James Murdoch, News Corp.'s deputy chief operating officer, has stepped down as chairman of pay-TV company British Sky Broadcasting Group following demands that he resign over his role in a U.K. phone-hacking scandal.
U.K. lawmakers are preparing a report on the scandal after testimony that Mr. Murdoch gave was contradicted by former subordinates. U.K. media regulator Ofcom has said it will take parliament's report into consideration when evaluating whether Mr. Murdoch is "fit and proper" to hold a broadcast license on behalf of BSkyB.
Senior independent director Nicholas Ferguson will succeed Mr. Murdoch, BSkyB said in a statement today. Mr. Murdoch, 39 and the youngest son of News Corp.'sCEO Rupert Murdoch, will remain a nonexecutive director of the U.K.'s biggest pay-TV company.
"I am aware that my role as chairman could become a lightning rod for BSkyB," James Murdoch said. "I believe that my resignation will help to ensure that there is no false conflation with events at a separate organization."
The resignation as chairman of BSkyB, the company the younger Murdoch built into one of News Corp.'s most profitable businesses, is the biggest sacrifice he has made since the phone-hacking revelations damaged his career. The scandal, in which News Corp.'sjournalists illegally listened to voice mail messages of politicians and celebrities, prompted News Corp.'sto drop its 7.8 billion-pound ($12.5 billion) bid for full control of BSkyB in July when lawmakers objected.
Mr. Murdoch had moved a step closer to succeeding his 81-year-old father with his promotion to News Corp.'s deputy chief operating officer in New York in March 2011. The role at BSkyB had been crucial for Mr. Murdoch after he stepped down from other boards in the wake of the hacking scandal to focus on overseeing News Corp.'s international TV business.
In 2003, at the age of 30, Mr. Murdoch moved to London to become CEO of BSkyB, in which News Corp.'sholds a 39% stake. In 2007, he was put in charge of the company's operations throughout Europe and Asia, a portfolio that includes digital television distribution and newspapers. In that role, he also oversaw the U.K. publishing business, which later became the focus of the hacking allegations.
The scandal, which also prompted the company to close the News of the World in July, has led to the arrest of more than 30 people in three related probes. Police identified more than 800 likely victims of the practice.
News Corp.'sshareholders in October lodged a protest vote against Rupert Murdoch and his sons, following an annual meeting at which investors called for governance changes and an end to voting practices that cement the family's control.
In November, one third of BSkyB's independent shareholders voted against Murdoch's re-election as chairman.
He resigned from the board of GlaxoSmithKline in January, stepped down as executive chairman of News Corp.'s U.K. unit News International in February and left the board of auction house Sotheby's in March.
James Murdoch joined News Corp.'sin 1996 after dropping out of Harvard University and starting a hip-hop recording label. In 2000, he was sent by his father to Asia, where he became CEO of News Corp.'s money-losing Star television businesses in Asia. He was based in Hong Kong, and spent much of his time in India, developing the nascent pay-TV market there.
On March 14, Mr. Murdoch told the lawmakers he should have dug deeper to uncover the phone hacking at the company's U.K. unit.
"I could have asked more questions, requested more documents and taken a more challenging and skeptical view of what I was told," Mr. Murdoch said.
Mr. Murdoch told lawmakers in November that News of the World editor Colin Myler failed to tell him in 2008 that phone hacking at the now-defunct tabloid was common. Mr. Myler and the newspaper's lawyer, Tom Crone, have repeatedly insisted that they discussed evidence with Mr. Murdoch and that they told him in 2008 about an email that showed phone hacking was more widespread than initially thought.
Mr. Murdoch has said he didn't read the email, sent on a Saturday , because he was probably occupied with his two small children at home.
-- Bloomberg News --