Responding to shareholder questions regarding News Corp.'s controversial $1 million contributions to the Chamber of Commerce and the Republican Governors Association, Rupert Murdoch said the donations were “unusual” and “in the interest of our shareholders and the country.” Murdoch also said that it is “in the interest of the country and of all the shareholders ... that there be a fair amount of change in Washington.”
According to Murdoch and the board of directors -- who took questions from shareholders during the News Corp. annual meeting in New York this morning -- the payments were reviewed by the general counsel. Sir Roderick Eddington, chairman of the audit committee, said he understood shareholders' calls for transparency and Murdoch indicated the company would consider some type of disclosure.
Murdoch also indicated that shareholders would not be engaged in selecting recipients of donations, and that if shareholders disagreed with directors' decisions, “you have the right to vote us off the board.”
When asked specifically about his widely reported comment that News Corp.'s donation to the RGA was a result of his friendship with former Fox News employee and current GOP gubernatorial candidate John Kasich, Murdoch said “I didn't say it had nothing to do with News. Corp. I did make a foolish throwaway line saying -- I was trying to -- candidate Kasich who used to work for us for a number of years.”
Eddington told a representative from the Nathan Cummings Foundation -- which sent a letter to the board of directors earlier this week calling for full disclosure of News Corp.'s political contributions -- that their proposal would be reviewed and that News Corp. would “act expeditiously.”
Transcript after the jump.
CAMPOS: Good morning. My name's Laura Shaffer Campos. I am here on the AFL-CIO Reserve Funds Proxy, and I'm also the director of shareholder activities at the Nathan Cummings Foundation. I have just a quick question for you. As you all know, there have been a number of news reports lately focusing on apparent donations from the News Corporation treasury to both the Republican Governors Association and the U.S. Chamber of Commerce. What we would like to know is: When and how did the board learn of these contributions? Did the board formally approve these payments given their magnitude? And if so, could you please tell us how these contributions further the strategic interests of the company and its shareholders?
MURDOCH: Yes. It is the belief that we also gave a lot of money in our PAC, I think more to the Democrats than to the Republicans. But in these two donations you're speaking of, we judged it to be in the best interest of the company. It has nothing to do with the editorial policies or the journalism or the films or anything else.
CAMPOS: Could you just take a moment and explain how you believed it to be in the best interest, about how you believe it would farther the --
MURDOCH: No, we believe it's in the interests -- we believe that it's certainly in the interest of the country and of all the shareholders and the prosperity of the -- that there be a degree of -- a fair amount of change in Washington.
CAMPOS: Thank you.
MLP STOCKHOLDER: Thank you. Per Holsteit [ph] here on -- as a representative on behalf of the Massachusetts Laborers Pension Fund. I actually have a question for Sir Roddington [sic] as chair of the audit committee also regarding the news concerning the political contributions. As Chairman Murdoch just indicated, it sounds like the board approved these contributions in advance. But I wonder if you could speak to the press reports that quoted Mr. Murdoch as saying that this actually -- particularly the contribution to the Republican Governors Association -- was a result of his personal relationships, not out of strategic benefit to the company. As a second question, I also wonder if you could speak to how the board analyzed and is prepared to deal with the contributions to the U.S. Chamber of Commerce, which as I believe you know, is engulfed in several scandals right now concerning allegations of tax fraud and potential violations of election law, not just around the foreign money contributions, although obviously that has been large in the media, but there are several other existing claims of election law, so I'm wondering if you could describe to me what the --
MURDOCH: I don't agree with you at all about that, I'm sorry. The -- if you were to read today's Wall Street Journal, you'll read some very reassuring words about the relationship between the White House and the Chamber of Commerce.
MLP STOCKHOLDER: Well, certainly. But I wonder if you could just -- I actually wanted to direct my question to Mr. -- or, Sir, excuse me-- Sir Eddington - just to describe the Board's process in analyzing how it weighed the reputational risk, given that this is a media company and there are very clear concerns about the objectivity of news reporting and the perception that such sizeable contributions -- and I take your point, Chairman Murdoch, that you do, your PAC gives contributions to Democrats as well, but I think you'd agree with me that the relative dollar amounts are very different. So I wonder if you could speak to that Mr. -- Sir Eddington.
