Wilmington, Del.—In the wake of the mobile phone hacking scandal and subsequent closing of News Corp.'s News of the World tabloid, a group of institutional investors in News Corp. have amended a lawsuit originally filed against the company in May.
The amended complaint adds alleged failed corporate governance to the original complaint of nepotism in News Corp.'s $615 million acquisition of Shine Group, a company run and majority-owned by News Corp. Chairman Rupert Murdoch's daughter, Elizabeth Murdoch. The plaintiff shareholders in the suit are led by Amalgamated Bank and Central Laborers Pension Fund.
Various news reports have speculated that the phone hacking scandal may also derail News Corp.'s bid for a complete takeover of BSkyB (British Sky Broadcasting Group).
“News Corp.'s behavior 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,” Jay Eisenhofer, co-managing director of law firm Grant & Eisenhofer and co-lead counsel to shareholders, said in a statement. “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.”