News Corp investors claim the mechanisim, which will prevent John Malone's Liberty Media from increasing its voting stake in the company beyond 18%, is a direct breach of the pledge the company made last year in order to obtain approval to relocate News Corp to the US from Australia.
The Australian Council of Super Investors said that News Corp's board had promised in writing only to extend the "poison pill" provision beyond November 2005 if the move was backed by investors.
ACSI said the pledge was filed with the US authorities and the Federal Court of Australia.
Michael Sullivan, ACSI president, said the "poison pill" is set out to benefit News Corp's chairman Rupert Murdoch.
"Shareholders will now be denied any benefit from any offer by Liberty or anyone else to increase their holding to a substantial level. The 'poison pill' benefits only the Murdoch interest," he said.
In addition, the move has angered members of the Global Institutional Governance Network, which includes Hermes in the UK and Calpers in the US. Its members are said to be now consulting on the matter.
The "poison pill" was initially due to expire in November this year, but News Corp when announced its better-than-expected results on Wednesday, the board said it would be extended for another two years.
The strategy blocks investors from taking their voting shareholding beyond 15% and existing shareholders with stakes above 15% are prevented from adding to their holdings.
Murdoch has wanted to try to regain some of the voting shares to secure his family's control over the media group. The decision to extend the "poison pill" makes it clear that Malone and Murdoch have failed to strike a deal. Murdoch and the family trusts under his control own 29.5% of the voting shares.
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