James Murdoch, News Corp.’s deputy chief operating officer, is cutting some of his ties to London ahead of a move to New York that was delayed amid a phone- hacking scandal that engulfed the U.K. business.
Murdoch, the son of News Corp. ChairmanRupert Murdoch, is leaving the board of London-based GlaxoSmithKline Plc (GSK) after less than three years, the U.K. drugmaker said yesterday. Murdoch’s strategy adviser for Europe, Matthew Anderson, is stepping down and moving to San Francisco, News Corp. said separately.
James Murdoch was named deputy chief operating officer last March, four months before reports of voicemail interception by tabloid journalists in the U.K. forced News Corp. to drop its bid for British Sky Broadcasting Group Plc. (BSY) U.K. lawmakers are currently preparing a report about Murdoch’s role in the scandal and may publish their findings in coming weeks.
“The strategy has shifted with the political issues in London, with the phone-hacking scandal, the BSkyB bid falling through, the fact that James is moving from London to New York,” said Alan Gould, an analyst at Evercore Partners in New York. “Most of the power is in New York. They want most of the strategic planning with the senior executives.”
There are no plans to replace Anderson in London, according to two people with knowledge of the considerations. They declined to be identified because the decision is private. Alice Macandrew, the former head of public relations for News Corp. in Europe, left her role in December.
News Corp. spokesman Jack Horner declined to comment yesterday on the management changes.
Murdoch was given the deputy COO job in March 2011, with News Corp. announcing plans to move the 39-year-old, who is Rupert Murdoch’s youngest son, to its headquarters in New York. By July, the company’s News International U.K. publishing unit faced phone-hacking allegations against the News of the World, leading to the tabloid’s closure. Both Murdochs appeared before U.K. lawmakers to explain their role.
The fallout also led to the resignation of Rebekah Brooks, the CEO of News International, and Les Hinton, head of the Dow Jones & Co. division who had previously worked in the U.K.
Shareholders of News Corp. and pay-TV broadcaster BSkyB, partly owned by News Corp., lodged protest votes against Murdoch after the scandal engulfed the company. Murdoch is chairman of BSkyB and also sits on the board of Sotheby’s (BID), the largest publicly traded auction house.
Murdoch should quit the board of Sotheby’s, said CtW Investment Group, an adviser to union-sponsored pension funds with more than $200 billion in assets. The phone-hacking scandal makes Murdoch “ill-suited for service” on the boards of Glaxo, Sotheby’s and BSkyB, CtW said.
Sotheby’s spokeswoman Diana Phillips said in an e-mailed statement that “James Murdoch is a valued member of Sotheby’s board.”
Lawmaker Tom Watson, a member of the U.K.’s Labour party and a member of the Parliament’s Culture Committee investigating the scandal, said in July that James Murdoch should face criminal charges and was unsuitable to be a director of BSkyB, in which News Corp. (NWSA) owns 39 percent.
James Murdoch told lawmakers in November that News of the World editor Colin Myler failed to tell him in 2008 that phone hacking at the now-defunct tabloid was common. Myler and the newspaper’s lawyer Tom Crone have repeatedly insisted that they discussed evidence with Murdoch.
Murdoch joined News Corp.’s U.K. publishing unit News International as chairman in December 2007, after the hacking took place. Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.
When News Corp. announced Murdoch’s New York move, analysts including David Joyce at Miller Tabak & Co. said the decision was probably part of a plan for James to succeed his father at some point.
Following the phone-hacking scandal, it will be important for Murdoch to work with Chief Operating Officer Chase Carey, says Michael Morris, an analyst at Davenport & Co. LLC.
“Chase Carey is the single-most important operational executive at the company, and he’s based in New York,” Morris said. “If executives are going to be geographically aligned with the economics of the business, then most of your executives will be based in New York.”
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