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Ranking the 16 News Corp directors for independence as regime change looms

For the first time in 58 years, the independent directors of News Corp appear to be stirring.

There is a majority of Murdoch family members and former executives on the News Corp board and very few independent directors at all if you accept the argument that former executives can never be independent and non-executive directors lose their independence after 10 years of service.

However, Bloomberg has this morning broken an important story claiming that the two most likely independent champions of action on the News Corp board, Tom Perkins and Viet Dinh, are indeed beginning to move.

The story included this:

“Independent directors of New York-based News Corp have begun questioning the company’s response to the crisis and whether a leadership change is needed, said two people with direct knowledge of the situation who wouldn’t speak publicly.”

Perkins was the independent director of Hewlett Packard who led the charge to oust Carly Fiorana as CEO and Viet Dinh was his legal adviser during that fight.

Here’s a profile of all 16 News Corp directors ranked according to potential independence:

  • Viet Dinh: tough chairman of the corporate governance committee who has impressed at recent AGMs with forthright observations on governance issues. Was the architect of the Patriot Act for George W Bush and is a professor of law at Georgetown University. Clearly independent as only joined the board in 2004.
  • Tom Perkins: well-regarded venture capitalist who at 79 and after 15 years on the board, may not sound like a reformer, but has the runs on the board at Hewlett Packard.
  • Peter Barnes: the former boss of Phillip Morris in Australia who was brought onto the board by former News Corp director and global Phillip Morris CEO Geoffrey Bible, another Aussie made good in New York who was close mates with Rupert. However, Barnes has impressed as chairman of Metcash and Ansell in Australia and at 68 doesn’t necessarily have much to lose if he joins the anti-Murdoch reform push.
  • Jose Maria Aznar: the 58 year old former Spanish President is an unknown corporate performer who was rewarded with a News Corp board seat in 2006 after being thrown out of office, largely for supporting the Murdoch-backed Iraq invasion. However, anyone who has risen to the top of politics shouldn’t be troubled by the scheming and number counting needed to execute a regime change at News Corp.
  • John Thornton: not strictly independent given the millions this former investment banker pocketed from the advice Goldman Sachs gave News Corp over the years, including on the original float of BSkyB. However, he’s an impressive figure with global experience and certainly no pushover for the Murdochs.
  • Joel Klein: former Washington lawyer, Harvard scholar and boss of New York’s public schools joined as an executive director in November 2010 to establish a new education division for News Corp and has been given board oversight of the hacking scandal which included attending the Parliamentary committee hearings. Aged 64 and reportedly earning $US2m a year before bonuses.
  • Sir Rod Eddington: described as the lead independent director but as a former News Corp executive who was paid more than $10 million whilst running Ansett Airlines for the company, he is really affiliated and unlikely to stand up to Rupert.
  • David DeVoe: a very competent and level-headed finance director for the past 20 years who is respected by investors and would be a key man to retain if the Murdochs surrender management control.
  • Andrew Knight: the 71 year old former chief executive of The Daily Telegraph and 20 year veteran of the News Corp board was Murdoch’s link to Thatcher during the 1980s and considered unlikely to lead a revolt, despite being the only non-executive director based in Britain.
  • Natalie Bancroft: 30 year old European-based opera singer whose selection to represent the former owners of Dow Jones was Rupert’s idea of a joke. Her extended family are furious with Murdoch and publically condemning the hacking scandal, so she could yet stump up the courage to speak out publically.
  • Chase Carey: CEO and deputy chairman who is regarded as inoffensive and supportive, unlike his predecessor Peter Chernin who was more likely to stand up to Rupert and left after opposing the over-priced Dow Jones acquisition in 2007.
  • Lachlan Murdoch: eldest son who quit with a $US10 million payout in 2006 but has remained a director. Sold most of his $US100 million non-voting News Corp share gift to fund other media investments and may have an appetite for revenge on executives such as Fox News boss Roger Ailes who forced him out.
  • James Murdoch: has stuffed his own chances of succeeding Rupert as global CEO and is now focused on staying out of jail. Unlikely to shaft his old man or walk the plank himself.
  • Arthur Siskind: former chief general counsel who first worked for Rupert when he bought a newspaper in San Antonio in the 1970s. Considered an extremely loyal foot soldier to Rupert but is now 72 and retired.
  • Ken Cowley: most loyal Australian operative left at News Corp who ran the Australian division for more than 15 years and joined the company when The Australian was launched in the 1960s. Aged 76 but expected to be loyal to the death.
  • Rupert Murdoch: executive chairman, hardly likely to sack himself.

(It is important to note that Elisabeth Murdoch is only attending board meetings as an observer and will formally join once the controversial $700 million cash payment for her Shine TV production business has settled.)

All these chaps, and Ms Bancroft, may like to consider the fact that News Corp shares have now tanked more than 20% since the peak on July 6.

