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James Murdoch Steps Down as BSkyB Chairman

James Murdoch DLD Conference 2011 - H 2012
Miguel Villagran/Getty Images

UPDATED: The son of News Corp. chairman Rupert Murdoch will focus on his role as deputy COO of the conglomerate but remain on the U.K. pay TV company's board.

LONDON -- James Murdoch has stepped down as BSkyB chairman, effective immediately. The news at the U.K. pay TV giant came midday Tuesday local time.

The decision by the son of News Corp. chairman and CEO Rupert Murdoch to step down from his role puts an end to growing speculation in the British media surrounding his tenure there. News Corp. owns a 39 percent stake in BSkyB. James Murdoch previously severed all ties to News Corp.'s U.K. publishing arm News International, which has been the focus of a phone-hacking scandal.

He will remain a BSkyB non-executive director on the company's board. BSkyB deputy chairman Nicholas Ferguson will take over as chairman, with News International CEO Tom Mockridge becoming deputy chairman, BSkyB said.

"I have been privileged to serve first as chief executive and then as chairman of this outstanding company, and I am proud of what we have achieved over this period," James Murdoch said Tuesday. "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.

"I am aware that my role as chairman could become a lightning rod for BSkyB," he added, "and I believe that my resignation will help to ensure that there is no false conflation with events at a separate organization."
 
Ferguson thanked Murdoch "for the outstanding contribution he has made." 

"With his vision, drive and strategic insight, the company has performed exceptionally and continues to transform itself to take advantage of a broader growth opportunity in home entertainment and communications," he said. "The board's support for James and belief in his integrity remain strong. We understand his decision to step aside at this time, and we both welcome and look forward to his continued contribution as a non-executive director. "

News Corp. sources previously have said that a resignation would not change the conglomerate's commitment to BSkyB or the Murdoch son who recently relocated to the U.S. From News Corp.'s New York headquarters, he has been focusing on the company's international pay TV business, of which BSkyB is a key part.

"We are grateful for James Murdoch’s successful leadership of BSkyB," Rupert Murdoch and News Corp. president and COO Chase Carey said in a joint statement Tuesday. "He has played a major role in propelling the company into the market-leading position it enjoys today and in the process has been instrumental in creating substantial value for News Corporation shareholders.  We look forward to BSkyB’s continued growth under the leadership of Nicholas Ferguson and [BSkyB CEO] Jeremy Darroch and to James’ continued substantial contributions at News Corporation.”

The U.K. press came alive as word of Murdoch’s resignation emerged, with the move making the BBC’s main lunchtime news update.

Reports in The Daily Telegraph and The Guardian point to the timing of his decision to step down as being ahead of the government’s Department of Culture, Media and Sport publication of a report into the phone-hacking scandal.

According to the Daily Telegraph, one source familiar with discussions between Murdoch and BSkyB and News Corp. said his decision was mostly made during the weekend.

It has been widely reported that pressure on the father-and-son team has been building as speculation that the pair might be called to give evidence to the Leveson Inquiry into media ethics. But Murdoch’s resignation from BSkyB is now being interpreted in reports as going before he was pushed. The Murdoch son was facing a probe by British regulator Ofcom into his right to sit on BSkyB’s board as reams of evidence of phone-hacking builds from an ongoing police probe and the inquiry led by Lord Justice Brian Leveson. Ofcom has set up a special team to deal specifically with it.

And a parliamentary committee, to which both James and Rupert Murdoch gave evidence to last year, is expected to deliver its findings to the media and beyond within the next few weeks.

With two BSkyB directors expected to leave this year and another one changing his role, a trio of independent board members are expected to join the company. They were tipped as likely to be wary of backing Murdoch as strongly as the company's current board does.