Rupert Murdoch faced a series of angry shareholders — many of whom had pledged to vote him out of his own company — at News Corp.'s annual meeting on Friday.
The meeting was held in Los Angeles, on the lot of the 20th Century Fox studios. It was the shareholders' first chance to question Murdoch since the phone hacking scandal erupted in July, and they made the most of the rare opportunity.
Bolstered by a formal proposal from one investor to eject Murdoch from his role as chairman of the News Corp. board, shareholder after shareholder vented their frustration with his handling of the company, and criticized News Corp.'s corporate governance and stock structure. All of them called for a new, more independent structure, and many said that the hacking scandal had fatally damaged Murdoch's credibility.
The central issue at hand —whether Murdoch, his son James and his closest allies on the company board would be voted out of their posts — was never a very suspenseful one. News Corp.'s stock structure means that Murdoch alone controls 40 percent of the vote, ensuring that he would maintain his status as CEO and chairman. Indeed, News Corp. announced later on Friday that all nominees to the board had been elected, though the company declined to release the tallies until next week. But, with huge pension funds like Calpers vowing to vote against him, it seems likely that a substantial protest vote will be recorded.
The meeting was hardly the first storm Murdoch has weathered thanks to the hacking scandal, which has been relentless in its forward motion. Beyond his infamous appearance before the British Parliament, he has also addressed the scandal during a company earnings call with Wall Street in August. However, Friday's meeting brought him face to face with shareholders representing pension funds from such diverse interests as labor unions, church groups and an Australian man with whom Murdoch had a series of increasingly contentious debates.
In addition, one of Murdoch's fiercest critics in the UK, Labour MP Tom Watson, showed up at the meeting, having bought stock in News Corp. expressly to question the company chief. Watson made a numbers of serious allegations against News Corp., charging employees with having hacked into peoples' computers and falsely impersonating a former Prime Minister.
Throughout it all, Murdoch struggled to keep his cool, repeatedly interrupting his interrogators and defending his conduct. Though he issued another abject apology for the hacking scandal, he also pointedly said that News Corp. had faced "unfair criticism." He especially lost his temper with the Australian, a former employee named Stephen Mayne, calling him a "liar" at one point.
Below, see a recap of what happened at the meeting.
Tom Watson — the MP who is a big thorn in Murdoch's side — will be at the meeting. He bought shares in News Corp. just to be able to trash Murdoch to his face.
So far, the music is rather New Age-y and plaintive on the audio feed we're listening to.
"I'm Rupert Murdoch," he says. "It's my pleasure to welcome all of you."
He thanks the shareholders for a "remarkable journey...that is still in its early stages," and says he wants to reaffirm the "seriousness" of the hacking scandal, while also wanting to put it in context.
Then, he talks about how great News Corp.'s shares are doing.
|@ GregMitch : #OWS protest coming this morning at Fox Studios in L.A. -- News Corp shareholders meeting http://t.co/nCXyGVGN|
"We cannot just be a profitable company," Murdoch says. "We must be a principled company...that is why we must admit to and confront our mistake, and establish rigorous and vigorous procedures to put things right."
He says there is "no excuse" for hacking, and that the company "could not be taking this more seriously."
Murdoch also praises the directors of News Corp., especially Joel Klein (former NY schools chief) and Viet Dinh (former Bush official). He praises Klein for hiring good lawyers for the company, and Dinh for being a good watchdog. "I am grateful that they are the ones leading News Corp. in the effort to put things right," he says.
Murdoch now going on about all of the company properties that are doing great—yet another reminder that his British newspaper division is a microscopic part of News Corp.
Murdoch introduces them! 'Mr. James Murdoch' comes in the middle of the list, but he's the one everyone cares about (besides Rupert himself, of course.)
Rupert lists all the nominees for a one-year term (the list includes himself and his sons Lachlan and James.) This is the point that many shareholders have taken issue with: they want the Murdochs off the board. With Murdoch controlling 40% of the shares all by himself, it's not likely. The thing to see will be how many protest votes are lobbied against Murdoch — and what shareholders want to say to him in person.
Viet Dinh now speaking. He says that (surprise!) Murdoch is the best choice to remain as News Corp. chair and CEO. (Having never heard a News Corp. shareholder's meeting before, we assume this happens every year.) He also says that the board is unanimous in its recommendation to vote "against the floor proposal."
Julie Tanner, from Christian Brothers Investment Services, criticizes "the pervasive and value-destroying scandal at the company," and requests that the chairman of the board be independent (i.e., not Murdoch), along with more "truly independent" directors and a "truly independent" investigation into phone hacking.
