Advanced Television

News Corp: FBI probe – Sky: Murdoch shouldn’t be chair

July 15, 2011

The Federal Bureau of Investigation has confirmed it is responding to calls from Congress and investigating whether the News of the World hacked into the mobile phones of the relatives of victims of 9/11. It is also being called on to look into the accusations News Corp executives bribed police in the UK as this could contravene US laws.

Meanwhile PIRC, Pensions Investment Research Consultants – the representative of independent shareholders, has said the board of British Sky Broadcasting should consider the appointment of an independent chair.

Alan MacDougall, managing director of PIRC, said: “We have had concerns about weak governance, related party transactions and improper controls at BSkyB since it first listed. We recommended shareholders oppose James Murdoch’s election as chair in 2008, and his re-election last year, and would do so again because we consider his relationship to the controlling shareholder clearly compromises his independence. Questionable governance practices have been tolerated at BSkyB for a long time, and unfortunately many shareholders have not effectively challenged them. That must change.”

“In light of current events it is time for the board to review whether BSkyB and its shareholders would benefit from a new, independent chair.”

This is the latest unwelcome fallout for the company from the phone hacking and police corruption scandal. On Thursday July 14, Rupert Murdoch gave an interview to the Wall Street Journal – which News Corp owns – saying he thought News International had only made ‘small mistakes’ in its handling of the affair. However, the following morning, Rebekah Brooks, the CEO he had tried hard to protect, resigned. It may not be coincidental this move followed an interview given by Saudi Prince Al-Waleed bin Talal Alsaud, who with 7 per cent is second largest shareholder in News, to the BBC. He backed Rupert and James, but made clear if Brooks could not prove her integrity she would have to go.

Meanwhile, Murdoch emphasised to the WSJ that he wasn’t closing or selling any more newspapers, contrary to speculation. However, it is clear that the Murdochs are no longer entirely in control of the destiny of News Corp and predicting what the final outcome for group will be is impossible.

A group of disgruntled US shareholders are already suing the company for allegedly overpaying for daughter Elisabeth Murdoch’s Shine TV company. That suit has been joined by others damning the board for lack of effective oversight.

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