Rupert Murdoch could be facing a coup. If a recent report from Bloomberg is correct, at least some of the independent directors of News Corp. have, due to the phone hacking scandal that is engulfing the company and taking down some of its senior-most executives, begun asking "whether a leadership change is needed."
Fortunately for Murdoch, he's built himself something of a firewall. Of the 16 voting members currently on the board, three are Murdoch family members—there’s Rupert himself, of course, along with his sons James and Lachlan—and another four are current News Corp. executives. (Elisabeth Murdoch, whose Shine Group was just purchased by News Corp., is expected to join the board as a voting member at some point, though the current scandal may delay that move a bit.)
But even those seven presumably reliable votes don’t get Rupert Murdoch an automatic majority. So he’s stacked the rest of the board with loyalists and puppets. Many have ties with Murdoch that stretch back decades—and involve mutually beneficial financial transactions.
"It's an open secret, a joke inside News Corp., that the board is designed to be obsequious to Rupert," a source close to the company says.
As directors of a multinational media conglomerate, these people should have legitimately independent voices, be leaders in their fields. Until he retired from it in January, the Washington Post Company, for example, had Warren Buffett on its board. News Corp. has a 31-year-old aspiring opera singer.
That said, there are a few people on the board who, if they have a mind to, could pose a real threat to the Murdoch family and its control of News Corp. Here's a look at the board members who aren't Murdochs or current News Corp. executives:
Viet Dinh: It's no surprise that, according to Bloomberg, Dinh is one of two directors leading the anti-Murdoch forces. A former government employee now in academia, Dinh—who serves as chairman of the board's corporate governance committee—isn't likely to have the kind of bank account that can easily absorb a lawsuit that involves personal liability on the part of the board members. Plus, having served as an assistant attorney general during the George W. Bush administration, Dinh, 43, is no stranger to privacy issues surrounding phone calls—he was the primary author of the Patriot Act. Currently a law professor at Georgetown University, where he steers the Asian Law and Policy Studies Program, Dinh got his law degree from Harvard and served as a clerk to former U.S. Supreme Court Justice Sandra Day O’Connor.
Thomas Perkins: Perhaps the most independent of the “independent” directors, Perkins is reportedly the other leader of the move against Murdoch. And, if he is, he has reason to be working with Dinh. When Perkins resigned from Hewlett-Packard’s board in 2006 over a separate phone hacking scandal, Dinh was his lawyer.
Perkins has more substantive business experience than some of his fellow directors: In 1972, he founded the venture capital firm Kleiner Perkins Caufield & Byers. An early Silicon Valley investor, the firm reached a deal with Google in 1999—buying 20 percent for $25 million. Perkins, 79, joined the News Corp. board in 1996.
Formerly married to romance novelist Danielle Steel, Perkins is well acquainted with scandal—in 1996, he was convicted of involuntary manslaughter after a lethal collision involving a yacht he was racing.
Kenneth Cowley: A native Australian, Cowley is an old Murdoch cohort. He spent 16 years—until 1997—serving as News Corp.’s director of Australian operations. Trouble struck in 1996 when Cowley fell out of Murdoch’s good graces following an election in Australia in which incumbent Prime Minister Paul Keating was defeated, thanks in part to Murdoch’s publications. Keating has said that Murdoch called him the day after the vote to apologize, saying, “[W]e got it wrong: correction—Ken got it wrong.” A year later, Cowley was out of his position at News Corp., replaced by Murdoch’s son Lachlan. Still, he’s been sitting on Murdoch’s board for over three decades—it's something of an honorary position, given by Murdoch to a discarded executive.
Sir Rod Eddington: The former CEO of British Airways. In 1997, Murdoch appointed him chairman of the now extinct Ansett, an Australian airline in which News Corp. had acquired a major stake. The airline went under four years later. Murdoch named Eddington deputy chairman of News Limited in 1998—he ascended to the News Corp. board the following year. Currently, Eddington is the chairman of the board’s audit committee, which came under scrutiny last spring when it approved the Shine acquisition. Currently, a shareholder lawsuit contends that News Corp. investors overpaid to acquire Elisabeth Murdoch’s company—and that the board failed to question Rupert Murdoch while he treated the company “like a wholly owned family candy store.” And yet with critical questions being asked about the actions taken on his watch, Eddington is in Australia, a long way away, perhaps to be actively engaged in these issues in any kind of serious fashion.
Andrew S.B. Knight: A newspaper man after Murdoch’s own heart, Knight was editor of The Economist in the 1970s before he began leading the charge to revitalize the suffering Telegraph Group in 1985. Under his stewardship, the Daily Telegraph soon became the best selling broadsheet newspaper in England. Knight was chief executive and editor-in-chief of the London Daily Telegraph Group from 1986 until 1989. Murdoch admired the great work Knight was doing and, in 1990, Murdoch named him chairman of News International—the British arm of Murdoch’s newspaper empire, now enmeshed in the phone hacking scandal. The following year, Knight joined News Corp.’s board. Knight, who chairs the board’s compensation committee, was once Murdoch’s right-hand man. Now, though, he's a castoff, like Cowley, his continuing place on the board something of a gesture from Murdoch.
Natalie Bancroft: Perhaps the best example of how Murdoch has rigged the game. Bancroft, 31, an aspiring opera singer whom Murdoch handpicked to be the only woman on the board. (At the company's annual meetings, Murdoch is often asked about the lack of female representation on the board; once, in rehearsing his answer to that question, he quipped, "They talk too much.")
Bancroft has her seat thanks to her family’s decision to sell Dow Jones & Company and The Wall Street Journal to News Corp. One condition of the deal was a guaranteed seat for a Bancroft family member on the board until 2018. “At the time, she was literally the least equipped person to do that job,” a Bancroft family member told Adweek. “This nice girl had never had any involvement in any family business.” According to the family member, Natalie Bancroft’s appointment was seen by her family as a “ploy by Rupert”—he kept to the letter of the deal, but it was all for show. When a reporter asked Bancroft in 2008 whether she was planning to get an MBA to help prepare her for the position, she responded, “In journalism?”
Jose Maria Aznar: The former prime minister of Spain. When his tenure as prime minister ended, in 2004, the conservative politician was appointed a distinguished scholar in the practice of global leadership at Georgetown University in Washington, D.C. Aznar, 58, joined the News Corp. board in June 2006.
John Thornton: Thornton—the former president and co-COO of Goldman Sachs—represents Murdoch’s fascination with Asia, particularly China. He grabbed Murdoch’s attention around 1994, during a transaction in which the banker represented a party selling a stake in Star TV, an Asian satellite operator, to Murdoch. After that, BSkyB and News Corp. hired Goldman to broker deals, with Thornton winning business for Murdoch. In 1996, Thornton was named chairman of Goldman Sachs Asia. Now, he’s a professor and director of global leadership at Tsinghua University in Beijing. He's been on News Corp.’s board since 2004.
Peter Barnes: Another Australian, Barnes, 68, spent most of his career with Philip Morris. Prior to retirement, he was president of Philip Morris Asia. He’s also the former president of the Winemakers’ Federation of Australia.