Risk & Compliance

Did News Corp. Violate Reg FD?

A meeting in Australia for a group of investors raises questions about whether the media giant selectively disclosed material information.
Stephen TaubJuly 7, 2006

Did News Corp. chief executive officer Rupert Murdoch violate Reg FD when he invited only a select group of investors to a meeting in Australia last week?

According to a report by Reuters, most shareholders did not learn how much revenue News Corp.’s critical Internet business MySpace.com would generate until the day after the meeting, when UBS analyst Aryeh Bourkoff published a research note about the proceedings that was furnished to U.S.-based media. News Corp. changed its domicile from Australia to the United States in 2004.

Legal experts contacted by Reuters were divided over whether Murdoch gave investors in Australia an advantage over those in this country, thus violating the Securities and Exchange Commission’s Regulation Fair Disclosure, or Reg FD, rules.

Companies that accidentally let material information slip to a select group have 24 hours to make it publicly available through an 8-K filing. News Corp. has not filed an 8-K, nor has it issued a press release.

Experts said the information about the high-profile MySpace.com could potentially be material, which would trigger Reg FD rules.

According to the wire service, a New York–based spokesman for News Corp. said Murdoch’s Internet revenue forecast had not previously been disclosed, but the company did not consider it materially relevant.

“Fox Interactive Media’s revenues are currently a little over 1 percent of our total revenues,” a News Corp. spokesman said, according to the wire service. “By no stretch of the imagination could that be regarded as material to a company of our size. That was evidenced by the complete lack of reaction in the market.”