Rupert Murdoch's News Corp sued over 'nepotism' in buying his daughter's firm

Investors allege group is overpaying in $675m deal to acquire Elisabeth Murdoch's TV production business Shine

Rupert Murdoch's News Corporation is being sued by shareholders for "paying for nepotism" in its $675m deal to buy daughter Elisabeth Murdoch's production business Shine.

Shareholders the Amalgamated Bank of New York and the Central Laborers Pension Fund filed a lawsuit on Wednesday in a Delaware court alleging that the deal was a case of "nepotism" and that the board of News Corp failed to question or challenge Rupert Murdoch.

The deal, which following regulatory approval is expected to close on 31 March, will see 42-year-old Elisabeth take a seat on the News Corp board.

"In addition to larding the executive ranks of the company with his offspring, Murdoch constantly engages in transactions designed to benefit family members," said the lawsuit by Amalgamated Bank, a trustee for several investment funds.

The lawsuit accuses Rupert of treating News Corp "like a wholly owned family candy store" and argues that a fair price was not achieved for Shine.

"Although the transaction makes little or no sense for News Corporation and is far above a price any independent, disinterested party would pay for Shine, it is unsurprising that the transaction was approved by News Corporation's board," lawyers for Amalgamated Bank said in the filing.

Amalgamated Bank, a trustee for several investment funds, holds about 1 million shares or 0.003% of News Corporation stock. It is understood that this is the third time the bank has taken action against the board in recent years.

The lawsuit seeks damages and a declaration the board breached their fiduciary duty to shareholders. A spokeswoman for News Corp said that the lawsuit was "without merit" and added that Shine is a "very attractive business" that fits with the company's entertainment portfolio.

The acquisition, which was engineered by bank JP Morgan, still needs approval by News Corp's audit committee and the approval of the two companies' boards. It also requires an independent fairness opinion.

Founded by Elisabeth Murdoch in 2001, Shine has become one of Britain's largest independent production companies as a leading producer of such reality shows as The Biggest Loser, MasterChef and One Born Every Minute.

According to the first figures available on the performance of Shine in 2010 – to date only Companies House numbers from 2009 have been available – the production company increased turnover by 50% from £265m to £396m.

• To contact the MediaGuardian news desk email or phone 020 3353 3857. For all other inquiries please call the main Guardian switchboard on 020 3353 2000.

• If you are writing a comment for publication, please mark clearly "for publication".


Mark Sweney

The GuardianTramp

Related Content

Article image
Rupert Murdoch's News Corp closes in on daughter's Shine Television
Key meetings due in coming days to consider takeover of Elisabeth Murdoch's London-based company. By Dan Sabbagh

Dan Sabbagh

09, Feb, 2011 @11:45 AM

Article image
Elisabeth Murdoch to join board of News Corp after £415m buyout of Shine
Shine Television's founder will have similar status in her father's company to her brother James Murdoch when deal is complete. By Dan Sabbagh

Dan Sabbagh

21, Feb, 2011 @3:11 PM

Article image
Elisabeth Murdoch's Shine in talks with suitors including News Corp
Production company Shine Group appoints JP Morgan to advise on options, including a possible sale. By Mark Sweney

Mark Sweney

14, Jan, 2011 @9:08 AM

Article image
BSkyB and News Corp: Rupert Murdoch and the regulators | Dan Sabbagh
Dan Sabbagh: Vince Cable has, in effect, created the first official inquiry into power and influence enjoyed by Murdoch's papers and TV stations

Dan Sabbagh

04, Nov, 2010 @7:52 PM

Article image
Elisabeth Murdoch ponders sale of TV production firm to News Corp

Shine, maker of Spooks and Hustle, seeking 'transformative' deal as speculation grows Murdoch could win senior post at BSkyB

Dan Sabbagh and Mark Sweney

14, Jan, 2011 @7:20 PM

Article image
News Corp paid Elisabeth Murdoch almost $4m for running Shine
TV production company's founder paid $1.7m basic salary and $2.125m performance bonus in year to end of June. By Mark Sweney

Mark Sweney

05, Sep, 2012 @6:05 PM

Article image
Elisabeth Murdoch made $214m from Shine sale
News Corp's annual report reveals payout to Rupert Murdoch's daughter on takeover of her TV production company. By Josh Halliday

Josh Halliday

18, Aug, 2011 @9:21 AM

Article image
Ofcom to demand further inquiry of Rupert Murdoch's BSkyB buyout
Competition Commission may now scrutinise bid but Jeremy Hunt could reject recommendation

Dan Sabbagh

29, Dec, 2010 @7:45 PM

Article image
Rupert Murdoch to decide over News Corp split
Mogul to meet board on Wednesday and could announce decision as early as Thursday, according to reports. By Lisa O'Carroll

Lisa O'Carroll

27, Jun, 2012 @10:47 AM

Article image
Rupert Murdoch's News Corp backing in doubt as he faces MPs' grilling
Reports say directors considering replacing Murdoch as chief executive, as he prepares to answer phone-hacking questions

James Meikle

19, Jul, 2011 @8:35 AM