James Murdoch Gives Up News International Role
James Murdoch resigned as executive chairman of News International on Wednesday, raising new doubts he can succeed his father Rupert as CEO of parent company News Corp in the wake of a phone hacking scandal at the unit he oversaw.
It also raises the possibility that one of his older siblings — Elisabeth or Lachlan — could emerge as an eventual contender for the top job, according to people familiar with the matter.
Other sources suggested a contrarian view of James’ departure from News International, interpreting the move to focus him on operations based out of corporate headquarters in New York as Rupert defying his doubters by bringing his embattled son closer to the company’s power center. That would dovetail with another counterintuitive move the elder Murdoch made recently: launching a Sunday edition of his tabloid The Sun newspaper in London last week amidst an investigation that had led to the arrest of staff of that paper in addition to those of the now-defunct News of the World.
The younger Murdoch, once seen as heir apparent to his 80-year-old father, has been under pressure since the phone-hacking scandal erupted last summer at the British newspapers. His resignation is the latest in a flurry of senior executive resignations from News International since the scandal came to light.
On James’ watch, thousands of celebrities and everyday citizens had their voice mails hacked by journalists at News International newspapers. The company has paid out millions of dollars in settlement fees to date with more expected to come.
James will remain deputy chief operating officer of News Corp with a focus on its international TV business, a New York-based post he was promoted to last year.
The move appears to further strengthen the position of News Corp President Chase Carey, who is now favored by investors to take the top job at the Murdoch family controlled media conglomerate.
“It clarifies the management hierarchy and clarifies Chase Carey as the person who’s both No. 2 and No. 3 behind Rupert Murdoch,” said Collins Stewart analyst Thomas Eagan. “That’s a good thing. I think the operations are going well.”
News Corp’s shares hit a new 52-week high on Wednesday morning of $20.35. Analysts and investors have remained ambivalent to the phone hacking scandal throughout the last year, noting that newspapers make up only a tiny portion of News Corp’s overall business.
News Corp Chairman Rupert Murdoch said in a statement his son would still play a key role at the company.
The elder Murdoch has spent most of the last two weeks in London overseeing The Sun’s Sunday launch. The move was seen as an effort to boost staff morale following an ongoing internal investigation into his newspapers’ journalistic operations.
“I think it is clearly regrettable that any of this happened but it did and as a shareholder I believe the company has behaved very responsibly to find the people who were responsible,” said Larry Haverty, a portfolio manager at Gabelli Multimedia Funds.