BSkyB delivers upbeat message ahead of tough AGM
BSkyB has delivered an upbeat message on its first quarter results ahead of a meeting with shareholders which is expected to be a heated discussion about the appointment of Rupert Murdoch’s son as chief executive.
BSkyB announced that its total revenue increased by 17 per cent to £850 million during the three months to the end of September 2003. The company’s operating profits doubled during the period to £151 million, up from £45 million in the year before.
The company’s results were driven by subscriber growth of 170,000 in the quarter to 7 million.
Chief Executive James Murdoch commented: ‘The current financial year has started well and we continue to grow both subscribers and revenues. In particular, the most significant achievements are the doubling of operating profit and the considerable increase in profit margin.’
However, it remains to be seen if the company’s good performance will calm shareholders anger at the appointment of James as the company’s head.
James Murdoch will face a vote on his appointment after it was claimed by shareholders that he was parachuted in by his father without a proper appointment process being followed.
A number of institutional shareholders are concerned that the appointment process was not open. There is also concern about such a young man without much experience taking control of such a large media empire.
The chances of James Murdoch’s appointment being rejected seems slim as Rupert Murdoch owns around 35 per cent of BSkyB and a further 10 per cent is owned by supportive American investment institutions.
However, the Association of British Insurers (ABI) which represents the UK investment firms’ interests in the company is not happy with the selection process.
Rupert Murdoch is not likely to get all his own way at the meeting. The reappointment of Lord St John of Fawsley as a non-executive director is expected to face stiff opposition. Shareholders are concerned that after twelve years on the board Lord St John has lost his independence.
There are concerns that, with his son in the top job of BSkyB, Rupert Murdoch will be able to ride rough-shot over the best interests of the company by pressurising his son into agreeing with his decisions.
James Murdoch replaced the outgoing Tony Ball and was formerly chief of the Asian broadcaster, Star TV, which he was accredited with turning around in a short period of time.
