Rupert Murdoch Parliament Appearance Gets Mixed Reviews From Shareholders
Wall Street reacted positively to Rupert Murdoch's appearance before a Parliamentary committee investigating the phone hacking scandal, but some News Corp. shareholders and investors were not impressed by Rupert Murdoch's performance at a Parliamentary hearing, according to multiple reports.
Murdoch had to play to many different crowds in his testimony on Tuesday--from media watchers to British politicians to average consumers to police officers. One of the more important groups Murdoch must have been thinking of, though, were his own investors. In recent days, there have been rumblings coming from within News Corp. that Murdoch may have to step down as CEO due to his handling of the hacking scandal.
And, on the basis of the News Corp. share price, Murdoch and his son James did a pretty good job. Far from tumbling, the price went up on Tuesday, though the stock is still down 11 percent from before the hacking scandal blew up a few weeks ago. No earth-shattering revelations emerged during the hearings, and both Murdochs avoided making huge mistakes. One analyst told the New York Times he thought it was "the best day these guys have had in a really long time."
However, not everyone in Murdoch-land has been assuaged, if a report in Murdoch's own Wall Street Journal is to be believed. According to a the Journal, his testimony--in which he claimed ignorance about vast swaths of his company's activities, and refused to accept any personal responsibility for the crisis--only solidified some shareholders' feelings that it is time for his tenure as CEO to come to an end.
The Journal quoted what it called a "big shareholder," who said that it would be a "shrewd" move for News Corp.'s COO Chase Carey to be given the top job, with Murdoch becoming chairman of the company.
One way for that to happen would be for the Murdochs to lose their dominant position in the company's shareholder voting structure. Under the current structure, the Murdoch family owns 12% of the stock but controls 40% of the company's votes. Anne Simpson, the head of corporate governance for the California Public Retirement System--which is the largest U.S. pension fund and owns 6.4 million shares of News Corp. stock.--announced Wednesday that she wants major changes to the system.
"News Corp does not have one share one vote," Simpson said. "...The situation is very serious and we're considering our options. We don't intend to be spectators--we're owners."
It's not clear if those efforts will be successful. But the drama surrounding Murdoch is not yet over.