BSkyB could regret its backing of Murdoch Saturday, 30 July 2011 01:46

Can you snatch defeat from the jaws of victory? We should ask James Murdoch, for each time the head of News International overcomes one hurdle, he finds himself dragged deeper into the morass that is the phone-hacking scandal.

Fresh from winning unanimous support to continue as chairman of BSkyB, the head of the company that owned the News of the World emerged to find that the scandal engulfing his business had reached a new low, with claims that Sara Payne, the mother of a murdered schoolgirl, may also have been a hacking target. Payne had been a huge supporter of the now defunct newspaper, helping a campaign that former editor Rebekah Brooks considered one of her greatest successes and writing a farewell column just a few weeks ago that spoke of her “good and trusted friends” there. She is now said to be devastated. If nothing else, this grim tale suggests that support can change with the facts, a message that surely can’t have escaped James Murdoch, or indeed the board of BSkyB.

The board of Sky, which contains a majority of nominally independent directors, insists that it will keep a “watching brief” on events. It backed James Murdoch because of his strong record at the business – the thing he is said to be most proud of in his relatively short career – and because he convinced all 14 directors that he had the time and ability to continue while at the same time dealing with the demands of simultaneous criminal, judicial and parliamentary investigations.

Yet with each new revelation of wrongdoing, James Murdoch’s own reputation for good governance and management is called further into question, rightly or wrongly. At stake is not only his stewardship of his beloved satellite business but also the ability of Rupert Murdoch’s youngest son to fulfil his father’s wishes and take over the whole of the family firm. Less dramatically, but equally importantly for the investors and directors of BSkyB, will be the questions raised about the company’s own independence after this decision.

It only took a cup of tea at Wapping last week to convince the company’s lead independent director that James Murdoch deserved support. The options open for Nicholas Ferguson were limited, of course. Let’s not forget, there have been no Murdoch charges and the manifold investigations are going to take some time to come to a conclusion.

Indeed, while they play out, the chief operating officer of News Corporation and chairman of Sky could decide that the job he was supposed to be doing in New York from this summer was really rather onerous after all. But no company likes to have its most senior member subject to such high-profile allegations of wilful blindness or mismanagement

If BSkyB is to prove itself an independent company following the collapse of News Corporation’s bid, then its actions over the continuing chairmanship of James Murdoch is key. He could have been asked to stand down temporarily while so much is going on. Only time will tell how wise that decision was.

The Guardian