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News Corp. executives will try to use an important board meeting and full-year earnings this week to steer attention away from the scandal at the media giant's U.K. newspapers unit and refocus investors on the company's core operations, people familiar with the matter said.
On Tuesday, News Corp.'s 16-member board will meet in person for the first time since the long-simmering scandal over voice-mail interceptions in the U.K. flared last month with news that a teen murder victim's phone was hacked.
Then, on Wednesday, the company will deliver its fiscal year-end results, which it hopes will defuse pressure relating to the scandal, people familiar with the matter say. In its fourth quarter, News Corp. sold Myspace, the struggling social network, and analysts expect the cable network and television businesses performed well.
After trying to stem the initial scandal fallout with moves including closing the News of the World tabloid, abandoning a more than $12 billion deal to buy the rest of British Sky Broadcasting Group PLC and accepting the resignations of two senior executives, the company isn't likely to announce any major deals or management changes soon, according to people familiar with the matter.
High on the list of the directors' priorities for the board meeting, according to people familiar with the matter, is what to do with News Corp.'s bulging pile of cash, which stood at nearly $12 billion in March. Much of that had been earmarked to buy the 60.9% of BSkyB it doesn't own. One measure News Corp. has discussed and the board could pursue is raising the company's dividend, said a person familiar with the matter.
Chris Marangi, portfolio manager of News Corp. shareholder Gamco Investors, said the company's best use of capital is buying back shares beyond the $5 billion program it already announced on July 12, particularly given the company's low stock price. Gamco and its Gabelli funds owned about 12 million of News Corp.'s Class A shares and 90,000 Class B shares as of the end of March.
News Corp. owns The Wall Street Journal.
The board meeting, in Los Angeles, will be a chance for the nine independent directors, who have been communicating throughout the crisis, to discuss the progress of a company committee formed to help investigate the allegations of phone-hacking and police bribery and cooperate with police and parliamentary investigations in the U.K.
The independence of News Corp.'s committee has come under attack from corporate-governance critics because it reports through News Corp. executive Joel Klein to independent director Viet Dinh. The company says Mr. Klein, who is also a director, is reporting to independent directors, not to Chairman and Chief Executive Rupert Murdoch, on this investigation.
The directors meet as the U.S. Justice Department has said it is looking into whether alleged police bribery at News of the World violated foreign bribery laws. The Federal Bureau of Investigation is also probing whether any News Corp. employees sought to hack the phones of Sept. 11 victims, after an anonymous allegation appeared in a British newspaper. U.S. Attorney General Eric Holder said last week the department continues to investigate.
A News Corp. spokeswoman declined to comment on the U.S. investigations beyond a previous statement that the company hadn't "seen any evidence to suggest there was any hacking of 9/11 victims' phones" and saying the article was based on "anonymous speculation, which has since mushroomed in the broader media with no substantiation."
The board is facing criticism that it is too beholden to Mr. Murdoch, whose family has 40% voting control of the company even though it owns a much smaller economic stake. Some shareholders also question the role two of Mr. Murdoch's children play at the company and whether it is appropriate for him to hold both the chairman and CEO titles.
On Friday, in response to inquiries from The Wall Street Journal, independent director Mr. Dinh said that Mr. Murdoch's daughter Elisabeth Murdoch won't be joining the board at this year's annual meeting, as previously planned. He said she and the board "hope this decision reaffirms that News Corp aspires to the highest standards of corporate governance."
Christian Brothers Investment Services, an institutional investor with a small News Corp. stake, in July submitted a so-called "floor" resolution that will seek to strip Mr. Murdoch of his chairmanship and appoint an independent board chairman at the company's annual meeting in October. Members of the Interfaith Center on Corporate Responsibility with about 1.1 million nonvoting Class A shares and 201,000 voting Class B shares, sent a letter Friday to Sir Roderick I. Eddington, News Corp.'s lead independent director, expressing concern about Mr. Murdoch remaining chairman and CEO as well as other governance issues. The signers "will support the 'floor' resolution'' to split the roles, said Father Seamus Finn, a board member of the association of faith-based institutional investors.
News Corp. shares closed Friday at $14.67 a share on the Nasdaq Stock Market, down 19% from $18.13 on July 5, the first day of trading after the allegations involving the phone of Milly Dowler, the murdered girl. The Standard & Poor's 500-stock index is off 10% over the same period.
