Taking on Rupert Murdoch in New York in 2005

By Stephen Mayne
May 10, 2019

After 53 years in Australia, Rupert Murdoch shifted News Corp to the US in November 2004. And after seven straight AGMs tussling with Rupert in Adelaide, Stephen Mayne travelled to New York for the 2005 AGM, just when the controversy over the News Corp poison pill was raging. This was the account of the meeting sent to Crikey subscribers.

It was a disappointing performance from American investors in News Corp today with only four speakers bothering to ask News Corp executive chairman Rupert Murdoch questions at the 90 minute meeting held at the historic Hudson Theatre. Stephen Mayne was one of them and he managed to fire off at least a dozen questions. Stephen ended up locking horns not only with Rupert, but with nutty American shareholder activist Evelyn Davis, who said he "looked like a Nazi storm trooper."

However, some interesting answers came from the questions, which engaged Rupert on topics like the claims by former News Corp analyst Mike Mangan that he was bullied for downgrading the company, Rupert's ability to sell his family's shares into any John Malone takeover and Rupert's decades long stint on the board without being elected. In response to one question Rupert said he didn't know the last time he faced a board election. It may have been never.

Murdoch often likes to dominate his AGMs, but this year's meeting saw other directors, including Viet Dinh, Andrew Knight, Chase Carey and Rod Eddington, drawn into the fray about the poison pill. And don't for a moment believe the Murdoch spin about their being "no outcry" against the poison pill. The directors probably wouldn't have got their pay rise but for Malone's Liberty Media voting his 18% stake in favour of every resolution.

Enjoy this special edition on all the angles coming out Rupert's historic first AGM in New York after 52 years of fronting up in Adelaide.

Rupert spins big protest vote

In terms of brazen spin, it was the equivalent of declaring that the Iraq war is going well. Despite a record protest vote against four directors and the reliance on open proxies and John Malone to get the non executive directors a pay rise, Rupert Murdoch was trying all sorts of dodgy tactics at today's AGM to claim his shareholders were happy.

The first procedural trick was to declare that all seven items of business were to be dealt with in one debate and only then, after the formal business was dealt with, would Rupert given his chairman's address and allow general questions.

He attempted to quash debate by revealing proxy figures before the debate was completed, but only in terms of the percentage cast in favour including the dominant combined 48% stake held by the Murdoch family and John Malone.

Rather than relying on Rupert's selective use of percentages – he claimed that only 5.5% of shares were cast against the various contentious resolutions – let's just go with the actual votes which we only prised out of him after several specific questions.




% against

% against
(ex Murdoch/Malone)

Andrew Knight





Rod Eddington





Chase Carey





Peter Chernin





Director pay rise





Does anyone else see the irony in the so-called enemy, John Malone, voting his 18% stake in favour of every resolution? Malone's 188 million shares could easily have defeated the one resolution that the Murdoch family couldn't vote its 313 million shares on – the pay rise for non-executive directors, which now includes Lachlan Murdoch.

Incredibly, shareholders were being asked to approve a $US100,000 bonus for each director after they laboured long and hard on the move to America – the very move that allowed the odious poison pill to be introduced which has since contributed to a 10% fall in News Corp's share price.

As Malone negotiates with the board for a sweetheart peace deal that would entrench Murdoch family control and see minority shareholders lose out, he has now managed to give all the supposedly independent directors a pay rise.

Even if Malone had abstained, the pay rise vote would have been 145 million in favour and 143 million against so presumably the victory only came after the use of open proxies, although group general counsel Lawrence Jacobs somehow claimed these were still being counted and couldn't be provided to the meeting.

In an attempt to counter Rupert's spin, I told the meeting that the "withheld" votes against directors were easily the biggest protest in the 53 year history of board ballots since the Sun King took control in late 1952.

Voting stock worth an average $2.4 billion was voted against all four incumbents - almost double the previous biggest protest when 71 million shares (adjusting for the 1 for 2 share consolidation with the move to America) were voted against Aatos Erko in 2002 as you can see here.

