James Murdoch to resign as chairman of News International

February 29, 2012

Rupert Murdoch, the octogenarian media baron, has never officially annointed a successor-in-waiting among his four adult children. But his choices may just have gotten a little more complicated.

James Murdoch, the youngest son of the News Corp. chairman, stepped down Wednesday as the head of the company’s British newspaper division, resigning amid a cloud of scandal and continuing questions about the extent of bribery and corruption within the operation.

The younger Murdoch will move from London to New York and remain a senior executive with New York-based News Corp., which owns the Wall Street Journal, Fox News and other media and entertainment properties, the company said. But his surprise resignation from British-based News International, which operates the Sun tabloid and Times of London newspaper, suggests that the phone-hacking allegations that engulfed the division last year are continuing to resonate.

Murdoch, 39, has widely been thought of as his father’s heir apparent at News Corp., which Rupert Murdoch built into a globe-straddling behemoth since inheriting two ailing Australian newspapers from his father in the early 1950s. James Murdoch has served a long apprenticeship under his father, moving successfully through several News Corp. divisions. Most company watchers thought he had eclipsed his older brother, Lachlan, and sister Elisabeth, both of whom have served in the company, as the next in line (a fourth child, Penelope, from the first of Murdoch’s three marriages, hasn’t been involved in the company).

But the Harvard-educated James Murdoch has been struggling to contain the damage from the hacking scandal ever since he took over the chairmanship of News International in 2007. For several years before his arrival, reporters and private investigators at the News International-owned tabloid News of the World intercepted private phone calls and messages to British celebrities, politicians and newsworthy individuals, including a young girl who had been kidnapped and later found murdered.

The paper’s newsgathering methods also included bribing officers of Scotland Yard for information about ongoing investigations. A more recent government inquiry has exposed what a police official called “a culture of illegal payments” to government officials by executives and journalists at the Sun, Britain’s most popular newspaper.

News Corp. closed the News of the World last summer as the extent of its activities came to light. The scandal has led to more than a dozen arrests, several criminal convictions, millions of dollars in private settlements for victims and the resignations of top News International executives, including James Murdoch’s predecessor, Rebekah Brooks.

A lingering question is whether it has fatally damaged James, who has long maintained that he was unaware of the extent of the corruption within his organization.

James remains his father’s “preferred successor,” said Ian Hargreaves, a media expert at Cardiff University in Wales. “He thinks he is the right person and nothing that has happened so far in the U.K. newspaper scandal has deflected him from that view.” Removing James from the turmoil in London to take on an undefined role in News Corp.’s global television business — the company’s core business — indicates that James still has his father’s confidence, Hargreaves said.

But in his new job, James will rank as a weakened No. 3 in the corporate hierarchy, behind his powerful father and chief operating officer Chase Carey.

Meanwhile, he’ll leave behind a swarm of inquiries and investigations into News International, including three related police investigations, an inquiry into press ethics and a parliamentary committee investigating phone hacking.

In addition to closing News of the World last summer, the outcry over the company’s behavior last summer led James Murdoch to withdraw a $12 billion bid to buy the majority share of British Sky Broadcasting, a satellite TV company that News Corp. partially owns.

James Murdoch’s most visible moment in the spotlight came in July when he testified with his father at a parliamentary panel investigating the scandal. Whereas his father struggled to remember details and dates under questioning, James Murdoch was sharp and focused. He repeated earlier statements that top executives weren’t aware of the extent of the hacking and bribery until 2007, when the subsidiary, newly under James Murdoch’s direction, began paying compensation to hacking victims. However, Murdoch’s claims that he was unaware have been disputed by former colleagues.

In a statement Wednesday, Rupert Murdoch said of his son: “We are all grateful for James’ leadership at News International and across Europe and Asia, where he has made lasting contributions to the group’s strategy in paid digital content and its efforts to improve and enhance governance programs. . . . Now that he has moved to New York, James will continue to assume a variety of essential corporate leadership mandates, with particular focus on important pay-TV businesses and broader international operations.”

The same statement quoted James Murdoch as saying: “I deeply appreciate the dedication of my many talented colleagues at News International. News International is now in a strong position to build on its successes in the future.”

There appears to be no end in sight to the troubles with the Murdochs’ British newspapers. A senior police official testifying before an investigative panel known as the Leveson Inquiry raised new allegations about the Sun newspaper this week. The official, Sue Akers, said a preliminary police inquiry had found that the Sun had bribed police, military, health, government and prison sources for information.

Rupert Murdoch is in Britain overseeing the launch of a Sunday edition of the Sun, Britain’s best-selling newspaper. The first edition last Sunday was successful, selling 3.26 million copies.

Correspondent Karla Adam contributed to this report from London.

Paul Farhi is The Washington Post's media reporter.
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