Saturday, 17 March 2012

James Murdoch's position looking shakier

Last night it was revealed that James Murdoch isn't going to stand for re-election at Sotheby's. He has been the target of pressure from investors who want his removal, led by the US unions. Of all the positions I thought he could lose I thought the Sotheby's one was the safest. But coming after his stepping down from GSK, this was the next obvious target.

There is, of course, much focus on his continuing chairmanship of BSkyB. As I've blogged previously, the threats to him are various - DCMS committee report, Ofcom 'fit and proper' test, possible police interview - and any one of them potentially could kill his chairmanship off. It's in this context that we should consider both his letter to the DCMS committee, and the noise around Nick Ferguson stepping down as chair of BSkyB.

First the letter. Essentially it's an articulate defence of his position that aims to invite the conclusion that he wasn't told enough to know, and what he was told wasn't conclusive. He goes as far as trying to tell the committee members what *that* email actually meant. It looks like an attempt to steer the committee to give him a minor ticking off (which a cowed BSkyB board might conclude can be toughed out) rather than accusing him of incompetence or, much worse. of misleading Parliament. I think we can probably conclude that the Tories on the committee will prevent the worst outcome, but a charge of incompetence from Parliament would probably do for him.

On the SVG rejig, I'm personally not convinced it's necessarily about, or solely about, freeing up Nick Ferguson to be BSkyB chair. There are evidently other things at play at SVG. In addition, I do wonder if Ferguson is a safe bet now as chair in the event Murdoch has to step down. Remember that he has backed Murdoch even as the picture of what he knew and when has become more... ahem... complicated. I personally think he made a bad judgment call. Also I think BSkyB could have taken the sting out of this last year - what about Murdoch temporarily relinquishing the chair but continuing as a NED until things worked out? I don't think that's a realistic option now.

In addition, by taking the position that they wouldn't even review the chair's position unless anything 'material' occurred, the board has essentially put the decision in other people's hands. So, when *that* email appeared before xmas, the company would have got a lot of media calls about whether it was considered material or not. Similarly the news that Ofcom had set up a project. For these reasons, I don't think yo can conclude that Nick Ferguson has played a blinder, and I think some shareholders will want an entirely new chair.

To conclude, I think that unless James Murdoch clears all three hurdles faultlessly he is going to have to go. And if the board doesn't ask him to go, shareholders will increase the pressure. In short I don't think he'll make it to the next AGM. But then I thought he would have gone last Summer, so what do I know?

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