Rothschild brought on board at Sky as sop to anti-Murdoch camp

Lord Rothschild, the financier, was last night named deputy chairman at BSkyB, a new position, as the company tried to counter the furore over the appointment of James Murdoch as chief executive, which was confirmed.

The Association of British Insurers, a key group representing independent shareholders, said it still had "serious concerns" about the selection of the 30-year-old son of the company's chairman, Rupert Murdoch, as BSkyB's new chief executive.

A boardroom meeting at the company's headquarters, close to Heathrow airport, attended by both Murdochs, decided to disregard widespread concern in the City over the recruitment of a new chief executive. Mr Murdoch junior was endorsed for the position, leaving a father-and-son team at the helm of the satellite television company, a prospect that many independent shareholders regard as a dangerous concentration of power. Mr Murdoch senior is also chairman of News Corp, which has a 35 per cent stake in BSkyB.

The National Association of Pension Funds, another powerful shareholder, said it "continued to have concerns" over the process of appointing the BSkyB chief executive. It added it did not regard the person in charge of that process, Lord St John of Fawsley, the head of BSkyB board's nomination committee, as independent.

Rupert Murdoch said: "The board and I are pleased that the [BSkyB] nomination committee has completed its task and it is unanimous in its conviction that James is the right man for this job. He follows a series of successful chief executives: Sam Chisholm, Mark Booth and Tony Ball. I feel confident that James will carry on their work and continue the company's success."

To give some ground to shareholder concerns, BSkyB put in place an independent part-time deputy chairman. Lord (Jacob) Rothschild, 67, was chairman of the executive committee at the family bank NM Rothschild, before leaving in 1980 to develop his own financial interests.

BSkyB will also appoint an independent non-executive director to replace Philip Bowman, Allied Domecq's chief executive, who is leaving the television group's board.

Peter Montagnon, the head of investment affairs at the ABI, said: "We have no way of telling whether the selection process has been robust and impartial, and the company has declined to keep in contact with us. Therefore we have serious concerns." BSkyB's nomination committee will meet the ABI and the NAPF, "to discuss the nomination process", in the next few days.

Since Tony Ball, the current BSkyB chief executive, said weeks ago that he wanted to step down, Mr Murdoch senior and his aides have made it clear James would get his job. Some shareholders have said they would consider selling their stock if the chairman's son was appointed.

James Murdoch said: "Sky is one of a very small group of Britain's great new industrial companies. I look forward to working for all the shareholders to deliver even greater value."

Brendan Barber, the general secretary of the TUC, said: "The chances of the hereditary principle producing the best candidate are several billion to one."

As James Murdoch was made a non-executive director at BSkyB earlier this year, he faces a shareholder vote, anyway, at the company's annual meeting on 14 November. That vote may now turn again him.