Transcript 2007 News Corp AGM

July 22, 2011

News Corp AGM:
New York, October 2007

Has Rupert ever been elected a director?

Stephen Mayne: I've got some questions on the individual directors.

Rupert Murdoch: could you just hold up for a little while?

Stephen Mayne: sure

Rupert Murdoch: on the direction?

Stephen Mayne: yes on the directors

Rupert Murdoch: we've declared them...

Stephen Mayne: you haven't asked for any questions on the election of any of the directors

Rupert Murdoch: if you want the votes, I can tell you

Stephen Mayne: chairman I have to say that you are running a slightly unusal AGM here. We have an agenda.

Rupert Murdoch: right.

Stephen Mayne: the first of which is the election of 5 different directors. Now normally wouldn't you say, we're now dealing with the first director, I'm up for election, I'll hand over to neutral chair because this concerns me, are there any questions, let's talk about the proxies and let's have a vote.

Now I know I'm from Australia and it might be different here, isn't that the normal way to do it, rather than...

Rupert Murdoch: yes, but if you want to speak for 3 minutes go ahead.

Stephen Mayne: I've questions on some of the different directors up for election and you're first on the ballot. So my first question to you chairman is, when were you last elected?

Rupert Murdoch: I imagine 3 years ago.

Stephen Mayne: you went for many many years in Australia without an election, and when I asked you two years ago when you were last elected, you said you couldn't remember because you didn't have to be elected in Australia. Now I don't ever recall you being elected at the annual meeting 3 years ago. As far as I'm concerned I can't find any records of you ever being elected. Now 2 years ago when I asked you said you didn't remember, now you're saying it happened 3 years ago. Which is right?

Rupert Murdoch: I didn't say I've never been elected I said I didn't recall.

Other boardmember: and not only that, it didn't happen at an annual meeting, it happened as part of the special vote for the reincorporation.

Stephen Mayne: So the whole board was re-elected as part of the move to America, but in regular AGM 3 year terms, chairman when were you last elected?

Rupert Murdoch: at that time.

Stephen Mayne: Have you ever been elected in regular AGMs, you have been CEO for 55 years of publicly listed company, have you ever been elected as a director or re-elected as a director?

Rupert Murdoch: Mr Jacobs can you answer that?

Arthur Jacobs: it occurred at the reincorporation in November 2004. If you look at page 87 on the information memorandum, you will see that each of the directors then serving as directors of the Australian company, were elected in 3 different classes. Mr Murdoch was part of a class 1 director that was to serve until the 3rd annual meeting, succeeding the reincorporation.

Three years did not elapse until this meeting date. So consequently he was elected as part of the reincorporation procedure in November 2004. This is the first annual meeting he is required to stand for election and he has done so.

Stephen Mayne: thank you Arthur. Now we have established that Rupert was elected as a director when we reincorporated to America as part of the EGM. Now my question. In the 55 years of annual general meetings of News Corporation, when were you last elected?

Arthur Jacobs: Mr Mayne, look, you know the corporation law in Australia. The managing director of an Australian corporation is not required to stand for election. Mr Murdoch through all those was managing director of News Corporation Ltd, which was the name of the company at that time, he was never required to stand for election, and you know that. Don't ask silly questions.

Stephen Mayne: Arthur, it is not a silly question. The chairman of Australian companies are required to be elected. Every other Australian executive chairman of note, James Packer, David Clark - Macquarie Bank, Kerry Stokes - Channel 7, every billionaire, every prominent executive chairman in Australia, is re-elected every 3 years. The exemption relates to chief executives only.

When Rupert fired our former non executive chairman in 1991, he became the executive chairman. At that point, he should have been re-elected every 3 years, and there is no other prominent executive chairman in Australia who hasn't.

So my simple question is, he didn't do the right thing in Australia and I'm simply asking a question of historical fact, has Rupert ever been re-elected at an annual meeting of this company? Whether that be News Ltd up until 1979, or News Corporation since then.

Rupert Murdoch: I have been re-elected today.

Stephen Mayne: So I think from all this, the answer is that the world's longest serving chief executive, the most powerful businessman in the world, who's News Corporation for 55 years, has never ever been elected by shareholders.

So we should all celebrate today. Today is history! Rupert 's up for election and congratulations, I think with your 32% of the shares, chairman you will get back. I would simply say that I think you shouldn't have been so paranoid over the years to avoid election. It's terrific they we're finally having an election, as you are probably the world's oldest and longest serving CEO of a major company, are you intending to serve a full 3 year term?

