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News Corp. insurers pay $139M in shareholder suit
Tuesday - 4/23/2013, 9:10am EDT
NEW YORK (AP) -- News Corp. has reached a $139 million settlement in shareholder lawsuits over the British phone hacking scandal and the controversial purchase of an entertainment company run by founder Rupert Murdoch's daughter.
The company also said Monday that it has agreed to corporate governance reforms including a whistleblower hotline and an annual review of the independence of current and prospective board members. The reforms will remain in place through at least 2016.
The insurers backing News Corp.'s board will pay the company $139 million to settle the lawsuits. The cash, after subtracting fees for the plaintiffs' lawyers, will benefit shareholders indirectly by going into the company's coffers.
It will go part of the way to covering some of the $346 million the company has spent so far on probes related to the hacking scandal, which burst into the open in the summer of 2011. The company is still dealing with the fallout. Last week, Fergus Shanahan, executive editor at News Corp.'s Sun newspaper in Britain, was charged with authorizing bribes to a government official.
Shareholders had also argued that News Corp. overpaid when it bought Elisabeth Murdoch's Shine Group, a TV production company, for 290 million pounds, then worth about $470 million, in April 2011.
Mark Lebovitch, a head lawyer for the plaintiffs, said the money and the corporate governance reforms were significant.
"If you compare the company's governance and compliance today to where it was when the lawsuit was filed, you would see some really significant improvement," Lebovitch said.
In one example of the changes, News Corp. in August named its general counsel, Gerson Zweifach, as its chief compliance officer, a position mandated in the settlement.
The reforms don't change News Corp.'s dual-class share structure, which allows CEO Murdoch to control the company through the 40 percent of voting shares he controls through a family trust.
News Corp. is preparing this summer to split into two companies -- one containing its newspaper and publishing assets, and the other containing its TV and movie properties -- and the settlement resolves an issue that had been hanging over the company without it having to admit to wrongdoing.
"We are pleased to have resolved this matter," the company said in a statement.
News Corp. shares rose 43 cents, or 1.4 percent, to close at $31.64 Monday.
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