Entertainment Industry

Category: News of the World

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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-- Henry Chu

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

Rupert Murdoch unfit to lead company, British lawmakers say

Rupert Murdoch “exhibited willful blindness” toward the illegal phone hacking that was rife at the News of the World tabloid and is “not a fit person” to head a major international company such as News Corp., a panel of British lawmakers said in a stinging report
This post has been corrected. See the note below for details.

LONDON -- Rupert Murdoch "exhibited willful blindness" toward the illegal phone hacking that was rife at the News of the World tabloid and is "not a fit person" to head a major international company such as News Corp., a panel of British lawmakers said in a stinging report Tuesday.

Murdoch's son, James. also showed poor leadership in failing to get to the bottom of the hacking scandal, but neither he nor his father lied to Parliament about their knowledge of the extent of the problem, the report said.

However, three other senior executives at News Corp. and the now-defunct News of the World -– including Les Hinton, one of Rupert Murdoch’s closest associates -– did mislead Parliament about how widespread the practice of snooping into cellphones was, the report said.

And as a whole, News International, News Corp.'s British arm, deliberately tried to hide the problem by suppressing documents and making statements to Parliament that were not fully truthful, according to the report.

"Their instinct throughout, until it was too late, was to cover up rather than seek out wrongdoing and discipline the perpetrators," the report said.

The scathing report by Parliament's committee on the media comes a week after Rupert and James Murdoch testified here before a judicial inquiry into media ethics. The report, months in the making, is certain to add pressure on the Murdochs as their global media empire struggles to deal with the continued fallout from the hacking scandal.

In particular, the report's most controversial statement, that Rupert Murdoch is unfit to lead an international company, could imperil News Corp.'s nearly 40% stake in the television company British Sky Broadcasting. British regulatory authorities are charged with determining whether major stakeholders such as Murdoch are "fit and proper" owners of mass media in Britain.

The committee's finding on Murdoch's unfitness was not unanimous. In fact, it led to a bitter split along party lines, with four Conservative Party members refusing to endorse the report on the grounds that such a declaration was outside the scope of the panel's investigation.

The report was approved on a 6-4 vote.

Committee members stressed they were completely agreed on their finding that three of Murdoch’s senior executives essentially lied to Parliament about phone hacking, which News International insisted for years was confined to one "rogue reporter."

One of those executives, Colin Myler, is now the editor of the New York Daily News.

Though misleading Parliament is a serious offense, it is unclear what punishment can actually be applied.

The committee called it "astonishing" that Rupert and James Murdoch took so long to find out that phone hacking went far beyond a lone reporter. Police say that thousands of people may have had their phones hacked into by the News of the World in its pursuit of sensational stories.

The scandal exploded in the public consciousness last summer with the revelation that among the hacking victims was a 13-year-old girl who was kidnapped and later found slain.

[For the Record, 11:41 a.m., May 1: A previous version of this post stated that the New York Daily News was owned by Rupert Murdoch's News Corp. The New York Post is owned by the company.]

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-- Henry Chu

Photo: Media tycoon Rupert Murdoch leaves from a London courthouse last week after testifying at a British judicial inquiry on media ethics. Credit: Justin Tallis / AFP/Getty Images

News Corp.'s relations with British politicians, regulators questioned

Details of contact between News Corp. executives, including James Murdoch, Rupert's son and the company's deputy chief operating officer, emerged during a judge-led inquiry into press ethics prompted by the scandal at the media giant's tabloid newspapers
LONDON -- Part of being a media mogul is schmoozing with politicians and regulators who have oversight over the industry, but there is a fine line between lobbying for your business and inappropriate contact. Now Rupert Murdoch's News Corp. is being accused of crossing that line when it was attempting to take over British Sky Broadcasting.

Details of contact between News Corp. executives, including James Murdoch, Rupert's son and the company's deputy chief operating officer, emerged Tuesday during a judge-led inquiry into press ethics prompted by the scandal at the media giant's tabloid newspapers. Operatives for News Corp. papers, including the now-closed News of the World, have been accused of hacking into voice mails and paying off police for stories.

At issue are News Corp.'s interactions with Jeremy Hunt, the secretary of media and culture who had oversight over News Corp.'s proposed deal to buy the 61% of BSkyB it didn't already own. News Corp. withdrew that bid after the phone-hacking scandal exploded and put a dark cloud over the company.

