According to reports, shareholders are calling for an overhaul of BSkyB's corporate governance after James Murdoch, the second son of News Corporation chairman Rupert Murdoch, was named as the new chief executive of BSkyB. The company's share price fell when the market opened, down 0.7%, or 4.5p, to 659p.
The Financial Times said this morning that one of the company's investors, Morley Fund Management, is demanding: a full explanation of the decision to appoint James Murdoch; the appointment of a new auditor; and a clean-up of pay practices. It will also oppose the reappointment of eight out of 11 board members at the next annual general meeting on November 14, saying that they are not independent enough.
In a statement announcing James' appointment, Rupert Murdoch said: "The board and I are pleased that the 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."
The company knew that it had a fight on its hands to convince investors that James, aged 30, was the right man to fill the shoes of outgoing chief executive Tony Ball, who is due to leave the company early next year.
While some speculated that Murdoch senior would not appoint his son if he did not think he was up to the job, others insisted that there be a full and fair search for a successor.
James Murdoch is reported to have faced psychometric testing as part of the process to see if he would be a suitable chief executive. He has been running the Asian satellite broadcaster Star since 2000.
He will now face a series of meetings with major investors to persuade them that he is up to the job, amid questions about how much of an interview process there really was before his appointment.
In a statement, James Murdoch said: "It is a privilege to have the opportunity to play a part in the company's future. I particularly look forward to working with the people at Sky who have played such a key role in its success, and to working for all the shareholders to deliver even greater value."
Murdoch Jnr will no doubt be wanting to avoid the fate of Michael Green, the Carlton Communications chairman, who was lined up to take on the role of chairman of the merged ITV until angry shareholders forced him out.
BSkyB also said that it had appointed Lord Rothschild to take up the new role of deputy chairman, and that Allan Leighton, a board member, will take over as chairman of the audit committee following the retirement of the incumbent Philip Bowman at its AGM
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