BSkyB Board Backs James R. Murdoch to Stay as Chairman

The board of British Sky Broadcasting, a satellite television company known as BSkyB, discussed James Murdoch’s role “at length” and decided he should keep the job, said a person with direct knowledge of the decision. The board planned to closely monitor developments linked to the phone hacking scandal, said the person, who declined to be identified because the meeting was private.

It was the first time BSkyB’s 14-member board had met since a public and political outcry over phone hacking at The News of the World, the now shuttered tabloid, forced News Corporation, the global media company controlled by James Murdoch’s father, Rupert Murdoch, to withdraw its offer for the rest of BSkyB.

News Corporation owns a 39 percent stake in BSkyB.

The board meeting had been initially scheduled to discuss BSkyB’s annual earnings, which are to be released on Friday, but the phone hacking scandal had obliged it to also address the question of whether James Murdoch should stay on as chairman. James and Rupert Murdoch faced angry questions from British lawmakers this month about how much they knew about phone hacking practices at The News of the World.

Keeping James Murdoch on the board of BSkyB, one of the best-performing and most important parts of News Corporation’s British business, is essential to the Murdoch family’s media empire, some analysts said. James Murdoch runs News Corporation’s European operations, which include the BSkyB stake and News International, the newspaper group that published The News of the World. He is also News Corporation’s deputy chief operating officer.

Pressure on James Murdoch intensified last week when two former News International executives contradicted testimony he had given to a parliamentary committee. The executives said that in 2008 they had made Mr. Murdoch aware of evidence that suggested phone hacking at The News of the World was more widespread. Mr. Murdoch denied he had ever been told that underlying evidence in the case implicated more than one reporter at the tabloid.

James Murdoch became chairman of BSkyB’s board, which also includes three other members who are on the News Corporation’s payroll, at the end of 2007, amid opposition from some institutional investors and pension funds. Some shareholders criticized the election process and said they would have preferred a chairman who was not linked to BSkyB’s biggest shareholder.

Lorna Tilbian, an analyst at Numis Securities in London, said James Murdoch’s support among BSkyB’s board members did not come as a surprise. “He’s done a good job as BSkyB’s chairman, and it’s innocent until proven guilty,” Ms. Tilbian said.

The phone hacking scandal might affect BSkyB in other ways. Ofcom, the British broadcasting regulator, is proceeding with inquiries into whether BSkyB remains “fit and proper” to hold a broadcasting license because of the hacking scandal still unfolding at the News Corporation.

The scandal took a toll on BSkyB’s share price because some investors were concerned that new investigations into phone hacking and bribery allegations could distract management. BSkyB’s shares slumped 16 percent from their peak this month. The shares remained unchanged at 7.2 pounds in London on Thursday.

BSkyB’s board also discussed whether  to either  pay a special dividend or buy back its own shares to compensate BSkyB shareholders, which include News Corporation, for the recent drop in the share price.

Article source: http://www.nytimes.com/2011/07/29/world/europe/29bskyb.html?partner=rss&emc=rss