James Murdoch will remain chairman of BSkyB after the board gave him unanimous backing last night.
Suggestions he could face a boardroom revolt built along with public fury over the phone hacking scandal and his involvement in dealing with the issue at News Corporation, where he runs the European operation. The anger led to News Corp pulling its bid for Sky.
A source close to Sky said yesterday that the board had discussed Mr Murdoch's position as chairman "at some length". Yet the source added: "Ultimately, he received unanimous support. James Murdoch will remain as chairman, which will be confirmed at the results."
The company will announce its full-year results today. After confirmation of Mr Murdoch's position, all eyes will be on whether Sky has decided to return money to its shareholders. Analysts have predicted that the group could hand back up to 150p a share through a special dividend. Others suggested that the group could launch a share buy-back programme.
The board, which met at the group's headquarters in Isleworth, has cautioned Mr Murdoch that it will keep a "watching brief" on any "relevant external" developments. While Sky's board was already scheduled to meet the day before the company announced its full-year results, this marked the first occasion it had met since News Corp, which already holds a 39 per cent stake in the company, dropped its bid for full control. After initial reports from earlier this month that Sky's independent directors were set to oust the chairman, analysts said this week that "the tide had turned" in his favour.
He had come under sustained pressure from the corporate advisory body Pirc to step down, given his lack of independence from News Corp. Yesterday, Sir Christopher Bland, chairman of the BBC from 1996 to 2001, added his voice to those calling for Mr Murdoch to resign. In a newspaper article, he said the conflict of interest in chairing a company he was bidding for still existed. Mr Bland added that the challenges Mr Murdoch faces in his job as European head of News Corp suggest that he "will not have enough time to discharge his BSkyB duties".
However, Mr Murdoch's position was strengthened as major shareholders offered their support behind closed doors. He received a further boost over the weekend as Crispin Odey, founder of Odey Asset Management, which owns more than 2 per cent in Sky, offered his public support.
The Sky insider said the board and shareholders had backed Mr Murdoch, as its performance under his stewardship had been exemplary.
The structure of the board at Sky has come under intense scrutiny in recent weeks. Six of the 14 work for the company or News Corp.
It is believed that long-serving directors including Allan Leighton, who was recently appointed chairman of the TV set-top box maker Pace, and David Evans could step down in the next few months.