Sky faces calls for special dividend and board reform

BSkyB executives are set to face calls from investors to return capital, possibly through a special dividend, in the wake of the dramatic collapse of News International's bid yesterday.

James Murdoch's role as chairman of Sky is also facing further scrutiny as the investigations into News Corporation, where he runs the European businesses, heat up.

Pirc, a corporate governance advisor, called for the appointment of an independent chairman at the group. Alan MacDougall, managing director of Pirc, said: "Questionable governance practices have been tolerated at BSkyB for a long time, and unfortunately many shareholders have not effectively challenged them. That must change."

Shortly after News Corp walked away from the deal – triggering a £38.5m break fee – Sky released a statement saying it remained a "compelling investment case and significant growth opportunities".

The chief executive Jeremy Darroch said nothing had changed: Sky would continue its "clear, consistent strategy" that has seen it secure more than 10 million customers and would continue "building a larger, more profitable business for the long term".

The shares dropped 4 per cent after the news, but bounced back to close up 13.5p at 705.5p. "They are at a level that looks like fair value," one analyst said.

Alex DeGroote, an analyst at Panmure Gordon, said: "It has good growth, a strong balance sheet in a market with extremely high barriers to entry."

The company will have to manage stock market expectations after the breakdown of the deal, he added. "There will be questions over a special dividend or a share buy-back. Shareholders will be looking at a share price that is down 20 per cent, with the bid off the table." This is likely to be strengthened by a shift in the shareholder register, with short-term investors, such as hedge funds, making way for longer-term stakeholders.

A Sky insider conceded the question of capital returns was likely to come up when the company releases its preliminary results on 29 July.