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News Corp. in Pill Pact

Shareholders will get to vote.

News Corp.

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quelled a minor shareholder revolt with a poison pill settlement.

Reached just weeks before the case was expected to go to trial in Delaware Chancery Court, the pact calls for News Corp. to put a proposed poison pill extension up for a shareholder vote at the annual meeting in October. Shareholders would gain the right to vote on future poison pill provisions.

The case was settled on the eve of Chairman Rupert Murdoch's scheduled deposition and shortly following two key depositions. One of the lead plaintiffs, Michael O'Sullivan, chairman of the Australian Council of Super Investors, and Ian Philip, the chief legal officer for News Corp's Australian operations, were both deposed prior to the settlement, according to a statement from plaintiff law firm Grant & Eisenhofer. News Corp. wasn't immediately available for comment.

The law firm says the "concession by News Corp will give its shareholders the voting rights they sought to enforce in the litigation. The proposal would also allow News Corp. to extend the pill for one additional year (until October 2009), but only if necessary to address concerns over possible moves by

Liberty Media

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in acquiring a controlling interest in News Corp."

Murdoch controls some 30% of News Corp. shares, but Liberty Media honcho John Malone surprised Murdoch last year by announcing he had amassed an 18% voting stake. A poison pill prevents a hostile takeover by diluting the bidder.

"While we cannot predict how each investor will vote with the exception of the Murdoch interests, the settlement with News Corporation is a tangible step toward rebuilding our trust on governance issues with the company," said O'Sullivan, in a statement. "Perhaps the major achievement for shareholders is the demonstration that international cooperation between institutional investors gets results."

Institutional shareholders in the U.S., Australia and Europe sued in October, saying News Corp. broke a promise to get shareholder approval before extending the antitakeover plan. The suit named Rupert Murdoch, his son Lachlan Murdoch, a former News Corp. exec , COO Peter Chernin and other corporate hard-hitters as defendants.

In August, News Corp. said it was extending the pill for two years, much to the chagrin of shareholders who claimed they were promised a say on the subject when the company reincorporated in America, from its native Australia, last year.

Plaintiffs included two American retirement funds and a number of big international fiduciaries, many of which are in Australia. Other foreign institutional investors, including the huge Hermes Assured Limited and Stichting Pensioenfonds ABP, an enormous Dutch-run fund, had been participating in the legal action.

On Thursday, shares in News Corp. rose 6 cents to $17.96.