News Corp. Chief Faces Angry Investors

(The Wall Street Journal) - Rupert Murdoch, chairman and chief executive of News Corp., on Friday faced shareholders for the first time since a phone-hacking scandal at its UK newspaper unit embroiled the company and heightened criticism of what some see as a lack of independent oversight.

Murdoch, speaking at the annual shareholders meeting in Los Angeles, said the current board and management "will stop at nothing to get to the bottom of this and put it right." He said the unit at the center of the scandal represents a small piece of an otherwise healthy company that is outperforming its peers.

"We cannot just be a profitable company," Murdoch said. "We must be a principled company."

A number of shareholder advisory firms and groups holding voting shares of News Corp. have been critical of the company for what they say is a board that is too closely tied, personally and financially, to the company to properly oversee it. Several investors telegraphed plans to withhold votes from some members of the board, including Murdoch and his two sons, Lachlan and James. News Corp. said it would release the vote tallies later today.

Christian Brothers Investment Services, a fund manager for Catholic organizations, submitted a floor resolution seeking to strip Murdoch of his chairmanship and appoint an independent board chairman, a resolution several institutional investors said they supported.

"I really expected the board to make some sweeping changes" in the wake of the phone-hacking crisis, Julie Tanner, assistant director of socially responsible investing at Christian Brothers, said in an interview. "But it hasn't."

Tom Watson, a British member of parliament who has spearheaded parliament's probe into phone-hacking and other allegations at News Corp.'s UK newspaper unit, appeared at the meeting Friday and said the company is potentially facing more damaging allegations about computer hacking.

Murdoch said he was unaware of the allegations but that News Corp. is cooperating with police on all such rumors.

Also on Friday, News Corp. said it had reached a financial settlement with the family of Milly Dowler, the murdered British schoolgirl whose phone messages were intercepted by the company's now-defunct News of the World newspaper in pursuit of scoops. Under the agreement, News Corp. will pay the family £2 million ($3.2 million) and will donate £1 million ($1.6 million) to charities chosen by the family.

News Corp. is the parent company of The Wall Street Journal and NewsCore.

Source: The Wall Street Journal