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James Murdoch Steps Down From British Broadcaster

Wednesday, 04 April 2012 13:48 By John F Burns, The New York Times News Service | Report

London - BSkyB, the British satellite broadcaster partly owned by the News Corporation, said on Tuesday that James Murdoch had resigned as chairman to shield the company from the phone hacking scandal engulfing his family’s British newspaper group.

BSkyB said Nicholas Ferguson, the deputy chairman, had been named to succeed him.

Mr. Murdoch will continue to hold a seat on the board. But by relinquishing his position as the head of BSkyB, one of the fastest-growing and most lucrative television properties in the Murdoch stable, Mr. Murdoch, 39, appeared to be shedding one of the most important portfolios in the newly focused role assigned to him only weeks ago.

At that time, the News Corporation announced his resignation from oversight of the company’s British newspapers and said he would concentrate on overseeing the company’s television operations outside the United States.

Resigning Tuesday from what was his last major executive role in the British media, Mr. Murdoch — who has faced increasingly tough scrutiny of his handling of the hacking scandal at two tabloids — also appeared to step back from a career that had made him one of Britain’s most powerful media figures.

“I am aware that my role as chairman could become a lightning rod for BSkyB, and I believe that my resignation will help to ensure that there is no false conflation with events at a separate organization,” Mr. Murdoch wrote in a letter to the BSkyB board. The letter appeared to acknowledge investor concerns that damage inflicted by the hacking scandal could eventually undermine the wider $50 billion Murdoch conglomerate.

Among media commentators and market analysts on both sides of the Atlantic, Mr. Murdoch’s resignation renewed speculation that his longer-term prospects in the News Corporation — the company his father built and where he was considered the heir apparent — had plummeted.

For months, independent shareholder groups have been calling for his resignation from both the BSkyB board and the board of the News Corporation, where the Murdoch family has relied on the power vested in it by the company’s dual-class voting structure to protect him. Some of those groups saw his BSkyB resignation as a signal to renew pressure for his removal from any executive responsibility at the News Corporation, where he remains a board member and deputy chief operating officer.

“This ups the pressure on him to resign from News Corporation,” said Michael Pryce-Jones, a spokesman for CtW Investment Group, a shareholder activist group in Washington, who said discontented shareholders would not wait for the News Corporation’s next annual meeting in six months to renew their push for James Murdoch’s ouster.

The BSkyB resignation, he said, might have had more credibility several months ago.

A similar view was voiced by many analysts in Britain. Steve Hewlett, a media commentator for the BBC, said Mr. Murdoch’s quitting as head of Britain’s most powerful pay-TV company, a side of the News Corporation’s operations where he has built a formidable reputation for expanding operations and profits, signaled that his wider ambitions at the company were probably spent. “The prospect of his succeeding his father, you would have to say, are even less likely today than they were yesterday,” he said.

But others saw such assessments as premature.

Rupert Murdoch, 81, has already said his immediate successor as News Corporation chairman, if he were suddenly unable to continue in the post, would be Chase Carey, the company’s current president. That formulation has left open the possibility that a member of the Murdoch family — possibly another son, Lachlan, if not James — would ultimately take over.

Analysts in Britain said they believed that the immediate trigger for James Murdoch’s resignation as the BSkyB chairman was linked to the expected release within weeks of a report on the phone hacking scandal by a House of Commons select committee. Based on the questioning during the hearings last year, it is thought likely that the report will be highly critical of Mr. Murdoch for what some committee members described as incomplete and misleading testimony.

Through months of scrutiny, Mr. Murdoch has insisted that he was kept in the dark about the systematic wrongdoing at the tabloids, and has denied claims by other senior figures in the newspaper operation that they warned him of the breadth of the problem. Confronted with company e-mails that suggested that he knew more than he had acknowledged, he continued to deflect blame but apologized for not pressing his own inquiry sooner.

His prospects of escaping the spotlight appear to be further diminished by the likelihood that both he and his father will be among the media proprietors who will be called within weeks to testify before a separate judge-led inquiry into the scandal and its ramifications.

On top of this, Britain’s regulator for the communications industry, Ofcom, said last month that in light of the revelations of wrongdoing at the tabloids it was stepping up its investigation into whether BSkyB met the “fit and proper” person standard applied to the holders of broadcast licenses in Britain. Analysts have said that a ruling against BSkyB would be less likely if James Murdoch was no longer chairman.

The News Corporation owns about 40 percent of BSkyB’s stock and had hoped to acquire more.

But as the hacking scandal gripped the nation last July, the family bowed to pressure from leading politicians, including Prime Minister David Cameron, and announced that it was withdrawing a $12 billion bid to buy complete control of the broadcaster. The move was seen as a major setback to the Murdoch family’s ambitions to establish themselves as the most powerful force in global broadcasting. Last summer, BSkyB announced a pretax profit for 2010-2011 of $1.7 billion, up 16 percent from the previous year.

As the News Corporation’s deputy chief operating officer, Mr. Murdoch still oversees lucrative international channels like Star TV in Asia, Sky Deutschland and Sky Italia. The company’s fast-growing Star India business also reports directly to him.

 

Amy Chozick contributed reporting from New York, and Julia Werdigier and Alan Cowell from London.

 

This article has been revised to reflect the following correction:

Correction: April 3, 2012

An earlier version of this article incorrectly said that the Murdoch family, rather than News Corporation, owned 40 percent of BSkyB’s stock.

© 2014 The New York Times Company Truthout has licensed this content. It may not be reproduced by any other source and is not covered by our Creative Commons license.

