NewsCorp Fights Aussie Investors Over Delaware Move

01 October 2004

The sensitivities of Australia's institutional investors are seemingly not at the top of News Corporation's agenda – at least not if they stand between the clan Murdoch and its ambition to see the family business make it onto America's S&P 500 list [WAMN: 29-Sep-04].

To achieve that end it is necessary the group be incorporated within US shores, where the state of Delaware is especially noted for its hospitable climate to large corporations.

Inclusion on the S&P list and incorporation stateside (as opposed to the Australian city of Adelaide, NewsCorp's domicile for several decades) will, the group claims, improve its access to the world's largest capital market and eliminate a trading discount to its US media peers.

But the Australian Council of Superannuation Investors, the nation's main corporate governance body, has voiced its opposition to several of the changes proposed by NewsCorp and urged it to amend its US by-laws to reflect Australian boardroom guidelines – especially that which requires any single investor amassing more than 20% of company stock to bid for the remainder of the shares.

But patriarch Murdoch is having none of it. His spokesman and elder son Lachlan told the Australian Financial Review: "We don't believe [the] American corporate governance regime is any weaker than the Australian corporate governance regime. We can't see any evidence of that whatsoever."

He argued: "To try to cherry pick aspects of Australian corporate governance and put it into an American company just doesn't work, and will be to the detriment of what we're trying to do – become an American company."

In order to shoehorn through the changes, NewsCorp needs a minimum of 75% of the votes cast plus approval from at least 50% of all shareholders. But there is just one small hurdle standing between the clan and a fait accompli at the annual meeting next month.

Although the Murdoch family controls 30% of NewsCorp voting stock, under Australian law they are not permitted to vote on the issue. And the ACSI has advised its members – who collectively account for around 19% of the group's stock – to vote against the proposal.

Fortunately for the Murdochs, the ACSI's advice is not mandatory and members are free to vote as they choose. A Murdoch family charm blitzkrieg is reportedly imminent!

Data sourced from Financial Times; additional content by WARC staff