Rupert told the press after the meeting that his office has received only one complaint and hundreds of calls in support of the poison pill when it was first announced to fend off John Malone.

However, his board's broken promise to seek shareholder approval for a two year extension has undoubted caused a major protest. Rupert declined to be engaged when the chairman of the Global Institutional Governance Network, Andrew Clearfield, eloquently spelt out the arguments against the move.

Crikey vs Evelyn Davis

It wasn't exactly a coalition of the willing against Rupert Murdoch today as crazy American shareholder activist Evelyn Davis demonstrated she was completely nuts. Davis makes Jack Tilburn look sane.

"I am the most famous shareholder in the world," she declared to Crikey before the meeting even began. "I've got more than 1 million hits on Google."

The journalist I was chatting to immediately walked off and later warned she was crazy and constantly harangued the media talking up her performances.

Evelyn denouces talking to "flunkies" and claims to only deal with CEOs, so when Rupert strolled in she button holed him and they almost seemed to cuddle.

When it came to asking questions, Evelyn was up first for a 10 minute rave in which she plugged her publication, Highlights and lowlights of Watergate, and then declared she liked the board and supported the poison pill because she didn't like John Malone. The most lucid she sounded was in her attacks on News Corp's staggered board – a rort she claimed to have persuaded a whole range of companies from Viacom, Marriott and GE down to ditch.

The most self-important moment probably came when she declared, "I know more about what goes on in Washington than anyone else in this room."

Crikey followed with about 15 minutes on questions for the individual directors up for re-election, at which point Evelyn began her attacks which variously included the following over the next hour:

"I never stoop that low," - asking about private matters such as Lachlan's resignation.

"You look like a Nazi storm trooper." – I was dressed in black.

"Unlike others, I know when to stop." - a recurring theme.

About a dozen American shareholders came up afterwards to apologise for Evelyn's rudeness and constant interruptions. At one point one of them asked Rupert, "Who's chairing this meeting?"

Sadly, if Evelyn Davis is the best America can come up with in terms of retail shareholder activists, the much feted American culture of shareholder pressure has a long way to go.

How the media covered the AGM

Rupert had his customary press conference at the end of the AGM and shareholders were able to listen in. Reporters from The Deal, AP, Reuters, The Financial Times, The Wall Street Journal, CNBC, The AFR, The Hollywood Reporter, USA Today and a couple of other outlets all got up to ask questions.

There were several Australian journalists present including Sean Aylmer from The AFR, Michael Rowland from the ABC, Mark Coultan from The SMH, Bulletin and News Ltd freelancer Luke Collins and David Nasan from The Australian.

The AFR, Wall Street Journal and Financial Times did focus on relations with John Malone and the poison pill and Rupert didn't hold back in taking a shot at their questions.

Sean Ayler was told that The AFR was the only paper that thought there was a problem with the poison pill extension whilst Sundeep Tucker from The FT copped quite a broadside. "Your paper got our big result wrong today," declared Rupert. "You said over 20%, you got it wrong."

Sandeep kept her composure and correctly pointed out that the FT merely quoted Stuart Grant, from the law firm running the institutional litigation in Delaware, Grant & Eisenhofer, predicting a protest vote of more than 20%.

Operationally, there was most interest at the press conference in News Corp's big push onto the internet and Peter Chernin did disclose that News Corp is now in the top 5 globally in terms of traffic and second in the world in terms of ad impressions.

Rupert bullishly told the meeting that is adding a staggering 130,000 members every day. Whilst "execution" of the integration of the recent takeovers will be a challenge, Chernin focused on the "enormous opportunity" for monetising all this traffic.

The early reports from the AGM are trickling in. Amusingly, Rupert's spinners leaked the votes to their Australian papers before the meeting or the New York stock exchange had been told, as you can see in The Australian and the Herald Sun. The SMH also ran with this feature on John Malone as the meeting was commencing.

MarketWatch was first out with this comprehensive account of the meeting, although it has missed the size, scale and significance of the protest vote, which had still not been announced to the New York Stock Exchange by close of trade at 4pm.