Rupert Murdoch: Absolutely!

Stephen Mayne: At any point are you considering going non executive, which is what Frank Lowy has in Australia has just done?

Rupert Murdoch: It is not my intention, but it will be up to the board.

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Jousting with Rupert Murdoch over my shareholder resolution

Stephen Mayne: I've come over from Australia for this meeting today, to support a resolution proposing that we get rid of the dual class structure of our capital base. I also would like Rupert to speak on the other resolutions, but I will just give you a quick two minutes on this resolution. Could you advise the proxies on this resolution first please. What's the current proxy positions? You've got the proxy results up there...

Rupert Murdoch: yes.

Stephen Mayne: could you just inform the meeting to what they are.

Rupert Murdoch: at the appropriate time we will announce the results - yes.

Stephen Mayne: So you can't do it now?

Before I speak, I think that this resolution has probably been quite well supported, and I would just like the meeting to know what the figure so we can talk to that.

Rupert Murdoch: yes, it was supported by 22.9%, which is 184 million shares, and opposed by 620 million.

Stephen Mayne: did Mr Malone oppose it or support it, do you know?

Rupert Murdoch: well if he voted, he certainly would have voted against it because he has more shares than 184 million.

Stephen Mayne: right, okay. My point is, if you take out Rupert's shares and Mr Malone's shares I think you'll find that's getting close to 50% of the neutral or independent shares supporting the resolution.

Rupert Murdoch: opposing the resolution. yes.

Stephen Mayne: sorry, supporting the resolution. If you take your shares ...

Rupert Murdoch: yes.Yes.

Stephen Mayne: what I am saying is, I think there is a lot of merit in moving to a one class stock company, because all of us B-class shareholders aren't currently in the S&P500.

So when Rupert first proposed the move to America, the big selling point for us Australians was that we would all get our stock in the S&P 500, but under the S&P's rules, only the most populous stock is allowed in the index. That's the non-voting share.

So all of us shareholders are sitting here with voting shares that aren't represented in the S&P 500 Index, so the simple argument would be if we went to a one class stock company, we would have a billion shares added to the index, and we would get a re-rating. The argument goes that now that Malone is off the register, Rupert doesn't need to be so paranoid about someone taking the company over.

I mean Rupert is an absolute legend. He's the longest serving CEO in the world. He's done 55 years straight - he's an amazing guy, no one's going to sack him.

The paranoia of having a two class company, is that Rupert is basically saying that I don't trust our shareholders. I think that they might vote me out, and we all suffer a lower share price for that.

If we have one vote, one share, rather than a gerrymander which sees 70% of the shares on issue not have the vote, then sure Rupert would come down to 15% from the 40% post the Malone deal, but that would actually cause a re-rating of the stock price.

So I'm actually proposing something that will probably make Rupert a billion dollars. The share would probably go from $A26 to $A30 because you would instantly get a takeover premium pricing of the stock. We get the index re-rating of having the B-class shares in the index, and Rupert could stand there and say I stand here on my record. I don't need to hide behind a gerrymander where only 30% of the stock on issue has the vote.

So I am simply saying to you Rupert, stand on your record. Trust yourself. You are not going to get the sack, no one is going to take you over. The company is worth $60 billion, Malone is neutralised. You've bought The Wall Street Journal, we now tell everyone else how to behave with The Wall Street Journal, but we're running a capital structure which is frankly, embarrassing - which is a gerrymandre.

Look at what has happened with the New York Times over the last 2 years. They've suffered a fairly substantial campaign against them on this very point. Don't have a dual class structure. So if we are trying to take on the New York Times with The Wall Street Journal, let's make the first move. Let's take the corporate governance high ground and actually go one vote, one value.

Frank Lowy, who is the third richest bloke in Australia, did that 3 years ago - the guy behind Westfield, the world's biggest shopping centre company. He went down from 30% to 10%, and no one has taken him over, no one has sacked him - he's still there and shares have been re-rated.

So I simply say Rupert, trust yourself, back your record, you are a legend, you have had a great career, no is going to sack you, so why not go one vote, one value, and actually makes yourself another billion dollars? Thank you.

Rupert Murdoch: Thank you very much. Well based upon the proxies already received I happy to inform the meeting, that a majority of the votes cast, have already been voted in favour of the re-election of each of the directors nominated.

In favour of the ratification of the appointment of Ernst & Young LLP. Against the stockholder proposal regarding the annual election of directors, and against the stockholder proposal regarding the elimination of the company's dual class capital structure.

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Transcript 2007 News Corp AGM

July 22, 2011