M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Sunday, October 23, 2011

News Corp shareholder meeting

If you haven't already, you should find the time to listen to at least part of the recent News Corp shareholder meeting.  You can access the webcast here.  I had a couple of impressions while listening to it.  First, the number of people who actually ask questions at News Corp meetings is very small - in fact less than a dozen.  Second, most of those who asked questions were well known to the board.  Indeed, from the back and forth it seems clear that News Corp engages with the questioners outside of the annual meeting.  

Third, Murdoch can be a rude character.  When a representative of the Church of England stood up to speak in support of the proposal to split the Chairman/CEO positions - by now this is a pretty common corporate governance reform proposal - Murdoch immediately insults the questioner.  Interrupting him to say, "You're investments haven't been that good, either."  The questioner is a bit taken aback - wait, did he just insult me? - and then Murdoch tells him to let it go and get on with his question.  It's pretty incredible how little Murdoch is interested in hearing from the shareholders who are present at the meeting. Or, how little interest he seems to have in being responsive to their concerns -- except when the animal rights activist stands to complain about Australia's live animal export policies.  Then Murdoch commits to looking into it and doing something about it.  (I can't imagine that's true, given the importance of the export of live sheep to the Islamic world is to Australian farmers.)

In any event, it's clear from the webcast that Murdoch is particularly uninterested in hearing from Tom Watson, the member of Parliament who has been heading up the investigation of the phone hacking scandal in the UK.  He turned up at the meeting asked questions intended to either embarrass or at least put Murdoch on the spot.  Now that he wasn't before the Parliament and he (Murdoch) was running the meeting, Murdoch wasn't all that interested in hearing from Watson, either.  I'd venture a guess that Murdoch is a supporter of Prof. Sjostrom's and Prof. Hammermesh's proposals to reduce the number of annual shareholder meetings.

Finally, I was also struck by the presence of religiously-affiliated shareholder representatives at the meeting.  Not that they were there, but that there were so many of them.  

Anyway, the summaries of the meeting don't do the meeting justice.  You should listen to some of it.  I'll post the transacript when it becomes available.  In the meantime, just to give you more flavor of the meeting there were two exchanges with shareholders that stick out.

In one exchange, a shareholder questioned how Viet Dinh could be an independent director given that he is the godfather of Lachlan Murdoch's son.  In response to this challenge, Prof. Dinh emotionally defended his integrity - making it clear that he was behold to no one.  I imagine that if the questioner was standing within arm's length of Prof Dinh that Prof Dinh might have been less restrained in his response to the challenge to his independence.

In another exchange, a shareholder complained about the use of share buybacks to entrench Murdoch control over the corporation.  I got a sense that Murdoch was willing to benignly ignore this question with a "thanks for your comment, next question," but Sir Rod Eddington, a director, interjected.  Something along the lines - I'll have you know we've done $1.8 billion in share buybacks and we haven't purchased a single Class B share!  Apparently, he misunderstood the question - or he misunderstands how share repurchases can be used as defensive/entrenchment devices.  If everyone other than Murdoch (Class B shares) is selling their shares back to the corporation, that raises Murdoch's control share.  Anyway...  

-bjmq

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