The Board
The Board currently comprises fifteen Directors, made up of two Executive Directors and thirteen Non-Executive Directors, eight of whom are Independent Non-Executive Directors. The Non-Executive Directors of the Company bring a wide range of experience and expertise to the Company’s affairs and they carry significant weight in the Board’s decisions. Short biographies of each of the Directors are set out on page 22, which also clearly identify those Directors who are, in the view of the Board, independent within the meaning of the Code. In the previous year’s Annual Report, the Board noted that there was not a majority of Independent Non-Executive Directors, as required by the Code, and expressed its intention to remedy this situation. Following the appointments of Gail Rebuck and Jacques Nasser at the Annual General Meeting on 8 November 2002 the Company has been compliant with the Code.

The roles of the Chairman and Chief Executive Officer are separate and have been so since the Company obtained its listing in 1994. In prior years the Board did not deem it necessary to appoint a Senior Non-Executive Director and as such was not compliant with the Code. However, in last year’s Annual Report the Board confirmed its commitment to make an appointment and on 7 November 2002, Lord St John of Fawsley was appointed as the Senior Non-Executive Director of the Company.

The Board is scheduled to meet at least six times a year to review appropriate strategic, operational and financial matters as required. A schedule of items reserved for the full Board’s approval is in place, which includes, inter alia, the approval of annual and interim results, significant transactions, agreements or arrangements between the Group and members of The News Corporation Limited group (“News Corporation”) and other related parties, major capital expenditure and the yearly budget and business plan.

The Board has also delegated specific responsibilities to Board committees, notably the Audit, Remuneration and Nomination Committees. Directors receive Board and Committee papers several days in advance of Board and Committee meetings and also have access to the advice and services of the Company Secretary. In addition, the Board members have access to external professional advice at the Company’s expense.

Appointments of Independent Non-Executive Directors are for an initial term of three years, subject to election by shareholders following appointment, subsequent re-election by shareholders, and Companies Act provisions relating to the removal of Directors. In addition, re-appointment for a further term is not automatic but may be made by mutual agreement.

In previous years the Articles of Association of the Company permitted News Corporation or a subsidiary of News Corporation to appoint a number of Directors dependent on its shareholding in the Company. BSkyB Holdco, Inc. (“Holdco”), a subsidiary of News Corporation, had the right to appoint five Directors to the Board. The Directors so appointed were not subject to election by shareholders, nor were they required to retire by rotation as required by the Code.

At the Company’s Annual General Meeting held on 8 November 2002, resolutions were put to the shareholders of the Company whereby new Articles of Association would be adopted, cancelling News Corporation’s special right to appoint Directors to the Board and the five Directors so appointed by News Corporation would be put forward for appointment by shareholders. These Directors would then be subject to the normal retirement by rotation provisions that are applicable to all other Directors. These resolutions were also conditional on another three Independent Non-Executive Directors being appointed to the Board. The resolutions were passed by the shareholders of the Company and became effective on 13 February 2003, when Lord Wilson of Dinton was appointed as the eighth Independent Non-Executive Director of the Board.

All the Directors of the Company now comply with the requirement for Directors to retire and offer themselves for re-election at least once every three years.

The Group Executive Committee generally meets on a weekly basis to allow prompt decision making and discussion of relevant business issues. It is chaired by the Chief Executive Officer and comprises the Chief Financial Officer and other senior executives from within the Group.

Board Committees
The Articles of Association formerly contained certain rights for Holdco, dependent on its shareholding in the Company, to appoint and remove members of any standing Committee established by the Board. Holdco had the right to appoint two members to any such Committee. These rights were also cancelled upon the adoption of the new Articles of Association by a Special Resolution of the Company at the Annual General Meeting, which was effective from 13 February 2003.

Remuneration Committee
The Remuneration Committee, on behalf of the Board, is responsible for recommending to the Board the framework and policy for Executive Directors’ remuneration and remuneration for any Executive of the Company earning a basic salary in excess of £250,000 per annum. The Remuneration Committee has clearly defined terms of reference, meets not less than once a year and takes advice from the Chief Executive Officer and independent consultants as appropriate in carrying out its work. The Remuneration Committee currently comprises five Non-Executive Directors, three of whom are independent.

