BSkyB investors back James Murdoch

The Murdoch family has clung on to its influence at BSkyB, the UK’s largest pay-TV operator, after winning overwhelming support from shareholders.

Murdoch enjoyed an easy ride at the company’s Annual General Meeting (AGM), with over 95 percent of shareholders voting for his re­appointment as a non-executive director. This strong endorsement might surprise casual followers of the last 18 months’ events surrounding BSkyB and News Corp (run by James’ father Rupert Murdoch), which still effectively controls the operator with a 39-percent stake.

News Corp became embroiled in the now infamous phone hacking scandal during the summer of 2011, as it became clear that some of its newspapers, notably the News of the World, had been tapping the phones of people in the news. This was quickly followed by closure of News of the World, eventually followed in April 2012 by James Murdoch’s resignation as BSkyB chairman after a campaign that included some shareholders formed to get him out, partly to clear BSkyB of the toxic associations. Then came an assessment by Ofcom into whether Sky was fit and proper, concluding that James Murdoch’s conduct fell short of “the standard to be expected."

But, Ofcom conceded that there was no reason why James Murdoch should not be retained as non-executive director of Sky. Since then, he has managed to slip away from association with the phone hacking. At the same time, BSkyB (the UK brand, used interchangeably with ‘Sky’ in the country) continued to meet or exceed analyst expectations, and the AGM took place just after BSkyB had reported positive first-quarter results, with recent price rises helping revenues up 3.5 percent year-on-year to £1.7 million ($2.5 billion). Shares rose 3.9 percent on the news, which was also positive for subscriber additions, up by 48,000 households for the three months ending Sept. 30 compared with the same quarter of 2011.

Murdoch is perceived as a competent director and at least partly instrumental in recent success, including a strong multi-screen strategy that is pulling in new subscribers to online-only packages without as yet at least cannibalizing the core satellite customer base. Sky confirmed plans to add Sky Sports content to its most recently launched online video service, ‘Now TV,’ available to anyone in the UK with a broadband connection by the end of 2012, and not confined to existing subscribers.

OTT looks like it has also helped gain and maintain subscribers for the main satellite service, with the number of unique users for its ‘Sky Go’ package available only to existing satellite customers rising 75 percent year-on-year.

At the same time, Murdoch appears to have survived the phone hacking scandal with his reputation scarred but not fatally wounded.