News Corporation reached a $139 million settlement in a lawsuit filed against its board, alleging that the media giant’s top brass put chairman and CEO Rupert Murdoch’s interests before those of the company.
A group of shareholders, suing on behalf of the company, settled a class suit filed in Delaware two years ago claimed the board failed to prevent the phone-hacking scandal in the U.K. and negotiate a fair price for the acquisition of Shine Group, a TV production firm owned by the boss’s daughter, Elisabeth Murdoch.
The board put in place new rules, appeasing the plaintiffs, last year.
News Corp. will recover $139 million in insurance proceeds.
“We are pleased to have resolved this matter,” News Corp. said in a statement on Monday. “The agreement reflects the important steps News Corporation has taken over the last year to strengthen our corporate governance and compliance structure and we have committed to building on those efforts going forward.”
The News of the World tabloid, the main antagonist in the phone-hacking debacle, was shuttered in July 2011, months after Murdoch bought Shine in an all-stock deal worth about $675 million.
The settlement comes ahead of a planned split of News Corp.’s holdings into two publicly traded companies, which will both be chaired by Murdoch. The lucrative television and film studios will break off into 21st Century Fox, while the namesake company will carry on as the owner of the Wall Street Journal, the Times of London, HarperCollins, Dow Jones & Co. and other publishing entities.
“The Board’s utter failure to curb Murdoch’s use of the Company’s money to pursue his own agenda reflects that Murdoch completely controls the majority of the Board, including the Audit Committee,” the suit, a copy of which was obtained by FishbowlNY, alleged. “The Directors — all Murdoch family members, long-time friends, News Corp. executives, or people with extensive business relationships with Murdoch and his media empire, consistently place Murdoch’s interest ahead of those of News Corp. and its public shareholders.
The suit was led by Amalgamated Bank, the Central Laborers Pension Fund and City of New Orleans Employees’ Retirement System and counsel Bernstein Litowitz Berger & Grossman and Grant & Eisenhofer P.A. on behalf of the company.