was indicted for defrauding News.
Another American director Thomas Perkins approached for a chat and to say the 16 questions were interesting.
At this point, an ABC journalist rang from outside to say come outside and, believe it or not, this little News Corp shareholder then held a press conference, much to the amusement of some of the business hacks. ABC radio's PM program then ran a five minute segment based on this and the meeting.
Once this was sorted it was back into the private shareholder area for another feed and, much to my surprise, the great man stepped forward to say hello. There was an introduction to new wife Wendi Deng and then Lachlan and Sarah popped over for a friendly chat.
Rupert welcomed the questions and was pleased with how he handled the meeting. It certainly was better than James Packer at the PBL meeting. At this point another shareholder intervened and started lecturing a very patient Sun King about the attraction and benefits of investing in the Middle East. Wendi piped up that ''we'', as in News Corp, had some small pay-TV interests there.
Having asked Lachlan about his plans for a new magazine division during the meeting, Lachlan's first offering was ''how long do you give The Eye?''.
Thankfully, this chat was happening a day before Lachlan read today's edition of The Eye which had two shots at The Daily Telegraph, including outlining a drinking binge by its riotous editor-in-chief Col Allan.
Staff at The Eye will be heartened to know Lachlan said he really likes the magazine which he believes is much better than Kerry Packer's ailing and boring Bulletin magazine. Sorry, can't resist one free plug.
After the Middle Eastern jibberer moved on, Rupert and I had a quick chat about the upcoming John Fairfax AGM on November 18. The issue of Fairfax having directors with a close association to one Kerry Packer came up and it is fair to say that we are strongly in agreement on this one. Should be an interesting meeting.
Lastly, I suggested Rupert move the meeting to Sydney or Melbourne so more shareholders could attend.
''I think we'll move it to Alice Springs next year,'' he laughed.
Now it is important not to get duchessed in this AGM process. Just because a chairman is nice does not mean you should change your questions or your account of the meeting.
Self-described shareholder activist Jack Tilburn tends to praise companies that write him nice letters and viciously attacks those that point out when he is ranting.
However, in the case of Rupert, by any standards he was generous with his time, tolerant and polite. His answers occasionally fell short of the mark. For instance, he declined to tell shareholders exactly how much we have lost in rugby league when you would think a loss in the vicinity of $500 million should be spelled out.
However, his answers were generally fulsome. Afterall, I broached sensitive issues such as his personal family finances and suggested he'd been inappropriately cuddling up to the Chinese government. People like Westfield's Frank Lowy and James Packer would do well to follow Rupert's lead when they chair their next meeting.
Sixteen questions from one shareholder is now the benchmark and it has been set by no less than Australia's greatest businessman.
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