SIR EDDINGTON: [inaudible] I think if you looked to contributions, particularly from all our people and [inaudible] and so on, you'd find --
MLP STOCKHOLDER: Well, actually, I have looked at them, my understanding of the numbers is that the two one-million dollar contributions made to the Republican Governors Association and the Chamber of Commerce --
MURDOCH: They were unusual, and we made them because we decided that was in the interest of our shareholders and the country.
MLP STOCKHOLDER: Sir Eddington, can you speak to this at all, as Chairman of the Audit Committee?
EDDINGTON: The Board takes advice from its executives on this, listened to the case, acted accordingly. And donations of this type are also evaluated and reviewed by our general counsel, to make sure they're appropriate in that context as well. And on that basis, as the chairman has said, the donations were made.
MLP STOCKHOLDER: And regarding the potential reputational risk for giving such a sizeable contribution to the U.S. Chamber, which is involved in multiple scandals right now?
EDDINGTON: Well, I think our chairman's answered that particular piece. I understand the issues and the concerns. But I've talked through the process by which these were agreed.
MURDOCH: There are no scandals, there are only allegations, and you should not be stating that as fact.
MLP STOCKHOLDER: The scandals are a fact. I mean, they're being played out in the headlines every day, so --
MURDOCH: No, any allegations, I'm sorry.
MLP STOCKHOLDER: If it's playing out in the headlines, I would argue that that is in fact a scandal, and I'd just, all I would really like to know is what the board's process is in weighing the reputational risk involved. I take your point about the Wall Street Journal piece today, and I welcome that news, but I would like to know how the board evaluated the reputational risk there.
EDDINGTON: As I said, the board takes advice from the management team and considers it on that basis, and also refers it to the company's general counsel, and on that basis the donations were made. I understand the concerns.
MLP STOCKHOLDER: And going forward, then, would you be willing to have greater disclosure to shareholders around political contributions, both the policies and the actual dollar amounts? It's particularly troubling to shareholders that, in particular, the U.S. Chamber contribution was only learned of by shareholders because of a leak to the press. Would the board consider much broader disclosure around shareholder -- around political spending?
MURDOCH: We've considered it from time to time. I don't believe we'll [inaudible] it again, but we'll see.
MLP STOCKHOLDER: Would you be willing to engage shareholders in that process?
MURDOCH: No. Sorry, you have the right to vote us off the board if you don't like that.
MLP STOCKHOLDER: Thank you very much.
LINDBLOM: Good morning. My name is Lance Lindblom, I'm president and CEO of the Nathan Cummings Foundation, and I'm here on behalf of the Nathan Cummings Foundation. Given your statements, Chairman Murdoch, I'd like to address my question to Sir Eddington. First of all, as much as we've been told today, the chair has been quoted in Politico as saying that his one-million-dollar contribution to the Republican Governors' Association, quote, “had nothing to do with News Corp. It was based on his personal friendship with Kasich.” Have you investigated this matter and considered rescission of this contribution? Secondly, how does the board plan to respond to the request put forward earlier by the Nathan Cummings Foundation in a letter to you? Does the company plan to join Time Warner, and other leading countries [sic] in providing full disclosure and board oversight of its political contributions and payments to trade associations and other tax-exempt organizations that are used for political purposes? We trust the chair, but we want to verify. If he's saying that you're making strategic contributions, I don't see any reason why we can't make these completely transparent, so stockholders and the public can judge.
EDDINGTON: My comment and my response to that would be to say I understand the concerns, I understand the call for transparency, and that's something that the board will consider.
LINDBLOM: And in your consideration of the possible rescission of the News Corp. contribution to the Republican Governor's conference, based on the reports, I mean, they may not be true if you'd like to deny them, Chairman Murdoch, that you stated that that contribution had nothing to do with News Corp., and that it was based on your personal relationship with --
MURDOCH: I didn't say it had nothing to do with News Corp. I did make a foolish throwaway line saying I was trying to [inaudible] candidate Kasich, who used to work for us for a number of years.
LINBLOM: Can we -- can you give us any kind of time horizon where we can expect your response to our letter on these matters?
EDDINGTON: My response to that would be to say that we will review it and act expeditiously.