Ever since the Fairfax family lost control of their media empire 25 years ago, the Murdochs and the Packers have unequivocally been the two most powerful families in Australia.

Indeed, with the emergence of Fox News and Rupert Murdoch’s ongoing influence over British politics since the rise of Margaret Thatcher, it’s hard to name any other global family that wields more power than the Murdochs.

The key to that power is board and voting control of both News Corp and 21st Century Fox. This is delivered by a gerrymandered capital structure, which denies a vote to 66% of the shares on issue.

Glenn Dyer reported in Crikey on Friday that News Corp shareholders went perilously close to voting in favour of an advisory resolution to unwind the dual-class voting structure at last Wednesday’s 24-minute AGM in New York.

The extraordinary voting results were belatedly released early on Friday morning, but it was surprising and disappointing that none of the major Fairfax newspapers bothered to report the unprecedented shareholder revolt in their Saturday print editions.

It was left to the reliable Murdoch booster Darren Davidson to opine in The Weekend Australian that protest votes were bad for business.

Perhaps the most instructive way to look at the data is to strip out the Murdoch family’s 78.7 million voting shares, and see how the independent shareholders view the controlling family and their compliant directors.

After 90% of voting independents opposed the Murdoch gerrymander in 2014, the number came in at 88.9% this year, with 10.926 million votes joining with the Murdochs to support the dual-class capital structure, while 87.83 million votes backed the call to unwind the power grab.

The so-called independent directors who back the gerrymander — and who also back the undemocratic poison pill, which prevents anyone else controlling more than 15% of the votes — also proved to be exceedingly unpopular, only surviving after support from the Murdoch voting bloc.

Here is how all 12 of the directors would have fared without Rupert’s near-40% voting power saving their bacon.

Ranking the directors by popular independent vote

Robert Thomson, CEO: 64.5% in favour.
Rupert Murdoch, co-executive chairman: 60.8% in favour.
Masroor Siddiqui, new director: 49.81% in favour.
Elaine Chao, Republican Party royalty: 46.91% in favour.
Ana Pessoa, new independent director:  46.1% in favour.
James Murdoch, incoming CEO: 45% in favour.
Lachlan Murdoch, co executive chairman who was silent at AGM: 41.51% in favour.
Peter Barnes, veteran audit committee chair: 40.86% in favour.
Joel Klein,
exec director responsible for Amplify losses: 40.73% in favour.
Natalie Bancroft, Rupert’s hand-picked Dow Jones family rep: 25.4% in favour.
Jose Maria Aznar, former Spanish president who leads defence of gerrymander: 23.1% in favour.
John Elkann, new director with poor attendance record: 16.5% in favour.

In other words, without Rupert’s key voting support, 10 of the 12 directors would have been defeated, representing a shareholder revolt of unprecedented proportions for an ASX-listed company.

Darren Davidson contentiously suggested in Saturday’s paper that the protest votes against the directors were bigger last year.

Natalie Bancroft suffered the biggest protest in 2014, with 60.7 million votes against. This year, however, three of the protests were above 70 million, with the man who runs the Agnelli empire in Italy, John Elkann, topping the unpopularity stakes with 79.5 million votes against his re-election.

Even on the News Corp remuneration report, Davidson tried to claim it “received overwhelming support”. Strip out the Murdoch family voting for more largesse on top of the circa $1 billion in salaries they secure, and the remuneration report was actually supported by just 60.94% of the directed votes — hardly overwhelming.

If you want to see what real overwhelming support looks like, check out the voting results from last year’s Crown Resorts AGM when 93.3% of voted shares approved James Packer’s pay practices at the time, even though he wasn’t able to vote his controlling stake under Australian law.

It may be a slightly different story at Crown’s 2015 AGM in Melbourne on Wednesday now that James Packer is reportedly drawing an annual salary of $10 million.

This will be a major topic at the AGM along with this quite remarkable exclusive in The Weekend Australian by Damon Kitney and Christine Lacy revealing that James Packer has given his sister Gretel more than $1 billion to separate their financial affairs.

Sharri Markson had more detail in The Australian’s Media Diary today.

Given that new Crown Resorts chairman Rob Rankin was prepared to be quoted extensively on the circumstances that led to this deal, here’s hoping they will open up further at the AGM, which James Packer is expected to attend.

Sibling buy-outs are not rare. After Rupert almost sent News Corp broke in 1990-91, he agreed to buy out his three sisters and gave them about $600 million through the balance of the 1990s.

Rupert also shelled out about US$600 million to his four adult children several years ago when they agreed to cut Wendi Deng’s two daughters with Rupert into the inheritance.

However, the 84-year-old remains obsessed with retaining personal power over the empire.

James Packer has a more honourable story to tell, having spent real cash securing a majority stake in Crown without any voting rorts. He’s also never drawn a salary from Crown until recently and is even prepared to let someone else serve as chairman.

However, with his sister Gretel now out of the picture as an independent billionaire, it is not clear what would happen if James Packer fell under the proverbial bus, given his three children are so young.

With Rupert, it is clear that power would pass to his four adult children, but with no mechanism to break any two-two deadlock, one can only guess how that situation would play out.

Peter Fray

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