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Last Updated: Tuesday, 4 November, 2003, 13:56 GMT
The City looks Sky-ward and scowls

Analysis
By Declan Curry
BBC Breakfast business presenter

Investors are giving the new BSkyB boss, James Murdoch a mixed reception.

Satellite TV has always been strong on family shows.

The Simpsons. The Ewings. The Colbys and the Carringtons.

Now Sky has given us another dynastic drama.

The Murdochs.

30 year old James Murdoch took up his new job as chief executive of the satellite company BSkyB this morning. He joins the other Murdoch in charge of the company - his father Rupert, the global media mogul who's also BSkyB's chairman.

Welcome to the family business

Big investors want reassurance that with two Murdochs now in charge, BSkyB won't become a Murdoch family pet

If BSkyB was a family-owned company, this would be no-one's business.

This happens all the time in private firms. The top jobs stay in the family. The company is passed from father to son, to grandson.

But BSkyB is not a family concern. It's a listed company, owned by its shareholders, with stock traded on the London Stock Exchange.

The Murdoch family controls just over one-third of the shares through its companies and investments - a substantial chunk, but not one which gives it exclusive control of the business.

It's our BSkyB too

The people who own the other two-thirds of the company have a right to expect the business will be run on their behalf too.

James Murdoch's transformation from a bleach-haired college dropout with an eyebrow stud to a sober-suited TV executive has been rapid - and not without controversy.

And that's why there's been such a fuss about Murdoch junior's appointment.

The other shareholders want to be sure they've got a chief executive who will pay attention to their needs - not follow a family whim.

Those shareholders, by the way, probably include you and me. BSkyB is Britain's 19th largest company, and its shares are owned by many of the big pension companies who manage our old age savings.

Some of them are not happy. At least one firm has spoken out in public - still a rare event in the City.

Morley Fund Management says it is "dismayed" - but not surprised - by James Murdoch's appointment.

Is James his own boss?

It's not saying Mr Murdoch is stupid, or doesn't have the qualifications for the job. Almost everyone in the City I've spoken to about this thinks he's one of the brightest players in the subscriber TV industry.

He turned around massive losses at another Murdoch-dominated business, Star TV in Asia. He ran his father's internet businesses. He founded his own hip-hop record label.

The City doesn't doubt his talent.

It's worried about his independence.

Big investors want reassurance that with two Murdochs now in charge, BSkyB won't become a Murdoch family pet.

The Association of British Insurers - which speaks for many fund managers - is demanding a "compelling" explanation for the appointment.

Investors are grumbling

Sky has gone some way to soothe those concerns.

It's appointing a new independent deputy chairman. And one of its best known directors - the post office boss Allan Leighton - is to meet with some disgruntled investors.

Mr Leighton says the selection process that preceded Mr Murdoch's appointment was the most rigorous he'd seen. He called it a role model for independence.

Will James Murdoch be strong as well as clever - and stand up to his old man if the occasion demands it?
But still there are grumblings.

And investors may take their revenge on the people who are meant to look out for them in the first place - the independent directors in the boardroom.

Those directors come up for re-election next week, at the company's annual meeting.

Behind the scenes, lobby groups are calling on the City's big guns to vote against them - in effect, to sack the board.

The unanswered question

The highest profile casualty may be the company's most senior independent director - Lord St John of Fawsley, who joined the business world after a political life as plain old Norman St John Stevas. (He was in Margaret Thatcher's early governments.)

He's been on the BSkyB board for more than a decade. Some on the City frown on that length of service; they fear a long-time association with a company can weaken a director's independence.

Lord St John was also in charge of the hunt for a new chief executive.

James Murdoch may well be the most talented man for the job. After all, his father is no fool - he's hardly likely to threaten any of his business interests, simply to give a relative a job.

And any child of Rupert Murdoch is going to have an unrivalled insight into the media business.

But does that make him the right man for the job? Will he be strong as well as clever - and stand up to his old man if the occasion demands it?

For the City, that's the crucial question - and it's still unanswered.




SEE ALSO:
Q&A: Murdoch Jr takes BSkyB reins
04 Nov 03  |  Business



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