Jane Cowan
LOS ANGELES (ABC News / Pacific Media Watch): News Corp chief executive Rupert Murdoch and his sons have faced angry shareholders in its first annual meeting since the News of the World phone-hacking scandal.
The meeting was held amid unprecedented security inside the gated confines of Fox studios in Los Angeles,
Murdoch showed defiance as shareholders slammed the media for poor corporate governance and called for him and his sons to be stripped of their boardroom roles.
He told shareholders there was "simply no excuse" for the phone-hacking scandal and vowed to "put things right".
"We cannot just be a profitable company, we must be a principled company," he said.
The media mogul also heard from British Member of Parliament Tom Watson, who said journalists at the now-defunct News of the World hacked computers as well as telephone voicemails.
Watson claimed a man who had left prison was hired by News Corp and hacked into the computer of a former army intelligence officer.
'Stop at nothing'
"I promise you absolutely that we will stop at nothing to get to the bottom of this," Murdoch said in response to Watson's claims.
Murdoch was feisty in defending his company. At times, he pounded his fist on the podium, but he was generally good natured, smiling and laughing as he interrupted speakers.
At one point, he jokingly defended News Corp's democratic voting process by pointing out that its Fox News channel featured Watson earlier in the day.
"We're fair and balanced," he said using Fox News' well known tagline.
He also said News Corp stock outperformed every one of its peers except CBS Corp in the past six months.
Representatives from major US, British and Australian pension funds and other shareholders criticised the company's ethical practices in the wake of the phone-hacking scandal.
Watson, the British MP who probed Murdoch's and his son James's roles in the scandal at a parliamentary inquiry in July, flew to Los Angeles this week to attend the meeting.
Non-voting stock
He represents 1669 shares of non-voting stock held by the American Federation of Labour and Congress of Industrial Organisations.
"I want to leave institutional investors with no doubt about the criminal wrongdoing that took place at this company," Watson said.
He said ahead of the meeting that shareholders should see that a $32 billion media conglomerate like News Corp could not continue to be run "like a dysfunctional family business".
"I think Rupert Murdoch is nearing his Rosebud moment," he said in a reference to the 1941 Orson Welles film Citizen Kane about a fictional media mogul modelled on real-life US newspaper baron William Randolph Hearst.
SCANDAL PAYOUT
Before the annual meeting confrontation, News International confirmed it would pay $3 million to the family of the murdered girl at the heart of Britain's phone-hacking scandal.
In a joint statement with the family of Milly Dowler, Murdoch said he would personally donate $1.5 million to charities chosen by the family.
He says it "underscores my regret" for the actions of the now-defunct the News of the World.
News Corp is still struggling to keep a lid on the fallout in the wake of the phone-hacking scandal at the News of the World which has rocked the company to its core.
Since Murdoch has 40 percent control of News Corp's voting B shares and is supported by the next largest holder, Saudi Prince Alwaleed bin Talal, it is unlikely that Murdoch, his sons James and Lachlan or any other long-time serving director could get voted off the board.
But corporate governance watchers will focus on whether the board receives a much lower share of the vote than it would normally expect.
A significantly lower vote could force some sort of board shake-up in coming months.
Details to become clear
Details of the vote might not become clear until early next week.
Among the many concerns for Murdoch aides is the strong possibility of further reputation damage and embarrassment even though the event is being carefully staged in Murdoch's own backyard at Zanuck Theatre on the Fox Studios lot in Hollywood.
It is a change from previous AGMs in recent years at public venues in New York City such as the Asia Society.
Also present will be protesters from a group called Avaaz who had previously campaigned against News Corp's withdrawn bid to take full control of UK satellite operator BSkyB. There were early reports of increased police presence around the Fox lot.
News Corp will be trying to avoid a similar incident to the one where Murdoch was physically assaulted with a foam pie during the parliamentary committee meeting in July.
Avaaz campaign director Emma Ruby Sachs said more than 1000 Avaaz supporters launched a "phone blitz" on shareholders asking them to fire the "Murdoch Mafia". - ABC/Reuters
Murdoch takes on shareholders at annual meeting
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