James Murdoch resignation revives News Corp. succession parlor game

James Murdoch’s resignation as head of News Corp.’s British publishing unit marks the end of his time as Rupert Murdoch’s heir apparent and opens the door for further speculation about who will succeed Rupert Murdoch as head of the company.

It remains to be seen whether Rupert Murdoch will be able to install one of James’ siblings in his place, or whether, as Ken Auletta wrote in December, “it’s almost a certainty that Rupert Murdoch’s dream of keeping News Corp. a family-run enterprise is dead.”

Since last summer, James Murdoch has been unable to distance himself from the allegations of unethical and illegal practices at News International’s British tabloids. He has maintained that he didn’t know about widespread phone hacking, despite others’ testimony and emails to the contrary.

In October, a shareholder advisory group recommended that shareholders vote at the company’s annual meeting to remove Rupert Murdoch and his sons James and Lachlan, along with 10 others, from News Corp.’s board of directors. Murdoch, who controls the company with 40 percent of voting stock, was able to defeat the movement, but most independent shareholders voted against James and Lachlan.

The Guardian called the vote “a damning verdict on [James Murdoch's] tenure amid widespread criticism of his handling of the hacking scandal.”

Among the media, the issue of family succession is a longstanding parlor game; among the siblings, it’s apparently the subject of family therapy.

Michael Wolff wrote in his 2008 book “The Man Who Owns the News: Inside the Secret World of Rupert Murdoch”:

The consensus that has formed around James as the better successor comes, at least in part, from the fact that he was farther from the company and from the top job. So the more James was praised, the more that took from Lachlan’s inevitability. The more James was praised, the more his father had an alternative. This reinforces the idea that staying away from the epicenter of News Corp. is the better strategy—one now being followed by Lachlan.

And in October, Vanity Fair’s Alex Massie described how things had changed over the years:

At one point or another, each of Murdoch’s children has appeared to be the chosen one. Each has known favor, being sent off to distant corners of the empire to govern far-off provinces with a view to preparing them for life back at the centre of the imperial court. And each has endured spells in the wilderness, shunned by their father and forced into exile.

As James’s prospects dimmed, so the price of Elisabeth Murdoch futures began to rise.  Earlier this year, Rupert signaled it was time for Elisabeth, 42, to come in from the cold. Purchasing her television company, Shine, for $675 million was an expensive way of signaling parental approval, but it marked her return to favor after a decade in exile. Previously she had run BSkyB until she resigned in 2000. To add spice to the melodrama, she reportedly blames James for his failure to get a grip on the London papers. Her little brother has embarrassed the family and must pay.

James helped found a record label, later bought by News Corp., before running Star TV in Asia and then BSkyB, Murdoch’s lucrative British satellite TV operation. Four years ago he became viceroy of News Corp.’s holdings in Europe, the Middle East, and Asia. That seemed to make him favorite to inherit, but that was before the meltdown at the News of the World.

Now some have speculated Lachlan is again the favorite. When Rupert visited The Sun newsroom two weeks ago, he brought Lachlan, not James, reported The New York Times:

The presence of Lachlan on the tour signaled to observers of the Murdoch family’s internal dramas that James — the overall head of British newspaper operations and the heir apparent until the phone hacking scandal that erupted last summer — may have ceded his place to his older brother. Lachlan, a onetime heir apparent himself, had a falling-out with News Corporation executives in 2005.

Others, however, see President and Chief Operating Officer as the front-runner to fill Rupert’s shoes.

Another potential beneficiary of James Murdoch’s stumbles: Roger Ailes. New York’s Gabriel Sherman predicted in July that “if James winds up mortally compromised by the hacking scandal … Ailes will have one less potential future boss to worry about.”

Even before the hacking scandal exploded last summer, according to The New York Times’ Jeremy Peters, there were tensions between Rupert Murdoch and James.

Their disagreements … stemmed in large part from the clashing visions of a young technocratic student of modern management and a traditionalist who rules by instinct and conviction. The tension grew worse as the gap between the New York headquarters and James’s London operations, where he oversees the company’s European and Asian holdings, proved difficult to bridge.

The elder Mr. Murdoch reached his boiling point last winter, said one of the former officials, and delivered a blunt ultimatum to his son.

“You’re coming back to New York, or you’re out.”

In its announcement, News Corp. said that Murdoch’s resignation followed his relocation to company headquarters in New York.

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