James Murdoch gives up News International role

Wed Feb 29, 2012 6:29pm EST
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By Yinka Adegoke and Mark Hosenball

(Reuters) - James Murdoch resigned as executive chairman of News International on Wednesday, raising new doubts he can succeed his father Rupert as CEO of parent company News Corp in the wake of a phone hacking scandal at the unit he oversaw.

It also raises the possibility that one of his older siblings -- Elisabeth or Lachlan -- could emerge as an eventual contender for the top job, according to people familiar with the matter.

Other sources suggested a contrarian view of James' departure from News International, interpreting the move to focus him on operations based out of corporate headquarters in New York as Rupert defying his doubters by bringing his embattled son closer to the company's power center. That would dovetail with another counterintuitive move the elder Murdoch made recently: launching a Sunday edition of his tabloid The Sun newspaper in London last week amidst an investigation that had led to the arrest of several journalists at that paper in addition to those of the now-defunct News of the World.

The younger Murdoch, once seen as heir apparent to his 80-year-old father, has been under pressure since the phone-hacking scandal erupted last summer at the British newspapers. His resignation is the latest in a flurry of senior executive resignations from News International since the scandal came to light.

Thousands of celebrities and everyday citizens had their voice mails hacked by journalists at News International newspapers before James took over but he has been heavily criticized for his handling of the affair afterwards. The company has paid out millions of dollars in settlement fees to date with more expected to come.

"We won't miss him," said a News International insider who asked not to be named. "His contribution to dealing with this whole (hacking) issue has been unimpressive at best as well as his lack of ability to see what was going on himself and to do anything about it."

James will remain deputy chief operating officer of News Corp with a focus on its international TV business, a New York-based post he was promoted to last year.

Analysts said the move was unsurprising in one sense because Rupert Murdoch would be keen to distance his son from the troubles in London.   Continued...

James Murdoch in Edinburgh, August 28, 2009.   REUTERS/David Moir