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Rupert Murdoch received the grilling he had expected at News Corp.’s shareholders meeting and was more than prepared in remarks that offered a mix of contrition, amusement, weariness and ultimately, a sense that all was well and right with the company and his standing as Chairman and CEO.
Murdoch opened the meeting, which was greeted by protesters holding placards outside the Fox (NSDQ: NWS) Studios’ Zanuck Theater in Los Angeles, with a general statement that served as the basis for each of his responses to his detractors.
“It’s fair to say that the company has attracted a certain amount of attention in recent months. And I wanted to reaffirm the serious with which I take what has gone on in London, as well as put that controversy in context of our entire global business. I want to share my optimism with you about the growth of our profits, our products and most importantly, our people. The story of our company is the stuff of legend…”
Murdoch would have preferred to tout the company’s share price — up 15 percent this year, though down 7 percent since July, he said — but the meeting was dominated by charges that the company is not done with the fallout from the phone-hacking scandal in the UK. (Perhaps not coincidentally, the meeting began at 10am Pacific time, which was about 6pm Friday night in the UK.)
In terms of the contrition, Murdoch told shareholders, “We cannot just be a profitable company. We must be a principled company. We simply can’t deliver on our mission to inform and entertain if our 50,000 employees are not beacons for good, professional and ethical behavior. That is why we must admit to, and confront, our mistakes…. Over the past few months, we’ve been the subject of allegations that some our journalists in Britain have hacked the personal telephone voice mails. There is simply no excuse for such unethical behavior. We could not take this more seriously or listen as intently to criticisms.”
For the next hour, Murdoch heard the criticisms, but he did not just listen intently. He parried several times with Labour MP Tom Watson, who was able to secure a proxy that allowed him to vote on behalf of a shareholder. Before he took the mic, Julie Tanner, corporate advocacy coordinator at Christian Brothers Investment Services, put forward a motion that Murdoch be voted down as chairman over the News of The World phone hacking scandal. “Thank you, I’m sure the board will take that under consideration,” Murdoch said.
Stephen Mayne, director of the Australian Shareholder Association, took the mic afterward and charged News Corp. under Murdoch “with gross financial under-performance for 15 years” of the company, at least as far as the Australian stock price goes. Murdoch sounded a bit irritated with Mayne’s charges and accused him of selectively choosing time periods for valuing News Corp. stock. In the midst of a later harangue, Mayne mentioned that as journalist for a News Corp. paper in Australia, he wrote many positive articles about the company. “Well, you’ve made up for it since,” Murdoch said to audience laughter.
Watson, who was effectively the chief inquisitor of the News Corp. CEO and his son, James, during Parliament’s hearings on the scandal this summer, was up next. Murdoch’s voice brightened as the two exchanged pleasantries. But immediately, Watson’s tone soured. “It’s with the deepest of irony that the board sits in front of that backdrop — with Prince William there, who was targeted by the convicted investigator Glenn Mulcaire. And Kate Middleton, who was targeted by the convicted private investigator Jonathan Rees, both on behalf of News of the World.”
As Watson listed a string of other corruption charges, including obstruction of justice and bribery, he was interrupted and told his time was up. “I gave you 2 and half hours to answer at my committee and I would hope you would give me –”
“I don’t think you did, actually, but that’s fine,” Murdoch shot back, before allowing Watson to continue. “You haven’t told any of your investors about” additional charges of computer hacking, Watson said. “If I know about this, you must know about it too. There isn’t the corporate governance structure in place to prevent this from happening again.”
Murdoch did have some support at the shareholders meeting. Towards the end, billionaire Haim Saban, who bought back the rights to the Power Rangers characters from Disney last year, offered Murdoch a degree of levity, even if the News Corp. head didn’t completely understand him. “My money’s on you,” Saban said, addressing Murdoch. “I’ve heard so many questions, but not one question about the operations of this great company. This is just all kinds of mishegas, this talk about governance.”
Sensing that Murdoch didn’t know the Yiddishism, the next speaker, who also expressed support for the chairman, helpfully noted that mishegas means “craziness.”
As the meeting ended with Murdoch safely ensconced in the chairman role, it’s clear that the matter of phone hacking scandal is as intense as it was when the news broke. In any case, the concerns about phone hacking did allow Murdoch to avoid other questions about his judgment. Still, Mayne, after several other swipes, brought up the Myspace debacle, which News Corp. sold to Specific Media for a mere $40 million in June — way below well below the $580 million the company paid for it in 2005.
While the price for Myspace made sense in 2005, Murdoch said, he half-jokingly conceded that News Corp. spent the next six years “mismanaging it in every possible way.”
At the end of the day, the all directors of the board were re-elected — there was never really any doubt that Murdoch would be dethroned, since he controls 40 percent of News Corp.’s shares — though there was no vote count immediately available, according to an early evening report from Marketwatch.