AT the moment, it appears that shareholders are all-powerful.

No matter what strategy a company pursues or management appointments it wants to make, those pesky people who actually own the company are insisting on having their say, and sometimes getting those decisions reversed. Consider the case of the Carlton and Granada merger to form one ITV.

The two men who should have gone on from their respective companies, Michael Green and Charles Allen, to become the powerbrokers of commercial television instead became the pawns of shareholders; one man, Green, ousted thanks to shareholder dislike, the other, Allen, merely a junior partner now in the new ITV, to a chairman who will be picked by those crowing shareholders. What a humiliation.

Another telly company has been having its own problems with recalcitrant shareholders. At BSkyB, its new chief executive is James Murdoch. Here, they objected merely because his name is Murdoch, son of Rupert, chairman of the company. Nepotism was sniffed and some shareholders protested at the younger Murdoch's appointment last week.

"Our view is that the overall structure of the board is still extremely disturbing from an outside shareholders' perspective," said Richard Talbut, chief investment officer at fund manager ISIS. "We think there is an over-concentration of power or influence in the hands of one particular shareholder body." That of course is Rupert Murdoch's NewsCorp, which has a 35 per cent shareholding in BSkyB.

Another ten per cent of shares are held by supportive American investors. But are appointments such as this so bad? BSkyB has just unveiled an incredibly fine set of results for the July to September period. Pre-tax profits before one-off items surged to £150m and turnover was up by 17 per cent to £850m.

Who in their right mind would want to risk that sort of performance by insisting on the appointment of their son? Certainly not Rupert Murdoch who, one often gets the impression, might consider selling his son, but certainly not advancing his career. Shareholders instead should listen to the wise voice of Sir Nigel Rudd, chairman of Boots. Late last week he warned that no amount of corporate governance activism would protect shareholders from losing their money when risky business decisions went wrong. Take a look at Marconi.

Under the autocratic grip of Lord Weinstock, it made its name as GEC, never diversified, had a croney board and made pots of money for everyone. But after Lord Weinstock's departure, shareholder activism got rid of all that - including the cash. Rebranding as Marconi, it quickly spent four billion quid in the US.

But a decline in its markets saw shareholders lose practically all of their investments. And there is the lesson. What activist shareholders should be looking for is evidence of people being good managers, irrespective of the surname.

* Ian Reeve is Business Correspondent, BBC TV North East and Cumbria.

lan Reeve is Business Correspondent, BBC TV North East & Cumbria.

Published: 18/11/2003