| LONDON, July 28
LONDON, July 28 James Murdoch was unanimously
confirmed as chairman by BSkyB's BSY.L board, winning a
reprieve from a phone-hacking scandal that threatens to draw him
into multiple investigations, two sources briefed on the board
meeting told Reuters.
Thursday's meeting of the BSkyB board was its first since
the crisis forced News Corp (NWSA.O) to close the News of the
World newspaper, drop a $12 billion bid for BSkyB and offer up
James and his father Rupert to answer questions in the UK
Several shareholders had demanded he step down to avoid
conflicts of interest, fearing contamination from the scandal
that acquired new dimensions earlier this month when it was
revealed that a murdered schoolgirl had had her phone hacked.
One of the sources said: "The role of chairman was discussed
at some length," and added that the board would be monitoring
external developments that might prove relevant to Murdoch's
Murdoch did not oversee operations at the News of the World
at the time the hacking occurred but did approve large payoffs
to victims after he took charge of News Corp's British newspaper
He was chief executive of BSkyB before moving to News Corp
and is widely considered to have done a good job.
On Thursday, a children's charity said the mother of another
murdered schoolgirl, who was championed by the News of the
World's "Sarah's Law" anti-paedophile campaign, had been told
that her own phone may have been targeted. [ID:nL6E7IS1GK]
The Phoenix Foundation, a children's charity that Sara Payne
co-founded after her daughter Sarah was killed by a paedophile
11 years ago, said police had found her details on a list seized
from an investigator employed by the tabloid.
The anti-paedophile campaign was a pet project of
then-editor Rebekah Brooks, who was arrested earlier this month.
ARC OF A CRISIS
The phone-hacking affair is now the subject of three
separate investigations in Britain: a criminal police
investigation, a parliamentary probe and a judicial inquiry that
opened on Thursday.
Murdoch's testimony given in parliament last week has
already been called into question by two ex-News of the World
executives, who say he was aware of evidence that showed the
hacking was not limited to a couple of "rogue" individuals.
The now defunct-tabloid's last editor and its chief lawyer
said Murdoch had been mistaken when he told parliament he had
not been aware of an email containing evidence of hacking when
he approved a large payoff to the victim.
Murdoch said he stood by his statement, while the chairman
of the parliamentary committee in charge of questioning the
Murdochs has said he will seek further clarification.
Richard Levick, president and CEO of Levick Strategic
Communications, who has advised countries and companies on
issues including the U.S. prison camp at Guantanamo Bay and the
recent Wall Street crash, says the crisis is far from over.
"If you look at the arc of a crisis, their worst days are
not yet behind them. It's parallel in many ways to Watergate.
Watergate took 18 months to unfold. It appears that this is one
of those elongated crises," he told Reuters.
The Murdochs face further questions from a judge-led inquiry
ordered by Prime Minister David Cameron in response to the
Cameron's own image has been tarnished by his support for
his ex-spokesman Andy Coulson, a former News of the World editor
who was arrested earlier this month.
Judge Brian Leveson, who prosecuted serial killer Rosemary
West in the 1990s, is leading the inquiry into the phone-hacking
allegations, media ethics, and the relationship between media
organisations, police and politicians.
On Thursday, he urged all parties to consider the public
interest, not only their own. He has authority to call any party
to give evidence under oath to the inquiry, which is planned to
take about a year.
"It may be tempting for a number of people to close ranks
and suggest that the problem is or was local to a small group of
journalists then operating at the News of the World," he told a
news conference in London.
"I would encourage all to take a wider picture of the public
good and help me grapple with the length, width and depth of the
Shareholders in News Corp have called for an overhaul of
corporate governance as the crisis spreads.
A spokesman for Co-Operative Asset Management, a small
investor in both News Corp and BSkyB, said on Thursday: "We
believe radical reform is needed at both companies but at News
Corp in particular, and indeed in the newspaper industry in the
UK to stamp out the kind of illegal and grossly invasive
practices that are alleged."
Thursday's BSkyB board meeting in London took place on the
eve of the company's quarterly results announcement. The results
are expected to continue a strong run for the company, and
investors hope a special dividend will also be announced.
The board had said for the last year that it would not be
appropriate to consider such a measure while it was a takeover
target, and many brokers are stoking hopes of a payout now.
Analyst Ian Whittaker of Liberum Capital cautioned, however,
that the moment may be too sensitive politically.
"Given the fast-moving events of the past two weeks,
management may feel now is not the right time to announce a
special dividend, especially given the potential complications
of returning a significant level of cash back to its 39 percent
shareholder News Corp," he said.
"Historically, BSkyB management have emphasised investment
over a return of cash back."