News Corp executives 'push for Murdoch succession plans'

Directors claim Murdoch must allay shareholder fears as analysts claim strong block wants Chase Carey at helm

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• Dominic Rushe in New York
• guardian.co.uk, Monday 18 July 2011 19.53 BST
• Article history


News Corp chief Rupert Murdoch has apparently been pushed by shareholders to outline succession plans amid the phone-hacking furore. Photograph: Ki Price/AFP/Getty Images

News Corp's independent directors are pushing for Rupert Murdoch to clarify plans for his succession as they move to separate the media mogul's UK problems from the company's US business.

According to executives close to the company, who spoke anonymously, independent News Corp executives have told Murdoch he needs to move quickly to allay shareholder fears that the hacking scandal will spread to the US business.

News Corp's News International stable of UK newspapers, including the now closed News of the World, represents a small part of the media firm's business. News Corp also owns the Fox TV network and 20th Century Fox film studio.

The phone-hacking scandal has already wiped billions off News Corp's value. Shares fell again on Monday as shareholders sold out on the first day of trading following news that former News International chief executive Rebekah Brooks had been arrested over the weekend.

Claire Enders, founder and chief executive of media researcher Enders Analysis, said there were many factions within the News Corp shareholders. She said there was a strong group that would like to see Chase Carey, News Corp's chief operating officer, officially designated as Murdoch's successor. "For them this is a great opportunity," she said.

Shareholders were closely watching how Rupert Murdoch and his son James answer questions about the scandal in parliament tomorrow. But Enders said it would be foolish to write off the Murdochs. "Right now everyone is holding their breath," she said.

In the US she said there was "a lot of sturm und drang" but as yet no concrete evidence that the scandal would hit the US business.

"The stock price is collapsing. There's a lot of disquiet among shareholders, but it is all wait and see," she said.

Enders predicted News Corp's shares would bounce back sharply if Chase was named successor.

The scandal has already cost News Corp two big deals. News Corp's planned takeover of BSkyB has been halted and the company's plans to buy the Formula One racing franchise have also stalled. News Corp had been planning to join a consortium to bid for F1 but F1 boss Bernie Ecclestone has said people might object to a bid from a consortium containing News Corp.

Last week, shareholder Amalgamated Bank filed a new law suit against News Corp accusing the firm of a "complete failure" of oversight regarding the allegations of phone hacking at the News of the World.

Jay Eisenhofer, co-lead counsel to shareholders, said: "News Corp's behaviour has become an egregious collection of nepotism and corporate governance failures, with a board completely unwilling to provide even the slightest level of adult supervision. The result has been a piling on of questionable deals, a waste of corporate resources, a starring role in a blockbuster scandal, and a gigantic public relations disaster. It is way past time that the News Corp board step in and initiate serious changes to the company's corporate governance."

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