Farnish papers over cracks at BSkyB

NATIONAL Association of Pension Funds boss Christine Farnish has done a U-turn in the row over the appointment of James Murdoch as British Sky Broadcasting's new chief executive.

Farnish - who this week spelled out the 'nuclear option' of calling an extraordinary general meeting to block the appointment - said shareholders should fall into line.

The NAPF said: 'To cast aspersions on the [appointment] process would reflect a lack of faith in the non-executive directors and the professionalism of the recruitment firm.'

But it said shareholders still had legitimate worries over Sky's governance.

Investors fear that James Murdoch and his father, Sky chairman Rupert, may divert Sky's growing cash flow into the family-controlled media giant News Corp - 35% owner of Sky. They also worry about a father-and-son team leading Britain's largest media company.

The NAPF stood by its earlier recommendations that Sky's senior non-executive Lord St John of Fawsley should be dumped for mishandling James's appointment and that shareholders should reject Sky's pay policies.

James Murdoch sought to defuse the row by promising to keep a possible cash return to shareholders at the top of the board agenda.

He said: 'We do not have any plans or strategies to run off and do this and that in terms of acquisitions or supporting other projects. There is a resolution at the board to discuss future dividends.'