During Tuesday's hearing, James Murdoch denied implications that News Corp. engaged in improper discussions with Hunt while seeking approval of the deal, and bristled at the idea that the company would use its media clout to persuade politicians to advance its corporate agenda.

"The question of support of an individual newspaper for politicians one way or another is not something that I would ever link to a commercial transaction like this," Murdoch said. "Nor would I expect ... political support one way or another ever to translate into a minister behaving in an inappropriate way -– ever. I simply wouldn’t do business that way."

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-- Henry Chu and Joe Flint

Photo: James Murdoch: Credit: Matthew Lloyd / Bloomberg

James Murdoch insists he was unaware of widespread phone-hacking

 

James Murdoch, the son of media titan Rupert Murdoch, testified that he had no idea phone hacking was widespread at the News of the World tabloid and that he would have insisted the company "get to the bottom of what was going on" had he known
LONDON -- James Murdoch, the son of media titan Rupert Murdoch, testified Tuesday that he had no idea phone hacking was widespread at the News of the World tabloid and that he would have insisted the company "get to the bottom of what was going on" had he known.

In a London courtroom, Murdoch said he had been assured by underlings that hacking was confined to a "rogue reporter" who was jailed in 2007 for tapping into voicemails left for members of Britain's royal household. Murdoch said he was told that the hacking issue had been safely "packed away" by the time he took control of News International, the British arm of media giant News Corp.

"I was given repeated assurances ... that the newsroom had been investigated, that there was no evidence" of more hacking, Murdoch said at the beginning of his highly anticipated appearance before a judge-led inquiry into media ethics here.

The inquiry was set up last summer after the hacking scandal broke wide open with the revelation that the News of the World had illegally accessed the voicemails left on the phone of a kidnapped teenager. The girl, 13-year-old Milly Dowler, was later found slain.

Police now say the now-defunct News of the World pried into the private voicemails of potentially hundreds of people, including actors, athletes, politicians and family members of murder victims and fallen soldiers.

In his sworn testimony, Murdoch insisted he would have "cut out the cancer" of hacking if he had known that the practice went beyond a single reporter to encompass other journalists at the News of the World. He denied that he was part of a corporate cover-up, but also rejected a suggestion that he was guilty of poor management for not knowing what was going on at one of his newspapers.

The paper's editor and its legal manager were responsible for making sure employees complied with ethical standards, Murdoch said. He also did not participate in editorial decisions, he said.

"I wasn't in the business of deciding what to put in the newspapers," Murdoch testified.

Both Rupert and James Murdoch were called before a parliamentary committee to answer questions on the hacking scandal last July.

Scotland Yard is now pursuing three separate investigations into voicemail interception, computer hacking and payoffs of police and public officials for information.

Dozens of journalists from the News of the World and its sister tabloid, the Sun, have been arrested in connection with the various probes. Britain's chief prosecutor is considering whether to file formal charges against 11 of them.

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James Murdoch resigns from BSkyB ahead of phone-hacking report

-- Henry Chu

Photo: James Murdoch gives testimony in London on Tuesday before a judge-led inquiry into media ethics. Credit: AFP/Getty Images

James Murdoch resigns as BSkyB chairman

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REPORTING FROM LONDON -- James Murdoch said Tuesday he is stepping down as chairman of the satellite TV network BSkyB amid Britain's ongoing phone-hacking scandal and accusations that newspapers under his leadership broke the law and tried to cover it up.

In a letter to other members of the BSkyB board, Murdoch indicated he had decided to resign because of the constant stream of negative publicity surrounding News Corp., whose British arm, News International, is under investigation in the hacking scandal.

"As attention continues to be paid to past events at News International, I am determined that the interests of BSkyB should not be undermined by matters outside the scope of this company," Murdoch wrote. "I am aware that my role as chairman could become a lightning rod for BSkyB and I believe that my resignation will help to ensure that there is no false conflation with events at a separate organization."

News Corp. owns about 39% of BSkyB and has tried to win overall control of the TV service. But it was forced to shelve its bid last summer after the phone-hacking scandal exploded in the public consciousness and prompted a backlash against the company.

The head of News Corp., media tycoon Rupert Murdoch, summarily closed down the weekly tabloid News of the World last July after it was revealed that the paper routinely hacked into the cellphones of celebrities, politicians and even murder victims.

