LOS ANGELES -- Rupert Murdoch jousted with disgruntled shareholders Friday as the 80-year-old chairman and CEO of News Corp. defended his handling of a phone hacking scandal in Britain and deflected any notion that he plans to step down soon.
More than 100 protesters gathered outside the 20th Century Fox studio lot where News Corp. held its annual shareholders meeting. Inside, with his sons Lachlan and James seated before him in the front row, Murdoch parried allegations that he had poor oversight of the company, sometimes cutting off speakers to jab in an insult or dispute a fact.
Votes from the shareholders were still being counted in the afternoon but the company said a proposal from the Christian Brothers Investment Services to force the company's chairman to be an independent director had failed. Few had held out any hope they could overcome Murdoch's control of 40 percent of voting shares through a family trust, or the 7 percent stake Saudi Prince Alwaleed bin Talal had almost certainly cast in support of him.
"It was pretty perfunctory," said Rev. Seamus Finn, who attended on behalf of the organization. "It was a nice meeting, but it didn't offer much in terms of how they're going to put this behind them."
Questions and comments from shareholders focused on the phone-hacking scandal, which caused the company this summer to shutter the tabloid News of the World and drop its $12 billion bid for full control of British Sky Broadcasting. Britons and other people worldwide were outraged to learn that a private investigator hired by the paper had hacked into the cellphone voicemail of 13-year-old Milly Dowler, potentially impeding a police investigation and giving false hope to her family. Dowler was later found to be murdered.
The phone hacking scandal has forced the resignation of two of London's top police officers, ousted top executives such as Dow Jones & Co. CEO Les Hinton, and claimed the job of Prime Minister David Cameron's former spin doctor, Andy Coulson, an ex-News of the World editor. The company said in London on Friday that it had agreed to pay 2 million pounds ($3.2 million) to her family and 1 million pounds ($1.6 million) to charities the family will choose.
Friday marked the first time Murdoch faced shareholders with small stakes in the company since the scandal broke in July.
Outside the studio lot, some demonstrators carried anti-Murdoch signs, including one that stated "Fire the Murdoch Mafia." Another read, "Rich media equals poor democracy." Some of the demonstrators were from an organization that has been staging rallies recently to demand good jobs.
Tom Watson, a member of Parliament with Britain's Labour Party, flew to Los Angeles to make a new allegation about covert surveillance techniques by company employees.
British lawmaker Tom Watson talks to reporters during a protest in front of Fox Studios in Los Angeles on Friday, Oct 21, 2011. A few dozen people showed up to demonstrate outside Fox Studios where News Corp. is holding its annual shareholders meeting. (AP Photo/Nick Ut)
Watson asked Murdoch if he was aware that a person who had left prison was hired by News Corp.'s British newspaper unit and hacked into the computer of a former army intelligence officer. He later said the incident happened around 2005 and that evidence of the computer hacking is with London's Metropolitan Police. He said it could lead to the discovery of further victims of computer hacking. Watson said he has made the allegation before but it hasn't been widely reported.
Watson represented nearly 1,700 non-voting shares for labor group AFL-CIO and got up twice and spoke for a few minutes during the 90-minute meeting. He is been a key driver of a 2 1/2-year probe into phone hacking and alleged police bribery at the company's British newspaper unit.
Murdoch said he wasn't aware of the allegation, and board director Viet Dinh said the company would look into it.
"I promise you absolutely that we will stop at nothing to get to the bottom of this and put it right," Murdoch said.
Watson evoked private investigator Glenn Mulcaire, who was jailed in 2007 for eavesdropping on the phones of royal staff. He warned that this investigation could mean more problems ahead for the company.
"News Corp. is potentially facing a Mulcaire 2," Watson said. "You haven't told any of your investors about what is to come."
Several shareholders took issue with a chart Murdoch put up showing the stock's upbeat performance compared with most media peers since the beginning of the year and since the beginning of July. They said its performance over 10 years or more lagged its peers. Murdoch said the chart was to address criticism that the company had been hurt by the hacking scandal.
Edward Mason, secretary of the Ethical Investment Advisory Group, which advises the Church of England's investments, began speaking about News Corp.'s shareholder returns when Murdoch butted in, saying "Your investments haven't been that great, but go on."
Stephen Mayne, a journalist and shareholder activist who once worked for News Corp.'s Australian newspapers, protested when Murdoch tried to bring the meeting to a close.
"Never before have you attempted to shut it down quite like this," Mayne said.
Murdoch retorted: "You had a lady friend who shut you down in the past."
Murdoch then got a laugh when he claimed he was being as open and fair as possible in letting critics air their concerns. "We even had Mr. Watson on Fox television this morning," he said. "It's called fair and balanced."
Despite the circus-like atmosphere, several large shareholder groups quietly registered their concerns, including Todd Mattley, investment officer for the California Public Employees' Retirement System, which has some $225 billion in assets.
Mattley said CalPERS voted its 1.4 million voting shares in favor of the Christian Brothers' proposal demanding an independent chairman. Although he said he knew the vote was "symbolic" he said later, "This is something we've said is a governance best practice."
The company also came under renewed fire for its dual-class share system, which allows the Murdochs to control the company despite owning voting shares that account for less than 15 percent of the company's total $44 billion market value.
Dinh said the last time the company voted on the dual-share structure was in 2007, when it passed with 77 percent of the votes.
News Corp.'s non-voting shares are down about 5 percent from when the scandal broke in early July, although they have been buoyed recently by a $5 billion share buyback plan that is about a third complete. On Friday, News Corp.'s stock rose 35 cents, or 2.1 percent, to close at $17.20.
Proxy advisory firm Institutional Shareholder Services had 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.
Although the vote count hadn't yet been tallied, the company said all of its director nominees had been elected.
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 that if even 20 percent of votes are cast against the re-election of Murdoch and his two sons, it would be a victory. That's because that would be nearly half the 53 percent of votes unaffiliated with the family, he said.
Associated Press video journalist John Mone contributed to this report.