Rupert Murdoch must be pretty used to people calling for his ouster by now. Even before this year's scandal spiraled out of control, protesters picketed News Corp. headquarters fairly regularly, and earlier this year, shareholders sued the media conglomerate for their failure to contain phone hacking practices at their tabloids. But now an influential corporate governance watchdog, Institutional Shareholders Services (ISS), has joined the critics and called for Murdoch to give up management control of his media empire. At the next shareholder meeting on October 21, ISS wants News Corp. shareholders to block the reelection of 13 out of the 15 board members, including Murdoch and his two sons. News Corp. has said they "strongly disagree" this idea, and it's unlikely that ISS will get what they want.
This kind of thing is ISS's bread and butter. In the past, ISS has said similarly condemning things about other massive companies like Google and Apple. As the world's largest institutional investor advisory firm, ISS sets out to keep corporate boards' behavior in check. The New York Times's calls the influence of these kinds of advisory firms "extraordinary," and ISS claims that "its opinions affect the governance decisions of professional investors controlling $25 trillion in assets--half the value of the world's common stock."
Still, Dealbook's Michael J. de la Merced calls ISS's call to arms "largely symbolic," and News Corp.'s quick dismissal of the statement supports that claim. Because corporate governance advisors' opinions really only apply to institutional investors, News Corp. is in a position to completely ignore them. Murdoch himself controls 40 percent of News Corp.'s voting shares, and the second largest single shareholder, Saudi Prince Walid bin Talal (pictured with Murdoch above) who owns 7 percent, has said he doesn't think News Corp. needs new leadership. "At the end of the day News Corp is going to get out of it," said bin Talal in July. "I think Rupert and James Murdoch came very forcefully and strongly and will resolve and clear this mess very quickly and I respect that."
Of course, even symbolic statements make noise. With several on-going investigations into their business practices, News Corp. certainly doesn't benefit from more criticism, and even after the phone hacking scandal dies down, nobody knows that the future will hold for the media conglomerate. At the very least, Murdoch has to be getting pretty annoyed with all of these protests. They're even showing up at his front door now.
This article is from the archive of our partner The Wire.
We want to hear what you think about this article. Submit a letter to the editor or write to email@example.com.