James Murdoch resigns as BSkyB chairman
James Murdoch has finally yielded to shareholder pressure and stepped down as chairman of BSkyB, saying he feared becoming a “lightning rod” for the business.
His letter to the board made reference to the phone–hacking scandal at News Corporation without mentioning his father Rupert Murdoch’s media empire directly. Nicholas Ferguson, BSkyB’s longstanding deputy chairman, will replace Mr Murdoch, who – controversially – will remain a non–executive director.
Mr Murdoch’s resignation follows nearly a year of opposition from major BSkyB investors, who feared that his handling of the hacking scandal weighed on its share price.
The board of BSkyB unanimously backed Mr Murdoch, but this did little to dampen a landslide of support away from him at the company’s last annual meeting in November, when a fifth of shareholders voted against him, despite the fact that News Corporation owns a 39pc stake in BSkyB. It is important to remember that the vote in question was held before News Corp’s Management & Standards Committee revealed an explosive email, which contradicted Mr Murdoch’s testimony to Parliament and confirmed he had been told about the extent of phone hacking at the News of the World.
James Murdoch seems to have been constantly under the spotlights since last year. On top of the News of the World phone-hacking scandal and the allegations of a cover-up, this year alone has already seen a string of arrests at the Sun over allegedly corrupt payments to public officials. Last month came the re-emergence of pay-TV hacking accusations that were long-thought dead, centred on the alleged activities of another one-time News Corp subsidiary. James Murdoch will be seen appearing at the Leveson inquiry, due in the week of 23rd April.
Pirc, the shareholder lobby group, said BSkyB’s “failure to act more quickly had resulted in self–inflicted reputational damage” and called for Mr Murdoch to quit the board entirely.
Meanwhile Ofcom, the broadcasting regulator, made it clear that Murdoch’s departure from BSkyB did not make the broadcaster safe from having his licence revoked under the “fit and proper” test. The regulator said its decision would take into account the position of “controlling directors and shareholders”, which include News Corp.
All these issues led James Murdoch two weeks ago to the conclusion that the risk of an adverse committee report – or a poor showing at Leveson – was too great.
Stepping down has defused the risks posed by a report and the Leveson inquiry, but may not be enough to get ahead of events.