Murdoch Move Slammed As Corporate Governance Breach

by Glen Shapiro, LawAndTax-News.com, New York

16 August 2005

News Corp chairman, Rupert Murdoch is reportedly facing the prospect of a shareholder revolt after he extended a 'poison pill' measure for a further two years without consulting the group's stakeholders.

The arrangement was put in place in November 2004 to prevent Liberty Media from increasing its 18% stake and staging a hostile takeover, and as part of a pledge made during News Corp's relocation from Australia to the United States, the firm's board stated that they would only extend the measure beyond November 2005 with shareholder approval.

The unilateral decision taken by Mr Murdoch as he struggles to keep the group under family control has been condemned by observers as a serious corporate governance breach.

Speaking to the UK media, a representative from Institutional Shareholder Services (ISS), which is advising News Corp investors on the matter, observed that:

"It is definitely not best practice. It's not a good thing for shareholders. Unless the pill is put to a vote, shareholders (are) likely to withhold re-election of the incumbent directors."

Joining the chorus of condemnation of the poison pill arrangement, Michael O'Sullivan, president of the Australian Council of Super Investors explained that:

"Shareholders will now be denied any benefit from any offer by Liberty or anyone else to increase their holding to a substantial level. The 'poison pill' benefits only the Murdoch interest."

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