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. Last Updated: 07/27/2016

James Murdoch to Head BSkyB

LONDON -- BSkyB, the British pay-TV company, has named Rupert Murdoch's son James as chief executive, leading irate investors to charge that the father-and-son executive team was rammed down their throats.

BSkyB sought to placate investors by naming banker Jacob Rothschild as a non-executive deputy chairman to serve under the elder Murdoch and beginning a search for a new independent director.

Several large institutional investors voiced concern that choosing James Murdoch to lead the company could compromise Sky's independence from News Corp., which is chaired by the elder Murdoch and owns about 35 percent of the company's shares.

They fear that Sky's ample cash flow could be used to fund investments that would enrich News Corp. shareholders.

BSkyB declined to comment.

Institutional investor groups argued the CEO search process was designed to ensure the younger Murdoch's ascension.

James Murdoch heads News Corp.'s STAR TV Asian pay-TV service and steered it to its first operating profit in the year ending June. He will start immediately, replacing outgoing CEO Tony Ball.

"We have serious corporate governance concerns that these changes do not appear to address," said a spokeswoman for the Association of British Insurers. "We have no way of telling whether their selection process has been robust and objective, as the company has declined to keep us informed."

The ABI is dubious about "having a father and son as chairman and CEO," the spokeswoman added.

Earlier Monday, the National Association of Pension Funds said investors had the "nuclear option" of calling an emergency general meeting and replacing the board.

"I think it's likely that [BSkyB] will find the appointment of additional independent directors would be an insufficient response to concerns that the CEO and the chairman are father and son," a major institutional investor said.

Investors succeeded last month in ousting the designated chairman of ITV, a TV company that will grow out of the merger of commercial broadcasters Granada and Carlton, in a new display of British shareholder activism.

If the owners of 10 percent of BSkyB's shares decide on the same course of action, they can seek to replace some or all of the board, a spokesman for the NAPF said earlier on Monday, while noting that such an occurrence is rare and unlikely.

Asked if the NAPF was planning such a move, the spokesman said: "Not at this stage. We're waiting to see what happens."

"What we've said all along is we don't necessarily have a problem with James Murdoch. He may be the best man for the job," the spokesman said. "Our issue is whether procedures have been followed correctly. We have certain concerns over the process, given the director primarily responsible is not independent."