News Corp. holds talks with CalSTRS, other investors
By Bloomberg | August 19, 2011 12:31 pm
News Corp. COO Chase Carey, reacting to the scandal over phone hacking at the News of the World tabloid, is holding discussions with some large investors, including the $154.2 billion California State Teachers' Retirement System, over governance and other concerns.
West Sacramento, Calif.-based CalSTRS, which held 3.86 million News Corp. Class A shares as of June 30, is among those participating, confirmed Ricardo Duran, a spokesman.
“CalSTRS is involved in the engagement process, which includes sending letters, holding conference calls and meetings, with News Corp. management,” Mr. Duran wrote in an e-mail. “Because this is delicate, we cannot say anything further about our efforts.”
The outreach by News Corp. reflects investor concern over succession plans for Chairman and CEO Rupert Murdoch, the use of capital and family control of the company following the scandal, two people with knowledge of the situation said.
Mr. Carey, Mr. Murdoch's second-in-command who also holds the title of president, and David DeVoe, the company's CFO, are conducting the briefings, according to a fund manager who wouldn't discuss the matter publicly and isn't planning to take part.
Julie Henderson, a spokeswoman for News Corp., declined to comment.
The $235.9 billion California Public Employees' Retirement System, which was aware of the discussions, won't be participating, said Brad Pacheco, a spokesman for the Sacramento-based fund. CalPERS owns 5 million Class A non-voting and 1.38 million Class B voting shares, according to Bloomberg data.
Last month, after the Guardian newspaper in the U.K. reported News Corp.'s now-defunct News of the World tabloid had hacked the voice mail of a murdered schoolgirl, the company hired consultant Sard Verbinnen & Co. to survey investors.
Since then, executives including Mr. Murdoch and his son James, News Corp.'s deputy COO, have faced questions about the accuracy of testimony they gave to a British parliamentary panel investigating the hacking and the company's response to it.
In an earnings call on Aug. 10, News Corp. addressed some of the investors' concerns, including who might succeed Mr. Murdoch as CEO. Mr. Murdoch controls the company through ownership of almost 40% of the voting stock.
“I hope that the job won't be open in the near future,” Mr. Murdoch said. “Chase is my partner. If anything happened to me, I'm sure he'll get it immediately if I went under a bus. But in the end, succession's a matter for the board.”