Roger Ailes

It’s a bit late for the The Murdoch family’s 21st Century Fox to claim that it has transformed itself internally in response to the sexual and racial harassment claims at Fox News that resulted in chair, the late Roger Ailes and major host Bill O’Reilly being sacked. Yet that is exactly what the company has tried to do, in this letter, as reported by Bloomberg. But you have to remember who the Murdochs are talking to: not shareholders, but UK regulators giving 21st Century Fox’s vital A$17 billion clean-up bid for the rest of Sky plc a major going-over.

In response to a shareholder call for a board shake-up (with the departure of long-time member Sir Rod Eddington urged) in the wake of successive scandals at Fox News, the chair of Fox’s nominating and corporate governance committee Viet Dinh said the company had taken steps to improve its human resources processes and governance. He was replying to a letter from Dieter Waizenegger, the executive director of CtW Investment Group, who had argued in a letter last week that 21st Century Fox needs a board shake-up, including the hiring of more women, and new measures on human resources and controls. (Fox is yet to post its letter on its website or at the SEC.) Waizenegger stated:

“In light of the Board’s failure to effectively address the longtime ethics crisis perpetuated by the leadership of Fox News, we are surprised and disappointed in the lack of corporate governance modifications at 21 st Century Fox ( ‘FOX’). Over the last 15 months, shareholders have witnessed an onslaught of negative headlines, expensive settlements, government inquiries, and resignations by top talent at Fox News. The magnitude of the sexual and racial harassment crisis demonstrates a tone at the top that is permissive of unethical behavior and a troubling lack of attention on the part of the Board to the company’s human capital management practices, as well as the associated risks to the company ’ s reputation, operations, and long-term value.”

In his reply, Dinh wrote: “The transformation of Fox News is proof that our long-held commitment to a diverse workplace is a key driver of success throughout 21st Century Fox — where, incidentally, women serve as the chairman and chief executive at the film studio, the television studio, and television network.”

The letter from CtW Investment Group was a surprise as it has not been associated with any previous lobbying or shareholder unease at the Murdoch family’s key company. CtW claims it advises pension funds that have invested over US$250 billion in global markets. It said in its letter the funds are “substantial investors” in 21st Century Fox, but did not detail their holdings, but it did make a very valid point about the way Fox has handled the scandals at Fox News, accusing the board of being too slow.

All this comes as Fox is already facing pressure from one small shareholder — the Nathan Cummings Foundation of New York — for an end to the company’s dual shareholder voting structure. The Murdoch’s control Fox — and News Corp — through a 28.1% stake in the voting shares in both companies. Rupert Murdoch owns another 1%, making the total Murdoch stake in Fox and News 39.1%. That’s even though their shares amount to around 14% of the A- and B-class shares in both companies. The Nathan Cummings group has previously tried to change the voting rules at News and came close last year.