Concerns over the inexperience and intentions of new BSkyB chief executive James Murdoch are likely to prolong uncertainty at the company, according to city analysts.
The appointment of Murdoch, youngest son of media baron Rupert, has irked shareholders concerned that the family may be exerting too great an influence at the satellite broadcaster (see
Murdoch’s Son Lands Top Job At BSkyB).
Merrill Lynch believes that the James’ youth and position within News Corporation could cause problems with top management at Sky likely to feel disenfranchised. The broker also suggests that cash could ultimately be diverted to other News Corp businesses, inhibiting debt pay down and dividend rises.
Through News Corp, Rupert Murdoch has a 35.4% stake in BSkyB and is also chairman of the company. There is unlikely to be a concerted attempt to oust Murdoch junior but shareholders will have the opportunity to voice any reservations at next week’s annual general meeting.
Sky gained 170,000 new subscribers in the last quarter, reaching its target of 7 million three months ahead of schedule (see BSkyB Reaches Subscriber Target Ahead Of Schedule). Merrill Lynch is forecasting that first quarter sales will be up 14.3% at £830 million. Earnings are expected to risen by 79% to £134.5 million.
Growth will be sustained by a rise in subscription prices of an average of 5% in January and the broker anticipates a further increase of 3.5% in 2005.
