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Last Updated: Friday, 14 November, 2003, 22:21 GMT
Murdoch survives investor protest
James Murdoch
James Murdoch's appointment has angered some shareholders
The new boss of BSkyB, Rupert Murdoch's son James, has been elected to the company's board of directors despite protests from some shareholders.

The appointment of the 30-year-old had been criticised by some as nepotism, with one investor calling the board's composition "extremely disturbing".

Lord St John of Fawsley, the director who led the selection process, defeated a campaign to kick him off the board.

Lord St John won 59% of the vote with the backing of big shareholders.

'Ready to sack son'

I feel the ordinary shareholders have been treated with arrogance and contempt
Ken Colvert, BSkyB shareholder

The elder Mr Murdoch has defended his son's promotion to chief executive of one of Britain's biggest public companies in a BBC interview.

"I know most people in this industry...I was quite convinced that he had the qualities of leadership," he said, adding he would be willing to sack James if he did a bad job.

Mr Murdoch, whose News Corp empire owns four UK newspapers, also courted controversy with his remarks on British politics on Friday.

Mr Murdoch told the BBC that "we may be torn in our decision" over who to support in the next UK election.

He said that "we will have to see how the new Tory front bench looks" now the party has elected Michael Howard as its leader, but that it had yet to prove itself.

Prime Minister Tony Blair had shown "courage in the international sphere", Mr Murdoch added.

Criticism

All the controversial elections at BSkyB went Mr Murdoch's way on Friday.

Another source of controversy, the report on top managers' pay, won an overall majority of 61%.

But shows of hands revealed a majority of the shareholders who turned up for the annual general meeting (AGM) opposed the re-election of Lord St John, and the remuneration report.

Some shareholders attending the meeting were angry at what BSkyB had done.

Lord St John of Fawsley
Lord St John of Fawsley: Under fire
"I feel the ordinary shareholders have been treated with arrogance and contempt," said shareholder Ken Colvert.

Another small shareholder, John Marshall, said: "Lord St John of Fawsley might be a constitutional expert but he is not an expert in corporate governance - he has been on the board too long."

Asked whether he thought Lord St John had done a good job handling the appointment process Rupert Murdoch said : "Yes, I think he did, but remember he was only one of four very independent and qualified people."

Concerns

The chances of James Murdoch's appointment to the board being rejected by the AGM had always appeared slim.

As the slightly-muted criticisms were aired, James Murdoch nervously sipped water, crossing and uncrossing his hands

Rupert Murdoch's News Corp owns about 35% of BSkyB shares and another 10% are held by supportive American investors.

But some shareholders voted against James Murdoch's appointment to register their unease at the board's make-up.

"Our view is that the overall structure of the board is still extremely disturbing from an outside shareholders' perspective," Robert Talbut, chief investment officer at fund manager ISIS, told the BBC.

"We think there is an over-concentration of power or influence in the hands of one particular shareholder body."

But Mr Talbut added that there was "a very good quality business within BSkyB".

Strong profits

The National Association of Pension Funds (NAPF) is also worried about the board's composition and has requested stronger safeguards in the form of independent directors.

"We have written to the board to tell them about our members' concerns regarding the father and son relationship," said the NAPF's Geoff Lindey before the meeting.

Earlier on Friday, BSkyB unveiled an impressive set of results for the July to September period.

Pre-tax profits before one-off items surged to 150m ($252m) and turnover was up 17% to 850m.

Subscriber numbers over the three months grew by 170,000 to seven million.

"The current financial year has started well and we continue to grow both subscribers and revenues," said James Murdoch in a statement.




WATCH AND LISTEN
The BBC's Jenny Scott
"Trying to keep BSkyB in the family has sparked outrage"



SEE ALSO:
Murdoch double act survives AGM
14 Nov 03  |  Business
Why Sky stuck with Murdoch's son
11 Nov 03  |  Entertainment
Shareholder group criticises BSkyB
05 Nov 03  |  Business
The City looks Sky-ward and scowls
04 Nov 03  |  Business


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