Murdoch says he will take the proposal seriously.
An Australian shareholder then gets up. "We've had dreadful shareholder returns over the last 20 years," he says. "We've had poor governance, we've had gerrymander...it's time to get on the governance high road. It's time to actually embrace good governance. The returns haven't been there...you've treated us like mushrooms for a long time...I think you should really just get with the program." He also criticizes Murdoch's choices on Dow Jones, MySpace and hacking.
Whew! Murdoch says thanks, and respectfully disagrees.
Why, it is! And his testimony is a doozy.
He says police are looking into allegations against News Corp., including: conspiring to pervert the course of justice and executives committing perjury. He also says that UK police "are now investigating at least three others" on the grounds of impersonating a prime minister, "targeting the former Queen," and illegally obtaining information from former Army intelligence officers. He says that the next shoe to drop is computer hacking, and that there is a "Mulcaire II" waiting in the wings (a reference to Glenn Mulcaire, of course.)
Murdoch essentially dismisses the allegations, saying that News Corp. is on top of them and that "we will make things right."
Two representatives — one from the Church Of England and one from the SEIU union — also get up in favor of the proposal. Murdoch snaps at the church man, saying, "Your investments haven't been that good." Meow!
Calpers— the country's largest pension fund— also says it's voting in favor of the proposal. This just keeps going!
|@ edmundlee : News Corp PR is desperately trying to stop the questions, gesturing to staff|
The Australian who hammered Murdoch earlier asks a procedural question, and says that he hasn't decided how to vote yet. Murdoch snaps at him. "I'd hate to call you a liar but I don't believe you," he says. "I know how you're going to vote."
Murdoch asked if he has a "ballpark figure" for how much it's going to cost to pay off the "thousands" of potential phone hacking lawsuits. Murdoch says he doesn't no, and dismisses the idea that there are "thousands" of victims. The police would apparently disagree with this!
Watson's back up again. He asks once more if Murdoch is aware of the allegations he made previously. Murdoch says he is not. "I promise you we will absolutely stop at nothing to put this right," he says, asking Watson to come forward with any new evidence. Watson says he's doing that now.
The Australian, Stephen Mayne, gets up again. "This is your third time, Stephen!" Murdoch says. Mayne says News Corp. security are pushing him to stop the questioning, and says it's "embarrassing" and "undemocratic."
Murdoch says News Corp. can stand any embarrassment like that, and notes that Tom Watson was even on Fox News earlier in the day. "It's called 'fair and balanced,'" he says.
Viet Dinh now answering questions about the broader corporate culture at News Corp. He says that, by and large, the company is "great," but that the "humiliating" situation in Britain is very serious.
As a director makes a lengthy, lengthy statement about Murdoch's compensation, let's just take note of the fact that Murdoch seems all over the shop here: from contrite to contrary, with a definite pattern of increased irritation as person after person criticizes his leadership.
Also, the director just said that Murdoch's bonus went up because the company had "a very good year." Ok then! Murdoch admits he doesn't understand everything that was just said.
Murdoch gets a loving testimonial from a longtime employee, who thanks him for all the money he's made him.
After a weird animal-rights interlude, more supportive shareholders praise Murdoch. "We are kicking ass," one says.
Then Stephen Mayne gets up! He says he used to "self-censor" a bit when he worked for Murdoch. "You've made up for it," Murdoch says. Someone get these two a vaudeville act!
"Anyone else?" Rupert Murdoch says. He apparently sees Stephen Mayne get up again, and sighs.
A teacher asks Murdoch about his education ventures. He says she should have read his speech on the subject. She says she was teaching when he gave it. He says she should read the Wall Street Journal.
He says the results of the vote will be listed later today. We'll see what happens...
Days after the disappearance of 13-year old Milly Dowler, British tabloid News of the World began intercepting Dowler's voicemail messages. The paper deleted old messages to make room for new ones, leading some to speculate that she was alive. The Guardian reports: "The Dowler family then granted an exclusive interview to the News of the World in which they talked about their hope, quite unaware that it had been falsely kindled by the newspaper's own intervention. Sally Dowler told the paper: 'If Milly walked through the door, I don't think we'd be able to speak. We'd just weep tears of joy and give her a great big hug.'"
Police first became aware that the paper was listening to Dowler's messages after it reported that an employment agency had called Dowler about a job vacancy, but didn't take action "partly because their main focus was to find the missing schoolgirl and partly because this was only one example of tabloid misbehaviour," according to the Guardian.
