Rupert Murdoch has finally personally addressed those Crikey News Corp leaks at News Corp’s fiery AGM yesterday.
After just a 27-minute 21st Century Fox AGM on Wednesday, four News Corp shareholders managed to extend proceedings at the company’s AGM at Fox Studios to 40 minutes.
Only six shareholders bothered to go through the rigmarole of registering at the Century Park West car park, and we all thought it was such a joke we got the AAP reporter to take this photo of us after the shuttle bus dropped us back at the parking lot after the meeting finished:
I was the third shareholder to register at 9.15am and scored a private trip on one of the two shuttle buses available, down from four yesterday, when only 10 shareholders showed up.
Having made it through the over-the-top security arrangements, with screening and bag checks at the parking lot and outside the Zantuck Theatre, I tucked into some breakfast and got chatting to fellow shareholder Jim McKenzie.
He agreed the questions regime was paranoid, so he would ask a couple himself and also second my proposed amendment to the rules of the meeting, which would lock in a minimum of 30 minutes of debate and make the two-question limit apply to each of the six resolutions rather than the meeting as a whole.
Audit committee chairman Peter Barnes and the boss of investor relations both popped over for a chat before the meeting and were told that the amendment was coming so the directors of this famous media company themselves would all have to raise their cards and vote in favour of suppressing free speech and public debate.
In the end, I didn’t move the amendment to the meeting rules because the shareholder proposal to end News Corp’s gerrymander changed the dynamics of the meeting and there was an opportunity to have three solid runs at the microphone, which elicited plenty of interesting responses.
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Despite knowing that a BHP-Billiton board tilt against 21st Century Fox independent director Jac Nasser was riding on it, Rupert Murdoch decided to hold the line on the two-minute speaker limit.
Indeed, he cranked it up even more. Listen to the webcast and the first thing you hear is an announcement over the loud speaker reminding everyone of the speaker limitations. This was not done at the Fox AGM.
Bizarrely, the 2013 demerger of News Corp from 21st Century Fox has not led to the two separately listed companies having their own general counsel. The heavy-handed enforcer reported on in yesterday’s Crikey, Gerson Zweifach, was up on the stage doing Rupert’s anti-free speech dirty work again.
Rupert and Gerson are the only two executives common to both companies, and the only other personnel duplication comes from Lachlan and James Murdoch sitting on both boards.
Despite a scheduled News Corp board meeting in LA after the AGM, James Murdoch was a no-show today. Rupert said he had an unbreakable charitable commitment in New York. Poor form.
Bill Dempsey from the Nathan Cummings Foundation, which put up the shareholder proposal to end Rupert’s gerrymander, blasted the three absent directors.
Rupert only had specific reasons for son James but defended the absent John Elkann on the basis that the two men spoke on the phone every week, along with Elaine Chao, the wife of incoming Republican Senate majority leader Mitch McConnell. Rupert said: “I hope she’s having a break after three months of intense campaigning.”
Sounds like Elaine is on the board for her political connections more than her contributions around the board table.
Sadly, for the second straight day, there was no female among the eight suits sitting on the stage. Opera singer and Bancroft family board representative Natalie Bancroft sat silently in the front row.
After five minutes from Rupert and five minutes from CEO Robert Thomson (neither bothered with any slides), Rupert threw to former Spanish President Jose Maria Aznar, to give the board’s defence of his gerrymander.
It was tosh, including that denying the owners of 70% of the shares on issue a vote at the AGM somehow helps News Corp attract and retain top talent.
After that, Bill Dempsey delivered an excellent two minute critique (listen here) on why gerrymanders are a bad idea. He invoked Cuba and North Korea, talked about insiders using them to extract private benefits ($600 million in Murdoch salaries since 1998) and said dual class voting structures delivered lower returns while insulating boards and management from facing shareholder concerns.
Rupert was hoping this issue would be book-ended and we’d then move onto general questions, but I got straight up and spoke strongly against the “abominable gerrymander” for being “fundamentally undemocratic”, allowing things like the $64 million in Murdoch salaries to be expropriated in 2013-14.
“Peter Barnes gave the main answer confirming a bid [for Ten] was on foot, but Rupert piped up with the important caveat that Lachlan was not planning to sell.”
I directly asked Rupert to respond on the issue of why he felt the need to hide behind these undemocratic structures rather than standing on his record in a one vote one value system as his media outlets demand from politicians all over the world.
Incredibly, after Rupert briefly interjected to contest the salary figure, blustering lawyer Gerson stepped in again, providing a detailed response protecting the man who pays him millions but won’t let him serve as an executive director.
Unfortunately, Gerson obviously misheard the $64 million figure and instead referenced the $600 million figure mentioned in the Crikey story, which he had obviously read.
After that, two other shareholders got up on different issues related to dividends, synergies and Amazon legal settlements with book sellers.
Rupert took the opportunity to pump up son Lachlan’s tyres for the original REA purchase for $2 million in 2000. Lachlan was also praised in Rupert’s opening remarks, but once again, for the second day running, the co-chairman was seen but not heard.
I then got up for my two designated questions, which really morphed into half a dozen, based around the general themes of “Australian operations” and “UK operations”.
Goon Gerson continued to run interference but ultimately Rupert played ball, coughing up quite a few gems.
Firstly, when shown a copy of Kim Williams’ book, Rules of Engagement, Rupert said it was “nonsense” that he was fired for launching Chris Bowen’s book last year.
“I don’t want to be unfair to Mr Williams, but if you see those figures which he or someone else leaked to you [he meant Crikey] on the performance of the company in the previous financial year, that tells you everything.”
In other words, Kim Williams was fired because his major restructuring hadn’t worked.
News Corp CEO Robert Thomson dealt with the question on the heavy-handed legal response by News after the Crikey leak, saying it was merely “legal bluster”.
Then came the main news story of the day, which was Foxtel’s bid for Ten. The independent directors through the News Corp audit committee have retained legal and financial advisers because of Lachlan’s 9% stake in Ten, which made it a related party transaction the company.
Peter Barnes gave the main answer confirming a bid was on foot, but Rupert piped up with the important caveat that Lachlan was not planning to sell. Presumably Lachlan will do the same as largest shareholder Bruce Gordon and roll his Ten stake into the Foxtel bid vehicle.
All this will be highly controversial in Australia requiring government, Australian Competition and Consumer Commission, Foreign Investment Review Board, Telstra and Ten shareholder approval. It’s also illegal under the current cross media laws because the Murdochs would be controlling a majority of the newspaper market, the monopoly pay TV provider, a free-to-air network and Lachlan’s Nova radio network.
Why would favourite Murdoch target Clive Palmer vote for that when no other family has such media market dominance in any other country on earth?
If it happens, Lachlan will no doubt be relieved when dad helps take him off the hook to the Commonwealth Bank on that $200 million loan facility that the imploding Ten Network has negotiated and is guaranteed jointly by Lachlan, James Packer and Bruce Gordon.
The final question of the AGM was on the United Kingdom. Rupert proudly declared The Times would make a profit this year, goon Gerson battered away the question about a settlement with the US Department of Justice over phone hacking, and Rupert wisely declined to explain his falling out with Tony Blair, simply declaring that he had never been on the News Corp payroll.