Since then, more than a dozen journalists and executives with News International have been arrested and questioned by Scotland Yard in its wide-ranging probe into allegations of phone hacking and bribery. Police are also investigating whether News International engaged in a coverup of criminal activity at News of the World and its sister tabloid, the Sun.

James Murdoch, who served as chairman of News International until stepping down from that post in February, has consistently denied any knowledge of widespread phone hacking at the papers then under his command. He insists he was led to believe that phone hacking was confined to one "rogue reporter" at the News of the World who was convicted and jailed for his offense.

But many British lawmakers, before whom the younger Murdoch has been called to appear for questioning more than once, have been highly critical of his leadership and skeptical of his denials.

BSkyB said he would be replaced by Nicholas Ferguson, currently the company's deputy chairman.

Chris Bryant, a member of Parliament from the opposition Labor Party, welcomed the report of Murdoch's decision to step down. Bryant has been outspoken in his criticism of Rupert Murdoch's news empire in Britain, which he says has exercised undue influence over British politicians and harassed lawmakers like him who object to it.

"I hope that the British political class ... will never kowtow to any one media mogul, will never allow one body to have so much of the newspapers and the broadcasting in one pair of hands, because in the end I think that leads to terrible hubris," Bryant told the BBC.

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-- Henry Chu

Photo: James Murdoch. Credit: Getty Images

News Corp. second-quarter net income jumps 65% to $1.06 billion

Planet-of-the-apes
Strong performances from the film and cable television business helped propel a 65% jump in News Corp.'s net income for its second quarter from a year earlier, the company said Wednesday.

The media conglomerate reported revenue of $8.98 billion for the quarter that ended Dec. 31, up 2% from the same time a year earlier.  Net income rose to $1.06 billion, compared with $642 million a year earlier. Earnings per share rose to 42 cents.

"The significant growth we reported in the second quarter in the cable network programming, television and filmed entertainment segments clearly validates our strategy to develop and distribute superior wide-ranging content," Chairman and Chief Executive Rupert Murdoch said in a statement.

Cable television remains the engine that drives News Corp. Operating income rose 20% to $882 million for the second quarter, reflecting improved results at Fox's Regional Sports networks, reduced rights costs associated with the NBA lockout, and the continued performance of Fox News. 

The film group saw its operating income more than double, to $393 million, from $189 million in the same period in 2010.  The strong results were driven by home entertainment sales of the animated film "Rio" and summer releases "Rise of the Planet of the Apes" and "X-Men: First Class," as well as the strong second- quarter box office performance of "Alvin and the Chipmunks: Chipwrecked," which generated more than $300 million in worldwide ticket sales. The company also released the multiple Academy Award nominee "The Descendants."

The television group, which includes the Fox broadcasting network and a local television station group, reported a 25% increase in operating income from a year earlier, to $189 million for the second quarter. The growth reflects increased ad revenue from the network's stronger fall schedule, led by "X-Factor" and "The New Girl," as well as a 100% increase in fees paid to distribute network programming.

Publishing took a hit in the second quarter, with operating income falling 43% to $218 million, partly because of the lack of contributions from the now-defunct News of the World tabloid -- closed after revelations of phone hacking and bribes -- and weak advertising revenue from the company's Australian newspapers.

News Corp. took an $87-million charge related to the costs and ongoing investigations connected with the London phone-hacking scandal.

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-- Dawn C. Chmielewski

Photo: Caesar the ape is portrayed by Andy Serkis in "Rise of the Planet of the Apes." Credit: 20th Century Fox

The Morning Fix: 'The Grey' gets the green. 'The Help' cleans up

After the coffee. Before starting my own awards show.

The Skinny: Viacom CEO Philippe Dauman took a 50% pay cut in his salary to just $43 million in 2011. My offer to my bosses is to work for 50% of what Dauman took home. It's a steal! Monday's headlines include a box-office recap, new questions for DreamWorks, the results of Sunday's Screen Actors Guild Awards and a profile of NBC's Paul Telegdy. 

