Sky board to discuss Murdoch's position

Sources close to Mr Murdoch say the Sky chairman retains the support of some of the group's largest investors

James Murdoch, the embattled head of News Corporation's European operations, goes into a crunch board meeting at BSkyB today confident he will survive as chairman of the group.

Sky's board is meeting before its full-year results tomorrow, and one of the issues under discussion will be Mr Murdoch's position. This comes after questions were raised about his involvement in the wake of the collapse of News Corp's bid for Sky, in which it holds a 39 per cent stake, and the ongoing phone hacking inquiries.

Yet people close to the chairman are confident the members of the board will not call on him to step down, adding yesterday that he retained the support of some of the group's largest investors. Mr Murdoch himself has made it clear to colleagues he does not intend to hand in his resignation.

Six of Sky's directors are in News Corp or Sky's employ. Yesterday, sources close to the company said Mr Murdoch also had the support of several senior independent directors.

Alex de Groote, an analyst with Panmure Gordon, agreed that Mr Murdoch was likely to remain in charge. "It feels as though the mood music has changed and the balance has shifted in his favour," he said.

One source close to the process said several of Sky's largest shareholders had thrown their support behind Mr Murdoch in private.

So far, the majority of the largest shareholders have remained tight-lipped over his continuing position as chairman. Several days ago, however, Crispin Odey, head of Odey Asset Management, broke cover to back Mr Murdoch.

One larger institutional investor said it was watching the situation very closely but did not go as far as calling for his resignation. Several investors said they were waiting on the results of today's board meeting.

One analyst, who declined to be named, said: "James was a brilliant chief executive of Sky and a very good chairman." He added that should Mr Murdoch change his mind and step down, the company would likely be in the "capable hands" of independent director Nicholas Ferguson.

"If you look at Sky's current position of strength, a lot of that dates back to the infrastructure investment put in place by James Murdoch," the analyst said. "He understands television. He's the perfect person to oversee Sky."

Mr De Groote added: "It looks like James Murdoch will remain in place and we will all move on. The really interesting thing to look out for will be whether the company returns capital to shareholders this Friday."

Analysts at Numis expect the company to report another good operational and financial performance tomorrow, forecasting pre-tax profits of £950m. They point out that the company's recent decision to freeze package prices may put its earnings per share forecast under pressure, but that was likely to be offset by cost cuts.

The company could hand out an 80p special dividend at its current debt levels or increase that to back a return of up to 150p, Numis said.

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