12-07-2011, 01:37 PM
Shareholder Lawsuit: Phone-Hacking Scandal Caused 'Immeasurable Damage To News Corp.'s Goodwill'
July 11, 2011 3:38 pm ET by Joe Strupp
A group of News Corp. shareholders led by Amalgamated Bank has sued the media company claiming several of its business decisions, as well as the recent phone-hacking scandal at News of the World, have adversely affected shareholder interests.
The lawsuit claims, among other things, that "News Corp executives are ... grossly overpaid, ensuring their loyalty to Murdoch and his personal initiatives," later stating that Murdoch is "larding the executive ranks of the Company with his offspring."
Among the lawsuit's complaints: the company's purchase of Elisabeth Murodoch's Shine Group has harmed the shareholder value; the board as it is comprised has numerous conflicts of interest; and the phone-hacking scandal has hurt the company's reputation and investor value.
"In sum, these acts will cause a direct harm to News Corp shareholders by diluting their ability to influence the Company through the exercise of the shareholder franchise because a greater percentage of the Board will be completely beholden to Rupert Murdoch's wishes," the lawsuit, filed Friday, stated in part. "In contemplating, planning, and/or affecting the foregoing conduct, Murdoch and the other Defendants were not acting in good faith toward News Corp shareholders, and breached or will breach their fiduciary duties owed to them. As a result of these actions, News Corp shareholders have been and will be damaged."
The 94-page lawsuit seeks unspecified monetary damages, a determination that News Corp. board members "breached their fiduciary duties to the Company," and to block the appointment of Elisabeth Murdoch to the News Corp. board, claiming that would also be a violation of fiduciary responsibilities.
"News Corp.'s behavior has become an egregious collection of nepotism and corporate governance failures, with a board completely unwilling to provide even the slightest level of adult supervision," Jay Eisenhofer, co-managing director of Grant & Eisenhofer and co-lead counsel on the lawsuit, said in a statement.
The lawsuit specifically cites the recent phone-hacking scandal as a major element in the dilution of shareholder value, stating:
The filing is a continuation of a complaint filed in May that initially targeted News Corp.'s purchase of Shine Group, according to a release from the plaintiffs' attorney.News Corp. declined comment to Media Matters on Monday.
http://mediamatters.org/blog/201107110018
July 11, 2011 3:38 pm ET by Joe Strupp
A group of News Corp. shareholders led by Amalgamated Bank has sued the media company claiming several of its business decisions, as well as the recent phone-hacking scandal at News of the World, have adversely affected shareholder interests.
The lawsuit claims, among other things, that "News Corp executives are ... grossly overpaid, ensuring their loyalty to Murdoch and his personal initiatives," later stating that Murdoch is "larding the executive ranks of the Company with his offspring."
Among the lawsuit's complaints: the company's purchase of Elisabeth Murodoch's Shine Group has harmed the shareholder value; the board as it is comprised has numerous conflicts of interest; and the phone-hacking scandal has hurt the company's reputation and investor value.
"In sum, these acts will cause a direct harm to News Corp shareholders by diluting their ability to influence the Company through the exercise of the shareholder franchise because a greater percentage of the Board will be completely beholden to Rupert Murdoch's wishes," the lawsuit, filed Friday, stated in part. "In contemplating, planning, and/or affecting the foregoing conduct, Murdoch and the other Defendants were not acting in good faith toward News Corp shareholders, and breached or will breach their fiduciary duties owed to them. As a result of these actions, News Corp shareholders have been and will be damaged."
The 94-page lawsuit seeks unspecified monetary damages, a determination that News Corp. board members "breached their fiduciary duties to the Company," and to block the appointment of Elisabeth Murdoch to the News Corp. board, claiming that would also be a violation of fiduciary responsibilities.
"News Corp.'s behavior has become an egregious collection of nepotism and corporate governance failures, with a board completely unwilling to provide even the slightest level of adult supervision," Jay Eisenhofer, co-managing director of Grant & Eisenhofer and co-lead counsel on the lawsuit, said in a statement.
