Entertainment Industry

Category: BSkyB

Despite Murdoch furor, BSkyB says it is a 'fit and proper' broadcaster

British Sky Broadcasting insisted that it remains a "fit and proper" holder of a broadcasting license in Britain, despite a damning parliamentary report on media baron Rupert Murdoch, whose News Corp. owns a controlling stake in the company
LONDON -- British Sky Broadcasting insisted Wednesday that it remains a "fit and proper" holder of a broadcasting license in Britain, despite a damning parliamentary report on media baron Rupert Murdoch, whose News Corp. owns a controlling stake in the company.

In an earnings report, the lucrative satellite television service said it was cooperating with British regulator Ofcom as part of the agency's evaluation of whether BSkyB remains a suitable holder of a broadcasting license.

The company said its "positive contribution to U.K. audiences, employment and the broader economy, as well as its strong record of regulatory compliance and high standards of governance" qualified it to maintain its license.

The statement came a day after an excoriating report by a parliamentary committee branded Murdoch as "not fit" to run a major international company. The report accused three senior News Corp. executives of lying to the panel during its investigation into phone hacking by the News of the World.

Murdoch shut down the tabloid last summer at the height of public outrage over phone hacking, which now appears to have been common practice at the paper. The furor also forced Murdoch to abandon his bid to buy the 61% of BSkyB that News Corp. does not already own.

The head of BSkyB sought to put some distance between his company and Murdoch's on Wednesday.

"It's important to remember that Sky and News Corp. are separate companies," Chief Executive Jeremy Darroch told reporters. "We believe that Sky's track record as a broadcaster is the most important factor in determining our fitness to hold a license. And the evidence shows that Sky serves U.K. audiences and customers well."

BSkyB reported a 5% rise in revenue over the last nine months, compared with same period a year earlier. Its adjusted operating profit during that period exceeded $1.4 billion, a 15% increase.


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Photo: Media magnate Rupert Murdoch and son James attend a horse race in Britain in March 2010. Credit: Adrian Dennis / AFP/Getty Images

James Murdoch survives BSkyB vote despite dissent

Despite the taint of the persistent British phone-hacking scandal, James Murdoch on Tuesday was reelected as chairman of the powerful British Sky Broadcasting television service

Despite the taint of the persistent British phone-hacking scandal, James Murdoch on Tuesday was reelected as chairman of the powerful British Sky Broadcasting television service.

The youngest son of Rupert Murdoch received the support of 81.2% of votes cast in Tuesday's election. Nearly 19% of shareholders voted against him. James Murdoch, 38, also is deputy chief operating officer of News Corp., which owns 39% of the BSkyB shares, and has been considered the likely heir to his father's media empire. 

Stripping out the votes held by News Corp., James Murdoch received far less support. Slightly more than 55% of the independent shareholders voted for his retention on the board. Nearly 32% opposed his continued tenure, and the remaining 12.9% withheld their votes.

In October, James Murdoch survived a vote of no confidence during the annual meeting of News Corp. investors. At that time, he retained his position as a director in the New York-based media giant. However, he faces continued hearings in the British Parliament concerning his oversight of News Corp.'s U.K.-based newspaper division, and his handling of the phone-hacking scandal that led to the shuttering of News of the World tabloid. 

In July, fallout from the scandal forced News Corp. to withdraw its $12-billion bid to buy out the remaining shares of BSkyB. James Murdoch on Tuesday reaffirmed News Corp.'s continued role as a long-term shareholder in the television service.

In his statement to shareholders, he also said that BSkyB passed its long-term target of 10 million TV customers last year. "This is a significant achievement," he said.  "But more important than any single target is the way that our business has been transformed through constant appetite for change and a strong culture of continuous improvement."

The vote results were reported by RNS, a news service of the London Stock Exchange.


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-- Meg James

Photo: James Murdoch leaves Tuesday's annual meeting of British Sky Broadcasting shareholders in London. Credit:  Gareth Fuller / Associated Press

News Corp. profits fall as hacking scandal continues to take toll

Rupert Murdoch reads the last edition of the News of the World tabloid

The British phone hacking scandal continues to take its toll on News Corp.

