News Corp is being sued by a group of shareholders who allege that a failure of corporate governance is behind the phone-hacking scandal engulfing Rupert Murdoch's media company.
Rupert Murdoch fearful as BSkyB deal in jeopardy after shares take a tumble.
4:11PM BST 11 Jul 2011
2 Comments The lawsuit, filed by Amalgamated Bank and a group of pension funds, accuses News Corp's board of "failing to exercise proper oversight and take sufficient action since news of the hacking first surfaced at its subsidiary nearly six years ago."
The failure of News Corp's board has led to a "piling on of questionable deals, a waste of corporate resources, a starring role in a blockbuster scandal, and a gigantic public relations disaster," said Jay Eisenhofer of Grant & Eisenhofer, the law firm that filed the suit in Delaware.
The legal complaint is an updated version of action that Amalgamated first bought in March, when they accused Mr Murdoch of "rampant nepotism" for paying 415m pounds for Shine, a UK television production company founded by his daughter Elizabeth. News Corp could not immediately be reached for comment.
News Corp's shares plunged more than 6.6pc on opening, as investors digested developments on both sides of the Atlantic.
Rupert Murdoch's biographer had earlier suggested that News Corp could even be mulling a sale of News International in an attempt to calm calls for it to shelve its proposed bid for BSkyB.
Michael Wolff, Vanity Fair contributing editor, tweeted: "#MURDOCHGATE Get out of Dodge strategy being discussed at News Corp: Sell all of News Int."
British Sky Broadcasting had £877m wiped off its value on Monday morning, as shares crashed back to the level of News Corporation's original proposed bid for the company.
Shares in the company fell 7.3pc on market opening to below £7, as the British government asked media regulator Ofcom to consider whether undertakings provided by News Corp to secure a buy out of BSkyB were still credible in light of a phone hacking scandal.
BSkyB's shares have slumped 17pc so far this month, valuing the company at £12.3bn.
UK Deputy Prime Minister Nick Clegg also urged News Corp to reconsider its proposed bid for the company on Monday morning.
Speaking to the BBC, Mr Clegg said the public had “reacted with revulsion” to the allegations of phone hacking at the News of the World adding that Mr Murdoch should "do the sensible thing, reconsider and think again for your bid for BSkyB."
British Sky Broadcasting had £877m wiped off its value on Monday morning, as shares crashed back to the level of News Corporation's original proposed bid for the company.
Shares in the company fell 7.3pc on market opening to below £7, as the British government asked media regulator Ofcom to consider whether undertakings provided by News Corp to secure a buy out of BSkyB were still credible in light of a phone hacking scandal.
BSkyB's shares have slumped 17pc so far this month, valuing the company at £12.3bn.
UK Deputy Prime Minister Nick Clegg also urged News Corp to reconsider its proposed bid for the company on Monday morning.
Speaking to the BBC, Mr Clegg said the public had “reacted with revulsion” to the allegations of phone hacking at the News of the World adding that Mr Murdoch should "do the sensible thing, reconsider and think again for your bid for BSkyB."
http://www.telegraph.co.uk/news/uknews/phone-hacking/8630545/Shareholders-sue-News-Corp-for-failing-to-take-early-action-on-phone-hacking-scandal.html
