Rupert Murdoch's News Corp. Settles Shareholder Lawsuit for $139 Million
As part of a deal, the company agrees to set up a "whistleblowing hotline" as well as put a "political activity policy" on its website.
News Corp. has agreed to a deal to recover $139 million for shareholder claims over its corporate governance.
The lawsuit was filed in Delaware state court in March 2011 over the company's $214 million purchase of Shine Group Ltd., which was being run by Rupert Murdoch's daughter Elisabeth. It was later amended to include the allegation that the company's board had failed to exercise its duties properly in relation to phone hacking from the company's U.K. newspaper assets.
After several months of mediation, News Corp. and the plaintiffs led by Amalgamated Bank have reached an agreement to resolve litigation.
Beyond the money that News Corp. will get from insurers, the company has also entered into an agreement to establish a Compliance Steering Committee, chaired by a Chief Compliance Officer. The compliance committee will have to report quarterly to the company's audit committee of the board of directors. Last year, Rupert Murdoch announced in a memo that Gerson Zweifach, senior executive VP and group GC at News Corporation, would be appointed as the company's chief compliance officer.
In reaching the new deal with shareholders, News Corp. said in a statement that it "acknowledges the meaningful role the plaintiffs and their counsel played in the Company’s continuing efforts to enhance the important compliance and governance structures and policies that the Board and management of News Corporation have adopted over the last year and are adopting as part of the settlement."
News Corp.'s settlement also includes other facets.
For example, the agreement establishes an "anonymous whistleblowing hotline" at News Corp.
Also, News Corp has agreed to a "political activity policy" which will be posted on the company's websites. As part of this stipulation, News Corp will be required to annually disclose to its shareholders political contributions. The agreement also requires notification to the board of any non-tax-deductable payments of $25,000 or more.
The agreement to take these steps come after the company's U.K. tabloid News of the World was shuttered, Murdoch giving testimony to U.K. parliament about the relationship between the press and politicians, and the company being on the receiving end of more than 500 civil claims. By last August, the tab for the phone hacking scandal had already come to $224 million for News Corp, with further settlements to come.
Although News Corp. has announced a big settlement to resolve derivative claims from shareholders, there are still some hurdles to overcome.
First, the agreement is subject to a judge's approval.
Also, this is just one of several shareholder lawsuits to be lodged against the company.
Around July 2011, there were three derivative lawsuits filed in New York, and against News Corp.'s objection for allegedly being duplicative of the Delaware action, a federal judge in New York refused the company's request to stay those suits.
News Corp. continues to believe that the lawsuits are tied to each other, saying in a memorandum of understanding lodged in Delaware Chancery Court last week that what is being fussed over in New York is duplicative. It says, "Actions arose from the same underlying operative facts and asserted claims that were substantially similar to the claims brought in the Delaware Action."
A hearing on the approval of the settlement will likely take place soon.
E-mail: firstname.lastname@example.org; Twitter: @eriqgardner
Hollywood Goes Broadway
What Hollywood Earns
- Olivier Martinez Supports the Denver Broncos Before Sunday Night Football Game!
- Chloe Bennet Gets All Dolled Up for 'Agents Of S.H.I.E.L.D' PaleyFest - Watch The Full Panel Here!
- Julie Bowen & Zach Braff Support HIV/AIDS Reseach at 'A Time for Heroes' Celebration 2014!
- Kaley Cuoco Wraps Up Ryan Sweeting at Elle Women in Hollywood Celebration