The lawsuit specifically cites the recent phone-hacking scandal as a major element in the dilution of shareholder value, stating:
The egregious conduct triggering this stunning turn of events was not limited to reporters. Former News Of The World employees involved in the phone hacking have indicated that at least two editors-in-chief of the paper were aware of and condoned the hacking in order to obtain news stories that would drive readership.
Rebekah Brooks ("Brooks"), a very close friend of Murdoch and his family who has repeatedly been promoted by Murdoch (most recently to the position of Chief Executive Officer of News International), and Andy Coulson ("Coulson"), a Murdoch political ally and a close friend of Brooks who became an aide to British Prime Minister David Cameron, both were editor-in chief of the paper while the illegal hacking was on-going and have been linked to explicit knowledge of the practice. Coulson, in fact, has been arrested on suspicion of phone hacking and making payments to police and faces criminal indictment for his conduct.
These revelations should not have taken years to uncover and stop. These revelations show a culture run amuck within News Corp and a Board that provides no effective review or oversight.
The suit also cites various business decisions by the News Corp. board of directors as being harmful to investors, including the takeover of Elisabeth Murdoch's Shine Group:Rebekah Brooks ("Brooks"), a very close friend of Murdoch and his family who has repeatedly been promoted by Murdoch (most recently to the position of Chief Executive Officer of News International), and Andy Coulson ("Coulson"), a Murdoch political ally and a close friend of Brooks who became an aide to British Prime Minister David Cameron, both were editor-in chief of the paper while the illegal hacking was on-going and have been linked to explicit knowledge of the practice. Coulson, in fact, has been arrested on suspicion of phone hacking and making payments to police and faces criminal indictment for his conduct.
These revelations should not have taken years to uncover and stop. These revelations show a culture run amuck within News Corp and a Board that provides no effective review or oversight.
The Transaction made little or no business sense for News Corp, and is far above a price any independent, disinterested third-party would have paid for Shine.
Further, even if the pricing was proper or there was some business justification for News Corp to acquire a start-up, niche television production company, there was no reason for News Corp to acquire Shine specifically, except to enrich the Murdoch family, perpetuate the family's involvement in the senior management of News Corp, and further tighten Murdoch's control over the Company. Nevertheless, the Transaction was rubberstamped by News Corp's Board at Murdoch's urging. That is how Murdoch and the Board have interacted for years.
The Board's acquiescence to Murdoch's desire to benefit his daughter, and the Company' willingness to overlook transgressions on the part of Murdoch protégés is nothing new. Throughout his tenure, Murdoch has treated News Corp like a family candy jar, which he raids whenever his appetite strikes.
The lawsuit, filed in the Court of Chancery of Delaware, is being done on behalf of Amalgamated Bank and several pension funds it represents, according to plaintiff attorneys. The plaintiffs own 835,000 News Corp. shares.Further, even if the pricing was proper or there was some business justification for News Corp to acquire a start-up, niche television production company, there was no reason for News Corp to acquire Shine specifically, except to enrich the Murdoch family, perpetuate the family's involvement in the senior management of News Corp, and further tighten Murdoch's control over the Company. Nevertheless, the Transaction was rubberstamped by News Corp's Board at Murdoch's urging. That is how Murdoch and the Board have interacted for years.
The Board's acquiescence to Murdoch's desire to benefit his daughter, and the Company' willingness to overlook transgressions on the part of Murdoch protégés is nothing new. Throughout his tenure, Murdoch has treated News Corp like a family candy jar, which he raids whenever his appetite strikes.
The filing is a continuation of a complaint filed in May that initially targeted News Corp.'s purchase of Shine Group, according to a release from the plaintiffs' attorney.News Corp. declined comment to Media Matters on Monday.
http://mediamatters.org/blog/201107110018
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"He would, wouldn't he?" Mandy Rice-Davies. When asked in court whether she knew that Lord Astor had denied having sex with her.
“I think it would be a good idea” Ghandi, when asked about Western Civilisation.