Murdoch Defends Poison Pill Strategy

Oct 21, 2005  •  Post A Comment

News Corp. Chairman and CEO Rupert Murdoch said Friday that he and the News Corp. board had shareholders in mind when they extended by two years the company’s poison pill provision, saying the move was designed to prevent someone from snapping up shares without paying a premium for them.

“This was to protect the small shareholder from being tricked into giving up control of the company at a low price,” said Mr. Murdoch, speaking at the company’s annual shareholders meeting in New York.

The poison pill issue has become a bone of contention in some quarters of News Corp.’s shareholder base, and it is one element in the closely watched negotiations that are taking place between Mr. Murdoch and Liberty Media Chairman John Malone, who a year ago snapped up enough shares in News Corp. to boost Liberty’s stake to 18 percent.

Mr. Malone’s move caught News Corp. officials off guard as it made Liberty the largest shareholder in News Corp. behind Mr. Murdoch and his family. Since then, both sides have been in on-again-off-again discussions about how best to unwind Liberty’s stake in News Corp.

As an insurance policy, News Corp.’s board late last year adopted a poison pill provision designed prevent any single shareholder from acquiring a controlling stake in the company. In August, the board voted to extend the poison pill another two years-raising the hackles of some investors who believe the issue should have been put to a shareholder vote.

“We have continued to have a friendly discussion with Liberty, and didn’t want to poison the waters by putting [the poison pill extension] to a vote,” Mr. Murdoch said.

While News Corp. officials didn’t change their position on the issue and left the provision intact, some shareholders registered their disapproval by withholding their votes for the election of four directors up for re-election. However, those protests did not prevent the re-elections of Peter Chernin, News Corp.’s president and chief operating officer; Chase Carey, CEO of DirecTV; Rod Eddington, CEO of British Airways; and Andrew Knight, director of Rothschild Investment Trust. All were elected to three-year terms.

In other news, Mr. Chernin told shareholders that News Corp. is looking to launch a business-themed cable network sometime in 2006, but repeated previous comments that such a move will hinge on getting a number of cable operators on board in terms of carriage. “We’re making progress,” he said.

Meanwhile, Mr. Murdoch said that the company-at least for now-is satisfied with the collection of Internet assets that have been acquired in recent months, and that despite talk a few weeks ago about the possible acquisition of a Web search company, there is no such deal on the horizon at the moment.

“It’s something that is under consideration, but it’s not necessarily the way to go,” he said. “There are no firm plans to extend beyond what we have done. We’re OK where we are.”