Forbes has picked up on the protest and quotes an analyst describing it as "significant", whilst Reuters has gone with Rupert's declaration there has been "no outcry" against the poison pill extension.

News Corp shares closed down US24c at a year low of $US15.28 during Friday trade in New York.

Rupert unloads on Mike Mangan's "fiction"

Rupert Murdoch came out swinging at today's meeting in New York when I detailed the extraordinary claims made by Deutsche Bank's former News Corp analyst Mike Mangan on Eureka Report last week. The summary presented to the meeting went as follows:

1995: First downgrade from buy to hold sparked a call from News Corp in which he was "abused, insulted and sworn at".

1998: Second downgrade from "buy" to "hold" and News Corp called his boss claiming he was "unprofessional" and jeopardising any corporate relationship and fees for Deutsche Bank.

2000: Sell recommendation when stock was at $A56 in today's terms led to News calling Mangan's boss and asking that he be moved.

2005: Another sell recommendation and he was retrenched, albeit after rejecting an offer to be Deutsche's New-York-based media annalyst.

Asked if he would respond to these serious allegations and then spell out a company policy going forward in light of the reforms on analyst independence pushed through by New York attorney general Eliot Spitzer, Rupert fired right up:

"They are very serious allegations and they are total fiction...from a guy who is not in a job," he declared. "When in public life you've got to put up with these fictions."

Was Rupert ever elected? Who knows

For someone who passionately believes the bloodshed and expense of the Iraq campaign has been worth it in the name of beginning the democratisation process in the Middle East, Rupert Murdoch is remarkably uninformed about his own record when it comes to corporate democracy.

Asked when he was last elected as a director, if ever, during his 53 years at the top of News Ltd and News Corp, Rupert couldn't remember and then claimed it is normal for Australian executive chairs to not face election. That's completely wrong. Frank Lowy, David Clarke, Gerry Harvey, Kerry Stokes and James Packer are the most prominent executive chairmen in Australia and every one of them faces an election.

All directors get three year terms in Australia, although you are allowed an exemption for the managing director. Rupert then suggested I calm down because he was facing an election "next year." Wrong again, Rupert won't be up until 2007 and for all we know that might be the first time in history.

Asked whether the decision that he could wait until 2007 was done by ballot or unilateral decree, Rupert said "I don't know." Viet Dinh, the youngest and newest director who has already assumed the chairmanship of the nomination and corporate governance committee, was active in the press conference and also took on my question about the nomination process for new directors.

Asked if supporting the poison pill was a prerequisite for the two new independent directors being sought, he was non-committal, although he did say that all directors, including Rupert, would be consulted. We all know that Rupert completely controls the News Corp boardroom and there isn't any sign of that changing.

Rupert can't sell without approval of children

The News Corp proxy statement for this year's AGM makes the rather odd claim that "KR Murdoch disclaims any beneficial ownership of the Harris Trust," the main vehicle in which the family's 29.8% voting stake is held.

Given the shock resignation of Lachlan Murdoch two months ago and John Malone aspirations to increase his influence over News Corp, this paved the way for a question about who controls the Murdoch family stake. After all, we know that Rupert's four adult children from his first two marriages each have one representative on the corporate trustee and Rupert has four, although these automatically must resign when he dies. That sounds like a 4-4 deadlock, so who has control?

Given Lachlan's appointment of aggressive Sydney litigation lawyer Michael Ball to represent him on the trust after Rupert's unilateral decision to change the terms and give an equal share to his two infant children to Wendy Deng, the question of who actually controlled the stake was a live one.

Rupert declined to reveal whether he had unfettered control over how the shares were voted at AGMs, but then did answer the question as to whether he alone could decide to sell the stake into a Liberty Media takeover, were one to come along.

"No," was the simple answer, meaning that the children, as beneficial owners of the shares, can determine whether to sell the shares, although presumably Rupert has a veto while he's alive.

It must be very frustrating for the adult children to know they will one day each be billionaires in their own right, but the trusts have never made them a distribution.

* This story was republished with the kind permisson of Crikey, Australia's best known independent ezine.