A News of the World item about his knee injury lead Prince William to believe that his aides' voicemail messages were being listened to by a third party. Three royal aides also noticed that new voicemails were showing up as old. Months later, the New York Times reported, News of the World editor Clive Goodman wrote a piece about Prince Harry's visit to a strip club that quoted a voice mail message from his brother William word-for-word.
Goodman (right) and private investigator Glenn Mulcaire (left) received jail time for intercepting hundreds of voicemail messages meant for royal aides. The pair accessed the voice mailboxes of three aides 609 times, according to BBC News. An earlier search of Mulcaire's home turned up "dozens of notebooks and two computers containing 2,978 complete or partial mobile phone numbers and 91 PIN codes; at least three names of other News of the World journalists; and 30 tape recordings made by Mulcaire," reports the Times, but the pair were only charged for hacking the royal aides.
New allegations from the Guardian that NoW paid £1m to suppress evidence of phone hacking prompted Parliament to hold new hearings two years after News International exec Les Hinton (bottom left next to Murdoch) first testified that Goodman was the only person at NoW who knew about the hacking. At the new hearing, Coulson (top left) maintained that he was unaware of phone hacking during his time at NoW.
A New York Times piece alleged that phone hacking was pervasive at NoW and Coulson was aware of conversations about the practice, despite denying any knowledge about it. According to the Times: "'Everyone knew,' one longtime reporter said. 'The office cat knew,'" and reporters "described a frantic, sometimes degrading atmosphere in which some reporters openly pursued hacking or other improper tactics to satisfy demanding editors."
Coulson stepped down as communications chief, blaming media speculation that he knew about phone hacking during his tenure of NoW. News editor Ian Edmondson was fired after allegations of phone hacking, and new information prompted police to re-open the investigation on NoW.
The News of the World admitted its role in phone hacking in a public apology on its website and paper. Former editor Edmondson and reporters James Weatherup and Neville Thurlbeck were arrested on charges of intercepting voicemail messages.
Levi Bellfield was found guilty of murdering Milly Dowler, but a second charge that he had attempted to abduct another schoolgirl was abandoned after tabloid publicity made it impossible for the jury to reach a fair verdict. News of the World paid Sienna Miller £100,000 in damages after publishing 11 articles that used private information from her messages in 2005 and 2006, according to the Guardian.
Police notified Milly Dowler's family that NoW intercepted and deleted the young woman's voice mail messages, destroying possible evidence in the search for her killer. New evidence also shows that NoW targeted families of London's 7/7 bombings.
Andy Coulson, former communications chief to David Cameron and ex-editor of News of the World, was arrested in the investigation on phone hacking at NoW.
The News of the World released its final issue after James Murdoch, head of parent company News Corp's operations in Europe, made the decision to shutter the paper. The move was expected to "take some of the heat off immediate allegations about journalistic behavior and phone hacking."
Multiple news outlets reported that the Sun and the Sunday Times, also owned by parent company News International, had been hacking the voice mail box and other records of former Prime Minister Gordon Brown for years. The Sunday Times allegedly posed as Brown to obtain his financial records, and the Sun allegedly received details about Brown's son's cystic fibrosis. The revelations mark the first time allegations have targeted News International's other papers.
News Corp referred its bid to take over satellite broadcaster BSkyB to the Competition Commission, which will delay the deal by at least six months as the company awaits regulatory clearance. British leaders have called for Murdoch to drop the bid, with Labor Party leader Ed Millibrand calling the deal "untenable" and Liberal Democrat Nick Clegg calling on News Corp to "do the decent and sensible thing."
Rupert Murdoch withdrew its $12 billion bid for BSkyB, the largest pay-TV broadcaster in Britain, after the British government withdrew its support the day before. The deal, which would have substantially increased Murdoch's foothold in the British media, appeared like it would sail through until last week. News Corp, which began to seek full ownership of BSkyB in March 2011, will keep its 39% stake in the company.
The FBI launched a probe into allegations that News Corp. attempted to hack the phones of September 11 victims after Representative Peter King and other members of Congress wrote to FBI Director Robert Mueller demanding an investigation. Murdoch also agreed give evidence before a parliamentary committee. He had previously said that he was not available to attend the hearing, but relented after receiving a personal summons delivered to him and his son by a deputy sergeant-at-arms.
Les Hinton announced his resignation as Dow Jones CEO, and Rebekah Brooks stepped down as chief executive of News International. Brooks presided over the News of the World during the phone hacking of murder victim Milly Dowler, and is scheduled to appear before a parliamentary committee next week. Murdoch also met with Dowler's family to apologize.
