Conflict of Interest? Investor Group Cries Foul over News Corp’s New Board Member
2:08 pm, September 9th | by Amy Tennery
News Corp’s decision last week to nominate tech venture capital whiz Jim Breyer to its board has been met with near-universal praise. Breyer is well-regarded as a savvy investor and tech insider who’s made smart moves and supported numerous solid companies.
Of course, for one detractor, that’s exactly the problem.
It would seem, in fact, that there may have been a great deal of overlap between investments the Murdochs have made and those that Breyer (and his firm, Accel) have made over the last several years. To the extent that one firm is wondering whether Breyer will be an advocate for shareholders — or for the Murdochs.
U.S. shareholder lobbying group CtW Investment claims that News Corp knew of Breyer’s history with the company, but failed to make it sufficiently clear to investors when announcing his nomination. Here is just a handful of concerns raised in an open letter to independent director Viet Dinh (sent in a press release today) from CtW:
Since at least 2001, Mr. Breyer and Accel have undertaken a number of investments in companies where News Corp was also an investor, or where individuals linked to News Corp played a prominent role. For instance, both Accel and News Corp were investors in BizTravel.com, a business-oriented travel site that failed in the wake of 9-11. In 2007 Accel, through its joint venture with IDG partners, invested in MySpace China, a subsidiary of News Corp’s MySpace, which at the time employed Wendi Murdoch (nee Deng) as its Chief Strategy Officer. Mrs. Murdoch is the wife of News Corp Chairman and CEO Rupert Murdoch. In 2011, Mr. Breyer and Mrs. Murdoch were both reported to be investors in Art.sy, an art discovery and shopping site… In 2007 and again in 2009, Accel invested in online advertising firm OpenX Technologies Inc., whose chairman Jonathan Miller was appointed Chief Digital Officer of News Corp in 2009.
As you can imagine, the list goes on and on. So, why is this a problem? Well, for starters, CtW argues that shareholders might want a board member who’s not so heavily entrenched in the Murdoch clan. And, well, they kind of have a point. Sure, it’s nearly impossible to ask for board member who hasn’t crossed paths, err, I mean, wallets, with News Corp. But, as CtW puts it, his nomination could do more for the Murdochs than the shareholders:
The selection of Mr. Breyer, who has no investigative experience, no regulatory or law-enforcement background, and no track record of strong, independent leadership at the board’s on which he served, adds nothing to the board’s ability to root out any corrupt and illegal practices or determine how they seemingly went unchecked for so long. Moreover, News Corp has failed to disclose to shareholders the extent of Mr. Breyer and Accel’s past transactions with the company, with News Corp employees, and with Rupert Murdoch and his family.
Again, solid points.
But could CtW’s open letter make waves? That’s up in the air. One must acknowledge the preposterousness, however, of its intended recipient, Viet Dinh, the “independent director” — who also just so happens to be godfather to one of Rupert Murdoch’s grandchildren. Call me crazy, but I doubt Dinh will be sounding any alarms over impartiality toward the Murdochs anytime soon.
On top of that, it would seem that anyone with a few spare minutes and an operating web browser could come to the same conclusions about Breyer that CtW did — so it’s tough to prove News Corp was trying to hide anything. And, let’s be honest, it would appear that pretty much everyone and his uncle invested in Art.sy (Eric Schmidt, Jack Dorsey, etc.) — are all of them in cahoots with News Corp? I would doubt it.
Still, the report goes a long way to prove that News Corp may still be closing ranks around the Murdochs. Yes, Breyer has an interest in the Murdochs succeeding and leaving the phone hacking scandal behind. And that could be precisely the problem.