James Murdoch’s evacuation from the mess of News International’s UK newspaper business has been in the cards for a long time. Today’s announcement that he is relinquishing his chairmanship made up in prompted speculation what it lacked in surprise. It is a cue to ask, again, what this means for the Murdoch family as keepers of the News Corp. castle, and what it means for the UK newspaper business, so central to Murdoch’s power base for more than forty years.
James’s disappearance from the UK was signaled last weekend, when he failed to show at the launch of the new Sun on Sunday tabloid. Instead his father, Rupert, and his elder brother, Lachlan, were there to reassure the staff and set the presses rolling. James will be relocating to New York.
The launch of a new Murdoch paper, only seven months after James himself closed the News of the World in the heat of the phone-hacking scandal, provided only brief respite from the tide of scandal and revelations about the company.
This week has also seen an escalation of allegations against News International papers at the ongoing Leveson Inquiry in the UK into press and police behavior. Evidence of systematic bribes to police and officials by News International officials, and suggestions that they might have used resources to subvert a murder inquiry are the latest broadsides to hit the company.
James Murdoch only took charge of the newspaper divisions in 2007, and his role in covering up the extensive nature of the corruption within the organization during 2009 and 2010 is under fierce scrutiny. Depending on the evidence and the appetite to pursue a prosecution, this could be extremely damaging for James, the only remaining senior executive connected to the hacking scandal who has not lost his job. In an extreme case he could even be prosecuted under the Foreign and Corrupt Practices Act here in the US, although it is still far from clear whether agencies on either side of the Atlantic are likely to bring a case.
So for James, this is an important moment. He is moving to New York and into the heart of the US arm of the business, which might offer him both more short-term protection but less autonomy from his father. At the same time, he is likely to feel intense relief at being out of “Fortress Wapping,” the affectionate title for News International’s ugly headquarters building; running newspapers was a role for which he seemed both unsuited and unprepared. As in the demotion of a young officer who arrogantly and stupidly allowed his unit to be ambushed, it seems clear to all that he should never have been on that front in the first place.
When James Murdoch bounced into London in 2003 as the talented but entitled executive who took over the News International-controlled satellite broadcaster, BSkyB, he was greeted with great skepticism. However, he proved the doubters wrong, with astute business decisions and deal making worthy of his father. Sky thrived, and continues to prosper. It is one of the most profitable media entities in the world.
Newspapers, however, have a different metabolism to set-top boxes. Quite at home discussing compression rates, James hated being accountable, whether to regulators or journalists. His lack of editorial or news publishing experience, his wanton arrogance, and the motley selection of dishonest executives surrounding him were a toxic combination.
Chase Carey, the chief operating officer of News Corp., acknowledged this week that shareholders in the company would like nothing more than to see the newspapers sold or at least split off into a separate division. Although he went on to say this was not on the agenda, it could turn out that News Corp.’s board will need shareholder support more than it wants to retain the newspapers.
For Rupert Murdoch, chopping off his UK papers—the source of his wealth and influence in his climb to market power—in order to benefit the overall business, would be like choosing between his children. But as we have seen, when it comes to the crunch, he’s quite prepared to do that too.