UPDATE 1-Pressure set to mount on James Murdoch | Reuters
Analyst Will Smith at Jefferies said Murdoch had done a good job in chairing the group, which remained strategically important for News Corp.
“He’s led the company as CEO through a fairly strong growth period, so he’s got the background, the experience, and he knows the market,” he said.
“The risk is the Murdoch name, which a lot of people are viewing quite negatively right now, so he’s vulnerable due to family connections and the fallout from the scandal last summer.”
A UK shareholder at a large fund manager, speaking on condition of anonymity, agreed that Murdoch was vulnerable.
“It’s probably likely that James Murdoch will have to end up leaving, which will be a bloody great shame,” the shareholder said.
“What may happen is there will be enough mud thrown around by Ofcom, but not enough to force News Corp to sell its stake down, but Murdoch could say almost as a trade-off ‘I’m out’.”
UBS analyst Polo Tang said that any forced sale of the News Corp stake could result in a takeover of BSkyB.
“Rather than look at any potential stake sale by News Corp as an overhang, we believe any forced sale of such a strategic stake could potentially flush out a bidder for the whole company and therefore lead to hopes of a takeover,” he said in a note.
He added, however, that the Ofcom probe was not likely to reach any conclusions until the criminal investigation into phone hacking by News International was more advanced, which could take some time.
Selling any of the stake will be a major blow to Murdoch, who last year was prepared to pay 8.3 billion pounds to take full control of the group before bowing to political pressure to withdraw the bid.