Rupert Murdoch’s younger son stepped down from the pay-TV group in 2012 in the wake of the phone-hacking scandal
James Murdoch is to return to Sky as chairman, almost four years after he was forced to stand down in the wake of the phone-hacking scandal.
Murdoch, who was chief executive and then chairman from 2003 to 2012, stepped down from the then BSkyB because of the fallout from the phone hacking scandal at News International, publisher of the Sun, Times and now defunct News of the World, where he held the role of chairman.
At the time Murdoch said he felt it right to stand down as chairman of Sky – which is 39.6% owned by Rupert Murdoch’s Fox– to avoid becoming a “lightning rod” for criticism of Sky because of his association with the phone-hacking scandal.
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Murdoch, who remained a Sky non-executive director after stepping down as chairman, replaces Nick Ferguson who is leaving the company after 12 years.
“I would like to thank Nick for his outstanding contribution to the board over the last decade and more. I am proud to have been asked by the board to serve as chairman of Sky, one of the world’s leading pay TV companies,” said Murdoch.
“Jeremy and the team at Sky have done an outstanding job in building a dynamic and successful company. As chairman, I look forward to working with the board and management as they continue to deliver a great service for Sky’s customers and create value for all shareholders over the years to come.”
The Sky chief executive, Jeremy Darroch, brushed off any assertion that Murdoch should not be Sky chairman.
“Without a doubt he is the right man for the job,” he said, in a conference call with media on Friday morning.
Murdoch was the sole candidate put forward to Sky’s board by the nominations committee.
“The board was unanimous in support of James. At the time he stepped aside he felt was putting interests of the company ahead of his own. [Since then] he has been consistently re-elected by shareholders [as a non-executive director]. It was a smooth process and got to a good outcome. His knowledge of the international media industry will be a big asset.”
Thomas Singlehurst, an analyst at Citi, said that Murdoch’s appointment “may raise some questions about the balance of the board between independents/non-independents”.
James Murdoch’s handling of the phone-hacking scandal came under fire from MPs and others.
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Broadcasting regulator Ofcom, which ruled Sky was a fit and proper broadcaster to hold a licence following an investigation prompted by the phone-hacking scandal, heavily criticised Murdoch.
Ofcom said Murdoch’s conduct in handling of the hacking scandal “repeatedly fell short” of that expected of the chief executive and chairman at News International.
The regulator criticised his “failure” to take action, which Ofcom said was “difficult to comprehend and ill-judged”.
James’s return marks the latest stage of a remarkable reassertion of power by Rupert Murdoch over his UK and European media assets.
In September, News Corp confirmed the return of Rebekah Brooks as chief executive of News UK, a year after she was cleared of all charges related to the phone-hacking scandal.
The return of James Murdoch will further ignite rumours that Fox, where he holds the role of chief executive, may look to mount another bid to take full control of Sky.
Fox was forced to give up on an £8bn-plus bid to take full control of Sky UK in 2011.
In October, James Murdoch hinted at ownership change at Sky, now a pan-European operator after taking full control of Sky in Germany and Italy, when he said that not having complete control of Sky “is not an end state that is natural for us”.
Darroch said on Friday: “I think that from time time there is speculation about what Fox’s intentions are. As management we don’t get distracted by that. I can’t speak for Fox but [James] and they continue to be passionate supporters for Sky’s ongoing success. Our job is to keep building a bigger and better business.”
In June, Rupert Murdoch named James as his successor as chief executive of 21st Century Fox.
Eldest son Lachlan was named co-executive chairman alongside his father.
On Friday, Sky reported that revenues were up 5% to £5.72bn in the second half of last year, while operating profit rose by 12% to £747m.
The City was encouraged by Sky’s results with the company’s share price rising 2.2% in early trading.
Sky also said that it is delaying its plans to start selling mobile contracts until near the end of the year.
The company is also launching a new Now TV set-top box that offers free-to-air channels.
“When the new Now TV smart box arrives later this year, it will be the perfect one-stop box to get a contract-free, flexible way of watching the best of pay-TV and free-to-air content all in one place,” said Now TV director Gidon Katz.