by Nomad
After NewsCorp investors staged a revolt at the annual shareholders meeting last week, CEO and founder Rupert Murdoch barely managed to retain control over his company.
The source of the dissatisfaction revolves around the structure of the company, and the Murdoch family's ability to lead the company.
If reports are accurate, things apparently got hot and heavy at a recent News Corp shareholders meeting last week. According to an article in The Sidney Morning Herald, Rupert Murdoch just barely survived a revolt at the annual meeting of investors. At issue, was the Murdoch family control of the company, which sparked widespread displeasure among a large number of stockholders.
The company structure allows the Murdoch family to control around 40 per cent of the company's vote while actually owning 14 per cent of News Corp. In this way, they have been able to keep an iron grip on the company. That has, as the article notes, lead "to accusations it is run more like a family fiefdom than a conventional public company."
One investors at the meeting called it "“fundamentally undemocratic."
"This kind of governing structure may be exactly what we'd expect in Cuba or North Korea, but it is at odds with good governance practices here," Bill Dempsey, chief financial officer of the New York-based Nathan Cummings Foundation, told Mr Murdoch at Friday's meeting
Shareholders proposed that the company's controversial dual-class voting structure be reformed. They proposed scrapping the present structure and replacing it with a one share, one vote system. Although the motion was narrowly defeated, it was a sign that all is not well behind the ramparts of the News Corp fortress.
Notably, even one of the companies key investor, the Saudi Prince Alwaleed bin Talal, (worth an estimated $27 billion) also voted in favor of restructuring the company. It marked the first time in 17 years that Al-Waleed, News Corp's second largest single investor, has voted in opposition of Murdoch.
Had the resolution passed, Mr Murdoch faced the prospect of his control of the company he has built into a global media empire significantly diluted, making him much more vulnerable to the influence of other investors.
As it stands, the company share structure makes any takeover a much more unlikely or at least an expensive proposition.
However it's also important to note that, at present, the future of the company is closely tied to the Murdoch family. In the last few years, things have been as tumultuous to say the least. So, it is no surprise that News Corp investors are not too enthused.
Mr. Murdoch's eldest son Lachlan appears to be next in line to take charge. At the meeting Murdoch said
"I'm particularly proud today to be sharing the stage with my eldest son Lachlan, who is co-chairman. ...It is a very special thing to be fortunate enough to work side-by-side with Lachlan who has proven himself to be a talented and successful executive in his own right here and in Australia and will lead us to a very prosperous and bright future."
In fact, nine years ago, Lachlan Murdoch walked away from the company to start his own media empire in Australia- like his father once did. However, this year, Rupert wooed his son back and convinced him to return into the loving arms of the News Corp. Earlier in the year, Lachlan was appointed non-executive co-chairman of 21st Century Fox and News Corp.
(Last year News Corp was divided up into two supposedly distinct operations, its print entities, newspapers and magazines and publishing, from its broadcast and entertainment operations.)
Despite Mr. Murdoch's praise for his oldest son, it's easy to see that Rupert may have simply ran out of options. Of his other five children, Rupert has shown no inclination at installing his daughter, businesswoman Elizabeth. (with "the brains of James and the heart of Lachlan")
Prudence Murdoch MacLeod, the oldest child in the family, has decided to play the role of the housewife who chose to make her life outside the family business. She is described thus:
She is a truth teller, and an entirely good-natured one. Indeed, while her siblings display a certain forced and watchful attention, she is easy, unconcerned, eager to throw caution to the wind.
His other daughters, 12-year-old Grace, ten-year-old Chloe, both by his latest ex-wife, will not be part of the New Corp share arrangement apparently.
That leaves only Lachlan's younger brother, 41 year old James Murdoch. Along with his father, James, according to most reports, had also been pressing Lachlan to return to News Corp.
A fairly incredible scandal that most Americans never heard of.
Somehow in the modern age, News Corp successfully managed to keep the lid on damaging revelations of phone hacking from the American public. In the UK, the revelations had Brits calling for harsh punishments against the corporations.
According to allegations, employees from the newspapers owned by News Corp had, among other things, attempted to access former Prime Minister Gordon Brown voice mail, his bank account information, his family's medical records, and private legal files.
But it didn't stop there.
Other claims included the hacking of phones of celebrities like Hugh Grant and members of the Royal Family and Tony Blair. (As we shall see, his name will come up later.)
