A “lax ethical culture” and “lack of effective board oversight” at News Corporation have made Rupert Murdoch’s chairmanship untenable, according to Christian Brothers Investment Services (CBIS). The major News Corp investor has petitioned other shareholders in the media giant to follow its lead in opposing Murdoch’s position during the run-up to its annual general meeting in October. In CBIS’s view, News Corp should be run by an independent chair.
In its petition, CBIS – which manages around $4bn of investments predominantly by Catholic organisations – also takes aim at News Corp’s dual-class system of shares, in which holders of priority stock have a higher proportion of voting rights than those with common stock.
“It’s time for News Corp to be run for the benefit of all shareholders, not just the Murdoch family,” said the group. “Given the dual-class share structure and level of family control, it is particularly important for News Corp to have an independent chair who is empowered to challenge management, to foster a culture of accountability, and to reflect the interests of the wider shareholder body.”
It is not the first time that CBIS has criticised corporate governance at News Corp, or its subsidiaries. In March, it hailed News International’s announcement that Rupert’s son James had resigned from his post as executive chairman. “The resignation of James Murdoch as Executive Chairman of News International is a welcome small first step in the right direction toward improving the corporate culture at News Corporation, the parent company of News International,” said CBIS assistant director of socially responsible investing Julie Tanner.
“As News Corp shareholders, we remain troubled by what we see as the company’s failure to move quickly and decisively to address and correct the ethical lapses that continue to come to light. This continues to damage the company’s reputation, threaten the value of all shareholders’ investments in the company, and diminish their confidence in management and the board. Yet News Corp still has not implemented substantive corporate governance reforms or management practices, such as establishing robust press standards and a substantive code of ethics.”
At lunchtime on 3 April, news emerged that James Murdoch had stepped down from his other management role as non-executive chairman of BSkyB, in which News Corporation has a 39% stake. This marks his fourth resignation this year: in addition to vacating his post at the helm of News International, Murdoch Jr also resigned seats on the boards of pharmaceutical manufacturer GlaxoSmithKline and auction house Sothebys.