The media conglomerate on Wednesday reported a 5% drop in its fiscal first-quarter earnings, as News Corp. incurred $91 million in charges associated with shutting down its News of the World tabloid in London that has been at the center of the scandal.

News Corp. also incurred $130 million in "other" charges, which include the costs of dropping its bid to acquire 100% of satellite broadcaster British Sky Broadcasting.

Taken together, these charges eroded the company's net income, which fell to $738 million or 28 cents a share, compared with $775 million or 30 cents a share for the same period last year. Meanwhile, revenue grew to $7.96 billion for the quarter that ended Sept. 30, up 7% from a year earlier because of double-digit growth from the company's cable and film groups.

The cable network group, which includes the FX network and Fox News, remains News Corp.'s primary revenue generator. It produced operating income of $775 million for the quarter, up 18% from a year earlier; reflecting higher advertising revenue and higher fees paid by cable, satellite and telecommunications companies for the rights to distribute Fox's cable networks.

News Corp.'s film group reported a 24% increase in operating income for the quarter to $347 million, fueled by the  performance of "Rise of the Planet of the Apes," which grossed more than $450 million in box-office receipts and home entertainment sales of the animated release "Rio" and "X-Men: First Class."


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Photo of Rupert Murdoch reading the final issue of the News of the World tabloid. Credit: Frank Doran / Rex Features





Rupert Murdoch's L.A. dinner featured steak -- but not hacking

It's a summer tradition at News Corp. Top Los Angeles-based entertainment executives, along with their spouses, mingle with members of the company's board of directors for an elegant dinner at Chief Executive Rupert Murdoch's Benedict Canyon home.

The affair -- held Monday night at Murdoch's mansion, once owned by MCA founder Jules Stein -- always occurs the evening before the summer board meeting in Los Angeles.

And this year, there were as many hot seats as hot dishes.

News Corp. has seen its market value tumble during the last month in the wake of the British phone hacking scandal. The crisis has put a dark cloud over the company and its management. News Corp. last month shuttered its 168-year-old News of the World tabloid and withdrew its planned $12-billion purchase of the remaining shares of British Sky Broadcasting, the region's top pay-television provider. Two senior executives, sullied by the scandal, stepped down. More than 10 people in Britain have been arrested.

Probes of News Corp. activities have been launched by governments in both Britain and the United States. James Murdoch, often mentioned as the heir apparent to his father to eventually run the company, has been tarnished by the mess.  James Murdoch, who has been responsible for News Corp.'s European operations since 2007, approved large settlements to several victims of the phone hacking -- a decision he has said he now regrets because he had insufficient information.

Meanwhile, some investors have demanded action by News Corp.'s board.  They have complained that several of the independent directors are not as independent from Rupert Murdoch as they should be. 

For example, a key independent director is Viet Dinh, a Georgetown University law professor who served in former President George W. Bush's Justice Department, is the godfather of a son of Lachlan Murdoch,  Rupert Murdoch's oldest son.  Dinh oversees the company's internal review of the phone hacking scandal, which was expected to be discussed at Tuesday's board meeting.

The menu Monday night included steak, a vegetarian dish and perhaps a little avoidance.

Rupert Murdoch thanked everyone for attending, according to people present.

The 80-year-old patriarch, who hosted the dinner along with wife Wendi Deng, then expressed his gratitude to the spouses for putting up with the long hours and hard work that their mates must put in to be part of the News Corp. family. 

But Murdoch only briefly mentioned his British troubles.  He said the problems were isolated to one part of the company  -- and had no effect on the whole.

James Murdoch, who serves on the board and is deputy chief operating officer, was in attendance, as were more than a dozen executives who run key News Corp. operating units, including News Corp. Chief Operating Officer Chase Carey and Chief Financial Officer David DeVoe.

Other News Corp. executives who attended included: Fox Entertainment Chairman Peter Rice; 20th Century Fox Television Studio Co-Chairmen Gary Newman and Dana Walden: Fox Entertainment President Kevin Reilly; 20th Century Fox Film Production President Emma Watts; Fox Sports Chairman David Hill; Fox Sports Vice Chairman Ed Goren; Fox Sports co-Presidents Eric Shanks and Randy Freer; Twentieth Television President Greg Meidel; and the company's chief human resources officer, Beryl Cook.  Communications executives Teri Everett and Julie Henderson were on hand.

