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News Corp Settles Shareholder Suit with $139 Million – One of the Largest – Without Admitting Guilt
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In 2009 News Corps, which is owned and run by the Murdoch Family, with Rupert Murdoch as chairman and CEO and his sons Lachlan and James sitting on the News Corp Board, ran afoul of Britain Law in a phone hacking and bribery scandal in which many News Corp employees were arrested. This ultimately scrapped the popular tabloid News of the World, but its reverberations are still being felt, as News Corps will now receive $139 million from insurance proceeds in one of the largest settlements ever to be received in a derivative lawsuit, as detailed in a report by Reuters. Shareholders are basically suing for two reasons: because they believe the board refused to investigate alleged phone hacking in order to protect the Murdoch family, and because they think Murdoch used News Corp for political reasons, to give donations to advance his conservative political agenda, which may have broken election laws.

“We are pleased to have resolved this matter,” sad News Corp in a statement as reported in Reuters; pleased indeed, because the settlement indicated that it was not an admission of wrong doing by News Corp. Such slick sorts of settlements are common nowadays, but this one has had the effect of changing corporate governance procedures for News Corps, which will apply to both of the divisions it is making this year, as it breaks into a publishing corporation for the Wall Street Journal and Time of London, and another operation that will manage entertainment, such as Fox News.

  
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The plaintiffs included the labor union owned Amalgamated Bank and the New Orleans Employees’ Retirement System, and they first sued in March 2011 over News Corp’s acquisition of Shine Group Ltd., a company owned by Murdoch’s daughter.

The issues overall concern the corporate governance of News Corp, which independent research firm GovernanceMetric International has consistently given an “F” grade these last six years. Their shares have nevertheless risen 65 percent in the last 12 months.

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