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James Murdoch Steps Down From British Broadcaster

Wednesday, 04 April 2012 13:48 By John F Burns, The New York Times News Service | Report

London - BSkyB, the British satellite broadcaster partly owned by the News Corporation, said on Tuesday that James Murdoch had resigned as chairman to shield the company from the phone hacking scandal engulfing his family’s British newspaper group.

BSkyB said Nicholas Ferguson, the deputy chairman, had been named to succeed him.

Mr. Murdoch will continue to hold a seat on the board. But by relinquishing his position as the head of BSkyB, one of the fastest-growing and most lucrative television properties in the Murdoch stable, Mr. Murdoch, 39, appeared to be shedding one of the most important portfolios in the newly focused role assigned to him only weeks ago.

At that time, the News Corporation announced his resignation from oversight of the company’s British newspapers and said he would concentrate on overseeing the company’s television operations outside the United States.

Resigning Tuesday from what was his last major executive role in the British media, Mr. Murdoch — who has faced increasingly tough scrutiny of his handling of the hacking scandal at two tabloids — also appeared to step back from a career that had made him one of Britain’s most powerful media figures.

“I am aware that my role as chairman could become a lightning rod for BSkyB, and I believe that my resignation will help to ensure that there is no false conflation with events at a separate organization,” Mr. Murdoch wrote in a letter to the BSkyB board. The letter appeared to acknowledge investor concerns that damage inflicted by the hacking scandal could eventually undermine the wider $50 billion Murdoch conglomerate.

Among media commentators and market analysts on both sides of the Atlantic, Mr. Murdoch’s resignation renewed speculation that his longer-term prospects in the News Corporation — the company his father built and where he was considered the heir apparent — had plummeted.

For months, independent shareholder groups have been calling for his resignation from both the BSkyB board and the board of the News Corporation, where the Murdoch family has relied on the power vested in it by the company’s dual-class voting structure to protect him. Some of those groups saw his BSkyB resignation as a signal to renew pressure for his removal from any executive responsibility at the News Corporation, where he remains a board member and deputy chief operating officer.

“This ups the pressure on him to resign from News Corporation,” said Michael Pryce-Jones, a spokesman for CtW Investment Group, a shareholder activist group in Washington, who said discontented shareholders would not wait for the News Corporation’s next annual meeting in six months to renew their push for James Murdoch’s ouster.

The BSkyB resignation, he said, might have had more credibility several months ago.

A similar view was voiced by many analysts in Britain. Steve Hewlett, a media commentator for the BBC, said Mr. Murdoch’s quitting as head of Britain’s most powerful pay-TV company, a side of the News Corporation’s operations where he has built a formidable reputation for expanding operations and profits, signaled that his wider ambitions at the company were probably spent. “The prospect of his succeeding his father, you would have to say, are even less likely today than they were yesterday,” he said.

But others saw such assessments as premature.

Rupert Murdoch, 81, has already said his immediate successor as News Corporation chairman, if he were suddenly unable to continue in the post, would be Chase Carey, the company’s current president. That formulation has left open the possibility that a member of the Murdoch family — possibly another son, Lachlan, if not James — would ultimately take over.

Analysts in Britain said they believed that the immediate trigger for James Murdoch’s resignation as the BSkyB chairman was linked to the expected release within weeks of a report on the phone hacking scandal by a House of Commons select committee. Based on the questioning during the hearings last year, it is thought likely that the report will be highly critical of Mr. Murdoch for what some committee members described as incomplete and misleading testimony.

Through months of scrutiny, Mr. Murdoch has insisted that he was kept in the dark about the systematic wrongdoing at the tabloids, and has denied claims by other senior figures in the newspaper operation that they warned him of the breadth of the problem. Confronted with company e-mails that suggested that he knew more than he had acknowledged, he continued to deflect blame but apologized for not pressing his own inquiry sooner.

His prospects of escaping the spotlight appear to be further diminished by the likelihood that both he and his father will be among the media proprietors who will be called within weeks to testify before a separate judge-led inquiry into the scandal and its ramifications.

On top of this, Britain’s regulator for the communications industry, Ofcom, said last month that in light of the revelations of wrongdoing at the tabloids it was stepping up its investigation into whether BSkyB met the “fit and proper” person standard applied to the holders of broadcast licenses in Britain. Analysts have said that a ruling against BSkyB would be less likely if James Murdoch was no longer chairman.

The News Corporation owns about 40 percent of BSkyB’s stock and had hoped to acquire more.

But as the hacking scandal gripped the nation last July, the family bowed to pressure from leading politicians, including Prime Minister David Cameron, and announced that it was withdrawing a $12 billion bid to buy complete control of the broadcaster. The move was seen as a major setback to the Murdoch family’s ambitions to establish themselves as the most powerful force in global broadcasting. Last summer, BSkyB announced a pretax profit for 2010-2011 of $1.7 billion, up 16 percent from the previous year.

As the News Corporation’s deputy chief operating officer, Mr. Murdoch still oversees lucrative international channels like Star TV in Asia, Sky Deutschland and Sky Italia. The company’s fast-growing Star India business also reports directly to him.

 

Amy Chozick contributed reporting from New York, and Julia Werdigier and Alan Cowell from London.

 

This article has been revised to reflect the following correction:

Correction: April 3, 2012

An earlier version of this article incorrectly said that the Murdoch family, rather than News Corporation, owned 40 percent of BSkyB’s stock.

© 2014 The New York Times Company Truthout has licensed this content. It may not be reproduced by any other source and is not covered by our Creative Commons license.

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