The Remuneration Committee is chaired by John Thornton, and its members are David Evans, Jacques Nasser, Rupert Murdoch and David DeVoe. The Company notes that the composition of the Remuneration Committee does not comply with the Code. The Board considers that Messrs Murdoch and DeVoe, along with the other members of the Committee, have provided a valuable contribution to the Remuneration Committee, and believes that they will continue to do so in the future. Accordingly, the Company does not propose to alter the current membership of the Remuneration Committee.

The Board also notes that the terms of the Executive Directors’ service contracts do not comply with the Code and this is more specifically discussed within the Report on Directors’ Remuneration which can be found on pages 26 to 31. In accordance with the Directors’ Remuneration Report Regulations 2002, the Report on Directors’ Remuneration will be put forward for an advisory shareholder vote.

Audit Committee
The Audit Committee, which consists exclusively of Non-Executive Directors, has clearly defined terms of reference as laid out by the Board. The Audit Committee is chaired by Philip Bowman and its members are Allan Leighton, Gail Rebuck, David DeVoe and Arthur Siskind. It meets not fewer than four times a year to review all significant judgements made in the preparation of the quarterly, half yearly and annual financial results before they are submitted to the Board. It reviews with the external auditors the nature, scope and cost of their work, discusses with them the results thereof, reviews the audit plans and findings of the Group's internal audit function and any related party transactions entered into by the Group. The Audit Committee has the power to seek external advice as and when required.

Nomination Committee
On 17 September 2002, the Company established a Nomination Committee of the Board following the Board’s confirmation in the previous year’s Annual Report that it intended to establish a Nomination Committee. On 17 September 2003, the Company appointed Lord St John of Fawsley and John Thornton as the Committee members. Since there are only two members there is no Chairman. During the year Jacques Nasser, Gail Rebuck, Lord Wilson of Dinton, James Murdoch and Chase Carey were all nominated by the Nomination Committee for appointment to the Board.

The Company has from time to time engaged executive search consultants to assist with the recruitment of Independent Non-Executive Directors.

Appointment of Directors
Jacques Nasser and Gail Rebuck were appointed to the Board on 8 November 2002.

Lord Wilson of Dinton was appointed to the Board on 13 February 2003.

Martin Pompadur and Leslie Hinton resigned from the Board on 13 February 2003 and were replaced by Chase Carey and James Murdoch.

Communication with Shareholders
The Company is keen to maintain a dialogue with institutional shareholders in order to ensure that the objectives of both the Company and the shareholders are understood. A programme of meetings with institutional shareholders, fund managers and analysts takes place each year. The Company also makes presentations to analysts and fund managers following the half year and full year results of the Company.

The Board views the Annual General Meeting as an opportunity to communicate with private investors and sets aside time at these meetings for shareholders to ask questions of the Board. All members of the Board are encouraged to attend the meeting. The Chairman provides a brief resume of the Company’s activities for the previous year to the shareholders.

The Company, in accordance with the Code, announces the number of proxy votes cast on resolutions at the Annual General Meeting.

Directors’ responsibilities
The responsibilities of the Directors are set out on page 31.

Internal control
The Directors have overall responsibility for establishing and maintaining the Group's systems of internal control and risk management and for reviewing their effectiveness. These systems are designed to manage, and where possible eliminate, the risk of failure to achieve business objectives and to provide reasonable but not absolute assurance against material misstatement or loss. An ongoing process for identifying, evaluating and managing the significant risks faced by the Group has been established, in accordance with the guidance of the Turnbull Committee on internal control issued in September 1999. This process has been in place for the whole of the year ended 30 June 2003 and up to the date the financial statements were approved.

Use of external auditors
The Group has a policy on the provision by the external auditors of audit and non-audit services, which categorises such services between:
– those services which the auditors are prohibited from providing;
– those services which are acceptable for the auditors to provide and the provision
of which has been pre-approved by the Audit Committee; and
– those services for which the specific approval of the Audit Committee is required before the auditors are permitted to provide the service.

The policy defines the types of services falling under each category and sets out the criteria which need to be met and the internal approval mechanisms required to be completed prior to any engagement. An analysis of all services provided by the external auditors is reviewed by the Audit Committee at each meeting.

For the year ended 30 June 2003, the Audit Committee has discussed the matter of audit independence with Deloitte & Touche LLP, the Group’s external auditors, and has received and reviewed confirmation in writing that, in Deloitte & Touche LLP’s professional judgement, Deloitte & Touche LLP is independent within the meaning of regulatory and professional requirements and the objectivity of the audit engagement partner and audit staff is not impaired.