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Crunch time for Murdoch as L&G joins quit call

November 28, 2011

By Chris Forrester & Nick Snow

One of the City’s biggest investors, Legal & General, has joined a growing band of shareholders set to oppose James Murdoch’s re-election as chairman of BSkyB at the AGM on Tuesday.

L&G, which supported his chairmanship last year and holds 2.9 per cent of the company, has changed its view on the suitability of Murdoch to lead the board following the collapse of News Corporation’s attempt to acquire the 60 per cent of BSkyB it does not already own.

Other potential members of the voting rebellion are Aviva, British Airways Pensions Investment and the Co-operative Asset Management. All also opposed Murdoch’s re-election at a shareholder vote last year.

Kames Capital, which holds 1.6 per cent of BSkyB shares, also came out over the weekend as a rebel shareholder expected to oppose Murdoch’s continued leadership of the board. Others reportedly linked to the likely rebellion include Calstrs, Franklin Templeton, Florida State Board of Administration and CBIS.

Three US-based investors (California State Teachers Retirement System, Florida State Board of Administration and Christian Brothers Investment Services) have also lodged votes for him to quit.

However, earlier in November the current independent directors of BSkyB stated they would be backing his re-election to the broadcaster’s board. Scottish Widows and Capital Research Global are said to be backing his re-election. Also Odey Asset Management, the hedge fund run by Rupert Murdoch’s former son-in-law. The size of the protest vote is also likely to be limited by News Corporation’s 39 per cent stake.

The question for the AGM isn’t whether there will be an overwhelming vote against James Murdoch, which is not expected to happen, but the size of the vote against him. Anything above 20 per cent of shareholders voting against him would likely create problems. More problems might be created should a large number of investors abstain from expressing a formal opinion.

Moreover, the Sky board needs to gird itself for more potential bad news about Murdoch emerging during the current inquiry into phone hacking.


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