BSkyB has appointed media tycoon Rupert Murdoch's son James as its new chief executive, setting the scene for a bruising confrontation with shareholders.
James Murdoch: Meet the new boss
BSkyB said late on Monday that James Murdoch had been recommended unanimously by a nominations committee made up of four non-executive board members.
James Murdoch's candidacy for the top job has been championed by his father, whose News Corporation media conglomerate is BSkyB's biggest shareholder, with a 35% stake.
But his appointment goes against the wishes of other BSkyB investors, who fear that it will hand too much control to NewsCorp.
They have also questioned whether 30-year-old James Murdoch - previously head of NewsCorp's Asian pay TV subsidiary, Star TV - has the skills and experience needed to run BSkyB, Europe's largest and most successful satellite broadcaster.
"We have serious corporate governance concerns that these changes do not appear to address," said a spokeswoman for the Association of British Insurers.
"We have no way of telling whether their selection process has been robust and objective, as the company has declined to keep us informed."
One concern is that with two Murdochs at the top, BSkyB's strong cash-flow could be used to prop up the balance sheet at parent News Corp.
The issue is likely to come to a head on 14 November, when BSkyB is scheduled to hold its annual general meeting.
There has been speculation that some investors may use the meeting to demand that Rupert Murdoch surrender his role as BSkyB chairman as the price for installing his son as chief executive.
The company has named banker Jacob Rothschild to the post of non-executive deputy chairman under Murdoch Senior, in the hope of staving off concerns.
However, the National Association of Pension Funds - a powerful shareholder lobby - on Monday raised the possibility that rebel investors may call an extraordinary general meeting to vote off BSkyB's entire board.
The BSkyB succession dispute comes at a time when shareholders are becoming increasingly assertive.
Last month, shareholders in ITV merger partners Carlton and Granada blocked the appointment of Carlton boss Michael Green as chairman of the combined company.
In an effort to deflect investor criticism, BSkyB said on Monday that directors affiliated to NewsCorp had not voted on the appointment of a new chief executive.
It added that the nominations committee, headed by Lord St John of Fawsley, had carried out a "rigorous" search process, and had considered a wide range of "excellent" candidates.
What's in an age?
Youngest FTSE 100 chief executive is Simon Wolfson, of Next, age 35
Youngest FTSE 100 chairman is Viscount Rothermere, of Daily Mail & General Trust, age 35
Non-executive director, Fabiola Arrendondo, of BOC, is also 35
Executive director, George Weston, of Associated British Foods, is 38
Oldest FTSE 100 director is Masao Inagaki, 80, who holds a non-executive post at WPP
"He follows a series of successful chief executives," said Rupert Murdoch.
"I feel confident that James will carry on their work and continue the company's success."
Path to the top
James Murdoch said it was "a privilege to have the opportunity to play a part in the company's future."
Mr Murdoch junior's appointment makes him the youngest chief executive of any FTSE 100 company, displacing 35-year old Simon Wolfson of clothes retailer Next.
The younger of Rupert Murdoch's sons, he dropped out of Harvard in 1995 to launch a hip-hop record label, Rawkus, with friends.
He later took charge of NewsCorp's internet operations, and helped set up the now defunct Australian telecoms venture One-Tel, before taking on the top job Hong Kong-based Star TV.
He is due to take over the day to day running of BSkyB from Tuesday.
Before James Murdoch's appointment was confirmed, BSkyB shares closed 3.6% higher at 663p.