Brooks was arrested in connection with the scandal, throwing her scheduled appearance before Parliament on Tuesday into serious doubt. In addition, Sir Paul Stephenson, the head of Scotland Yard, resigned his position, becoming the highest-profile public official yet to lose his job because of the scandal. (The Met has itself been plunged into crisis for its lax handling of the scandal and for the corrupt ties police officers developed to News International.)
John Yates, assistant commissioner of the British Metropolitan Police, stepped down after the resignation of chief Paul Stephenson the previous night. The scandal has focused on British police for failing to investigate evidence of News of the World's phone hacking activities and for accepting bribes for information from tabloid writers. Yates decided not to reopen the investigation two years ago, saying he did not believe there was new evidence to consider.
Rupert Murdoch, son James and former News of the World editor Rebekah Brooks testified in front of a parliamentary committee. All three insisted that they were not aware of phone hacking activities at the tabloid. Rupert Murdoch also made clear that he would not resign. Someone attempted to pie Murdoch in the face with shaving cream.
A former editor and a top lawyer for the News of the World accused Murdoch of lying in his testimony that he had no knowledge of phone hacking at the tabloid. The two recall showing him an email between private investigation Glenn Mulcaire and then-reporter Neville Thurlbeck with transcripts of hacked voice messages. Sun editor Matt Nixson was fired following allegations that he knew about phone hacking during his time at the News of the World. The investigation also threatened to spread to other newspapers that were named for using a private investigator to illegally obtain information.
The Guardian reported that the News of the World hacked the phone of Sara Payne, the mother of an 8 year old girl who was abducted and killed by a pedophile. The 2000 murder had prompted Rebekah Brooks to launch a campaign for a sex offender's law in Britain now known as "Sarah's Law." The phone that the tabloid hacked may have been one that Brooks personally gave to Payne in the aftermath of the tragedy, which Payne had praised as for helping her "stay in touch with my family, friends and support network."
Clive Goodman, a former News of the World reporter, has alleged that there was a massive coverup of phone hacking at the tabloid. He was arrested for phone hacking in 2007, and now claims that former editor Andy Coulson offered to let him keep his job in exchange for saying that he was the only person at the tabloid who hacked phones. The allegations are deeply damaging to Coulson and Rupert and James Murdoch, who have all maintained that they knew nothing about phone hacking.
Glenn Mulcaire, the private investigator hired by the News of the World to intercept voicemails, sued News Corp. over the payment of his legal fees. The company had been paying his fees since 2007 when he was found guilty of hacking the phones of aides to the royal family, but recently terminated the arrangement after Rupert and James Murdoch's testimonies in Parliament. Mulcaire himself is the target of dozens of civil lawsuits filed by suspected victims of phone hacking.
Glenn Mulcaire has been ordered to release the names of people who ordered him to hack the phones of six public figures. He is due to make the disclosure by the end of next week, as part of actor Steve Coogan's lawsuit against News Group. The revelations threaten to blow the defense presented by News of the World editors, who claim they knew nothing about phone hacking.
The media conglomerate has been rocked by evidence that its now-shuttered British tabloid, News of the World, hired a private investigator who tapped into the cellphone voicemail of a 13-year-old who disappeared in 2002 and was later found murdered.
Murdoch and his son James, who is in line to succeed him, were grilled by Watson and other lawmakers in a parliamentary committee hearing in late July. The elder Murdoch said he was ashamed at what happened but declined to take personal blame. He said he was the best person "to clean this up."
Watson told reporters Thursday that he will show that News Corp. used techniques that go "beyond phone hacking" into other technological means that could leave the company open to civil lawsuits and further damage to its reputation. News Corp. officials declined to comment.
Murdoch controls News Corp. through his family trust's 40 percent stake of voting shares. A key backer is Saudi Prince Alwaleed bin Talal, who controls 7 percent. The voting stock represents less than a third of the company's total $44.4 billion market value.
That dual-class share system has come under renewed fire. Critics say the company's board is dysfunctional and management has poor oversight of the company.
Proxy advisory firm Institutional Shareholder Services has recommended voting out all existing board members, including Murdoch and his sons James and Lachlan. Two other firms, Glass Lewis and Egan-Jones, recommend voting against the sons, among others.
Jay Eisenhofer, co-lead attorney in a shareholder lawsuit against News Corp. on charges of mishandling the affair, said on a conference call with Watson on Thursday if even 20 percent of votes are cast against the reelection of Murdoch and his two sons, it would be a victory.That's because that approach half the 53 percent of votes unaffiliated with the family, he said.