The Grey finished first

The Daily Dose: On Sunday, CBS' "60 Minutes" ran a profile of NFL Commissioner Roger Goodell. But anyone expecting a Troy Polamalu-like hit on the NFL's big boss by television's toughest news magazine was sadly disappointed. While it would be silly to expect one of the NFL's biggest customers to bite the hand that feeds it, the piece could have still raised some tough issues. For example, how about asking Goodell about how fewer fans can afford to go to games or whether he's worried about how rising television rights fees for his product leads to bigger cable bills for fans? Too close to home? Then how about whether he's comfortable with the league being in bed with so many beer companies?

'The Grey' brings in the green. Liam Neeson's "The Grey" became the actor's third action hit in a row, taking in $20 million and easily finishing first at the box office. Doing better than expected was Katherine Heigl's "One for the Money" while "Man on a Ledge" fell off and went splat. Box-office coverage from the Los Angeles Times and Movie City News.

Dilemma for DreamWorks. With its movies "The Help" and "War Horse" in the running for lots of Oscar love, the mood should be bright and confident at DreamWorks, the movie studio run by Steven Spielberg and Stacey Snider. Instead, though, the production company finds itself facing questions about its financial future as their initial investment from backer Reliance Entertainment runs out. The New York Times looks at the challenges facing Spielberg & Co.

Hey DreamWorks, I solved your dilemma. While the New York Times writes about DreamWorks' potential money crunch, the Wall Street Journal says that 94-year-old billionaire Kirk Kerkorian, who used to own MGM, again wants to be a player in Hollywood. While the WSJ didn't talk to Kerkorian (or even get a recent picture), Jay Rakow, one of his top aides, told the paper, "Our investment or investments could include a technology company with the potential to transform the entertainment industry to a studio or mini-major which can benefit from the infusion of cutting-edge technology." Perhaps Kirk can pick up the phone and call Steven Spielberg. Problem solved and my finder's fee is only 10%.

Too soon to tell? It's been a year since Comcast took over running NBC and the Financial Times says the move is paying off for the peacock network. The story notes all the money Comcast has pumped into NBC for programming and new leadership. It's true that NBC is spending a lot to develop new shows and beef up its local stations. However, the fact that Comcast is investing in NBC doesn't mean it is proving profitable for the cable giant. If the network rises out of last place and starts making more money, then Comcast brass can pop the champagne.

Wait, you mean that's wrong? The ethics scandal tearing through media giant News Corp.'s British tabloids picked up steam over the weekend when several reporters from the Sun were arrested as part of an investigation into illegal payoffs from the press to police. Details from the Los Angeles Times and BBC.

The lesson is report before reporting. Before legendary Penn State coach Joe Paterno died, an erroneous report of his death was posted by a Penn State student website. Then CBS Sports picked up that wrong story and posted it as well, giving it legs. Now CBS Sports has canned the staffer guily of posting first and asking questions later. More from the Washington Post.

Inside the Los Angeles Times: "The Help" was the big winner at Sunday's Screen Actors Guild Awards.  Viacom Chief Executive Philippe Dauman saw his pay package drop by about 50% to only $43 million. A look at NBC executive Paul Telegdy, who oversees late night and alternative programming for the network. 

-- Joe Flint

Follow me on Twitter. I won't censor your tweets at me. Twitter.com/JBFlint

Photo: Liam Neeson in "The Grey." Credit: Open Road

The Morning Fix: 'Idol' ratings tumble! SOPA and PIPA fight rages on.

After the coffee. Before trying to make this a three-day weekend.

The Skinny: I'm picking the Giants and Patriots this weekend, which is no doubt also the match NBC wants for the Super Bowl. Friday's headlines include a look at the new Star Wars video game, a box office preview, the latest on the piracy legislation fight and a tumble in the ratings for "American Idol."

The Daily Dose: Co-worker Ben Fritz asks this burning question: Mirror mirror, on the wall, which media conglomerate engages in the most blatant cross-promotion of them all? "Top Chef" fans likely noticed that this week's episode was essentially an hour-long commercial for June's big-budget movie "Snow White and the Huntsman." Film star Charlize Theron was the guest judge and the challenge was to cook a meal fit for an evil queen (guess which character Charlize plays). Not mentioned in the episode is that "Snow White" comes from Universal Pictures, which like "Top Chef" network Bravo is owned by Comcast Corp.'s NBC Universal. Smart corporate synergy or crass product placement? How about both?

