Rupert runs scared after just 3 of our 8 questions

February 2, 2010

Dear Mayne Reporters,

Rupert Murdoch pulled quite a swifty at the News Corp annual meeting on Friday when he reneged on a promise to allow for general questions after his formal address. Have a listen to how it happened here.

Unlike normal practice in Australia, Rupert likes to dive straight into the formal business, when most normal chairs provide an overview of the year before taking general questions and then dealing with the formalities on things like director elections, incentive schemes and audit appointments.

We've had our differences about this over our 10 shareholder meeting exchanges since 1999, but in recent years Rupert has relented and allowed general questions at the end of his final address.

The Sun King promised precisely that at the start of Friday night's 53-minute meeting. However, go to the very end of the webcast and you'll hear an aide advising him that there was no need allow for general questions at all.

This was inspite of the fact that Michael Halliday, a proxy for Adelaide-based shareholder John Johnson and armed with two pages worth of questions from The Mayne Report, was standing at the microphone ready to go.

Mike had delivered the first three questions of a proposed eight, but he gave Rupert an inch by slipping in one general question during the director elections, and Rupert took a mile with an utterly undemocratic performance.

The Sun King even cancelled the scheduled press conference after the meeting, which has been happening every year since the 1990s.

These are the questions that our man Michael Halliday did ask, along with explanations of how they played out:

The young Italian-based opera singer director - listen to full audio

Michael Halliday: Chairman, we agreed to appoint a member of the Bancroft family to the board as part of the Dow Jones acquisition. The selection of 27 year old Natalie Bancroft, a professionally trained opera singer based in Italy, raised plenty of eye-brows. Could we please hear from Ms Bancroft about what value she had added to the board and how she regards progress at Dow Jones.

Natalie Bancroft:
She didn't say boo at the meeting, but Rupert stepped up to say she had enthusiastically visited most parts of the business around the world and The Guardian quoted her as follows in comments made after the meeting:

There was little dissent among the 50 or so investors present, except for a question over the appointment to News Corp's board of Natalie Bancroft, a 28-year-old opera singer, to represent the Bancroft family which sold the Wall Street Journal to Murdoch last year.

An Australian shareholder activist asked if the meeting could hear from Bancroft on "what values she adds to the board", while another investor (Evelyn Davis) questioned whether she would stand up to her all-male, middle-aged boardroom colleagues.

Murdoch replied that Bancroft, who lives in Europe, had already visited all branches of the company: "She's one of the most diligent new directors I've ever seen."

Bancroft said that her age was a strength: "I'm young - this is a company driven by a younger market. I think I bring a youthful perspective."

She declined to say how much time she was devoting to News Corp: "I'm not calculating it in terms of days per month. I'm spending time on both of my jobs."

The James Murdoch question - listen to full audio

Michael Halliday: Our other newest director is James Murdoch who rejoined the board last year. Could we hear from James about what went wrong with that big ITV play at BSkyB and how he is getting on as a board member. Also, people have commented that James has no background or interest in newspapers. How is he finding the job of running News International in Britain, our biggest and most important newspaper business? Also, could James please comment on whether he was comfortable with what the News of the World did to Max Mosley with those hidden cameras capturing that Nazi sex romp?

RESPONSE: This Reuters blog has some fun with the youthful directors angle and ran the full James Murdoch non-answer as follows: "With respect to the newspapers, we're only a few weeks away from our earnings statement so that would probably be inappropriate for me to comment on. It's a great honor and a huge challenge as well to be involved and to be able to contribute to a franchise like News International and the great brands within it. On News of the World, I have absolute faith in the journalists and editors and I stand behind them.”

However, Rupert then stepped up and let fly at the British authorities over the BSkyB situation, which was the lead to The Guardian's coverage on Saturday in the UK and also featured prominently in The Independent.

Murdoch family debt - listen to full audio

Michael Halliday: The first of my general questions relates to the Murdoch Trusts. In light of what happened last week to Sumner Redstone with that margin call on part of his holding in Viacom, what level of debt is the Murdoch family carrying on its controlling stake in News Corp, which is now worth less than $US3 billion after the shares fell from more than $US23 to this week's low of $US8.81 over the past year.

Response: Rupert said there was no debt, but Mike didn't hear it and came back with the planned follow-up in the event of a non-answer: “This issue is material to the market, chairman, can you at least confirm that the debt is less than $US1 billion on your family's stake?”

Rupert confirmed again that there was no debt at all, "happily". For mine, this was quite an important angle and the first time it has been revealed publicly. We'll be asking James Packer a similar question this week because now both Frank Lowy and Rupert Murdoch have confirmed their respective stakes in Westfield and News Corp are completely debt free, which is a useful situation to be in during a global credit crisis.

