James Murdoch Steps Down as Head of News Corp.'s News International Unit

James Feels the Heat As News Corp. Scandal Deepens
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The next 12 months will be the most important of james Murdoch's career. The News Corp. hacking inquiry has revealed his signature on a payment that looks like an attempt to cover up criminal wrongdoing.

UPDATED: Tom Mockridge, CEO of News International, will run the U.K. newspaper business.

NEW YORK - News Corp. said Wednesday that following his recent relocation to the company’s headquarters in New York, James Murdoch, deputy COO, has relinquished his position as executive chairman of News International, the conglomerate's U.K. publishing unit that has been the focus of the phone hacking scandal.

Tom Mockridge, CEO of News International, will continue in his post and run the business, reporting to News Corp. president, COO and deputy chairman Chase Carey.

“We are all grateful for James' leadership at News International and across Europe and Asia, where he has made lasting contributions to the group's strategy in paid digital content and its efforts to improve and enhance governance programs,” said his father and News Corp. chairman and CEO Rupert Murdoch. “He has demonstrated leadership and continues to create great value at Star TV, Sky Deutschland, Sky Italia, and BSkyB. Now that he has moved to New York, James will continue to assume a variety of essential corporate leadership mandates, with particular focus on important pay TV businesses and broader international operations.”

Said James Murdoch: "With the successful launch of The Sun on Sunday and new business practices in place across all titles, News International is now in a strong position to build on its successes in the future. As deputy chief operating officer, I look forward to expanding my commitment to News Corporation’s international television businesses and other key initiatives across the company.”

Sources have said that the global TV business is where the Murdoch son's true passion and strength lies. One observer said in a first reaction that the change moves the young Murdoch out of the line of fire following the phone hacking scandal and allows him to focus on other business challenges while retaining support from senior management.

A News Corp. source said that James Murdoch's relocation to New York has been a process, but concluded in the past few weeks. 

The end of his four-year tenure at News International was described by News Corp. as a natural step following his appointment late last March as deputy COO. But critics suggested the change was another sign that James Murdoch may not be the first choice in terms of possible successors to his father. They argued he faces an uphill battle to rebuild his image as a top media executive. 

"We are not surprised given Mr. Murdoch's recent relocation to NYC in addition to the numerous headlines that continue to come across on the News of the World phone hacking scandal," said Wells Fargo analyst Marci Ryvicker as the stock rose in early trading. "We view today's news as a positive step in resolving the U.K. publication issues and reiterate our "outperform" [rating] on News Corp."

She also suggested that the move could be "one sign that some or all of News Corp.'s publishing unit may be spun, sold or otherwise shed," which Wall Street has long suggested given the lower-growth profile of newspapers.

RBC Capital Markets analyst David Bank said the move doesn't change much and doesn't really amount to a demotion. "James remains deputy COO, and he is running the international TV business etc," he said. "[This] just separates him a bit from the hacking headlines, in theory."

Email: Georg.Szalai@thr.com

Twitter: @georgszalai