Investors focus on James Murdoch

By Ben Fenton and Kiran Stacey

Investors in British Sky Broadcasting have told the Financial Times they will reserve judgment on their attitude to James Murdoch continuing as chairman of the satellite broadcaster until he has given evidence to MPs on Tuesday about his role in the phone hacking scandal.

The arrest of Rebekah Brooks on Sunday decreased the likelihood of her appearing before the Commons’ culture, media and sport select committee, and increased pressure on her immediate boss James Murdoch, deputy chief operating officer of News Corp, people close to the group conceded.

John Whittingdale MP, the chairman of the committee, said they would be particularly keen to hear Mr Murdoch clarify remarks he made last week that executives at News International, the publisher of the News of the World, had misled MPs in earlier appearances in 2007 and 2009 by making statements about the scandal “without being in full possession of the facts”.

Tom Watson, a Labour member of the committee, said he also expected Mr Murdoch to be questioned about what he meant when he said, hours after closing down the Sunday tabloid, that he had approved out-of-court settlements over phone hacking when he “did not have a complete picture”.

Mr Watson has written to Richard Alderman, director of the Serious Fraud Office, drawing his attention to these payments, and others, and asking if he will consider investigating possible breaches of fiduciary duty by directors of the relevant News Corp subsidiaries, including Mr Murdoch.

One investor, whose holding is about one per cent of BSkyB shares, said at the weekend: “At the moment, we are trying to strike a balance. James doesn’t seem to have done anything wrong and he has been a good chairman of the company.

“On the other hand, we all know that mud sticks and we wouldn’t want people saying they were going to cancel subscriptions in Sky because of the Murdoch association.”

Another investor, with a larger holding, added: “This committee meeting is going to be box-office television. It’s a pity Sky can’t put it on pay-per-view.

“But to be serious, if on television he came across as someone with something to hide, or he got angry with MPs or, who know, anything might happen, you might take a view that Sky could be affected and it would be better not to have the Murdoch name on the chairmanship.”

A third investor added: “We think we should have a non-Murdoch chairman, but we’ll wait to see what Tuesday brings. Having said that, I would be more worried if I was a News Corp shareholder. In the States, there is more than a sense that things aren’t real till they’ve happened on television.”

Mr Murdoch, 38, is due to give evidence alongside his 80-year-old father, Rupert.

The MPs have vowed to hold the Murdochs and Mrs Brooks to account over the phone hacking scandal.

Previously, when they heard evidence in 2009 and 2010 from News Intl executives, including Colin Myler, the editor of the News of the World, Andy Coulson, its former editor, and Les Hinton, former executive chairman of News International, they were unhappy at the testimony, accusing witnesses of suffering from “collective amnesia”.

Mrs Brooks and the Murdochs continue to deny any knowledge of hacking. Committee members will decide in the next two days whether to make them do so under oath.

The legal investigation may give the Murdochs and Mrs Brooks a good reason not to answer some questions, but committee members are also conscious it could hamper their questioning. They will meet the parliamentary counsel on Tuesday morning to discuss what they can and cannot ask, and a lawyer will sit with them in the committee to advise on whether a question is likely to be blocked on legal grounds.

Copyright The Financial Times Limited 2011.