Media: News Corporation — Motion to Take Note

Part of the debate – in the House of Lords at 2:23 pm on 15th July 2011.

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Photo of Lord Myners Lord Myners Labour 2:23 pm, 15th July 2011

My Lords, I congratulate the noble Lord, Lord Fowler, not only on securing this debate but on the campaign that he has waged for such a long time on press responsibility and accountability. I have three interests to declare. First, I was chairman of the Guardianfor 10 years. I am hugely proud of the work that Nick Davies and Alan Rusbridger have done in exposing what has allegedly happened at News International, particularly against the opposition of many others in the media, including the Press Complaints Commission. Secondly, I have worked with Mr Jeremy Darroch, the chief executive of BSkyB. I will come to that subject in a moment. Thirdly, I have met Mr Rupert Murdoch only once in my life. That was in 1990 when he came to me in the City, desperate to raise additional funds as he had almost landed News Corp on the rocks as a result of foolhardy financing strategies. I did not save him by providing more money but others did.

I have very little to add to the general debate to which noble Lords have already contributed. Proper process will now be followed here in the United Kingdom and elsewhere to investigate questions of criminality, morality and probity. Your Lordships' House has adopted the right moderate tone today. However, I cannot avoid noting that the Prime Minister and the Government vacillated on many issues to do with News International at every critical decision moment and had to be dragged to the right decision when it was so obvious that there was no alternative, rather than providing the leadership that we might have expected. The Secretary of State for Culture, Media and Sport bent over backwards to do everything he possibly could to facilitate the acquisition of BSkyB by News International. He took every possible action to ensure that the matter did not go to the Competition Commission but rather negotiated in private with the Murdochs and with News International. That was clearly a very poor judgment by the Secretary of State.

I was going to say that I was sad that the noble Baroness, Lady Buscombe, was not in her place. She then appeared in her place and she has now again departed from her place. I think she might follow that same chain of events in terms of the chairmanship of the Press Complaints Commission because it is clear that the Press Complaints Commission, as the noble Lord, Lord Stoneham, said, needs a completely fresh start with a new vigour and intention, which is clearly not there. I felt for the noble Baroness, Lady Buscombe, when I watched her being interviewed by Mr Andrew Neil on BBC television, but it was clear that the Press Complaints Commission has become an apologist for the newspaper industry rather than a vibrant and independent body performing the role that we would expect. I am afraid that the noble Baroness, Lady Buscombe, must fall on her sword if the Press Complaints Commission is to be given a fresh start.

Other things need to be done. The Communications Act 2003 is clearly, with hindsight, deficient: the public interest test is too narrow, as are the restrictions placed on cross-media ownership. That Act did not anticipate the advent of digital media and consequently it needs to be revisited as soon as possible. In the mean time, Ofcom needs to look seriously at the fit and proper test, and in particular to articulate the criteria and processes that will be applied in the future in exercising "fit and proper" as a test because there is a lack of specificity and clarity. We also need to address the issue of privacy. We are reminded at this time of the importance of ensuring that the BBC continues to be properly funded in order to provide an independent and reliable source of information and comment.

I want to focus on corporate governance. The governance of News Corp, an American company, is not a matter of great concern to this House. The company is run on hereditary principles and is controlled by the Murdoch family, even though they have a modest equity interest in the business as a result of the use of shares with super-voting rights. The board of News Corp has clearly been very ineffective. However, I want to turn our attention to the board of BSkyB, a company in which News Corp has a 39 per cent equity interest. This company is chaired by Mr James Murdoch. A significant number of the directors on the board of BSkyB are related to News Corp or do not pass the test of independence as defined by the Financial Reporting Council's governance code. Mr DeVoe, Mr Evans, Mr Mockridge and Mr Siskind have all previously worked for News International while Mr Leighton and Mr Nasser are judged not to be independent by length of service. Clearly, the proportion of BSkyB board directors represented by those who speak for, or are sympathetic to, the interests of News International is disproportionate to the equity ownership that News Corp and News International have in that company. BSkyB will announce its profit figures on 29 July. I urge the board of BSkyB to reflect over the next fortnight on the governance of that company as a matter of priority and-this is important-to consult with other shareholders.

BSkyB's corporate governance page on its website talks about all the normal committees that you would expect there to be in a public company-the Audit Committee, the Nominations Committee and the Remuneration Committee. It also has a committee that I have never seen before-the Bigger Picture Committee. It is not entirely clear what the Bigger Picture Committee does but it is pretty clear what the Bigger Picture Committee should now be doing. All directors of BSkyB, in accordance with best advice from the Financial Reporting Council, should stand for re-election at the annual general meeting this summer, including Mr James Murdoch. The board should seek to persuade Mr Murdoch that it is no longer appropriate for him to chair this company. There are sufficient doubts about his business judgment. His investments in MySpace and AP Dow Jones, the large loss consequent on the investment in ITV, and the settlements that he now admits he entered into without fully understanding the facts, are surely all reasons why it is no longer appropriate for Mr James Murdoch to chair BSkyB. There is, fortunately, an excellent alternative in Mr Nicholas Ferguson, the senior independent director of BSkyB, who is a man of great integrity and wisdom. I should add that Mr James Murdoch intends to move to New York, which makes it even more difficult to believe that he is the right person to chair a British broadcaster.

The shareholders of BSkyB other than News Corp hold 60 per cent of the voting rights. It is within their power to secure these changes and ensure that in future News Corp's representation on the board of BSkyB is proportionate, but not so great that it can dominate the board of directors. It is important that BSkyB in these circumstances establishes an appropriate distance from News Corp as a shareholder. Fortunately, at last year's annual general meeting, a number of major institutional investors did vote against Mr James Murdoch's re-election as a director-Aviva, Baillie Gifford, Legal & General, and Co-operative Asset Management. I hope that they will again be given the opportunity to vote on Mr Murdoch and will again conclude that they should vote against his re-election; and I hope that others will join them. One of the things that we learnt from the banking crisis was that the failure of boards was at the heart of what went wrong in those companies, and the failure of shareholders who look after our savings and our pensions properly to engage was one of the great deficiencies. There is an opportunity here for the great investment institutions of Edinburgh, London and New York to show that they have had enough with the way that the Murdochs dominate BSkyB and they should ensure that the company has an independent board of directors and a truly independent chairman.