The five questions Rupert avoided

Here is the text of the other questions Michael Halliday was intending to ask if general business had proceeded as announced at the start of the meeting:


Chairman, your top executive in Australia, John Hartigan, told ABC radio in Sydney on Thursday that he believes many US salary packages are “toxic” and “obscene”. Your package of $US27.5m in 2007-08 only fell by 14% when the share price is down 60% over the past year. Peter Chernin's pay packet fell from $US34 million to $US29 million. Whilst I understand that Peter Chernin is a top executive who could be poached, would you as company founder consider taking a substantial pay cut this year given the pain that we are all suffering at the moment?


We first offered $US60 a share for Dow Jones in May last year when Dow Jones was trading at about $US35 and our shares were worth more than $US25. In hindsight, was paying a $US5 billion in cash for Dow Jones a major mistake, especially as newspaper profits plunge around the world. Also, please comment on the repayment schedule for our $US13 billion in debt.


Fox News has flourished during the George W Bush presidency, partly due to the access we've had to the key players. Is there a risk that we'll be shut out by an Obama Whitehouse after so strongly backing John McCain (New York Post editorial) and how are relations with Senator Obama at the moment?


Chairman, have you read the book by former News Corp executive Bruce Dover called “Rupert's adventures in China: how Murdoch lost a fortune and found a wife”.

If yes: what did you think? Was it accurate?

If no: is it right that we've lost billions in China and what is the current state of play with our investments there?

Lachlan Murdoch conflicts

A question about Lachlan Murdoch but I'd first like to quote from Michael Wolff's recent feature on Rupert in Vanity Fair:

“There's his first son, Lachlan, 38, whom he had pronounced his heir apparent, whom he openly adores—almost pines after—and who left the company after his father failed to stand up for him against other News Corp. executives. Lachlan, although raised as a New Yorker, has reconstituted himself as an Australian. He owns a cricket team in India and, with Jamie Packer, the son of the late Kerry Packer, one of Murdoch's epochal enemies in the Australian media wars, tried and failed earlier this year to complete a multi-billion-dollar leveraged buyout of an Australian media company. (Murdoch was obviously pained when I returned from seeing Lachlan in Sydney and knew more about his son's deal than he did. Pained enough for him to try to pretend he knew—that his son hadn't excluded him.)”

That proposed buyout deal of Consolidated Media Holdings was at $A4.80 a share. The company closed at $A1.95 in Australia last night. Would News Corp have been on the hook in any way and how could this deal have happened given that Consolidated Media Holdings owns businesses that compete with News Ltd in Australia? Also, are there any conflicts involving Lachlan's Indian cricket team and News Corp's booming Indian operations?

Final observation

Those additional questions would have added much-needed spice to a forlorn meeting at which only two shareholders got up to speak. After all that belly-aching about the takeover of Dow Jones, you would think that an American other than the nutty former sex worker Evelyn Davis would get to New York to quiz the world's most powerful man.

The Yanks all moan about Fox News and Murdoch's editorial practices, but when it comes to the crunch no-one ever fronts the man directly at his one annual compulsory accountability forum.

Media coverage after the AGM

The Australian media didn't produce anything detailed on the AGM until this morning, although the ABC's Washington correspondent Michael Rowland flew to New York but then quite sensibly wrapped the Murdoch comments on the credit crisis into his lead story for Saturday AM on ABC radio.

The most comprehensive account of the actual meeting was produced by David Kaplan for Forbes magazine, which noted how tiresome old Evelyn Davis had become for the board and shareholders alike.

Murdoch gave a few useful grabs in his formal address, which produced most of the lines for this story in Business Week.

We've already linked to the following:

Reuters blog
The Guardian
The Independent

As for the Australian coverage, The Australian Financial Review's Anthony Hughes went with the $US5 billion warchest angle and also noted that "unusually, Mr Murdoch refused to take questions after the one hour meeting".

The Australian's David Nason did well to produce two page leads on Monday morning. The first focused on the AGM and then there was a separate story for the media section about the BSkyB battle with British regulators over its ITV investment.

The Age and The SMH didn't appear to have anyone at the AGM and insteady just ran this AAP copy.

Edited audio of key exchanges

Rupert does a backflip on allowing general questions

Mike Halliday question about appointment of young opera singer to the board

Mike Halliday question to James Murdoch, sparking spray at UK government from Rupert

Mike Halliday twice asks the question which revealed Murdoch family stake is debt free

That's all for now.

Do ya best, Stephen Mayne

* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.