Investors gun for Murdoch ahead of NewsCorp AGM | business | Hindustan Times
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Investors gun for Murdoch ahead of NewsCorp AGM

business Updated: Oct 14, 2011 21:41 IST
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The European edition of The Wall Street Journal accounts for less than 1% of total business at its parent company, the News Corporation. But the controversy this week over an unorthodox circulation deal that resulted in the resignation of the newspaper’s publisher could influence investors already concerned about ethical practices at the company ahead of its annual shareholder meeting next Friday.

“No news of impropriety at News Corporation is a blip when they’re under such scrutiny,” said Doug Creutz, a senior research analyst at the Cowen Group. “This adds to the general question of how the company is run.”

Rupert Murdoch is the chairman and chief executive of News Corporation, and his sons James and Lachlan have large roles in the company.

The publisher of The Wall Street Journal Europe, Andrew Langhoff, had resigned on Tuesday after an internal investigation revealed a circulation deal with a Dutch company under which it bought thousands of copies of The Journal each day for as little as one euro cent, bolstering its circulation.

The Dutch company allegedly got two positive articles in exchange for its financial support, and further investigation into the deal is not unlikely, the bureau that audits newspaper sales in Britain has said.

Still, comparing circulation practices to phone-hacking is “apples to oranges,” said Barton Crockett, director and senior media analyst at Lazard Capital Markets.

“All sorts of magazines and newspapers boost circulation,” Crockett said. “You can’t expect that the board of directors would be auditing circulation practices at The Wall Street Journal Europe at a company the size of News Corporation.”

According to Reuters, Hermes Equity Ownership Services, the shareholder advisory service affiliated to Britain’s largest pension fund, has urged investors to vote against all Murdoch family re-elections to News Corp.

“We have a battle on our hands to demonstrate the strength of shareholder opposition because so many shares are held by the family or by people affiliated with the family,” Jennifer Walmsley, Hermes equity’s director, said. NYT