Shareholders Question News Corp’s contribution to Chamber, RGA

By Dennis Yedwab

The embarrassing revelation that News Corp donated $ 1 million each to the Republican Governors Association and U.S. Chamber of Commerce has created more problems for the company than just bad press stories. Shareholders have begun to express their concerns about the use of News Corp’s corporate funds to promote partisan attack ads. In advance of the annual shareholders’ meeting for News Corp., two shareholders have publically questioned the company’s decision to donate $2 million in corporate contributions to these two organizations that have run millions of dollars in attack ads this year.

The Nathan Cummings Foundation, wrote a letter to the board of News Corp objecting to the donation of $1 million each to the Republican Governors Association and the U.S. Chamber of Commerce.   In a press release accompanying the letter, Nathan Cummings expressed serious concern about Murdoch’s statement:

“that the Company’s $1 million contribution to the RGA was not made to further the interest of News Corp. or its shareholders, but was a result of his personal relationship with Republican gubernatorial candidate, John Kasich.” 

And also expressed concern about the “reputational risk for News Corp. connected to the $1 million contribution to the U.S. Chamber, which has recently come under fire for alleged tax fraud and potential violations of federal election laws.”

In the letter, the Foundation called for complete disclosure of all political contributions by the company and stated, “there are clear reputational risks involved in political expenditures – particularly for a news media company – and unnecessary potential for abuse of corporate treasury funds to further the personal political agendas of corporate management.”

In addition, F&C Asset Management, a London-based shareholder, will vote against the re-election of Sir Rod Eddington, News Corp’s audit committee chairman to protest the decision to make those contributions.  Karina Litvack, head of governance and sustainable investment at F&C said, “We are concerned to see the company deploy shareholder funds for activities that are best left to the individuals whose views they reflect and are not obviously a business matter for the company…While it is perfectly reasonable for companies to engage in policy debate on specific matters that affect their business, there needs to be a clear and transparent process to ensure that such activities serve the interests of shareholders. There is no evidence of a political contributions policy or process at News Corp.”

As the Guardian reported, F&C Asset Management’s decision “reflects wider unease among some investors about Murdoch's donations to the Republican Party.”  Murdoch had admitted to Politico that he made the donation to the RGA because of his friendship with Ohio Republican gubernatorial candidate John Kasich. He also acknowledged that he expected the donation to the Chamber to remain secret.