James Murdoch's Sky re-election opposition grows

Insurance giant Legal & General has reportedly joined the growing list of investors in Sky prepared to show their opposition to James Murdoch's re-election as chairman of the satellite pay-TV giant.

L&G, one of the City's biggest institutional investors which owns 2.9% of Sky, came out in support of Murdoch's position as chairman last year, but is now said to have changed its mind.

The Guardian reports that the firm is unsure Murdoch is the right person to lead the board following the collapse of a takeover bid by his father's News Corporation.

L&G declined to comment on the report.

At Sky's annual meeting tomorrow, Murdoch is potentially facing a major rebellion from shareholders concerned over his handling of the phone hacking affair at News International.

The costly bid to acquire the 60.9% of Sky that it does not already own by the Murdoch family-controlled News Corp was dropped in the summer at the height of the hacking scandal at the group's now closed News of the World newspaper.

James Murdoch is also currently executive chairman of News International, the former publisher of the News of the World, and he has faced accusations that he misled parliament over his knowledge of illegal practices at the group.

Other groups thought to be opposed to Murdoch's re-election as Sky chairman include insurance firm Aviva, British Airways Pensions Investment and the Co-operative Asset Management.

Calstrs, Franklin Templeton, Florida State Board of Administration and CBIS are also thought to be part of the rebellion, while the Local Authority Pension Forum, whose 54 members have combined assets of around £100bn and own around 1% of Sky, recently called on investors to challenge Murdoch's position.

Last week, Labour MP Chris Bryant wrote to 40 major shareholders in the pay-TV firm and urged them to oppose Murdoch's re-election, calling on investors to hold him "accountable".

Kames Capital, which holds 1.6% of Sky shares, has since announced its intention to join the rebels, but influential hedge fund Odey Asset Management is among those thought to remain loyal.

Despite the pressure on Murdoch, most investors do not expect to see him voted off the board of Sky, largely because News Corp is the firm's largest shareholder, with a 39.1% stake.

He also has the backing of the rest of the board, including Sky's deputy chairman Nick Ferguson, who recently told shareholders that Murdoch had "always acted with integrity" during his time at the company.