News Corp moved to distance James Murdoch from its scandal-hit British newspapers, announcing on Wednesday he would step down as executive chairman of News International, its UK press business.
For the first time since Rupert Murdoch bought into the UK newspaper market in 1969 no member of his family will have any direct role in the management of News Corp’s UK press assets which include The Times, The Sunday Times and The Sun.
Two senior British politicians linked the resignation of the media tycoon’s son to the bad publicity surrounding police and judicial inquiries into illegal journalistic techniques.
Don Foster, a member of the UK’s governing coalition and spokesman for the Liberal Democrat party on media, said the younger Mr Murdoch’s move “has all the appearances of being bundled in a car, away from the scene of the crime”.
He said News Corp had to “make clear that his move to New York will not be a barrier to getting answers and his taking responsibility for what happened on his watch”.
News Corp investors have already raised the prospect of selling or hiving off News International in conversations with Chase Carey, Mr Murdoch’s number two, but analysts doubt this will have any demonstrable effect in insulating the group from the bad publicity.
News Corp said in a statement on Wednesday: “James Murdoch, deputy chief operating officer, has relinquished his position as executive chairman of News International, its UK publishing unit.”
Tom Mockridge, chief executive officer of News International, will continue in his post but report directly to Mr Carey, chief operating officer.
News Corp shares hit a new 52-week high, closing up 6 cents at $19.87.
A barrage of damaging revelations about The Sun newspaper have put Mr Murdoch’s UK newspapers back in the spotlight. This week the police officer leading an investigation into bribery by journalists at News International said The Sun had a culture of corrupt payments to a network of public officials which was authorised at a senior level.
Mr Carey said this week he was taking seriously arguments put to him and the board by some investors in favour of selling the newspaper business.
“Our focus for now is managing these businesses and improving their profitability,” he said.
Harriet Harman, the opposition Labour party’s deputy leader, said James Murdoch “had no option but to go” given the continued allegations of phone hacking by the News of the World – which was closed down last year – and corrupt payments by The Sun to public officials.
“The practices at News International have stained the proud tradition of the British press,” she said.
News Corp said James Murdoch would now focus on the company’s pay-television businesses and international operations, which include Sky Italia, Sky Deutschland and Star TV, the Asian pay-TV business, and ownership of a controlling stake in BSkyB, the UK pay-TV group, where he is chairman.
Crispin Odey, whose fund Odey Asset Management owns 2.7 per cent of BSkyB, told the Daily Telegraph that James Murdoch was out of favour in News Corp. Asked whether he was likely to leave BSkyB as chairman, Mr Odey said: “It’s starting to feel that way…There is deﬁnitely change afoot.”
Having overseen News Corp’s UK newspapers since 2007, Mr Murdoch has been the focus of intense scrutiny following claims that he was aware that phone hacking at the tabloid paper was not confined to one rogue reporter, as News International originally claimed. He has said repeatedly that he was not aware of widespread wrongdoing.
Last year, News International was forced to close its Sunday tabloid paper the News of the World after it was hit by allegations of phone hacking.
To date, 10 journalists employed by The Sun have been arrested on suspicion of making corrupt payments to public officials, including police officers and members of the armed forces. Staff on The Sun believe other arrests are imminent. In total about 30 journalists have been arrested from News International for hacking or bribery.
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