James Murdoch Said to Have Backing of BSkyB Board as Payout Options Mulled
James Murdoch, the son of News Corp. Chief Executive Officer Rupert Murdoch, is poised to stay on as chairman of British Sky Broadcasting Group Plc (BSY) as the U.K. pay- television company’s board reviews options for investor returns today, said two people with knowledge of the matter.
The younger Murdoch has the backing of key shareholders and directors of BSkyB, even after his testimony last week to U.K. lawmakers over the phone-hacking scandal around News Corp.’s now defunct News of the World tabloid was contradicted by two former employees, said the people, asking not to be identified because the talks are private. The 38-year-old’s position at BSkyB isn’t on the agenda of today’s meeting, one of the people said.
The 14-person board also plans to discuss whether BSkyB will return cash to shareholders, with a share buyback a more likely option than a one-time dividend, one person said. A stock repurchase may follow previous buybacks where News Corp. (NWSA)’s voting rights were kept unchanged even though its 39 percent economic interest in BSkyB would increase, the person said. The board may also decide not to implement a cash-return program, the person said.
“It feels that the movement to shift James sideways has sort of lost some of its urgency,” said Alex de Groote, an analyst at Panmure Gordon in London. “The Murdochs seem to be prepared to tough it out.”
News Corp. Survey
BSkyB and News Corp. declined to comment on the possible outcomes and decisions of today’s meeting, scheduled to take place at BSkyB’s headquarters in Isleworth, west of London.
The satellite service’s board is meeting as New York-based News Corp. separately surveys its biggest shareholders on Murdoch family control, the company’s dual-class stock structure and the independence of its board, according to three people familiar with the matter.
The survey results may be shared with the board, said the people. News Corp.’s goal is to inform and frame shareholder communications, one person said. Sard Verbinnen & Co., the public-relations firm hired to respond to phone-hacking and police bribery allegations at News Corp.’s U.K. newspaper unit, has been conducting the conversations. Some investors were offered to speak with Chief Operating Officer Chase Carey.
“We got a call from somebody early last week indicating Chase Carey would love to talk to us at some point, but we’re not in any hurry, we’re fine,” Don Yacktman, founder of Yacktman Asset Management Co., said in a phone interview this week. “Obviously they’re concerned about reaction and everything. It was a nice gesture.”
BSkyB stock dropped 17 percent over seven days before the hacking allegations forced New York-based News Corp. to shelve its 7.8 billion-pound ($12.7 billion) offer for the 61 percent it doesn’t already own in the broadcaster.
The shares soared as high as 850 pence before the Guardian reported on July 4 that News of the World employees intercepted murder victim Milly Dowler’s voice mails in 2002. They slid 0.3 percent to 712.5 pence as of 10:10 a.m. in London, still 16 percent off their peak this year.
While the hacking incidents took place before James Murdoch started overseeing News International, the News Corp. U.K. publishing unit that managed the News of the World, he authorized settlements to hacking victims that are now being questioned.
Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.
News Corp., which owns Fox News and the Wall Street Journal in the U.S., fell 16 cents to $16 yesterday in Nasdaq Stock Market trading. The Class A shares have slid 11 percent since July 4.
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