The stock fell more than 7% in Australia this morning and more than $US10 billion has been wiped out by the Murdoch family’s incompetent handling of the hacking crisis.

As value evaporates all around them, it’s time for the directors to intervene and executive some regime change at News Corp.

Nothing else will satisfy the long suffering independent investors who do own 87% of the company, which is now only worth $36 billion and is in danger of dropping out of the Australian top 10.

* Stephen Mayne is an Australian shareholder activist who has spoken privately to a majority of the existing News Corp directors over the years after asking questions at 10 different News Corp shareholder meetings since 1999.

14
  • 1
    Andrew McIntosh
    Posted Monday, 18 July 2011 at 1:41 pm | Permalink

    Looks like quite the sus parade. No hope of any of them acting out of anything like ethics, I suggest, except maybe Bandcroft who would do better to simply resign and go off to live a blameless life. So it looks like self-interest will out, “in the best interests of the company and the shareholders” if they need a cover.

    You’d have to seriously wonder at the ethics of anyone wanting to involve themselves with this organisation. And that includes shareholders and “long suffering independent investors”.

  • 2
    Meski
    Posted Monday, 18 July 2011 at 2:06 pm | Permalink

    You missed an HP connection - Mark Hurd, ex HP CEO, Chairman, President.

  • 3
    Charles Richardson
    Posted Monday, 18 July 2011 at 2:17 pm | Permalink

    Hi Stephen -
    Nice rundown. One small correction: Aznar is a former Spanish prime minister, not president (Spain is a monarchy).

  • 4
    michael r james
    Posted Monday, 18 July 2011 at 4:41 pm | Permalink

    Even without reading this, and especially after reading it, one confidently knows that there is not a snowflake’s chance in hell of anything happening. It will only be a prospect if things in the UK continue to go badly (and I mean legally, no one in the US cares about UK public opinion) such that it threatened the US operation. This is the reason Les Hinton was sacrificed on Friday. He ran DowJones (WSJ) but his role in the UK during the hacking means he could be considered a felon in the US under the Foreign Corrupt Practices Act. (For the same reasons most observers expect James to go next.) As to the claims News Corp is doing the same dirty stuff in the US (9/11 survivors etc) it is already being disputed by senior Republicans (sensing that their campaign to make Obama a one-term president would be at risk if Fox changed owners?).

    As to Viet Dinh and Tom Perkins, they have flown to the UK to advise Murdoch on legal matters (it may be my ignorance but given the difference in law one wonders how this can work if not actually be counterproductive but Rupe always wants someone he is comfortable with even if it is the wrong person). This duo may have got rid of Carly Fiorina from HP but it doesn’t compare. She was a jumped-up marketing exec whose “great idea” was to spend a fortune on buying Compaq to create (for the moment) the world’s largest PC maker. A vicious price-sensitive commodity market for the world’s largest and best respected tech company? Stooopid. (But for her it represented an area in which marketing could matter…..).

    The main interesting play, perhaps way off-field, lies with Elizabeth. Forget Lachlan, he was not comfortable in News Corp and was humiliated by the likes of Ailes and Chernin, and he doesn’t want to go back to fight these guys — he is not in their league. He is his mother’s son not his father’s. On the other hand Elizabeth is a female Rupert in temperament and might have the motivation. It is hard to see the board really wanting to pass the throne to another Murdoch but if it comes to it Rupe himself can probably arrange it if he wants/needs (even if Wendi doesn’t). They could also accept it knowing that getting rid of her down the line a bit is not so difficult if required.

    But it is probably all moot. Rupe may be 80 but he really intends to live forever. “Rupert Murdoch is probably at his best when he is cornered or when he does have great adversity going against him,” former News Corp. executive Barry Diller said.

  • 5
    bricon
    Posted Monday, 18 July 2011 at 6:03 pm | Permalink

    What a coincidence; the SMH published a VERY similar article to this on their website an hour or so after Stephen Mayne’s article was posted here.

    http://www.smh.com.au/business/worst-is-yet-to-come-for-murdoch-20110718-1hkve.html

  • 6
    AR
    Posted Monday, 18 July 2011 at 6:51 pm | Permalink

    I wonder how many will decide that it is time to resign to spend more time with their wallets, if not families?
    They’ve shown few ethical concerns, as MickRJ above notes, so one can only expect them to look to their (perceived) self interest.

  • 7
    Glenn Brandham
    Posted Monday, 18 July 2011 at 7:41 pm | Permalink

    How quickly we forget that News LTD had a hand in the de-throning and humiliation of the Melbourne Storm. Everything Rupert touches eventually turns to crap. It’s like the Midas touch, only in reverse. I also remember when we had 3 independent newspapers to choose from in Queensland…so long ago. This is why we have Crikey.

