The fallout of the phone hacking scandal was well documented around the time when victims of the now defunct News of the World’s practices were suing it from left, right and centre. But less well known is that shareholders also threw their toys out of the pram when the picture became clear back in 2011.
In a lawsuit in which shareholders sued directors on the company’s board, News Corp has agreed a settlement of $139m, all over which will be claimable on the directors’ insurance policies.
The suit was originally filed by two institutional investors (Amalgamated Bank of New York and the Central Laborers Pension Fund), against directors because of claims that they paid over the odds for UK TV production company Shine Group.
The claimants said that the deal was overpriced and that directors had failed to scrutinise Rupert Murdoch about terms for the purchase. Why does it matter so much? Well, Murdoch’s daughter Elisabeth owned the company, leading some to accuse him of offering an overly sweet deal.
So where does the phone hacking fit in? Well, the two institutions then added to their lawsuit by alleging that the board did not offer any ‘effective review or oversight’ and this was the reason for ‘a culture run amok’ at the News International-owned News of the World.
News Corp said: ‘We are pleased to have resolved this matter. The agreement reflects the important steps [the company] has taken over the last year to strengthen our corporate governance and compliance structure and we have committed to building on those efforts going forward.’
At the height of the phone hacking scandal, questions began to be raised about whether the Murdochs could maintain their vice-like grip on the company – some major shareholders were evidently restive, James Murdoch was ousted from BSkyB after a botched bid to acquire the rest of the company, and media questioning of the Murdochs had never been more intense.
News Corp will no doubt be glad to put this episode behind it. That’s not to say others aren’t still having a go at suing it, however…