James Murdoch, chairman of British Sky Broadcasting Group Plc, received the backing of the pay-TV company’s board as some investors opposed his re-election following a second phone-hacking hearing by UK lawmakers.
“We agreed that James Murdoch has done a first class job,” Nicholas Ferguson, BSkyB’s senior independent director, said in a letter to investors today. Murdoch’s handling of the scandal at parent company News Corp had “no effect on sales, customers or suppliers over the last five months.”
Murdoch, trying to hold on to his job as BSkyB Chairman as well as News Corp’s Deputy Chief Operating Officer, yesterday blamed executives at the News of the World tabloid for not telling him in 2008 that intercepting the phones of celebrities and politicians went beyond a single reporter.
At BSkyB, James Murdoch “has always acted with integrity in the eyes of both the board and the senior management,” Ferguson said. “If this was to change, clearly the independent directors would re-evaluate the position.”
Testifying for a second time before a UK parliamentary committee, Murdoch said he regretted that he hadn’t looked into hacking allegations in 2009 when the Guardian newspaper reported them, or in 2010, when lawmakers raised questions. His failure to act triggered a scandal that engulfed News Corp. and thwarted a £7.8 billion ($12.4 billion) bid to buy the remaining 61 per cent of BSkyB.
James Murdoch will face BSkyB investors at the annual general meeting on November 29.
INVESTOR OPPOSITION
A group of British pension funds, accounting for about 1 per cent of BSkyB, today advised members to oppose Murdoch’s re-election. Following Murdoch’s appearance, the group said it was concerned about the chairman’s independence and the “ongoing risk” of “contagion.”
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“BSkyB shareholders need to see some distance put between the company and the scandal engulfing News Corp,” the UK Local Authority Pension Fund Forum said.
Murdoch’s re-election was also opposed today by New York- based proxy advisory firm Glass Lewis & Co, which said Murdoch’s “powerful position” at News Corp. compromised his ability to act in BSkyB’s interest. Glass Lewis, which advises investor institutions with over $15 trillion in assets, also recommended that shareholders oppose the nomination of Arthur Siskind, who’s on the board of both BSkyB and News Corp.
Franklin Resources Mutual Series, which owns about 3 per cent of BSkyB according to Bloomberg data, said in October that Murdoch should step down as chairman of the British pay-TV company as an “independent chairman would be advisable.”
‘ABSOLUTELY INCREDIBLE’
Murdoch’s testimony to UK lawmaker yesterday shows that he kept his distance from the scandal, says Claire Enders, founder and CEO of media researcher Enders Analysis.
“He was incurious, he was incurious about everything,” Enders, whose clients include the UK government, said in an interview.
At a meeting with News of the World executives in 2008, when Murdoch was running the newspaper unit, Murdoch was told that Gordon Taylor, the CEO of the Professional Footballers’ Association should be receiving a 425,000-pound payment to settle a phone-hacking case. Murdoch yesterday said he didn’t ask to see the opinion of an outside lawyer.
“It didn’t occur to me probe further,” Murdoch told the lawmakers during 2 1/2 hours of testimony. “I was given a narrower set of facts than I would have liked,” Murdoch said. “They did not discuss allegations of widespread phone hacking or criminality or the like.”
Murdoch said Colin Myler, the News of the World’s editor, and Tom Crone, its lawyer, were responsible for denials issued by the company, including to Parliament, until January of this year and failed to pass on relevant information.
SECOND GRILLING
Murdoch, 38, had been recalled by the panel after Myler and Crone both said he was mistaken in his July 19 testimony that he hadn’t been told in 2008 about an e-mail that showed hacking went beyond the newspaper’s royal reporter, Clive Goodman, and a private investigator, Glenn Mulcaire.
“Their testimony was misleading and I dispute it,” Murdoch said yesterday. Crone said in an e-mailed statement after that appearance that Murdoch “was told by us in 2008 about the damning e-mail and what it meant in terms of wider News of the World involvement.”
Myler said in an e-mailed statement that his evidence to the panel “has been entirely accurate and consistent” and he stood by his account. He said he was confident that the police probe into hacking and a judge-led inquiry set up by Prime Minister David Cameron “will establish the truth.”
James Murdoch joined News International as chairman in December 2007, after the alleged hacking took place.
MURDERED SCHOOLGIRL
“He obviously decided that it’s better to be the man who didn’t know than the man who didn’t do anything about it,” said Stewart Purvis, a professor for television journalism at London’s City University.
Bloomberg LP, the parent of Bloomberg News, competes with News Corp. (NWSA) units in providing financial news and information.
Since the revelations in July that the News of the World had intercepted the voicemail of a murdered schoolgirl, News Corp. has tried to limit the damage by closing the 168-year old News of the World tabloid, once Britain’s biggest-selling tabloid.
At least 17 people have been arrested by police investigating hacking and bribing police officers at News Corp.’s U.K. newspapers, including Rebekah Brooks, a former News International CEO, and Andy Coulson, a former editor of the News of the World and spokesman for Prime Minister David Cameron.