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MUMBAI:
Rupert Murdoch has once again proved his critics wrong getting
re-elected as the chairman and chief executive officer of
News Corporation at the company's annual general meeting in
Los Angeles Tuesday.
Murdoch
overcame opposition from shareholders who were hell bent on
cutting him and his members to size by getting both his sons
- Lachlan and James Murdoch - re-elected. Shareholders also
re-elected the rest of the company's returning board members
even as angry shareholders criticised Murdoch and the control
that he wields on the company.
The
Murdochs have been going through the worst phase of their
lives ever since the phone hacking scandal broke out at its
UK publishing business News International which led to the
closure of News of the World and arrest of employees.
The
scandal also led to a huge furore in UK and subsequently US
about the company's corporate governance structure. It also
diluted the power that Murdoch once wielded in UK and exposed
them to tough action from UK authorities.
While
only five per cent of investors voted against re-electing
Murdoch during this year's meeting which is in sharp contrast
to last year's when 16 per cent shareholders had voted against
his re-election. But last years AGM was held at the height
of phone hacking scandal which subsided with the Ofcom giving
clean to News Corp's broadcast business BSkyB.
However
the sons were not as lucky as their father with 17 per cent
shareholders voting against James and 21 per cent against
Lachlan.
It
is News Corps dual class shareholding that helped Murdoch
to sail through amidst opposition from powerful pension fund
outfits that wanted to curtail the power of Murdoch family
and separation of chairman and CEO's post.
The
Murdoch family holds 12 per cent but its dual class shareholding
structure gives it 40 per cent of the voting power. Add to
that the backing of second largest investor Prince Al-Waleed
bin Talal, who holds seven per cent in the media conglomerate.
The dual structure gives Prince Al-Waleed almost 20 per cent
voting power.
Meanwhile,
28 per cent shareholders voted in support of eliminating the
division between voting and non-voting shares.
During
his AGM speech Murdoch asserted that the media conglomerate
has strengthened its corporate governance across the globe
with modernisation of compliance across the board.
The
company has appointed Gerson Zweifach as Chief Compliance
Officer and compliance structure has been divided into five
groups to cover all the regions.
"We
have acknowledged the serious wrongdoing that occurred at
some of our publications in the United Kingdom. As a result,
we have had to work hard to make amends. But just as important,
we seized the moment as an opportunity to strengthen our governance
and our organization in key ways.
"Under
the guidance of our general counsel Gerson Zweifach -- who
now also serves as our Chief Compliance Officer -- we've modernized
our entire system of compliance from top to bottom.
"We've
organized this new global structure into five compliance groups
that together cover every region where we operate and every
business within it.
"We've
imposed strict, uniform policies with centralized oversight.
We've improved employee training. We've also imposed more
auditing and testing, so that we can fix any problem by identifying
it early. And we've backed it all up by appointing top-notch
professionals who have a track record that cannot be questioned--
including a former director of enforcement for the U.S. Securities
and Exchange Commission and a former U.S. federal prosecutor."
He
also said that there will be special emphasis on UK since
the phone hacking scandal took part in that market. He also
claimed that the company's other publications did not not
any sort of wrongdoing.
"Because
these problems were based in the United Kingdom, we've put
a special emphasis on our operations there. As you might expect,
this has meant especially rigorous internal reviews. And we
have confirmed that the problems in the United Kingdom were
not found at our other publications.
"Our
findings were born out by the recent, in-depth report by Ofcom,
the United Kingdon's independent media regulator. After looking
at the evidence related to phone hacking, Ofcom found no basis
for concluding that News Corporation acted inappropriately
in any way."
Murdoch
also acknowledged that the company is going through one of
the worst period in its history. He also said that despite
all the problems that inflicted the company it has continue
to grow.
"This
has been a difficult period in our company's 50-year history.
However, I believe the numbers will bear out that the market
likes the work we are doing and has confidence in our future.
Since addressing shareholders a year ago, our stock price
has risen nearly 45 per cent," he added.
And
to take this growth to the next level the company is being
split into two separate trading companies which will also
help it unlock more value for its media and entertainment
unit.
"Let
me conclude with what you know is our biggest potential change
and opportunity in the coming year: the transformation of
one of the world's most successful media companies into two
separate, publicly-traded companies. One will be focused on
news, publishing and education. The other will focus on media
and entertainment.
"We
are pursuing this for a simple reason. Notwithstanding our
success, our company is undervalued. With this separation,
we will free up each company to better deliver on its promises
to customers across the globe. As we do, it will also mean
unlocking more value for our shareholders.
"As
we head into this future, the company you know will be replaced
by two dynamic new ones with separate names and different
missions. But they will be driven by the same ethos of creativity,
competition and entrepreneurship that has always been at the
heart of our efforts.
"This
split will take time, but it is my expectation that by the
end of the calendar year, we will be ready to announce more
details about the executive management structures and Board
memberships. I am deeply excited and energised by this future,
and I hope you are as well."
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