Los Angeles - James Murdoch has regained his status as heir apparent at his father’s media empire just four years after a phone-hacking scandal in the UK threatened his ascent.
Rupert Murdoch is preparing to step down as chief executive officer of 21st Century Fox and hand the title to 42-year-old James, according to a person familiar with the matter. His older brother, Lachlan, would become co-executive chairman, the person said.
The changes would mark a long-awaited generational succession for the 84-year-old Murdoch, but the question has always been which of his children would succeed him: A year ago Lachlan, 43, was seen as a contender again when he returned to the family business after nine years in Australia. Meanwhile Elisabeth, 46, a successful businesswoman on her own in the UK, has been in and out of her father’s empire.
James’s promotion to a CEO job would have seemed unlikely in July 2011, when he stood before the UK Parliament with his father and swore he had no knowledge of phone-hacking at the family’s News of the World tabloid in London, including the interception of messages on a murdered school girl’s phone.
James was 38 then, and a rising star in his father’s media empire News Corp, which at the time included the Fox film studios, cable channels and newspapers like the Wall Street Journal. James was the head of international operations as well as chairman at Sky PLC, the UK pay-TV provider controlled by his father.
Though the Murdochs were never charged with wrongdoing, the phone-hacking scandal grew to include terror victims, celebrities and other public figures. It led to charges against journalists, the closure of News of the World, withdrawal of a takeover bid for Sky and James’s relocation to New York. In a 2012 ruling, British regulator Ofcom singled out James for his role, in comments that News Corp called “not at all substantiated by evidence”.
“The great and the good and the powerful rarely get touched by any scandal, but for a long time James has been the chosen son and it was only a matter of time,” said Alex DeGroote, a media analyst at Peel Hunt LLP in London. “You could argue that phone hacking put his anointment back by two to three years but this is a dynastic issue.”
Youngest CEO
James, who dropped out of Harvard University in 1995 and created a record label that established hip-hop acts Mos Def and Talib Kweli, had joined the Murdoch empire in 1996. In 2003, age 30, he became the youngest CEO of a FTSE 100 company when his father appointed him head of British satellite-TV operator BSkyB, which was how Sky was then called. His appointment at the helm of BskyB raised some criticism of nepotism. Still, after a few years of successfully running BSkyB, the younger son emerged as heir apparent. In 2005, Lachlan unexpectedly resigned, leaving the path clear for James.
Elisabeth has always been seen as the most independent of the three siblings - Rupert Murdoch has six children in total from three marriages. She left the company in 2001 to found a production company called Shine, and she didn’t seek a senior position within News Corp after Rupert bought Shine in 2011. She was openly critical of James during the phone-hacking crisis, telling reporters that he should have taken a “step back”.
Over the past four years, James has rebuilt his position within the company by returning to New York, leading an investment in Vice Media and joining the board of both Vice and TrueX, an advertising technology firm Fox now owns. After running international television businesses, James assumed oversight of Fox’s domestic television divisions - save for the Fox News network.
While James was working to create new business opportunities within the company, lawyers were working to clear the Murdoch name outside of it. Ofcom cleared BSkyB to continue broadcasting, and US regulators cleared the Murdochs of any wrongdoing, as well as News Corp and Fox - which were separated in 2013.
‘No slouch’
Rupert promoted James to co-chief operating officer in 2014, reporting to Chase Carey. This year, James and John Nallen, Fox’s chief financial officer, are spearheading the drive to move the company’s headquarters to 2 World Trade Center, according to a person with knowledge of the process.
Lachlan will also get promoted as part of the changes in leadership at Fox. The brothers’ new roles are designed to have them work together as a partnership, mimicking the close working relationship of Carey and Rupert Murdoch, said the person with knowledge of the plans. Meanwhile, Rupert Murdoch, who will remain executive chairman, will still drive strategy at Fox, the person said.
Dish Network CEO Charlie Ergen praised fellow billionaire Rupert Murdoch after reports of the plans to change the Fox leadership, calling him “one of the all time greatest business guys that I have ever met and certainly within the US”.
“And he’s fortunate that James is no slouch,” Ergen said. “He’s been well positioned in that company for a long time.”
* With assistance from Anousha Sakoui in Los Angeles and Betty Liu in New York
Bloomberg