American Idol ratings fell in its season premiere
Can't we all get along? The battle over proposed bills to fight piracy continues to rage on. Hollywood is furious that its efforts to curb theft and piracy have been overshadowed by Silicon Valley's claims that the laws will hurt innovation and free speech. In the meantime, an activist group has been hacking into websites to protest the bills and some sites went dark for a day as a form of protest. Of course, if Hollywood and the TV networks shut down for a day for political purposes, they'd hear about it from regulators and consumers. On Friday, Senate Majority Leader Harry Reid cancelled the vote on one of the bills. Meanwhile, on Thursday the feds shut down the site Megaupload for violating piracy laws. The latest coverage from the Los Angeles Times, New York Times and Variety.

An expensive galaxy far far away. It cost $200 million and took six years to make. No, we're not talking about James Cameron's next movie. We're talking about Star Wars: The Old Republic, the costliest and riskiest video game ever made. The Los Angeles Times looks behind the scenes at the making of the game and what it will have to do to be a hit.

Jump ball. Reading the stories about the box office this weekend and it seems to me that there is not going to be any dominating by any movie. "Underworld: Awakening," Sony's latest chapter in its vampire series (is it sign of how out of it I am that I have never heard of this franchise?) is expected to end up on top. I am no expert but I predict "Haywire," the action movie starring Gina Carano, is going to do better than people think. Projections from the Los Angeles Times and Hollywood Reporter.

Secrets of phone hacking. Earlier this week, News Corp. settled a bunch of claims having to do with phone hacking at the company's now-closed tabloid News of the World and its still up-and-running paper the Sun. While the company has tried to say that settling is not an admission of guilt, that's a hard sell. In the meantime, the Guardian, the biggest thorn in News Corp.'s side, offers up its story on how the media giant hid and misled authorities about the scope of the scandal.

Out of tune? Fox's "American Idol" returned Wednesday night and only 21.9 million tuned in to watch the season debut of the show's 11th season. Yes, the number is the lowest for the show since Season 1. But it is also an amazing number for a show that old. In my opinion, it is a little too early to start playing Taps for "American Idol." More on the numbers from the Wall Street Journal.

Inside the Los Angeles Times: Betsy Sharkey went crazy for "Haywire."

-- Joe Flint

Follow me on Twitter. Even when I'm not there, I'm there. Twitter.com/JBFlint

Photo: "American Idol." Credit: Michael Becker / Associated Press.

James Murdoch received email warning of phone hacking 'nightmare scenario'

JamesMurdochNewsCorp.

News Corp. Deputy Chief Operating Officer James Murdoch received an email in June 2008 that described the company's tenuous legal position because of the widespread nature of phone hacking by operatives of its now-defunct News of the World tabloid.

The internal emails, which were released Tuesday by the British Parliament's Culture, Media and Sport Committee, are important because they appear to belie Murdoch's statements to Parliament that he was unaware that illegal conduct involved numerous News of the World reporters as well as a private investigator hired by the tabloid. 

Murdoch consistently has insisted to Parliament that he did not learn until late 2010 of the widespread nature of the phone hacking. However, the emails lay out an exchange more than two years earlier between Murdoch, the 38-year-old son of media baron Rupert Murdoch, and Colin Myler, the former editor of the tabloid. 

"Unfortunately it is as bad as we feared," Myler wrote to James Murdoch in a June 7, 2008, email. 

The correspondence included another email, this one from the paper's in-house lawyer, which said News International -- the British newspaper unit of News Corp. -- would have to pay a soccer league executive Gordon Taylor about $1 million to settle invasion of privacy charges. The second email warned of a "nightmare scenario" because a second soccer league official, Joanne Armstrong, also had been targeted in the phone hacking.

Murdoch, in a separate letter submitted to Parliament this week, stated that he only became aware of the email chain last week. He noted that the 2008 emails had been sent to him on a Saturday afternoon, and that he failed to fully read them.

"I typically received emails on my BlackBerry on weekends. I am confident that I did not review the full email chain at the time or afterwards," Murdoch wrote to the head of the Parliament committee. "I would like to take this opportunity to reaffirm my past testimony that I was not aware of evidence that either pointed to widespread wrongdoing or indicated that further investigation was necessary."

News Corp. on Tuesday declined further comment.

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Photo: News Corp. Deputy Chief Operating Officer James Murdoch pictured in London last month. Credit: Oli Scarff / 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

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