The Murdochs are facing yet another multimillion-dollar legal case over their handling of the Trumpian election lie in late 2020. This latest one comes with a bizarre twist for anyone who’s been following the weaponisation of economics over the past half-century — and the leading role the Murdoch media has played in it all.
Suddenly, the Murdochs and their management stand accused of sinning against that most holy writ of neoliberalism: the primacy of shareholder value.
New York City’s big pension funds have ganged up to sue Fox Corporation and its board for their high-risk behaviour, saying the company neglected its duty to shareholders because it opened itself up to ultimately indefensible claims of defamation after it persistently amplified lies about the 2020 presidential election.
The company, they say, wasn’t thinking about the shareholders, the ultimate beneficial owners of the company’s assets who were left paying the bill. They were thinking about how to suck up to Trump and his increasingly hyped-up supporters.
“We are shareholders at a company that, unfortunately, has a longstanding practice of allowing conspiracy theories that its executives and its board know are false to be repeated over and over and over again, despite the very clear and present risk of defamation lawsuits eroding shareholder value,” Brad Lander, New York City’s comptroller, who oversees the pension funds, told his local paper The New York Times.
Now the shareholders have had enough: they’re challenging the Murdochs’ traditional approach to risk management — deny, fight, most humbly apologise, pay up, move on. It’s a ritualised dance that’s served the company well… so far. But now it looks like it’s getting on top of them. After Fox settled with Dominion Voting Systems for about A$1.2 billion and Lachlan dropped his defamation action against Crikey (at a far cheaper payment for costs of $1.3 million), the company was left facing a further (and larger) defamation claim by the Smartmatic election technology company and a later suit by Ray Epps, who’s been centred in a widespread conspiracy theory about the attack on the US Capitol.
And, of course, there’s the continued actions around the UK hacking scandal, now featuring Prince Harry. It’s already cost more than £1 billion — paid by News Corp, but underwritten by Fox in a deal between the family’s two arms.
The pension funds’ case is being launched in the Murdochs’ regulatory jurisdiction of choice: the US state of Delaware, where both the key family-controlled companies — Fox and News Corp — are registered. (The family trust which holds the Murdochs’ shares is legally ensconced in far-off Nevada.)
The details of the pension funds’ case will be released later this week after the company has a chance to redact parts of it.
The Delaware jurisdiction is a mixed blessing for the Murdochs. On the one hand, the judges tend to be business-friendly, leaning away from unnecessary fiddling in management decision-making. On the other, the state tends to take seriously the financial world’s magical thinking — about things like the primacy of shareholder value, for example — as even Elon Musk discovered last year when he was trying to wriggle out of buying Twitter.
The Murdochs have another problem: they’ve already offered up the Roy family’s “blood sacrifice” with the announcement that the company’s Chief Legal Officer Viet Dinh is leaving his post at the end of the year. In 2021 when COVID had nominal CEO Lachlan in Australia and Chairman Rupert sheltered by his then-wife Jerry Hall in the UK, the NYT’s Ben Smith called Dinh “a kind of regent who mostly runs the company day-to-day”.
With Dinh out of the picture, it’s not clear who’s left with the strategic and legal smarts to finagle the company through its various court actions.
The Murdochs are entitled to feel more than a bit miffed about this latest action. After all, no family has done more over the decades to entrench the noxious concept of the primacy of shareholder capital at the heart of corporate policy’s Overton window.
Since Milton Friedman launched the thought bubble in his 1970 New York Times essay “The Social Responsibility of Business Is to Increase Its Profits”, billionaire-owned media has seized the idea as the ethical underpinning of neoliberal capitalism, with all its legitimation of outsourcing, job cuts, union-busting and the resultant boom in executive and board remuneration. Friedman’s essay was, as Kurt Anderson subtitled his recent book, Evil Geniuses, central to “The Unmaking of America” (perhaps Australia too).
While the Murdoch-owned media (particularly, here, The Australian) has spent decades puffing Friedman’s idea, the Murdochs themselves have been more ambivalent about shareholder power. Part of the benefits of moving the then-single company’s registration base to Delaware back at the turn of the century was to entrench two classes of shares: one with votes (dominated by the Murdoch Family Trust) and another (that provides most of the capital) sadly voteless.
It’s what’s allowed the family to control two companies without having anywhere near a majority of shares, with the Murdoch men trousering $A1.74 billion in salaries and bonuses courtesy of shareholders over the past 24 years.
Now, courtesy of the big US pension funds, their media’s public enthusiasm for the primacy of shareholder capital may be coming back to bite them.
