This wasn’t the way it was supposed to go for James Murdoch.
Handsome, wealthy, the product of New York’s finest private schools and Harvard University, the fourth child of Rupert Murdoch has been bred to be a baron. Until two weeks ago, there seemed no question about it: James would someday inherit the realm and lead News Corp., the news and entertainment conglomerate his father has spent his entire life building.
Key relationships in the scandal
But that dynastic succession is no longer ensured, and something perhaps far darker looms. Today the younger Murdoch, 38, faces what could be a seminal moment in the drama engulfing the family business. Father and son will face a committee of the British Parliament on Tuesday to answer questions about a phone-hacking scandal that has rocked their vast corporation, threatened their succession plans and rattled the family’s trademark swagger.
As revelations have tumbled forth, British newspapers and American commentators have speculated that James could be the next News Corp. executive to be forced out.
“My personal estimation is that the end result of this is that someone not named Murdoch will become CEO of News Corp.,” Michael Wolff, Rupert Murdoch’s biographer, said in an interview.
The inquiry revolves around the classic scandal questions: What did James and his father know, and when did they know it? As the chairman of News Corp.’s British media operations, James may have a role more direct and germane than that of his 80-year-old father. He took over an operation that was already beset by allegations of widespread phone hacking and has said that the problem was the work of a single, misbehaving reporter.
Although James didn’t become involved with News Corp.’s British newspaper operations until 2007, after much of the hacking had taken place, there’s no question that the muck from this complex affair has piled up at his door.
Under his watch, News Corp. has closed a tabloid paper that James oversaw, the News of the World, which is at the heart of the hacking allegations; dropped its $12 billion bid to buy the remainder of British Sky Broadcasting (which James heads); and accepted the resignations of two key executives, Rebekah Brooks (James’s immediate underling) and Les Hinton (James’s predecessor, and chief executive of Dow Jones & Co.).
There is, too, the matter of alleged payoffs by the News of the World to corrupt police officials. News Corp. is a U.S.-based company and subject to federal laws that make it illegal for its employees to bribe foreign officials. James Murdoch or other News Corp. officials could potentially be held responsible if their employees are proven to have bribed British police.
The scandal continues to weigh on News Corp.’s stock price, adding to the financial pressure on the Murdoch family and James Murdoch’s leadership. On Monday, the publicly traded Class A shares fell 69 cents, or 4.4 percent, to $14.96 per share. The stock has now fallen more than 15 percent since the end of June, wiping away more than $6 billion of shareholder value.
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