News Corp is bracing itself for a dramatic showdown with shareholders and new revelations of surveillance tactics by some of its UK journalists at its annual meeting in Los Angeles on Friday.
Major U.S., British and Australian pension funds will be joined by street protesters and tenacious British member of parliament Tom Watson in keeping up the pressure in calls for the removal of founder Rupert Murdoch and his sons from the board.
Watson, the British MP who forensically probed Murdoch's and son James's roles in a hacking scandal at News Corp's News of the World newspaper at a parliamentary inquiry in July, flew into Los Angeles this week to attend the meeting. He is representing 1,669 shares of nonvoting stock held by the AFL-CIO labor union.
He told Reuters that he would reveal new details of surveillance tactics beyond phone hacking that was used by journalists at its News International UK unit.
He declined to reveal details ahead of the meeting, which begins at 1 p.m. ET though it is not guaranteed that he will be able to speak on the rostrum during the meeting.
I want to leave institutional investors with no doubt about the criminal wrongdoing that took place at this company, Watson said.
He said shareholders should see that a $32 billion media conglomerate like News Corp could not continue to be run like a dysfunctional family business.
I think Rupert Murdoch is nearing his Rosebud moment, he said in a reference to the 1941 Orson Welles film Citizen Kane about a fictional media mogul modeled on real-life U.S. newspaper baron William Randolph Hearst.
News Corp is struggling to keep a lid on the fallout in the wake of the phone hacking scandal at the News of the World which has rocked the company to its core.
Since Murdoch has 40 percent control of News Corp's voting B shares and is supported by the next largest holder, Saudi Prince Alwaleed bin Talal, it is unlikely that Murdoch, his sons James and Lachlan or any other long-time serving director could get voted off the board.
However, corporate governance watchers will focus on whether the board receives a much lower share of the vote than it would normally expect. A significantly lower vote could force some sort of board shake-up in coming months. Details of the vote might not become clear until early next week.
Among the many concerns for Murdoch aides is the strong possibility of further reputation damage and embarrassment even though the event is being carefully staged in Murdoch's own backyard at Zanuck Theater on the Fox Studios lot in Hollywood. It is a change from previous AGMs in recent years at public venues in New York City such as the Asia Society.
Also present will be protesters from a group called Avaaz who had previously campaigned against News Corp's withdrawn bid to take full control of UK satellite operator BSkyB. There were early reports of increased police presence around the Fox lot.
News Corp will be trying to avoid a similar incident as when Murdoch was physically assaulted with a foam pie during the parliamentary committee meeting this summer.
Avaaz Campaign Director Emma Ruby Sachs said over a thousand Avaaz supporters launched a phone blitz on shareholders asking them to fire the Murdoch Mafia.
(Reporting by Yinka Adegoke in New York. Additional reporting by Lisa Richwine in Los Angeles. Editing by Robert MacMillan)