The board of British Sky Broadcasting (PINK:BSYBY) has voted unanimously in favor of keeping News Corp.’s (NASDAQ:NWSA) James Murdoch as its chairman. Whether the younger Murdoch would maintain his role as non-executive chairman at BSkyB came up as a topic of discussion after his testimony to U.K. lawmakers over the News of the World phone-hacking scandal.
Murdoch’s testimony was contradicted by two former employees. Though Murdoch did not become head of News International until 2007, he authorized settlement payments to hacking victims that implicate him in the scandal. For that reason, BSkyB’s 14-person board discussed whether he should remain with the company.
News Corp. currently holds a 39% stake in BSkyB, Britain’s largest pay-TV broadcaster. Before the scandal, News Corp. planned to increase its stake to gain majority control of the company in a $12.7 billion offer, which would have made the deal News Corp.’s largest acquisition ever. However, News Corp. withdrew the offer shortly after news of the hacking scandal surfaced.
Not only did the scandal hurt News Corp.’s public image, but it hurt BSkyB’s image, and in turn, its share price, which dropped 17% in the seven days following the first news. The News Corp. bid for BSkyB is unlikely to be renewed any time in the foreseeable future as probes into multiple hacking allegations at News of the World continue. So far, at least 10 people, both current and former employees of News Corp., have been arrested on charges related to the phone hacking.