- The Washington Times - Tuesday, September 28, 2004

LONDON DAILY TELEGRAPH

Rupert Murdoch’s master plan to make News Corporation one of the United State’s largest companies has run into opposition from shareholder advocates.

A group representing Australian pension investors Monday said it would advise members to vote against Mr. Murdoch’s plan to switch the incorporation of the Adelaide company to Delaware.

While the recommendation from the Australia Council of Superannuation Investors is only advisory, it is a blow to the Murdoch family, which is enduring the rare experience of seeing its company’s fate in the hands of others.

Under Australian law, the family is prohibited from voting on the proposal, which needs 75 percent support to succeed and is designed to put News Corp. on the S&P; 500 index.

Australian institutions own 19 percent of the company, giving them a critical role. They prefer Australian corporate law, under which an investor who buys 20 percent of a company must make a bid for all the shares.

News Corp. has declined to take the rule with it to the United States, believing that investors would not be disadvantaged by Delaware corporate law, which is used by most large U.S. companies.

The ACSI said the plan had left many Australian investors with an “unsavory odor of further entrenchment of the board and management’s hegemony in News Corp.”

ACSI President Michael O’Sullivan told the Sydney Morning Herald: “We cannot accept that adhering to higher standards of corporate governance than the average American company can be a negative to the cost of capital or any other critical consideration.

“If you reincorporate in Delaware, the board and the major shareholder gets a bigger accretion of power and a greater ability to do what they want to do without having to refer it to shareholders, and that’s very attractive to them.”

Consulting firm Corporate Governance International also has complained about the move.

For years, News Corp., which owns the Times and Sun newspapers in Britain and controls broadcaster BSkyB, has been criticized for having poor corporate governance, including a complicated structure and a lack of independent directors.

Mr. Murdoch has sought to overturn this image by improving relations with institutions and the press and by appointing independent chairmen to the audit and compensation committees.

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