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trusting Murdoch

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on this page some problems of executive trust links
The antics of the Murdoch family provide some excellent illustrations of some important issues in relation to Business Ethics, Trust and Security. BSkyB (CEO James Murdoch) is a partly owned subsidiary of News International (CEO Rupert Murdoch). So is Fox Television.

Many people felt that the appointment of James (over the heads of older, possibly more experienced candidates) was unfair - an unusually blatant example of executive nepotism in a public company.

And because of his family interests, James Murdoch may be subject to conflicts of interest in commercial negotiations.

Can the non-Murdoch shareholders trust that James Murdoch will put the interests of all Sky shareholders above the interests of the Murdoch family. Or can Rupert Murdoch (who engineered the CEO role at Sky for his son) trust James to place the Murdoch interests above the Sky interests?

BSkyB case study

veryard projects - innovation for demanding change

Conflicts of Interest

veryard projects > trust > potter > appearance

News International and Fox Television are significant suppliers of content to BSkyB.

If James Murdoch (CEO of BSkyB) agrees a particular deal with News International (CEO Rupert Murdoch), can BSkyB shareholders regard this deal as reasonable and fair, or should they wonder whether he has been influenced by a family relationship to the management of News International?

In the case of "related party transactions" which way is the burden of proof? Is it for James Murdoch to demonstrate that he has not been influenced perhaps by stepping aside from the detailed negotiations or is it for his critics to show evidence that he has? (There are sometimes codes of practice and Chinese walls for potential conflicts of interest, but the general question remains open.)

If James Murdoch goes through several tough negotiations and produces good results for BSkyB, the shareholders may start to trust him more. They may never be willing to suspend all disbelief and waive all scrutiny, but this would be no different to the situation facing any other CEO.

However, in the meantime, James Murdoch's links to News International represents a potential threat or vulnerability for the non-Murdoch shareholders.  This is a security issue.

(Note - this is quite different from the Sleeper pattern, where a security threat lies dormant for an extended period. The difference is that a sleeper carefully avoids situations where the threat he poses might be prematurely exposed.)


Trust

Can the non-Murdoch shareholders trust that James Murdoch will put the interests of all Sky shareholders above the interests of the Murdoch family. Or can Rupert Murdoch (who engineered the CEO role at Sky for his son) trust James to place the Murdoch interests above the Sky interests?

Questions of trust often involve appreciating (Vickers) or making sense of (Weick) a person's judgements/actions. Do these judgements/actions seem reasonable given the position, perspective and partial knowledge of the person at the time? Can we make better sense of these judgements/actions by framing them within an alternative agenda (e.g. conflict of interest)?


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Page updated July 22nd, 2004
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