Murdoch takes flak for US move

OCTOBER is proving a difficult month for Rupert Murdoch, who is not used to having his decisions questioned and especially not those about News Corp, the multinational media group he still runs in many ways as if it were the family affair he set up in Adelaide almost half a century ago.

Murdoch's decision to shift the firm's global headquarters from Australia to the corporate-friendly jurisdiction of Delaware in the US has unleashed an avalanche of unaccustomed criticism and demands from shareholders. And they, not Murdoch, will have the final say in a vote on the proposal on 26 October.

Under Australian rules, he and his family are disqualified from voting on the move, which must have 75% support among votes cast.

Murdoch says the relocation is necessary because the company has outgrown its roots and must be centred in the US to compete with its media giant peers and access a larger capital base.

Few question the wisdom of this but many have misgivings about what it will mean to how the company is run.

A raft of Australian domestic investors and international shareholders such as Britain's Hermes pension fund, the Universities Superannuation Scheme and Dutch fund manager ABP have threatened to vote against the move unless the company ensures that Australia's more rigorous corporate governance standards are enshrined in the company's constitution when it moves to Delaware.

With 20% of the company in Australian hands, the country's institutions have found themselves with the whip hand. The Australian Council of Superannuation Investors, which represents 32 pension funds, said it would tell its members to block the deal unless key concessions were made.

Faced with this pressure, Murdoch has agreed to keep parts of Australia's tough corporate governance-standards despite previous arguments that such a move would disadvantage the company when competing with US firms.

Early signs are that he will have his way at the end of the month, but the experience of taking orders will not have been a pleasant one for him and will reinforce his leaning towards issuing non-voting preference stock.

Having gone through the process of being told what to do once, he is unlikely to put himself at shareholders' mercy again.