A report in Financial Times citing two insiders said that Murdoch, currently a non-executive director at Tesla, is likely to step into the vacant Chair position.
Musk resigned as Chairman for at least three years as part of a settlement with regulators, which also included a US$20 million fine.
The sanctions related to allegations he breached securities law by tweeting that he had secured the necessary funds to take Tesla private. Musk retained his position as CEO.
SCOOP: James Murdoch is the favourite to replace Elon Musk as Tesla chairman, according to multiple sources https://t.co/UFH5OARtm1
— Matthew Garrahan (@MattGarrahan) October 10, 2018
Murdoch reportedly keen to take over as Tesla Chairman
Per the Financial Times report, Murdoch “has signalled that he wants the job”. One source familiar with the conversations told the paper: “The Tesla Chairman job is perfect for James. He’s working on this fund and will be sitting next to Elon … he’s going to get access to so much deal flow.”
Tesla has until 13 November to replace Musk and the former Chair has the option to extend this deadline under his agreement with the SEC. The board had previously not ruled out conducting an external search for candidates.
Murdoch, the son of media tycoon Rupert, has previously been Chairman at Festival Records, Star Television and Sky as well as serving as CEO of BSkyB and, more recently, 21st Century Fox. He has also been a Non-Executive Director at pharma giant GlaxoSmithKline.
In 2011, he announced the closure of British tabloid News of the World after the paper’s reliance on phone hacking was exposed. Murdoch appeared before the Commons Culture, Media and Sport Committee and maintained that he was unaware of the practice. On 1 May 2012, a parliamentary select committee report found that Murdoch “exhibited wilful blindness to what was going on in his companies and publications” and subsequently was “not a fit person to exercise the stewardship of a major international company”.
— TheStreet (@TheStreet) October 3, 2018
Proxy advisers said Murdoch lacks relevant experience to be a Tesla Director
Earlier this week, he stepped down from the board of Sky plc, owner of Sky News, after Comcast seized majority control. He remains on the boards of 21st Century Fox and News Corp.
Proxy advisers Glass Lewis & Co and Institutional Shareholders Services both recommended investors vote against Murdoch continuing as a Tesla director at the company’s annual general meeting. Both were concerned that he was spreading himself too thin with other director roles and had an unimpressive record. Institutional Shareholders Services warned he lacked experience in the automobile industry.
Speaking at a recent Goldman Sachs conference, Murdoch said working at Tesla had been a “really fascinating experience”.
“What’s exciting about the company and about Elon is the goals are so audacious. He’s an entrepreneur who has some really audacious goals about what can be created and what can be settled for.”
This is incorrect
— Elon Musk (@elonmusk) October 10, 2018
If Murdoch does become Chair, he will oversee the company at a crucial juncture as it tries to expedite production of its Model 3 sedan to meet demand and beat a cash crunch. Musk previously vowed the company would move into profit and be cash flow positive in the second and third quarters of 2018.
Tesla shares are down 20% since the start of this year. Chaim Siegel, an Analyst at Elazar Advisors says Musk had built a great company but had been erratic in his approach to investors. “The company needs some added stability at the top to win back investor confidence,” he said.
None of the relevant parties has responded to media requests for comment though Musk tweeted “This is incorrect” in response to the Financial Times tweet linking to its story.
Musk apparently favours current Tesla board member Antonio Gracias for the role, but is concerned he may not be seen as independent enough.