The Murdoch Who Could Be King

Aiding Rupert in his bid for Dow Jones, son James looks likeliest to inherit his mantle

By Ronald Grover

When Rupert Murdoch finally sat down earlier this month with the Bancroft family to discuss his $5 billion bid for Dow Jones & Co. (DJ ), he knew the meeting was going to be more than a little awkward. The Bancrofts, who control Dow Jones, had publicly expressed concerns that he might meddle with their cherished Wall Street Journal.

That the Bancrofts, who had earlier spurned the offer, were now agreeing to meet was a positive sign. But Murdoch still needed to convince them that his intentions were honorable. So he brought along his 34-year-old son, James, who the News Corp. (NWS ) chief hoped would ease the family's concerns. James, who calls his father Pop, sat to his right, soothing and engaging the Bancrofts with tales of growing up Murdoch. "It was clear Rupert wanted his son there," says a person with knowledge of the meeting. "And James carried the ball at key moments."

If the deal goes through—which looks likelier since a potential Microsoft (MSFT )-General Electric (GE ) joint bid foundered in early June—the Bancroft meeting may be remembered as the moment James Murdoch emerged as one of his father's most influential confidants. The two men get each other on some deep genetic level, say News Corp. insiders, and converse at least twice a day. Will the youngest child inherit the father's throne? It's too early to say since the senior Murdoch, a vigorous 76, shows few signs of relinquishing control. But James, through hard work and canny maneuvering, has won over some of Murdoch Sr.'s veteran lieutenants. "He is just as tough as his old man," says British Sky Broadcasting Group PLC (BSY ) board member and longtime Murdoch ally David Evans.

Not long ago, it looked as though Lachlan Murdoch, not brother James, had cornered the old man's respect. But in 2005, Lachlan, now 35, bolted his job as News Corp.'s deputy chief operating officer, the result of one too many clashes with Fox News Network chief Roger Ailes, a Rupert associate who has long had the boss' ear. Murdoch daughter Elisabeth, who is 38, left the company in 2001 after battling another Murdoch aide, former BSkyB chief Sam Chisholm.

While some considered James the brightest of Murdoch's progeny, he seemed to lack seriousness at first. After just a year at Harvard University studying film and history, he dropped out in 1995 to finance a doomed hip-hop label with a musician pal. James spent most of his evenings then chain-smoking Marlboros and hanging out in nightclubs scouting talent. In those days, he swore so much that his mother, Anna, chastised him for dropping too many F-bombs in a GQ interview. Somewhere along the way, James matured; perhaps it was his 2000 marriage to Kathryn, a former model and marketing executive who grew up in Oregon and lives with him in London with their two kids and two dogs.

James was fortunate, perhaps, in that his first big job with the family business involved a stint in News Corp.'s outer rim, Asia, where he got experience away from the 24/7 scrutiny of his father and his aides. Not that the job was a cinch. Sent to Hong Kong in 2000 as CEO of ailing StarTV, he helped turn around the money-losing satellite company by forging deals with cable companies in India and then producing an Indian version of Who Wants to Be a Millionaire and other hot programs. "Being 12 hours away gave him the freedom to become his own man, make his own decisions," says Abe Peled, CEO of NDS Group (NNDS ), a News Corp.-controlled company that provides anti-piracy software for set-top boxes.

Named CEO of BSkyB in 2003, James pushed the British satellite TV company into broadband and phone service and watched earnings nearly double on a per-share basis. Since then, he has demonstrated Murdochian tactics—blocking rival Virgin Media Inc. (VMED ) from buying British TV producer ITV and then yanking five Sky-owned channels from Virgin's cable systems. Knowing the move would be unpopular, James went to Sky's Scottish call center to listen in on calls from folks who could no longer get Sky on cable.

DIGITAL STRATEGIST

In ways large and small, James is his father's son. He's intense, for starters, though where Roop is rumpled, he is polished, with his dark suits, white shirts, and pointy black shoes. Even as a kid, he exhibited dad's competitive hunger: He would switch places at dinner to be served first. And he shares Rupert's laissez-faire politics. "I'd say he's a libertarian," says an associate. "He'd as soon keep the government out."

Battle-tested as an executive, James is now helping reshape News Corp. for the 21st century. It was he who tutored Rupert on the Web, reviewing a 2005 speech in which Murdoch Sr. exhorted newspaper editors to embrace the Web or "be relegated to the status of also-rans." When News Corp. plunked down $580 million three months later to buy social network site MySpace.com (NWS ), Rupert did so after huddling with James, who had his own MySpace page.

At a moment when corporations are at least preaching the benefits of environmentalism, James is prodding his father to go green. News Corp.'s May 10 announcement that it would be carbon-neutral by 2010 is modeled on James' own initiatives at BSkyB that cut carbon emissions 20%, including software that powers down idle set-top boxes.

As Lachlan knows full well, there are no guarantees that James will one day take over. Neither he nor his father will address the succession issue. "There are other good members of the family," Rupert said earlier this year. But speculation is rife in the corridors of News Corp. Here's one theory: If the Murdochs bag Dow Jones, James will return before long to the U.S. as part of an enlarged management team, perhaps to help develop the company's expanded digital push. He made a strong first impression with the Bancrofts. And he has already done so with the one guy who really counts: Pop.

Grover is Los Angeles bureau manager for BusinessWeek

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE