Some investors are calling for the ouster of Rupert Murdoch as chairman and CEO of News Corp. — and even the removal of members of his family from the board of directors — following the now-infamous phone hacking scandal.
In a typical company hit by such a scandal, the ouster of the CEO by the board, under pressure from shareholders — especially institutional shareholders — would be likely. But at News Corp., shareholders are not likely to be able to force the departure of Mr. Murdoch unless he is proven to have known about and tolerated the phone hacking by reporters or if the company is found to have broken U.S. law and he knew about it.
For a number of reasons, shareholders unhappy with News Corp. would be better advised to sell their stock rather than try to persuade the board to dump Mr. Murdoch.
First, through a family trust, Mr. Murdoch and his children own 38.4% of the company's class B shares, the only class of shares with voting rights. Second, his three children also serve on the board, and since he brought the other members on board, they are unlikely to turn on him. Third, he built the company from scratch into a hugely successful media conglomerate, and he no doubt will fight to retain control of it.
Finally, the second biggest shareholder, Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud of Saudia Arabia, reportedly has declared his support for Mr. Murdoch.
Mr. Murdoch will leave the scene eventually, perhaps even in the near future, but he also will fight to make sure it is on his own terms and in his own time.