James Murdoch Steps Down as Chairman of News Corp. U.K. Unit

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James Murdoch
James Murdoch, deputy chief operating officer of News Corp., talks on the phone in New York on Feb. 28, 2012. Photographer: Peter Foley/Bloomberg

News Corp. Deputy Chief Operating Officer James Murdoch stepped down as executive chairman of News International almost eight months after the U.K. publishing unit was rocked by a phone-hacking scandal.

Murdoch, 39, who has moved to News Corp.’s New York headquarters, will assume a variety of “essential corporate leadership mandates” focusing on pay television and international operations, his 80-year-old father Rupert, who is News Corp.’s chairman and chief executive officer, said in a statement.

The younger Murdoch already handed News International’s CEO position to Tom Mockridge in July, after reports of voice-mail interception by its tabloid journalists in the U.K. prompted News Corp. to drop a bid for British Sky Broadcasting Group Plc, the pay TV company in which James Murdoch is still chairman. U.K. lawmakers are preparing a report about Murdoch’s role in the scandal and may publish their findings in coming weeks.

“James was itching to step down, he is well known to be no fan of the newspapers,” said Claire Enders, founder and CEO of Enders Analysis in London, who advises clients including the U.K. government. “I am sure the board understands James wants to leave and they are much more protective of him now.”

Murdoch was given the deputy COO job in March 2011, with News Corp. announcing plans to move Rupert Murdoch’s youngest son, to its headquarters in New York. By July, News International 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.

Time to Go

“Over time, it’s become clear that it was in the best interests of the company and James that he step down,” said Lawrence Haverty, a portfolio manager at Gamco Investors Inc. in Rye, New York, which owns shares of News Corp.

Murdoch has completed his move to New York and has no plans to step down from any of his other roles, according to a person close to the company who asked not to be named because the plans are private. He held onto his position as chairman of BSkyB, Britain’s biggest pay-TV company, last November amid criticism from some shareholders for him to resign.

The CTW Investment group, a fund representing unions and pension holdings, repeated its call today for James Murdoch’s resignation from the boards of News Corp. and Sotheby’s. The group said it sent a letter to the chairman of Sotheby’s, citing the company’s corporate governance policy which requires a director whose occupation has changed to resign.

Father’s Backing

“He has demonstrated leadership and continues to create great value at Star TV, Sky Deutschland, Sky Italia, and BSkyB,” Rupert Murdoch said in the statement.

James Murdoch was absent when his father flew to London earlier this month to help start a Sunday edition of the Sun tabloid. Ten Sun employees had been arrested as part of a police investigation into improper payments to public officials.

The Sunday edition of the Sun tabloid fills a void left by the News of the World, the 168-year-old newspaper that was shut last July after reporters were found to be hacking into sources’ voice mails for stories. The company’s internal investigation into hacking at News of the World eventually widened to encompass News Corp.’s other U.K. titles.

A separate judge-led inquiry, formed by Prime Minister David Cameron, was also started because of the News of the World revelations to look into media ethics and practices.

“If News International wanted to move on and start afresh then his presence was always going to be a problem for them,” Culture Committee Chairman John Whittingdale said on Sky News. “They want to demonstrate that they are making a fresh start with fresh personnel. That doesn’t necessarily mean that James Murdoch was guilty.”

News Corp. rose 0.3 percent to $19.86 in Nasdaq Stock Market trading at 3:45 p.m. New York time. The stock had gained 11 percent this year before today.

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.

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