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Nov. 17 (Bloomberg) -- British Sky Broadcasting Group Plc Chairman James Murdoch has the support of most shareholders even as some advisory groups have called for his resignation amid a phone-hacking scandal, its chief executive officer said.
In the run-up to a vote on Murdoch’s position at the annual meeting of Britain’s biggest pay-TV company, most shareholders understand “the huge contribution James has made,” Jeremy Darroch said in an interview yesterday at a conference organized by Morgan Stanley in Barcelona. Murdoch was grilled by U.K. lawmakers last week for a second time as phone-hacking and bribery allegations rocked the unit of News Corp.
Murdoch, who is also News Corp.’s deputy chief operating officer, has come under pressure because he didn’t look into allegations in 2009 when the Guardian newspaper reported that the News of the World tabloid hacked into the phones of celebrities and politician, or in 2010, when lawmakers raised questions. His failure to act triggered a scandal that engulfed News Corp. and thwarted a 7.8 billion-pound ($12.3 billion) bid to buy all of BSkyB. News Corp. currently owns 39 percent.
James Murdoch will face BSkyB investors at the annual general meeting on Nov. 29. At the shareholder meeting last year, he was re-elected with 98.2 percent of the vote.
The stock rose 0.4 percent to 718.5 pence as of 8:18 a.m. in London trading today. Before today, the stock had dropped 2.7 percent this year.
A group of U.K. pension funds, accounting for about 1 percent of BSkyB, on Nov. 11 advised members to oppose Murdoch’s re-election on concerns about his independence and the risk of “contagion.”
PIRC, an investment adviser, said on Nov. 15 that it does not support the appointment of a chairman linked to the controlling shareholder and that his involvement in the hacking inquiry raises concerns over whether he is fit to fulfil his role.
Murdoch’s re-election is also opposed by New York-based proxy advisory firm Glass Lewis & Co., which said his “powerful position” at News Corp. compromised his ability to act in BSkyB’s interest. Franklin Resources Mutual Series, which owns about 3 percent of BSkyB according to Bloomberg data, said in October that Murdoch should step down as chairman.
The position of most BSkyB investors is “very different,” Darroch said in Barcelona.
Testifying for a second time before a U.K. parliamentary committee, Murdoch last week blamed executives at the News of the World tabloid for not telling him in 2008 that intercepting the phones of celebrities and politicians went beyond a single reporter.
Murdoch’s second testimony came after News Corp. investors lodged a protest vote at the annual meeting against Rupert Murdoch, the company’s chairman and CEO, and his sons. James received the highest percentage of votes against his election to the board, at 35 percent.
BSkyB’s board backed Murdoch on Nov. 11 and the company’s senior independent director Nicholas Ferguson said that Murdoch’s handling of the scandal at parent company News Corp. had “no effect on sales, customers or suppliers over the last five months.”
BSkyB on Oct. 19 reported a 16 percent increase in fiscal first-quarter operating profit, topping analyst estimates, as the pay-TV broadcaster sold more broadband products to its subscribers.
Since the revelations in July that the News of the World had intercepted the voicemail of a murdered schoolgirl, News Corp. has tried to limit the damage by closing the 168-year old News of the World tabloid, once Britain’s biggest-selling tabloid.
At least 17 people have been arrested by police investigating phonr hacking and bribing police officers at News Corp.’s U.K. newspapers. James Murdoch joined News Corp.’s U.K. publishing unit News International as chairman in December 2007, after the alleged incidents took place.
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--Editors: Simon Thiel, Kenneth Wong.
To contact the reporter on this story: Jonathan Browning in Barcelona via firstname.lastname@example.org.
To contact the editor responsible for this story: Kenneth Wong at email@example.com