According to allegations, employees from the newspapers owned by News Corp had, among other things, attempted to access former Prime Minister Gordon Brown voice mail, his bank account information, his family's medical records, and private legal files.
But it didn't stop there.
Other claims included the hacking of phones of celebrities like Hugh Grant and members of the Royal Family and Tony Blair. (As we shall see, his name will come up later.)
All that might arouse some natural degree of disgust. However, as the investigation continued, there was still more to be revealed.
Prosecutors charged that the phones of average citizens were also being illegally tapped in the search for hot news.
For example, it was charged that the list of people whose phones were snooped were British victims of the 911 attacks, and victims of the London bus bombings, family members of British troops killed overseas, and most outrageous of all, the phone of a missing child who was later found dead. (In this last case, apparently older messages were intentionally erased by reporters in order that new messages could be recorded and listened to,)
Prosecutors charged that the phones of average citizens were also being illegally tapped in the search for hot news.
For example, it was charged that the list of people whose phones were snooped were British victims of the 911 attacks, and victims of the London bus bombings, family members of British troops killed overseas, and most outrageous of all, the phone of a missing child who was later found dead. (In this last case, apparently older messages were intentionally erased by reporters in order that new messages could be recorded and listened to,)
Remarkably, American news organizations reported very little of the official parliamentary investigation in the UK. Ironically soon afterwards Fox News was heavily criticizing the NSA doing much the same thing. In this case, NSA's work was not for the sake of celebrity news or hot gossip, but in the interests of national security.
Whether stockholders would have supported James to run the whole shebang after the scandal is unclear. Instead, James was appointed co-chief operating officer at 21st Century Fox which, given the size of the scandal, isn't that much of fall from grace.
The brothers had become closer as a result of the hacking scandal. Also, some have reported that tensions de-escalated following Rupert's divorce from Ms. Wendi Deng after a 14-year marriage. That marriage went kaboom when it was revealed that his wife had allegedly had a few affairs.
One person whose name came up immediately, according to the gossip columnists, was with none-other-than Tony Blair, a man that, as Vanity Fair points out, Murdoch had "virtually put into office."
Gad-zooks!
What exactly is the truth is anybody's guess. It's quite possible that Ms. Deng was exercising only her imagination (and nothing else) when she scribbled in her diary"
Whatever why I’m so so missing Tony. Because he is so so charming and his clothes are so good. He has such good body and he has really really good legs Butt . . . And he is slim tall and good skin. Pierce blue eyes which I love. Love his eyes. Also I love his power on the stage . . . and what else and what else and what else . . . ”
Blair's people categorically denied the claim of a hanky-panky on his part but the unverified details at least are entertaining. And there's a lot of delicious karma in reading the sordid details of the personal life of a man who first built his empire on tabloid journalism. They reported that when old man Rupert was shown the diary entries, he had no doubts about what to do or whether they were authentic. He immediately called his attorneys and filed for divorce.
Within the family circle, things never been exactly kosher. A Murdoch biographer with great access to what goes on behind closed doors, Michael Wolff said back in 2012:
“The family is always yelling. It’s a constant backdrop, acting out, confronting, not speaking and snubbing each other. But they are also all deeply involved with each other. They are each other’s central reference point but all is conducted at a pitch of emotion and intrigue, hurt and misunderstanding.”
That kind of dysfunction might sounds hellish, but not altogether unexpected. One reason for all this elbowing and jostling is suggested by one source:
There's a sense that the children are intent on not being played the way he's playing everyone else.
In a word, distrust. And the source of that suspicion is most likely Rupert Murdoch himself.
And all that history of instability within the family might explain why Rupert is working so hard at presenting an image of familial harmony and confidence and sturdy leadership at the helm.
Yet, News Corp investors have every reason to be concerned that too much power is being invested in the hands of a fragile dynasty. As long as Rupert is alive, he should be able to hold things together. Apres Murdoch, investor fear, the deluge will come,
Indeed, it's not hard to imagine the company being torn apart by a possible a blood feud. Every historian knows that family battles can put the "nasty" into any dynasty.
That's something a Saudi prince should know a thing or two about.
Indeed, it's not hard to imagine the company being torn apart by a possible a blood feud. Every historian knows that family battles can put the "nasty" into any dynasty.
That's something a Saudi prince should know a thing or two about.