James Murdoch has stepped down as executive chairman of News International, the British arm of News Corp., the company announced Wednesday. Murdoch, who was once seen as the heir apparent to his father Rupert at the head of News Corp., has now lost a key position within the company.
News Corp. cast the move as stemming from James' recent relocation to New York from London, and Rupert Murdoch said his son would "continue to assume a variety of essential corporate leadership mandates." He will also remain as the deputy COO of News Corp. But the reshuffling will be widely seen as a reflection of James' deeply diminished stature following wave after wave of damaging allegations about his complicity in News Corp.'s still-simmering phone hacking scandal. That scandal has mushroomed into a full-blown nightmare for the company, with the persistent threat of serious prosecution hanging in the air.
James has long denied having any knowledge of the widespread nature of phone hacking within the News of the World tabloid. But a series of testimonies and released documents have put him ever-closer to a crucial 2008 meeting in which the former editor and legal director of the paper have sworn he was informed that criminality had been out of control within the organization.
James was even sent a memo detailing the extent of phone hacking within the NOTW, but has stated he did not scroll down enough on his BlackBerry to read it.
As the allegations mounted against him, James' stock within News Corp. plummeted. Whereas it had been assumed that he was the natural successor to his father, Rupert Murdoch began stressing the power and influence of his COO, Chase Carey. Independent shareholders also voted, by a large margin, to oust him from the News Corp. board. In August, sources told Reuters that there was talk within News Corp. of James taking a "breather" from his top executive duties.
James' departure leaves News International — once the key building block in Rupert Murdoch's media empire, and still a wing of his company he treasures deeply — without any member of the Murdoch family involved on its masthead. It also maintains News International's status as the most troubled, and trouble-making, part of News Corp. In the last year, the subsidiary has become a gloomy focal point for the company, even as overall News Corp. revenues have hummed along.
Moreover, the misery shows no signs of stopping; just this week, dramatic new details about the levels of bribery at Murdoch's Sun newspaper have rocked the British media.
On Tuesday, Carey told a banking conference that there was an "awareness" that the publishing wing of News Corp. was depressing the company's stock price, and admitted that there have been discussions about spinning it off entirely.
News Corp.'s stock price rose steadily on Wednesday following the announcement about James Murdoch.
The full statement from News Corp.:
News Corporation today announced that, following his relocation to the company's headquarters in New York, James Murdoch, deputy chief operating officer, has relinquished his position as executive chairman of News International, its UK publishing unit. Tom Mockridge, chief executive officer of News International, will continue in his post and will report to News Corporation president and COO Chase Carey.
"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," said Rupert Murdoch, chairman and chief executive officer, News Corporation. "He has demonstrated leadership and continues to create great value at Star TV, Sky Deutschland, Sky Italia, and BSkyB. 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."
"I deeply appreciate the dedication of my many talented colleagues at News International who work tirelessly to inform the public and am confident about the tremendous momentum we have achieved under the leadership of my father and Tom Mockridge," said James Murdoch. "With the successful launch of the Sun on Sunday and new business practices in place across all titles, News International is now in a strong position to build on its successes in the future. As deputy chief operating Officer, I look forward to expanding my commitment to News Corporation's international television businesses and other key initiatives across the company."