James Murdoch quits another News Corp group to spare BSkyB from fall-out

Pretty soon, there may be nothing left for James Murdoch to distance himself from.

Ahead of a parliamentary report on phone hacking that reportedly may accuse him of “lying”, now he is resigning his chairmanship of the UK’s largest pay-TV operator, BSkyB, saying:

“As attention continues to be paid to past events at News International, I am determined that the interests of BSkyB should not be undermined.

“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” (announcement).

Director Nicholas Ferguson will take his place, deputised by News International CEO Tom Mockridge. Murdoch remains a non-executive director.

In November, BSkyB’s board unanimously recommended Murdoch’s re-election, which was achieved with only a fifth of shareholders voting against him.

But that was before communications regulator Ofcom this year stepped up an inquiry in to whether News Corp, which owns 39 percent of BSkyB and which last year proposed buying the rest, is a “fit and proper” owner in light of the hacking episode. And it was before further hacking revelations came to light…

The House Of Commons’ Culture, Media & Sport select committee has been examining the phone hacking issue. Appearing before it, Murdoch repeatedly and strongly denied former News International executives’ testimony that they had made him aware of the full extent of allegations.

But, in an embarrassing further submission, Murdoch told the committee he now recalled that he had indeed been made aware, via a weekend email that he did not fully act upon when he returned to the office later that week. Newspapers have since reported how company executives had commissioned a cover-up involving the deletion of emails.

The parliamentary committee appears to have two options for conclusion – either that Murdoch executed his corporate responsibilities sloppily or that he wilfully misled parliament. The first option has serious repercussions for Murdoch’s corporate career; the second could lead to a criminal investigation.

Which way will MPs go? “There are some on the committee who want to use the word ‘lie’,” Adam Boulton, the well-connected politics editor of BSkyB’s own Sky News, reported on Tuesday, explaining that there is disagreement amongst committee MPs.

What happens next? The parliamentary committee did not publish its report in to phone hacking as it hoped to ahead of parliament’s Easter recess, which started March 27. Now the MPs, who may be deciding Murdoch’s fate during their Easter holidays, will likely publish after parliament’s April 16 return.

In a March letter to the committee that may have been his final opportunity to convince it, Murdoch conceded he should have asked more questions of his News International executives but again blamed “false assurances” given by them.

  • Rupert and James were re-elected at News Corp in October’s AGM.
  • BSkyB’s board re-elected James Murdoch as chair in November, though a fifth of shareholders voted against him.
  • But he resigned from the boards of News International’s Sun and Times papers.
  • Then he quit GlaxkoSmithKline’s board.
  • In February he resigned his chairmanship of News International itself.
  • He also quit the boards of Newscorp Investments and News International Publishers Ltd, two more UK units.
  • And he resigned from auction house Sotheby’s board in March.

Upon being severed from News International, Murdoch was also distanced geographically from the epicenter. He was moved to New York full-time, where News Corp said he would remain News Corp group deputy COO and CEO of News Corp’s international activities to focus on its international TV business.

But BSkyB, which Murdoch once led as CEO, is one of the most significant parts of that business.

The whole issue is now so toxic that even lancing this boil is unlikely to make the prospect of News Corp returning to a successful buy-out of BSkyB any more likely. Perhaps in place of that opportunity, BSkyB on Tuesday confirmed an earlier plan to buy back a big tranche of shares.

But Murdoch’s exit from yet another News Corp property should soothe concerns that he may even have brought BSkyB down. BSkyB shares fell immediately following the announcement, however.