Murdoch resigns from BSkyB chair

James Murdoch yesterday resigned as chairman of BSkyB to prevent his links to a phone-hacking scandal undermining the group, whose broadcast licence is under scrutiny in Britain.

“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 organisation,” Murdoch said.

The 39-year-old is a previous chairman of News International, News Corp’s British newspaper arm and publisher of the News of the World, the tabloid at the heart of the scandal that has convulsed his father Rupert’s media empire before it was shut down last year.

“As attention continues to be paid to past events at News International, I am determined that the interests of BSkyB should not be undermined by matters outside the scope of this company,” Murdoch wrote in a letter to the BSkyB board.

Murdoch’s conduct is under scrutiny by a powerful parliamentary committee that is expected to deliver a critical report soon, as well as by the British television regulator and a judge-led inquiry into press ethics.

The regulator, Ofcom, has been investigating whether BSkyB is a “fit and proper” owner of a broadcast licence given its close relationship with Murdoch and its 39% owner News Corp.

Murdoch arrived at News International after the phone hacking had died down but has been criticised for failing to uncover the scale of the wrongdoing.

He will remain on the board and will be replaced as chairman by Nicholas Ferguson, who was previously deputy chairman and senior non-executive director.

Investors and analysts welcomed the move, although they said they had no complaints about Murdoch’s conduct at BSkyB, where he proved himself a talented executive in his own right in his previous role as CEO.

“I have no particular axe to grind about James Murdoch, but at least it would remove some uncertainty from the stock. Investors could get back to focusing on the company’s business rather than its corporate governance issues,” said a British-based BSkyB investor who asked not to be named.

Thomas Eagan, a US-based analyst with Canaccord Genuity, said: “I think it makes it easier for News Corp to pass the fit and proper test and it is a gesture made by Sky and News Corp for them to keep their licence.”

After long denying that phone hacking was institutionalised at the News of the World, the tabloid eventually admitted last year it had hacked into the phones of a murdered schoolgirl and British war dead, as well as politicians and celebrities in its search for ever more sensational front-page stories.

The affair rocked the British newspaper establishment, politicians, and police, as links were exposed between the powerful Murdoch press, prime minister David Cameron and senior police officers, two of whom resigned.

Cameron was forced to accept the resignation of his communications director, ex-News of the World editor Andy Coulson, and was cornered by opposition leaders newly emboldened to challenge Rupert Murdoch’s long-established influence over government.

James Murdoch has continued to plead his innocence but the investigations have severely dented his chances of inheriting the Murdoch empire, once thought his for the taking.

“You’ve got to see whether he can really seal himself off from any further criticism,” said media commentator Roy Greenslade, a former Murdoch editor, adding that investigations by US authorities would be key.

The FBI is examining whether phone hacking occurred inside the US, and the company could potentially also be accused of bribery offences in Britain under the US Foreign and Corrupt Practices Act.

As well as an investigation into phone hacking, British police are also probing allegations of bribery and computer hacking by News International.

Murdoch, previously chief executive of BSkyB, was dealt a heavy blow in November when more than 40% of the company’s independent shareholders failed to back his re-election as chairman.

Since then, he has stood down from his board positions at News Corp’s British newspaper arm, as well as from the boards of other companies, and moved to the US to take up his new role running international pay television.

Greenslade said the multiple investigations into News International and its executives, with both James and Rupert Murdoch expected to be hauled in front of a judge-led inquiry in the coming weeks, had likely prompted James’s departure.

“I do think the Leveson inquiry, Commons select committee report, and the Ofcom fit and proper test are a triple whammy, he said. “He really must have known it was better to go sooner rather than later.”

The chairman of the parliamentary select committee, John Whittingdale, told Reuters that James Murdoch had not seen its forthcoming report.

“We have not given wind to anybody of what might be in the report,” he said, adding that the removal of Murdoch as chairman of BSkyB would allow the successful pay-television group to distance itself from the wider problems at News Corp.

— Reuters