News Corp. reached a $139 million settlement this week with shareholders over the company's phone-hacking scandal and its acquisition of television production company Shine Group.
Under the memorandum of understanding (MOU) reached April 17, which is still subject to court approval, News Corp. also has agreed to continue to enhance its global compliance structure and corporate governance program. As part of the settlement, these enhancements will be adopted by both companies that emerge out of the separation of News Corporation after its pending split. These changes will remain in place until at least Dec. 31, 2016.
“We are pleased to have resolved this matter,” the company said in a statement. “The agreement reflects the important steps that News Corporation has taken over the last year to strengthen our corporate governance and compliance structure and we have committed to building on those efforts going forward.”
News Corp. said the settlement is not an admission of wrongdoing.
The settlement resolves a number of related complaints filed in 2011 and 2012 by shareholders against News Corp.'s directors, which were consolidated into one legal action. The original complaint filed in March 2011 in Delaware Chancery Court claims the board breached their fiduciary duties by allowing News Corp. to acquire Shine in 2011 for $480 million in cash. Shine was founded in 2001 by Elisabeth Murdoch, daughter of Chairman and Chief Executive Officer Rupert Murdoch.
“In addition to larding the executive ranks of the company with his offspring, Murdoch constantly engages in transactions designed to benefit family members,” the complaint stated. “Throughout his tenure, Murdoch has treated News Corp like a wholly-owned family candy store.”
In July 2011, shareholders amended the complaint alleging breaches of fiduciary duty relating to the phone hacking scandal and the related shuttering of its infamous British newspaper, News of the World.
According to News Corp., the $139 million will come from insurance policies held by defendant board members.