Coverage: James Murdoch regains chairman role at Sky

Sky, a British subscription-based broadcaster, announced Friday the reappointed of James Murdoch as chairman just four years after his forced resignation from the company for his involvement in a phone-hacking scandal that scandalized News Corp’s U.K. newspaper business.

Murdoch is the second-eldest son of Rupert Murdoch and current chairman of 21st Century Fox.

Kamal Ahmed of BBC News covered the day’s announcement:

James Murdoch is to become one of the most powerful figures in European television, becoming the chairman of Sky, Britain’s subscription broadcaster.

The move comes four years after Mr Murdoch resigned as chairman of what was then known as BSkyB.

He quit after News Corp, his father Rupert’s business, failed to push through a takeover of the broadcaster.

News Corp owned 39% of the BSkyB business.

James Murdoch also resigned as chairman of News International after claims that journalists working for the organisation had hacked into phones of celebrities.

One of News International’s papers, the News of the World, was shut down after allegations that a private investigator working for the paper had hacked into the phone of Milly Dowler, the murdered schoolgirl.

Mr Murdoch is the chief executive of the movie maker Fox, which now owns the 39% of Sky formerly held by News Corp.

Danica Kirka of the Associated Press explained Murdoch’s history with the company and what that could mean for the future of the broadcaster’s ownership:

James Murdoch served as chief executive from 2003 to 2007, before holding the position of chairman from 2007 to 2012. But while briefly in charge of British newspapers for Murdoch family interests, James Murdoch was tainted by the phone-hacking scandal that forced the closure of the tabloid News of the World in 2011.

He has denied any involvement, but the furor provided a setback to the man seen as vying for control of the empire with his elder brother Lachlan. The outcry that followed the scandal has largely died down, following the conclusion of an inquiry into the behavior of the media, and after several attempts to prosecute journalists on bribery and other charges failed to secure any spectacular convictions.

James Murdoch became CEO of Twenty-First Century Fox last year after Rupert Murdoch, one of the most powerful men in global media, began preparing to hand over aspects of his empire to his sons.

But James Murdoch’s elevation to role of chair will also fan rumors about Sky’s future ownership. Shore Capital analyst Roddy Davidson said James Murdoch’s return was likely to “rekindle speculation regarding 21st Century Fox’s plans for its 39 percent stake.”

The announcement came as Sky reported first half results in the highly competitive U.K. television and broadband market. Analysts like Charlie Huggins of Hargreaves Lansdown lauded the company for its strongest growth in 10 years in its retail customer base, but noted that profits would be hit as the company absorbed 630 million pounds ($900 million) per annum of additional Premier League costs.

Sky plc serves 21 million customers across five countries: UK, Ireland, Germany, Austria and Italy.

Simon Zekaria of The Wall Street Journal detailed the phone-hacking scandal that forced Murdoch out of his chairmanship role originally:

Mr. Murdoch, the second-eldest son of Rupert Murdoch, executive chairman of Wall Street Journal owner News Corp, previously served as chief executive and then chairman of Sky.

He resigned as chairman of the company, then known as British Sky Broadcasting Group PLC, in April 2012 as News Corp aimed to shield the prized asset from a scandal over illegal voice-mail interception and alleged bribery of police at its British newspaper division. At the time, News Corp held the stake in Sky now controlled by Fox, which was part of the same company as the Journal until June 2013.

The resignation was a culmination of a string of moves that eroded Mr. Murdoch’s responsibilities.

Two months before his exit as BSkyB chairman, Mr. Murdoch relinquished his oversight of the U.K. newspaper unit then known as News International, which was at the center of a scandal over reporting methods. He had taken charge of the company’s British newspapers in 2007, when he moved to News Corp from BSkyB.

At the time of his resignation, Mr. Murdoch said in a letter that he didn’t want his position as chairman to be a “lightning rod” for the company.

“As attention continues to be paid to past events at News International, I am determined that the interests of BSkyB should not be undermined by matters outside the scope of this company,” he said. Mr. Murdoch remained on the board of Sky as a nonexecutive director.

The phone-hacking scandal led to the closure of the company’s 168-year-old News of the World tabloid newspaper, criminal investigations in Britain and several executive resignations. It also led to the collapse in July 2011 of News Corp’s multibillion-dollar bid to take full control of BSkyB.

The U.K. telecommunications regulator, Ofcom, in 2011 reviewed whether BSkyB’s News Corp connection made it “fit and proper” to hold a broadcast license. The regulator found in the company’s favor the following year.

The phone-hacking scandal led to the closure of the company’s 168-year-old News of the World tabloid newspaper, criminal investigations in Britain and several executive resignations. It also led to the collapse in July 2011 of News Corp’s multibillion-dollar bid to take full control of BSkyB after political opposition was voiced to the deal.

The U.K. telecommunications regulator, Ofcom, in 2011 reviewed whether BSkyB’s News Corp connection made it “fit and proper” to hold a broadcast license. The regulator found in the company’s favor the following year.