Last updated: March 26, 2014 11:02 am

Lachlan returns to Murdoch empire succession race

BEVERLY HILLS, CA - MARCH 11: Lachlan Murdoch, Rupert Murdoch and James Murdoch attend The Television Academy's 23rd Hall Of Fame Induction Gala at Regent Beverly Wilshire Hotel on March 11, 2014 in Beverly Hills, California. (Photo by Jason Kempin/Getty Images)©Getty

Lachlan Murdoch (left), Rupert Murdoch (centre) and James Murdoch

Lachlan Murdoch is back in the race to succeed his father, nine years after leaving Rupert Murdoch’s media empire, with a new role as non-executive co-chairman of News Corp and 21st Century Fox.

The 42-year-old’s comeback, putting him in a senior role at the two family-controlled media groups – an empire that spans newspapers on both sides of the Atlantic, a movie studio and a cable news network – coincided with the promotion of his younger brother, James.

James’ elevation to co-chief operating officer at 21st Century Fox comes two years after he was embroiled in the UK phone hacking scandal as the former head of News Corp’s UK newspaper business.

His new position gives him a more central executive role at one of America’s most global media companies, in contrast to Lachlan’s non-executive position, keeping him in contention in a succession race that has seen numerous twists.

James will share his new title with Chase Carey, a trusted adviser and second-in-command to Rupert Murdoch, to whom he had reported in his previous role as deputy chief operating officer.

Timeline on succession

EMBARGOED UNTIL 1900 HOURS Elisabeth Murdoch, chairman of the Shine Group during a rehearsal for The James Mactaggart Memorial at the Edinburgh International Television Festival in Edinburgh. She is the first woman to give a MacTaggart lecture in 17 years. PRESS ASSOCIATION Photo. Picture date: Thursday August 23, 2012. See PA story MEDIA Edinburgh. Photo credit should read: Andrew Milligan/PA Wire

Key dates in the careers of Rupert Murdoch’s children, including Elisabeth Murdoch, pictured, and the handover at News Corp

See below

But it was the return of Lachlan to the heart of the family business, nine years after he left News Corp to pursue his own investment in Australia, that was a more significant appointment, a person close to the company said.

“This puts him in pole position to be the family’s senior member moving forward,” this person said. “This is his to lose,” added David Folkenflik, a Murdoch biographer, but he added: “James is biding his time as well, and certainly would have strong credentials to do it.”

There was no new role for Elisabeth Murdoch, their elder sister, who has fallen from favour after reportedly criticising News Corp’s response to the phone-hacking scandal.

A spokesperson for 21st Century Fox said the promotions of Lachlan and James would have no bearing on Rupert Murdoch's roles at the two companies. The 83-year-old Murdoch patriarch continues to control both companies, as executive chairman of News Corp and as chairman and chief executive of 21st Century Fox.

The spokesperson said he had no plans to step aside. "There will be no change whatsoever," she said.

Business Blog

Andrew Hill

Andrew Hill’s first reaction to the latest news of changes at the top of the Murdoch empire was: did the shrink get involved? Succession planning at family businesses is often full of unlikely twists and shrieking. After the phone-hacking scandal broke in 2011, Vanity Fair claimed the Murdoch siblings had discussed succession with a “family counsellor”

Read Andrew Hill’s full blog post

Negotiations with Lachlan Murdoch about a return to a senior role at the two companies had taken place for several months, said a person with knowledge of the situation.

There would be no immediate transfer of power, the person said. Instead, Mr Murdoch was laying the ground work for longer-term succession plans. “[The family] is aware of the need to have an orderly transition. It will be gradual . . . it’s not like Putin rushing in and seizing power.”

Mr Murdoch said the appointment of Lachlan as non-executive chairman at News Corp was “a sign of confidence in the growth potential” of the company “and a recognition of Lachlan’s entrepreneurial leadership and passion for news, digital media and sport”.

Robert Thomson, News Corp’s chief executive, highlighted Lachlan’s “prescience and strategic savvy” in identifying its investment in REA, an Australian digital property site.

Mr Carey said James’s appointment at 21st Century Fox “in many ways . . . formalises the role he’s been playing for some time and acknowledges the contribution he has made in driving our business”.

However, James Murdoch will not be responsible for Fox News Channel, the conservative-leaning cable news channel that is a profit machine for 21st Century Fox.

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News Corp building

Explore the connections between News Corp directors and executives and members of the Murdoch family

Fox News Channel is run by Roger Ailes, who was heavily criticised three years ago by Matthew Freud, Elisabeth Murdoch’s husband. In comments widely believed to have been sanctioned by James Murdoch, Mr Freud said he was “by no means alone” within the Murdoch family “in being sickened by Roger Ailes’ horrendous and sustained disregard of . . . journalistic standards”.

Mr Carey is presently negotiating an extension to his own contract. “We are finalising Chase’s extended agreement and are confident it will be completed shortly,” 21st Century Fox said.

The appointments come at a crucial time for both News Corp and 21st Century Fox.

News Corp, which owns newspapers including the Wall Street Journal, The Sun and The Times, is struggling with the poor performance of print advertising and its Dow Jones wire service, whose chief executive Lex Fenwick resigned in January.

Shares in News Corp and 21st Century Fox have risen about 10 per cent and 13 per cent respectively since the companies’ split last June, underperforming the Nasdaq Composite index.

James will have direct responsibility for Fox Networks Group. He will also be responsible for the strategic and operational development of the company’s interests in Sky and Star, its pay-television services in Europe and Asia, respectively.

Peter Rice, chairman and chief executive of Fox Networks Group, has agreed to extend his contract, the company said.

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Heirs apparent? A look at News Corp succession

2000: Lachlan Murdoch is appointed deputy chief operating officer of News Corp, becoming the heir apparent to his father Rupert. James becomes chair of ailing Asian TV unit Star TV.

2003: James takes over as chief executive of BSkyB, with outgoing chief Tony Ball paid nearly £11m in compensation

June 2005: Lachlan quits News Corp following conflicts with senior executives including Fox News creator Roger Ailes. He later creates private equity group Illyria, which invests in media assets including Australian radio stations, and partners with James Packer, the son of his father’s sometime rival Kerry

puknews Unsold copies of the last issue of the News of the World, published by Rupert Murdoch's News Corp., sit on the floor at a supermarket in Slough, U.K., on Sunday, July 10, 2011. The U.K. tabloid newspaper that has run stories about celebrities, sex scandals and murders since the Victorian era, published its final edition after News Corp. decided to shut it amid phone-hacking claims.

2007: James leaves Sky to take charge at News International, the publisher of the News of the World, top right, and the Times.

August 2009: James carries on his father’s animosity for the BBC, the UK’s public broadcaster. “The only reliable, durable, and perpetual guarantor of [editorial] independence is profit,” he says in a MacTaggart lecture.

Feb 2011: Elisabeth Murdoch, bottom right, receives $214m from the sale of her television production company Shine to News Corp. She leaves the business the following year, in a perceived step away from the family business.

Feb 2012: James resigns as chairman of News International after revelations of phone-hacking at the News of the World.

Aug 2012: Elisabeth publicly counters James’s political stance, arguing in her own MacTaggart lecture that “profit without purpose is a recipe for disaster”.

Mar 2014: Lachlan and James are given increased responsibilities within News Corp and 21st Century Fox. There is no additional role for Elisabeth.

Additional reporting by John Aglionby and Henry Mance

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