Summary:

Shareholders of News Corporation who are tempted to attend the company’s annual meeting later this week in Los Angeles might well be asking…

Shareholders of News Corporation who are tempted to attend the company’s annual meeting later this week in Los Angeles might well be asking themselves: what’s the point?

Unless their family name is Murdoch, they have scant power to affect the media giant’s direction. This is because the Murdoch clan, led by the all-powerful Rupert, media boss supreme, controls some 40 percent of News Corp.’s voting shares. Mounting a genuine challenge against that is just about impossible.

As the company’s buccaneer culture becomes better known among the wider public, a few large shareholders – including some institutions that should have known better – are nonetheless trying. They will vote against the board that the Murdochs essentially own and operate, not that their votes will matter much given the company’s governance structure.

Still, it’s at least somewhat noteworthy to watch as institutional investors – who generally don’t worry about ethics as long as returns are sufficiently high – suddenly pronounce themselves shocked, shocked to learn that News Corp has ethical issues.

And it’s doubly amusing that one of them is the investment arm of the state of California, known as Calpers, which has had some major ethical problems of its own. Note: I have a tiny amount of my pension savings invested with Calpers, a vestige from a brief stint at the University of California, Berkeley; but my faith in Calpers is close to zero, and given the underfunded nature of just about all public pensions, I am not remotely optimistic that I’ll see much of what I’ll allegedly be owed upon retirement.

If I’d had the ear of the Calpers investment decision-makers, I would have told them News Corp was poison for several reasons. The culture of sleaze, which was apparent long before the British revelations of voicemail hacking, is paramount. But even worse, I’d have said, was News Corp.’s negative effect on public discourse in the places it has media properties.

Its tabloids have been a disgrace (albeit a sometimes entertaining one) to honorable journalism wherever they operate. Fox (NSDQ: NWS) News Channel in the US – its “fair and balanced” slogan may hold a world record for containing as many falsehoods as it does words – has irreparably coarsened American politics.

I would also caution them about investing in companies that have two classes of stock. It’s not that this kind of governance is inherently bad; as a longtime Class A shareholder in Berkshire Hathaway, and as someone who publicly urged Google (NSDQ: GOOG) to adopt this kind of governance before it went public, I’d be a hypocrite to say otherwise. But as we’ve seen in the News Corp case, these situations can leave the lower-class shareholders with a majority of the risk and no ability to push out managers who are either incompetent or evil.

The shareholder objections to the company’s direction will be accompanied by actual protesters, one of whom apparently will be Tom Watson, the MP who is probably Murdoch’s fiercest critic in the British parliament. According to the Financial Times, he’s planning to be with a group in the Fox studio lot on Friday. He plainly wants to ratchet up the pressure.

By now, the leadership of almost any other major company facing scandals like those at News Corp would be out. There would be absolutely no question of familial succession, though even Rupert Murdoch surely realizes at this point that his son James is unfit in the eyes of just about everyone but himself.

He would be wise, at Friday’s meeting, to announce a new direction. But that would look like deference to shareholders and public opinion. As long as Rupert Murdoch is in control, there are only two factors that will lead to change: a genuine threat to his family’s money and power. Until they are in jeopardy, the protesters, financial and otherwise, might as well be baying at the moon.

This article originally appeared in The Guardian.

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