It's a huge injustice that we have to sell ITV stake, says Murdoch

Bancroft opera singer elected to News Corp board
Click to follow

The ruling that British Sky Broadcasting must sell down its stake in ITV was a "huge injustice", Rupert Murdoch said yesterday.

The chairman of BSkyB's parent company, News Corporation, lashed out at last month's decision by the Competition Appeal Tribunal when questioned on the subject at the News Corp shareholder meeting in New York.

His son James, who ran BSkyB in 2006 when it snatched a 17.9 per cent stake in ITV in order to block its takeover by the cable group NTL (now Virgin Media), parried a question from the floor, saying the issue was still subject to a legal appeals process. But the elder Mr Murdoch, 77, leapt in to express his frustration. "BSkyB's purchase was perfectly within the law," he said. The issue of the stake had been "passed out to quangos ... and it is a huge injustice that Sky has suffered".

In December, the Competition Commission ruled that BSkyB would have to reduce its stake to below 7.5 per cent, saying it would stifle competition and act against the public interest. An appeal ruling on 29 September went against BSkyB, and it could be forced to cut the stake even further by a second ruling that is still pending.

Subscription-based businesses such as BSkyB are to become more central to the News Corp business in the next few years, Mr Murdoch signalled yesterday, as the company braces for an advertising slump and a global recession.

The mogul told shareholders: "This has been a record year and it is tempting to boast, but I cannot when the unprecedented credit crisis is exacerbating an economic downturn across the globe, which has left no sector untouched, including our own, and which has weakened advertising markets and beaten down our share price. For many, 2009 will be a year of unprecedented challenges and we cannot fool ourselves otherwise."

News Corp shares have lost more than half their value since the start of the year. The Murdoch family has not borrowed against its controlling stake, said the 77-year-old chairman, and would not therefore be forced to sell shares – something that has affected other moguls, including Viacom's boss, Sumner Redstone, in recent weeks.

News Corp has a $5bn cash pile and a strong balance sheet that would help it snap up opportunistic acquisitions while rivals were hurting, Mr Murdoch said. Also at yesterday's meeting, shareholders voted to end staggered board elections so that all directors – including Mr Murdoch and his two sons, James and Lachlan – must face a vote every year, in line with best corporate governance practice. Shareholders also approved the election of Natalie Bancroft, the 27-year-old opera singer, to the board as a representative of the Bancroft family, which sold the Wall Street Journal to News Corp last year. Mr Murdoch defended Ms Bancroft from criticism over her qualifications and expertise.