Shareholders Oppose Creeping Control of BSkyB by News Corporation

In October 2005, BSkyB proposed to buy back some if its shares. News Corporation previously held 37.2% of BSkyB shares and this would raise News Corporation’s stake to over 39% and give them an even stronger influence over the affairs of the company. For example, under UK Listing Rules, any holder of more than 30% of a company’s shares is required to make a takeover bid, otherwise they can gain control without paying the normal “bid premium”.                 

It seems that News Corporation does not want to make a bid at this time, and is therefore asking for a waiver from shareholders. But major fund manager Hermes, who manage the BT and Royal Mail pension funds, has publicly declared their opposition to this move. UKSA supports their position and recommends shareholders to vote against all the relevant resolutions.  

Shareholders have also complained that BSkyB reneged on a promise to seek shareholder approval before extending a “poison pill” provision, and they have also been accused of nepotism by appointing James Murdoch, son of News Corporation Chairman Rupert Murdoch, as chief executive.  

Altogether this is a good example of the possibly malign influence of a major, and dominant, shareholder in the affairs of a public company. 

Roger Lawson 29/10/2005