It was unclear whether Wendi Deng served pie for dessert.

-- Joe Flint and Meg James


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James Murdoch remains chairman of BSkyB

JamesMurdochStory James Murdoch finally got some good news.

The embattled News Corp. executive, tarnished by the phone-hacking scandal at the now-closed News of the World, is still chairman of British Sky Broadcasting after a Thursday board meeting. There had been speculation that the probe into News of the World could weaken his position at BSkyB, Britain's largest pay television provider, and possibly lead to his having to step down. So far that bullet has been dodged.

Given that Murdoch's News Corp., owns 39% of BSkyB and its board of directors includes several current and former executives of the company, removing him would have been a difficult task. News Corp. had been planning to buy the 61% of BSkyB it doesn't already own, but had to table those plans after the News of the World mess grew from hacking into the voicemail accounts of celebrities and royal family members to victims of crime and terrorism.

Murdoch, the youngest son of News Corp. Chairman Rupert Murdoch, serves as deputy chief operating officer and has oversight over the conglomerate's European operations. He has been on the hot seat for the last few weeks over how he has managed the company's reaction to the scandal and how aware he was of what the paper was doing.

How the News of the World scandal plays out and its consequences for James Murdoch is crucial to News Corp. as he is seen as the likely successor to his father, who is 80.


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-- Joe Flint

 Photo: James Murdoch. Credit: EPA.

In lawsuit, investors claim 'a culture run amok' at Rupert Murdoch's News Corp.

Lawsuit agains Rupert Murdoch's News Corp. revised
The News of the World phone-hacking scandal continues to be an out-of-control brush fire for Rupert Murdoch's media empire.

Although Murdoch's News Corp. on Sunday shut down the 168-year-old tabloid in an effort to quell the controversy, British officials now are casting a wary eye on the company's bid to acquire 100% of Britain's largest pay-TV service -- British Sky Broadcasting. News Corp. currently owns 39% of BSkyB. Murdoch on Sunday flew to London to manage the crisis.

But on Monday, embers from the scandal touched down in the U.S.  A group of institutional investors led by Amalgamated Bank in New York revised a lawsuit filed earlier this year against News Corp. to include claims of "improper conduct" at high levels of the media company.  

Amalgamated Bank, which is leading the legal effort on behalf of several investment funds, first sued News Corp. in March in a Delaware court after Murdoch agreed to spend $675 million to buy daughter Elisabeth Murdoch's British television production company, Shine Group. 

The bank has been asserting that the 80-year-old media mogul operates News Corp. "as his own private fiefdom with little or no effective oversight from the board." 

On Monday, Amalgamated amended its complaint to fold in accusations stemming from the News of the World scandal. The lawsuit notes that at least two longtime Murdoch newspaper executives -- Rebekah Brooks and Andy Coulson -- have been implicated in the scandal. On Friday, Coulson, the former newspaper editor and a onetime aide to British Prime Minister David Cameron -- was brought in for questioning by Scotland Yard.  The entanglements between the newspaper, politicians and police have made the scandal front page news in Britain -- and the U.S.

The bank said Murdoch's son James Murdoch -- who in March was elevated to the No. 3 position within News Corp. as its deputy chief operating officer -- was deeply involved in the wiretap scandal. James Murdoch acknowledged that he authorized payments to some of the victims of the newspaper's phone hacking. He has been in charge of News Corp.'s European and Asian operations since 2007.  

"These revelations should not have taken years to uncover and stop," the bank said in its complaint, which now stands at 94 pages, compared with an earlier version that totalled 46 pages.

"These revelations show a culture run amuck [sic] within News Corp and a board that provides no
effective review or oversight," Amalgamated claimed. "In fact, Brooks was promoted while the scandal has been unfolding. Murdoch's son and fellow board member, James, has been personally involved in the cover-up of the extent of the scandal, as he finally confessed on July 7."

