BSkyB to unveil strong results amid hacking scandal

27th July 2011, Comments 0 comments

British pay-TV giant BSkyB is set to release strong results on Friday amid the phone-hacking scandal that forced News Corp. to abandon a takeover bid and now threatens James Murdoch's position as chairman.

Analysts said the annual figures will twist the knife in the wounds that Rupert Murdoch's News Corp. suffered when it had to call off its bid for the 61 percent of shares in the satellite broadcaster that it did not already own.

BSkyB is forecast to announce an annual operating profit of £1.0 billion (1.13 billion euros, $1.63 billion) for the 12 months to the end of June, according to analysts' consensus forecast.

BSkyB this year reached its target of 10 million household subscribers, who pay monthly subscriptions to watch live English Premier League football and blockbuster films in high definition, and to use Internet and phone services.

But this year its financial success has been overshadowed by corporate governance issues -- specifically the scandal that shut down News Corp.'s News of the World tabloid and has put James Murdoch's position under the spotlight.

The crisis has added to calls for him to resign the chairmanship of BSkyB, which the 38-year-old son and heir apparent of Rupert Murdoch took up in 2007 after being chief executive for four years.

Shareholder advisory group PIRC, which has for years opposed James Murdoch's influential position at the broadcaster, has led the calls for him to go, saying he should be replaced by someone without links to News Corp.

James Murdoch holds the position at BSkyB in addition to his activities as head of News Corp.'s European and Asian activities, or number three at the US-based group, where he is also chairman of its British newspaper arm News International.

His calm performance at his father's side in front of a British parliamentary committee last week was tarnished when two former News of the World executives later accused him of misleading lawmakers over how much he knew about hacking.

The Guardian newspaper on Wednesday said that James Murdoch would probably escape a humiliating defenestration, with the calls for him to go coming from minority shareholders.

At the weekend he received the support of an influential shareholder, the fund Odey Asset Management.

But reports in Britain suggested that as well as governance issues the board of directors, which meets Thursday, may decide to pay dividends of several million pounds to shareholders.

That would mean a jackpot for the Murdochs, which could itself make waves.

Last year News Corp. announced plans to add to the 39 percent of shares it owns in BSkyB, purchasing the remaining stock for £7.8 billion.

Despite BSkyB rejecting the 700-pence-per-share offer as too low and News Corp. facing opposition over the deal from media rivals on competition grounds, the Murdochs had been intent on capturing full control of the broadcaster.

But they dropped the offer on July 14 as lawmakers were about to pass a rare cross-party motion calling on Rupert Murdoch to do so, after the News of the World was accused of hacking voicemails of a murdered girl and families of dead soldiers.

BSkyB's share price meanwhile slumped from 850 pence to a below the bid-offer of 700 pence in one week prior to the deal's collapse, knocking £2.5 billion off the firm's value.

The hacking crisis has meanwhile claimed the jobs of two of Murdoch's closest aides, forced out two of Britain's top policemen and even rattled Prime Minister David Cameron.

© 2011 AFP

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