The Murdoch in Waiting

Tim Arango details the relationship between media mogul Rupert Murdoch and speculation over his son James’ eventual takeover of News Corp.

ON a night in late January when he should have been in the Swiss village of Davos, James Murdoch went to dinner here with his father, Rupert, and several journalists from The Sun, the tabloid that the Murdochs have owned since 1969.

In the private room at Wheeler’s of St. James’s, father and son politely argued about the lesser of the public controversies swirling around the Murdoch empire: the firing of Andy Gray, the chief soccer pundit for their Sky Sports network, for making sexist comments.

“Can we stop firing people for making a joke?” Rupert Murdoch asked.

James Murdoch defended the decision to fire Mr. Gray and later stood up, tapped a glass and reminded the gathering that it was 25 years ago that his father had busted London newspaper unions, a seminal event in both British labor history and the historical narrative of the Murdoch media kingdom, the News Corporation.

Unmentioned that evening was the deepening investigationinto the practice among journalists at The News of the World, another Murdoch tabloid, of hacking into the voice mail of the famous. The scandal alone would not have caused James Murdoch to cancel his trip to the World Economic Forum in Davos. (It was not, as the British press would have it, Rupert Murdoch who was scheduled to be in Davos.) Rather, it was that the uproar might threaten the single biggest deal in the News Corporation’s history: a $12 billion takeover bid for British Sky Broadcasting. The deal has been facing opposition in both the British media and the government, and some of the criticism has come from some longtime Murdoch allies.

The perennial speculation is whether James Murdoch, 38, will one day run the News Corporation. But the pertinent fact is that as the chairman and chief executive of its businesses in Europe and Asia, he already runs a large and growing part of it. If the Sky transaction is approved, the businesses reporting to James Murdoch would account for roughly half of the News Corporation’s annual revenue.

James Murdoch has risen higher in the company than his older siblings, Lachlan, 39, and Elisabeth, 42, who went to work for their father and later left acrimoniously. With Rupert about to turn 80, the issue of succession has taken on more importance. He may never name a sole heir; his preference, executives say, is to have all three involved. He has unsuccessfully sought to bring Lachlan back to the company, but as soon as this week could announce a deal to return Elisabeth to the fold, by buying her television production company, Shine.

Now James faces his greatest test: whether he can put an end to the phone-hacking scandal — without the company facing more troubling revelations, an embarrassingly high amount in damages or the collapse of the takeover of Sky. The News Corporation already controls a 39 percent stake of Sky, and James remains its chairman after serving as C.E.O. from 2003 until 2007. (The takeover, if successful, would let the News Corporation finally consolidate Sky’s growing profits on its balance sheet.)

James Murdoch is trying to succeed at the company his father built, but he is a very different character: more blunt, more bureaucratic and less able to smooth ruffled feathers. He has his father’s aggressiveness but not his tactical sense or temperance.

Ultimately, the deal for Sky could be undone by the tabloid sensibilities of the News Corporation, a heritage for which he seems to have little affection. But he faces this challenge at a time when he has become a steadier presence in the company, having emerged from a period of corporate infighting, particularly in 2009 and early 2010. Then, his efforts to involve himself in News Corporation entities outside his purview alienated several longtime executives and raised tensions between New York and London, according to several executives who spoke on condition of anonymity to maintain relationships with the family.

JAMES MURDOCH declined to speak on the record for this article. He put forward numerous people who know him well to speak on his behalf, and he asked others, including longtime friends from his childhood in New York City and time at Harvard, not to speak. (One of his best college friends, after first agreeing to speak, e-mailed with the note: “Sorry for not getting back to you earlier. As you probably figured out, the P.R. people at News Corp are handling this.”) Many others spoke without first seeking James’s permission.

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