Murdoch Scandal: News Corp.’s Motley Board of Directors
Are the children, cronies, and pushovers on Rupert Murdoch’s board rebelling—or just covering their backs?
For the first time since an ethics scandal erupted at one of its London tabloids, News Corp. enjoyed a period of relative stability Wednesday. No more of Rupert Murdoch’s employees were arrested, and the tycoon’s testimony before Parliament—though terse, awkward, and interrupted by a foam-pie attack—had the effect of calming the markets, as News Corp. shares climbed for the second day in a row.
Though further disclosures could hit at any moment, attention now turns to how Murdoch might exit the crisis—and to his relationship with the board that in theory oversees the company. Because Murdoch owns about 40 percent of News Corp.’s Class B voting stock, its directors effectively answer to him, and he has packed the board with pushovers; even so, the ineptness of his handling of the scandal until Tuesday had led to reports of restlessness among the directors’ ranks. On Tuesday, the independent directors hired a well-known defense attorney and a former U.S. attorney general to protect shareholder value and guard against liabilities.
The mixed signals reflect the mixed nature of the board that Murdoch faces. Their accomplishments range from national presidency to opera roles; some have spent their careers at News Corp., while others merely share with Murdoch an affinity for superyachts. What the 15 have in common is that they are on the board because Murdoch wants them to be, whether because of fealty, politics, or other avenues of control. With the crisis ongoing but on temporarily steady ground, Murdoch’s grip on these individuals will determine whether he retains his CEO title, and whether he will be compelled to spin off the newspaper divisions he holds dear. Here are the directors Rupert is wrangling:
JOSE MARIA AZNARFormer prime minister of Spain
As a two-term head of state (1996-2004), Aznar has amassed no shortage of contentious moments to go along with his achievements. He strongly backed George W. Bush in the run-up to the war in Iraq in 2003, promising suspicious Spaniards that weapons of mass destruction would be found.
NATALIE BANCROFTOpera singer
Bancroft, 31, is the unlikeliest News Corp. director. When Murdoch bought Dow Jones from the Bancrofts for $5 billion in 2007, he agreed to give the family a seat on his board. But the squabbling clan missed its deadline while debating an activist representative, and so Murdoch instead tapped Natalie Bancroft, who had no experience in business or journalism.
PETER BARNESChairman, Ansell Ltd.
Barnes had a long career at tobacco giant Philip Morris, eventually heading up its Asia division as president. He is now the chairman of Ansell Ltd., the $1 billion Australian “protection solutions” company, which sells medical supplies, industrial gloves, and a range of condom brands, including Jissbon, Blowtex, and LifeStyles.
CHASE CAREYDeputy Chairman, President, and COO, News Corp.
The fabulously mustachioed Carey rejoined News Corp. in 2009 from DirecTV, where he was CEO for six years. There, he doubled the broadcaster’s revenue but also agreed to pay a record fine to the Federal Trade Commission for “Do Not Call” list violations. Carey thrived in his first stint at News Corp. (1988-2002) as a key architect of Murdoch’s U.S. television network.
KENNETH E. COWLEYChairman, R.M. Williams Holdings
Cowley, 76, is the director with perhaps the oldest ties to Murdoch. For 30 years he ran the company’s news operation in Australia, where the News Corp. empire was born, eventually handing the reins off to Lachlan Murdoch in 1997. He is now chairman of an Australian apparel company.
DAVID F. DEVOECFO, News Corp.
DeVoe, 64, is the least well known News Corp. director. Now the company’s chief financial officer, he has been a News Corp. executive since 1990, with stints at its various business units. In the 2010 midterm election campaign, DeVoe gave the maximum contribution to six Tea Party-approved candidates, plus $1,000 to a Democrat, Kirsten Gillibrand.
VIET DINHLaw professor, Georgetown University
One of the newer members of the News Corp. board, Dinh is best known for writing the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, better known as the Patriot Act. The Wall Street Journal’s James Taranto floated his name as a potential Supreme Court justice in 2005. Dinh is said to be one of two directors agitating against Murdoch.
ROD EDDINGTONNon-Executive Chairman for Australia and New Zealand, J.P. Morgan
A longtime Murdoch friend and member of the board, Eddington reportedly advised Shine Group, a company run by Murdoch’s daughter Elisabeth, as News Corp. was arranging its purchase this year. That acquisition is the subject of a lawsuit by a group of shareholders. Eddington was formerly the CEO of British Airways and on the board of Rio Tinto, the $60 billion mining giant.
JOEL KLEINExecutive VP, News Corp.
A Democrat, Klein is a former Justice Department attorney who worked in the Clinton White House and ran the New York City school system for eight stormy years. Yet he and Murdoch are mutual admirers. Having joined News Corp. last year, Klein now makes considerably more money than he did in the public sector; his base salary, according to a filing, is $2 million, on top of a $1 million signing bonus and $1.5 million in annual incentives.
ANDREW S.B. KNIGHTChairman, J. Rothschild Capital Management Ltd.
The former editor of The Economist and The Daily Telegraph has served on the News Corp. board for nearly two decades. A Murdoch confidant, he was once considered a possible successor to run the company.
JAMES MURDOCHDeputy COO, News Corp.; Chairman and CEO, News International
In March, Murdoch’s son was promoted to the company’s third highest post, another step closer to eventually taking over from his father as CEO—or so the prevailing News Corp. succession theory goes. James’s involvement in the phone-hacking scandal, and the cancellation of a $12 billion bid for a chunk of satellite broadcaster BSkyB that he had championed, could delay that process or undo it entirely.
LACHLAN MURDOCHExecutive Chairman, Illyria
Although once-favored son Lachlan quit his deputy COO job at News Corp. in 2005, he remains on the board and was paid $1.8 million last year. Lachlan now has his own company, Illyria, and is the interim head of Network Ten, one of Australia’s largest commercial TV networks.
THOMAS J. PERKINSPartner, Kleiner, Perkins, Caufield & Byers
This isn’t Perkins’ first brush with phone hacking. The venture-capital billionaire resigned from the board of Hewlett-Packard in 2006 after learning that the company’s chief executive had allowed private investigators to spy on him and his colleagues. Perkins hasn’t commented publicly on the current scandal, though. He and Murdoch are on rosier terms, having fused their business relationship in the mid-1990s over their mutual love for superyachts.
ARTHUR M. SISKINDSenior Adviser to the Chairman, News Corp.
A longtime Murdoch loyalist and former News Corp. general counsel, Siskin has been a director at the company for 20 years. In 2010, he earned nearly $4 million for his role on Murdoch’s board. Like Aznar and Dinh, Siskind teaches at Georgetown.
JOHN L. THORNTONProfessor and Director of Global Leadership, Tsinghua University of Beijing
A former Goldman Sachs president with a reputation for flashiness, Thornton left the investment bank in 2003 to help start a public policy program at Tsinghua University in China, where he has a host of high-level connections. Murdoch’s ambitions there have drawn accusations that he skews his properties’ news coverage to curry favor with the Chinese regime.