Breakingviews-Back to first principles for BSkyB chairman
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
By Chris Hughes
LONDON, Oct 13 (Reuters Breakingviews) - The penny is dropping for BSkyB BSY.L shareholders. They’d be better off with a chairman who is independent of News Corporation (NWSA.O), the UK satellite broadcaster’s founding shareholder. That would mean a demotion for current chairman and scion of the News Corp empire, James Murdoch.
Mutual Series, part of Franklin Templeton, has said that “at this point an independent chairman would be advisable”. It is true that “at this point” things are a bit tricky for Murdoch. The phone-hacking scandal in News Corp’s UK newspaper business is a big distraction. As head of News Corp’s European and Asian operations, he is responsible for cleaning up the mess. He faces a second public grilling by UK lawmakers investigating the scandal. And his credibility has been challenged by former News Corp employees, who have disputed his evidence at an earlier hearing.
But Murdoch’s troubles outside BSkyB only underscore what was already true. The company is 39 percent owned by News Corp, which in turn is controlled by James’s father Rupert. Public shareholders in BSkyB need confidence that the chairman has their interests at heart, as much as those of News Corp. That means an independent chairman was always preferable.
Of course, News Corp should still be represented on the board as a big shareholder. James Murdoch could even take a senior role among the non-executive directors as deputy chairman, a position currently occupied by Nicholas Ferguson.
That leaves the question of Murdoch’s fitness to serve in such a role. The challenge to his integrity is serious but hasn’t been backed up by decisive evidence. Observers must decide who to believe. While the distractions of the News Corp scandal may preclude Murdoch serving as chairman, it's not clear they prevent him from contributing as non-executive -- although Murdoch’s performance at the next parliamentary inquisition will be critical.
Governance is easier in theory than in practice. Rupert Murdoch founded BSkyB, he used to chair it and James used to run it. Investors have never had a chance to invest in the company with an independent chairman, and have bought in for the ride anyway. But BSkyB’s annual meeting next month may be the best chance yet to push for a textbook board.
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-- Mutual Series, part of asset manager Franklin Templeton, suggested that James Murdoch should step aside as chairman of UK satellite broadcaster BSkyB.
-- "While we acknowledge the track record of Mr Murdoch, we think that at this point an independent chairman would be advisable,” Peter Langerman, president and chief executive of Mutual Series, told the Financial Times on Oct. 12.
-- BSkyB’s directors are due for re-election at the group’s annual meeting on Nov. 29.
-- Reuters: BSkyB investors voice doubts over James Murdoch-FT [ID:nL3E7LC01L]
-- For previous columns by the author, Reuters customers can -- For previous columns by the author, Reuters customers can click on [HUGHES/]
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