Anyone listening at News Corp?

1. Is anybody listening at News Corp?



By Stephen Mayne, in the British Airways Lounge at JFK International Airport

The US papers gave the News Corp AGM, which was attended by just 33 registered shareholders, mixed treatment on Saturday morning. The New York Post and New York Daily News both carried brief and straight reports, but the Financial Times ran the story on the front and The New York Times tried a different angle with some illuminating number crunching:

"Stockholders with 80 percent of News Corporation's 1.02 billion Class B shares submitted proxies, representing 818 million shares. Of those submitted, shares controlled by Mr. Murdoch represented nearly 38 percent of the stock voted; the interests of John C. Malone, head of Liberty Media, represented 23 percent; and those of the investor Prince Walid bin Talal of Saudi Arabia, 7 percent. All three men voted for each director, to make a 67 percent block."

News Corp spinner Gary Ginsberg tried arguing this take was "misleading" and instead we should consider excluding what the world's biggest fund manager did. Again from the Siklos story:

"He (Ginsberg) said that a single institutional shareholder with some 60 million votes opposed the re-elections because that institution has a policy of opposing any company that adopts a poison pill. Barring that one institution, Mr Ginsberg estimated that shares representing about 4 percent of News Corporation's outstanding B shares rejected the directors."

Doesn't that blow out of the water this News Corp argument about poison pills being normal in America, something the coalition of non-American institutions taking legal action in Delaware supposedly don't understand? The world's biggest fund manager, Boston-based Fidelity, voted as recommended by New York-based Institutional Shareholder Services, the world's most powerful proxy adviser.

The poison pill is all about oppressing minority interests. Yet the simple facts are that three billionaires got together and voted back the Murdoch slate of directors, with an on-going pay rise and a one-off bonus for working so hard to get the shift to Delaware done. If it had just been down to the oppressed minorities, the pay rise would have failed and it would have been line ball for the directors. That's called a revolt.

One veteran News Corp watcher summed up the situation as follows to Crikey:

"They are spinning it way too aggressively for my liking. Whether they like it or not, it was a significant protest vote. I think their investor relations function has been captured by the macho culture and they aren't carrying back any negative messages to the bunker. Any other organisation would be 'listening' – it's not just Rupert, the whole organisation seems hard of hearing."

In terms of Australian media coverage, Inside Business did an interview with ABC Washington correspondent Michael Rowland, The Australian's David Nason predictably failed to crunch the numbers but instead just quoted Rupert saying there was "no outcry," and the Murdoch tabloids ran some pap talking up the company's prospects and downplaying the historic protest vote against the directors.

Finally, Rupert's illogical explanation for not putting the poison pill extension to a vote cannot go unremarked. This is what he said with a straight face: "We have been having continuing and friendly discussions with Liberty and Dr Malone and we did not want to poison those waters by going for a vote."

Malone doesn't like the poison pill because he wants to buy more voting stock, so why would he care if it was put to a shareholder vote? Rupert's paranoia in not putting the pill to a vote suggests that Malone would not have voted to extend it.

Copyright © 2022 The Mayne Report. All rights reserved

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