Church of England loses faith in News Corp shares

Tue Aug 7, 2012 6:26pm IST

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* Sells all News Corp shares worth 1.9 mln stg

* Ethical concerns raised over governance

By Anjuli Davies

LONDON, Aug 7 (Reuters) - The Church of England has sold all shares in News Corporation held in its investment portfolios on ethical grounds, after a phone hacking scandal at the media empire's UK operations.

The Church, which has three national investing bodies, sold the shares worth 1.9 million pounds ($2.97 million) after its Ethical Investment Advisory Group (EIAG) was not satisfied with the level of corporate governance reform at Rupert Murdoch's media conglomerate following a year of dialogue.

"Last year's phone hacking allegations raised some serious concerns amongst the Church's investing bodies about our holding in News Corporation," Andrew Brown, Secretary of the Church Commissioners said in a statement on Tuesday.

"The EIAG put forward a number of recommendations around how corporate governance structures at News Corporation could be improved. However the EIAG does not feel that the company has brought about sufficient change and we have accepted its advice to disinvest."

The EIAG, established in 1994, has made several recommendations on investments that should be excluded, including companies involved in military products and services, pornography, alcoholic drinks, gambling, tobacco, human embryonic cloning and high interest rate lending.

It also seeks to engage with companies the Church holds equity stakes in on ethical and corporate governance issues, and held meetings with 40 companies, including News Corporation, between April 2011 and March 2012, it said.

The Church manages more than 8 billion pounds of assets across three national investment bodies: the Church Commissioners for England; the Church of England Pensions Board; and the CBF Church of England Funds.

The phone-hacking scandal has rocked Murdoch's News Corp titles in Britain, put the notoriously aggressive British press under the spotlight and embarrassed senior politicians, including British Prime Minister David Cameron, over cosy ties with the Australian-born businessman.

Three investigations have led to more than 60 arrests including dozens of current and former journalists, some of whom held senior positions at News International titles.

The $57 billion media conglomerate also announced in June it would split into two publicly traded companies.

News Corp shares have gained 29 percent this year, far outpacing the broader market partly because of a boom in political advertising spending ahead of the U.S. presidential election and also bigger cheques from cable and digital providers that have driven up media stocks in the United States.

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