Analysts believe chairman has enough support from allies on board to survive
James Murdoch, the embattled head of News Corporation's European operations, went into a crunch board meeting at BSkyB last night (NZT) confident he would survive as chairman of the group.
Sky's board was meeting before its full-year results today, and one of the issues under discussion was to be Murdoch's position. This was after questions were raised about his involvement in the wake of the collapse of News Corp's bid for Sky, in which it holds a 39 per cent stake, and the ongoing phone hacking inquiries.
Yet people close to the chairman were confident the members of the board would not call on him to step down, adding that he retained the support of some of the group's largest investors. Murdoch himself had made it clear to colleagues he did not intend to hand in his resignation.
Six of Sky's directors are in News Corp or Sky's employ. Yesterday, sources close to the company said Murdoch also had the support of several senior independent directors.
Alex de Groote, an analyst with Panmure Gordon, agreed that Murdoch was likely to remain in charge. "It feels as though the mood music has changed and the balance has shifted in his favour," he said.
One source said several of Sky's largest shareholders had thrown their support behind Murdoch in private.
So far, the majority of the largest shareholders have remained tight-lipped over his continuing position as chairman. Several days ago, however, Crispin Odey, head of Odey Asset Management, broke cover to back Murdoch.
One larger institutional investor said it was watching the situation very closely but did not go as far as calling for his resignation. Several investors said they were waiting on the results of the board meeting.
One analyst, who declined to be named, said: "James was a brilliant chief executive of Sky and a very good chairman." He added that should Murdoch change his mind and step down, the company would likely be in the "capable hands" of independent director Nicholas Ferguson.
"If you look at Sky's current position of strength, a lot of that dates back to the infrastructure investment put in place by James Murdoch," the analyst said.
"He understands television. He's the perfect person to oversee Sky."
De Groote said: "It looks like James Murdoch will remain in place and we will all move on. The really interesting thing to look out for will be whether the company returns capital to shareholders."
Analysts at Numis expect the company to report another good operational and financial performance today, forecasting pre-tax profits of £950 million ($1.7 billion). They point out that the company's recent decision to freeze package prices may put its earnings per share forecast under pressure.
Numis said the company could hand out an 80p special dividend or increase that to back a return of up to 150p.