Sky Faces New Pressure Over Murdoch’s Re-Election as ChairmanBy and
Business group says Sky should listen to independent investors
IoD: No vote should give board ‘strong pause for thought’
Sky Plc is facing pressure from a prominent business lobby group to remove James Murdoch as chairman if a majority of independent shareholders oppose his leadership at the U.K. pay-TV provider’s annual meeting on Thursday.
The Institute of Directors, an influential voice in U.K. corporate governance, has urged the broadcaster’s board to honor the votes of independent investors, who own just over 60 percent of the company. Advisory services including ISS have recommended voting against re-electing Sky’s 44-year-old chairman, citing a conflict of interest over his role as chief executive officer at 21st Century Fox Inc., which owns almost 40 percent of Sky and is trying to buy the rest for 11.7 billion pounds ($15.4 billion).
“The board should listen to the voice of independent investors,” said Roger Barker, head of corporate governance at the institute. “We’d like to think a no vote will give the board strong pause for thought.”
By wading into the debate, the institute has upped the stakes for Murdoch at the annual meeting, scheduled to take place in London after Sky reports first-quarter results. The Murdoch family, led by 86-year-old billionaire Rupert Murdoch, is already facing questions about its oversight of the Fox News network in the U.S. and its newspapers in the U.K. On Thursday, the focus will be on their handling of the bid itself, which came in December 2016, only months after James Murdoch resumed the role of Sky chairman.
“It would be very unconvincing if the board is forced to use the block vote of the Fox shareholder in order to back the re-appointment of James Murdoch,” said Stefan Stern, director of the High Pay Centre and an expert in corporate governance. “The block vote would recall the worst of 1970s trade unionism and would not reflect the views of independent shareholders.”
The Murdochs have a long history of facing down investor opposition over issues of control at their companies. The family controls News Corp. and Fox, the entertainment group that split off from it in 2013, through supervoting shares that give the family about 40 percent of the votes despite a much smaller economic interest.
In 2011, one-third of News Corp. votes were cast against the election of James and his brother Lachlan Murdoch to the board. The following year, Rupert Murdoch used his voting clout to block a News Corp. investor proposal calling for an independent chairman. A similar proposal was defeated at Fox in 2013.
Last year, about 51 percent of Sky’s independent shareholders voted against James Murdoch’s re-election, according to Manifest, a London-based proxy voting agency.
Representatives of Sky and of Fox didn’t immediately respond to a request for comment.
“This is a skirmish that crops up time and time again,” said Alice Enders, head of research at Enders Analysis. “I’m a little less convinced. This is a family that owns basically 40 percent of this company and it’s a little hard to insist that there not be a family member involved in the management.”
Opponents of the deal with Fox have cast a spotlight on sexual-harassment allegations at Fox News in the past year, as well as the past handling of the phone-hacking scandal at News Corp., which continues to percolate through British courts. Last week, News U.K. admitted that the Irish edition of its defunct News of the World tabloid hired a private investigator who hacked the computer of a former British Army intelligence officer.
U.K. regulators have said they will consider corporate governance across the Murdoch family companies, including the treatment of Fox employees in the U.S., as part of their review of the takeover bid for Sky.
“Particularly at this delicate time, the person leading the board should be independent and fair-minded,” the Institute of Directors’ Barker said.
Established in 1903, the Institute of Directors is a proponent of good corporate governance, speaking out on matters such as excessive bonuses. This week the group, which has 35,000 members, Cass Business School and the Chartered Quality Institute published an annual corporate-governance ranking of the U.K.’s biggest companies. Sky ranked 47, in the middle of the pack.