News Corp. to Put Poison Pill to a Vote
NEW YORK – News Corp. (NWS), the media conglomerate controlled by Rupert Murdoch, has reached a settlement with a group of shareholders who sued the company over its handling of a "poison pill" anti-takeover defense.
Lawyers for the shareholders said Thursday that News Corp., in a reversal, told them it would put the poison pill to a vote at its annual shareholder meeting in October. The company had previously said its board had been within its rights to change its mind about the requirement of a vote to extend the provision.
News Corp. is the parent company of the Fox News Channel, which operates FOXNews.com.
The tentative settlement was reached the day before Murdoch was scheduled to be deposed in the case and less than three weeks before a Delaware Chancery Court judge was to begin hearing arguments over the company's decision to renege on a pledge to seek shareholder approval before extending the takeover defense plan.
"This is a great victory for shareholder rights," Stuart Grant, an attorney representing the shareholder group, said in a statement.
News Corp. spokesman Andrew Butcher declined to comment.
The company, which owns the Fox TV network, Fox News Channel, the New York Post and newspapers in England and Australia, put the anti-takeover provision in place in 2004 after Liberty Media Corp., a Colorado-based company controlled by media investor John Malone, suddenly built up an 18 percent stake in News Corp.'s voting stock.
That move came as a surprise to Murdoch and posed a potential threat to his family's control of the sprawling media empire. Murdoch's family owns about 30 percent of the company's voting shares.
Shareholder advocates criticized News Corp. after it extended the poison pill provision without a shareholder vote even though it had earlier said that it wouldn't do so.
The poison pill defense would help the Murdochs to fend off any attack from Malone by allowing Murdoch and other shareholders to acquire shares at a deep discount should Malone move to increase his stake. That would drive up the price of a takeover.
As part of its settlement, News Corp. agreed to make a special proposal at its next annual meeting allowing shareholders to vote on whether to extend the poison pill for two more years. It would also allow the company to extend the pill for an additional year, until October 2009, but only if necessary to address concerns over potential maneuvers by Malone's Liberty Media.
The institutional shareholders suing News Corp. included pension funds in the United Kingdom, Australia and the Netherlands, as well as two U.S. retirement funds, the Connecticut Retirement Plans and Trust Funds as well as a retirement fund for police and firefighters in Clinton, Mich.
Final resolution of the case is subject to approval by Chancellor William Chandler III. Chandler was out of town Thursday, but his office said the trial, which was scheduled to begin April 24, has been taken off his calendar.
News Corp.'s B shares rose 13 cents to close at $18.03 on the New York Stock Exchange.