Murdoch seen surviving BSkyB vote, but at what cost?

Mon Nov 28, 2011 10:15am EST
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By Sinead Cruise and Kate Holton

LONDON (Reuters) - James Murdoch will probably survive a row with investors to be re-elected as chairman of BSkyB BSY.L with the support of News Corp but that link to his father's firm, tainted by the phone hacking scandal, could spell more problems with the regulator.

The 38-year-old executive's link to BSkyB's largest shareholder News Corp (NWSA.O: Quote) concerns some shareholders who say the company needs an independent chairman after News Corp had to pull its bid for the rest of BSkyB it does not own.

Referring to Tuesday's vote, investor interest group PIRC warned: "If combined oppose votes and abstentions get close to 20 percent then James Murdoch will struggle to claim the support of shareholders."

News Corp had to withdraw its $12 billion offer in July following revelations that people working for a News Corp weekend tabloid, the News of the World, had hacked into the phones of celebrities and murder victims to secure stories.

British communications regulator Ofcom has a duty to ensure that owners of UK media are "fit and proper" and has said it is monitoring developments in the phone-hacking investigations.

James Murdoch is chairman of News International, News Corp's British newspaper arm, and deputy chief operating officer at News Corp, where he survived a massive protest vote against his membership of the board last month.

During the phone hacking furor, he appeared regularly as a representative of News Corp and among a flurry of statements also gave evidence to a parliamentary committee that was later criticized by politicians as being misleading.

"He has blotted his copybook to a point where it could be damaging to this company because he just won't be viewed in a good light by the regulators," one top 30 institutional shareholder who intends to vote against Murdoch told Reuters.   Continued...