Murdoch announced he would drop the bid just hours before a planned vote in Parliament that had all-party support for a motion to urge him to drop the offer. News Corp. currently owns 39 percent of BSkyB, and will keep its current share.
Just a few days ago, Murdoch landed in London with a focus on saving his BSkyB bid through controlling the backlash over the phone-hacking scandal at News of the World (and, perhaps, beyond). But, not even closing the tabloid seemed to do the trick. Today, things continued to unravel, as British communications regulator Ofcom is looking into whether Murdoch is “fit and proper” to continue owning the 39 percent of BSkyB, Time reported.
As Murdoch’s empire is spinning out of control with some shareholders suing him over the phone-hacking scandal, there is a lesson to be learned, the Financial Times’ John Gapper points out:
No wonder the shareholders – or rather the holders of its A shares with limited voting rights – are unhappy. But there is little they can do, since the Murdochs exercise control through News Corp with a 38 per cent stake in the B voting shares, just as they largely control BSkyB through News Corp’s 39 per cent stake.
This should stand as a warning to the investors who are flocking to IPOs of social networks and internet companies. Since Google’s IPO in 1994, it has become de rigueur for Silicon Valley enterprises not only to adopt a dual-class share structure to grant the founders voting control but also to declare that this is good for the disenfranchised shareholders.
Image: Daily Kos