The bank contends that "given the close relationships with Murdoch, Brooks and Coulson, it is inconceivable that Murdoch and his fellow Board members would not have been aware of the illicit news gathering practices" at the News of the World.

"Yet, the Board took no real action to investigate the allegations until July 7, 2011, when Murdoch selected two of his codirectors to deal with the imbroglio," the lawsuit said.

A News Corp. spokeswoman declined to comment.


News Corp.'s News of the World debacle will have big aftershocks

News Corp. shares hammered in wake of British phone hacking scandal

News of the World: News Corp., competitors may as well be covering different scandals

-- Meg James

Photo: A photo illustration of various front pages of London newspapers reporting on the closing of News of the World. Credit: Stewart Stanley / Getty Images

News Corp. shares hammered in wake of British phone hacking scandal

News Corp. shares hammered in wake of British phone hacking scandal
Shares in Rupert Murdoch's empire, News Corp., have been roughed up this week as the British phone hacking scandal continues to cast an ominous cloud over the global media company's management.

By Friday, after four days of salacious news coverage, shares of News Corp. had fallen 6%, erasing $2.6 billion in market value. A week ago the shares were trading above $18. They closed Friday at $16.75 in New York.

The crisis has tarnished the reputation of Murdoch and his youngest son, James, who four months ago was elevated to the No. 3 management spot in News Corp. Now deputy chief operating officer, James Murdoch has been in charge of the company's Asian and European operations, including its British newspapers, since 2007.James Murdoch

The biggest concern so far for investors is that the controversy threatens News Corp.'s bid to take control of a media jewel -- Britain's largest pay TV service, British Sky Broadcasting. Government regulators had been expected this month to approve News Corp.'s buyout of the remaining BSkyB shares. Analysts now predict that approval of the BSkyB deal could be delayed up to a year, a costly proposition for  News Corp. 

BSkyB investors also have taken it on the chin as its shares have lost 12% in value this week.

In an attempt to quell the outcry in Britain, James Murdoch on Thursday announced that British subsidiary News International was shutting down the 168-year-old News of the World, the tabloid at the center of the storm. Sunday's edition will be the paper's last, a closure that eliminates the jobs of 200 newspaper staff members. 

Two people were arrested Friday in London in connection with the scandal, including former News of the World editor Andy Coulson, who until earlier this year was an aide to British Prime Minister David Cameron. Police also are investigating whether a News International executive deleted millions of emails to obstruct Scotland Yard's probe of the phone hacking scandal, the Guardian reported.

There are increasing questions about James Murdoch's involvement. He acknowledged his oversight in approving payouts for victims of the phone hacking scandal. "I did not have a complete picture when I did so. This was wrong and is a matter of serious regret,” James Murdoch said Thursday.

OldRupert Analysts said the scandal could force the company to review its management succession plans.

"There have been questions about whether these events undermine James Murdoch’s credentials to succeed his father, and perhaps that is why News Corp.'s share price is lower," Needham & Co. media analyst Laura Martin wrote in a research note Friday. "We don't think so."

She wrote that Wall Street investors have a favorable impression of News Corp.'s second in command, Chief Operating Officer Chase Carey. Shareholders, she wrote, do not know James Murdoch well enough to assess his ability to run the company.

Martin did speculate that the controversy could hasten the retirement of 80-year-old Rupert Murdoch. Since he controls News Corp. through his super-voting shares, Rupert Murdoch could not be forced out.

"There is no question that Rupert will go down in history as one of the best businessmen and most accurate visionaries of his age," Martin wrote, adding that News Corp. stock would be worth less "without Rupert Murdoch at the helm, regardless of who he hands the reins to."


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News Corp. general counsel Lon Jacobs to leave media giant

News Corp.'s news of the World debacle will have big aftershocks

-- Meg James

Top photo: A photo illustration of various front pages of London newspapers reporting on the closing of News of the World. Credit: Stewart Stanley / Getty Images

Middle photo: James Murdoch arrives for work Friday at News International in East London.  Credit:  Ki Price / AFP/Getty Images  

Bottom photo: News Corp. Chief Executive Rupert Murdoch on Friday at the Allen & Co. media conference in Sun Valley, Idaho.  Credit: Scott Eells / Bloomberg News


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