  • 8
    Frank Birchall
    Posted Monday, 18 July 2011 at 8:05 pm | Permalink

    A question for Michael James: I can’t understand how Les Hinton (or anyone else) can escape arrest and indictment for a breach of Foreign Corrupt Practices laws merely by resigning from a US based company. If the breach occurred while he was an employee, surely he could not escape liability merely by resigning ex post facto? Maybe Michael is simply making the point that the threat of such indictment was sufficient reason for News to break their links with Hinton; that is, throw him overboard.

  • 9
    william magnusson
    Posted Monday, 18 July 2011 at 8:28 pm | Permalink

    only a token female ?? puts truth to the myth that females are only eye candy in the media

  • 10
    Cynic
    Posted Monday, 18 July 2011 at 9:14 pm | Permalink

    When I worked for a Murdoch controlled business, they were always very good at ferreting out anyone who was critical in any way of the “clan” or stood up to the sycophants who called themselves “leaders” - some of them listed above. Pity they aren’t as good at ferreting out people within the organisation who break the law and have no morals or ethics. I guess it’s hard to admit the truth when your whole life has been a series of lies, back-stabbing and arse kissing. Don’t you sort of feel sorry for these board members? Despite all the money they have been paid, they now know that every person see and talk to every day, including their spouses, children and relatives, knows that they are low-life scum, who would sell out their grandmothers if it pleased Rupert.

  • 11
    michael r james
    Posted Monday, 18 July 2011 at 9:15 pm | Permalink

    @FRANK BIRCHALL Posted Monday, 18 July 2011 at 8:05 pm

    Frank, the goal is not for Hinton to escape prosecution — indeed he went to the UK to face the music — but for News Corp (the US master company) to avoid the Foreign Corrupt Practices laws being applied to them. Since the rogue employee no longer works for the organization and is no longer in the US, blah blah.
    Though technically you may be right, in that some commentators are suggesting the US AG could pursue some people thru extradition from the UK. In practice I don’t know if they do that when the law is really about organizations and their fitness for operating in the US.

    However, there is a terrific article in the NYT tonight: a few extracts:

    (nytimes.com/2011/07/18/business/media/for-news-corporation-troubles-that-money-cant-dispel.html?)
    In the case of News America Marketing, its obscure but profitable in-store and newspaper insert marketing business, the News Corporation has paid out about $655 million to make embarrassing charges of corporate espionage and anticompetitive behavior go away.
    “In 2009, a federal case in New Jersey brought by a company called Floorgraphics went to trial, accusing News America of, wait for it, hacking its way into Floorgraphics’s password protected computer system. The complaint summed up the ethos of News America nicely, saying it had “illegally accessed plaintiff’s computer system and obtained proprietary information” and “disseminated false, misleading and malicious information about the plaintiff.”
    It settled with Floorgraphics for $29.5 million and then, days later, bought it, even though it reportedly had sales of less than $1 million.
    .
    The plaintiff, Valassis Communications, had already won a $300 million verdict in Michigan, but dropped the lawsuit in exchange for $500 million and an agreement to cooperate on certain ventures going forward.

  • 12
    michael r james
    Posted Monday, 18 July 2011 at 9:26 pm | Permalink

    Monsieur Cynic (at 9:14 pm) I think you seriously overestimate the ability of these Fortune-500 corporate board members to care about such things. This stuff described in my last post smells very similar to what Microsoft did regularly for several decades. Indeed they were often convicted of unfair business practices but still managed to continue as if nothing happened.

    You are obviously a bed-wetting bleeding-heart liberal: (more from the same NYT article)

    News America was led by Paul V. Carlucci, who, according to Forbes, used to show the sales staff the scene in “The Untouchables” in which Al Capone beats a man to death with a baseball bat. Mr. Emmel testified that Mr. Carlucci was clear about the guiding corporate philosophy. According to Mr. Emmel’s testimony, Mr. Carlucci said that if there were employees uncomfortable with the company’s philosophy — “bed-wetting liberals in particular was the description he used” Mr. Emmel testified — then he could arrange to have those employees “outplaced from the company.”

  • 13
    michael r james
    Posted Monday, 18 July 2011 at 9:36 pm | Permalink

    But actually to get back to the point of Stephen Mayne’s article, the NYT piece finished in a manner than confirms my pessimism that News Corp will really change in any way:

    Even as the flames of the scandal begin to edge closer to Mr. Murdoch’s door, anybody betting against his business survival will most likely come away disappointed. He has been in deep trouble before and not only survived, but prospered. The News Corporation’s reputation may be under water, but the company itself is very liquid, with $11.8 billion in cash on hand and more than $2.5 billion of annual free cash flow.

  • 14
    Stephen
    Posted Tuesday, 19 July 2011 at 11:10 am | Permalink

    In other words, Rupert and the poor bastards that share his DNA run the show. This looks more like a university council or a Eurovision song contest than a real corporate board.

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