Phone Hacking Scandal: News Corp Gets This Good News
News Corp. (NASDAQ:NWSA) is one step closer to distancing itself from a phone-hacking scandal after a Delaware judge on Wednesday approved a $139-million cash settlement between the company and its shareholders. The case was settled without News Corp. admitting any wrongdoing.
“We are pleased to have resolved this matter,” the company said in a statement. “The agreement reflects the important steps News Corp. has taken over the last year to strengthen our corporate governance and compliance structure.”
The settlement was approved by Vice-Chancellor John Noble, who told the Associated Press it was the largest cash derivative settlement he had ever seen in a shareholder derivative lawsuit, a type of suit in which shareholders file to hold board members and other management officials responsible for damage caused to the company.
The lawsuit, filed by Amalgamated Bank – which owns 455,343 Class A common shares of News Corp., according to the New York Times – alleged that News Corp. directors failed to appropriately act on the News of the World scandal when news of the tabloid’s widespread phone hacking broke in 2011. The company shuttered the popular publication as a result.
Shareholders also alleged company leaders had breached their fiduciary duty by purchasing Shine Group, a TV production company owned by News Corp. founder Rupert Murdoch’s daughter, for $670 million.
Insurance payment from the settlement will go to the company and indirectly benefit shareholders. As part of the agreement, News Corp. will set up an anonymous hotline for whistleblowers to report company misconduct. Company officials also agreed to more oversight of News Corp. operations.
Though the media company is based in New York, it is incorporated in Delaware, where the suit was settled.