Murdoch Family Politics: What James and Lachlan Promotions Mean for Fox, News Corp

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"The more time goes by, the shorter any Chase Carey interregnum is likely to last," says one Wall Street observer about the implications for succession in Rupert Murdoch's empire.

James Murdoch and Lachlan Murdoch's elevations Wednesday at 21st Century Fox and News Corp are in some ways the most predictable of moves at a publicly traded company that, as much as possible, always has been a family business.

"This is nothing but what was always going to happen," says one observer with inside knowledge of the Rupert Murdoch empire. "This is about continuity of ownership."

James Murdoch was promoted from the deputy COO role to the post of co-COO with Chase Carey, who continues to serve as president and is expected to get a contract extension shortly. (His deal expires in June.) Meanwhile, Fox board member Lachlan has been elevated to the role of non-executive co-chairman.

The news marks a resurgence for Lachlan, 42, who had resigned as deputy COO at his father's business in 2005 after a difficult turn in which it was said that Lachlan had chafed at Rupert's interference with his decisions and found himself second-guessed by Fox News chief Roger Ailes and Peter Chernin, then News Corp.'s president and COO. He has remained a board member but now he'll share with his father the role of chairman at both companies.

STORY: Rupert Murdoch Discusses Sons' Promotions in 21st Century Fox, News Corp Memos

For a time it appeared that younger son James, 41, was in a favored position, though he hit a rough spot of his own due to the phone-hacking and police-bribery scandal plaguing the company's British newspaper operations.

But with Lachlan's return and James' elevation, it appears that both sons are positioned to play major roles in the company going forward. For now, however, the 83-year-old Rupert is said to remain firmly in control and in good health.

While it is unclear that either son has eclipsed the other, it is possible to imagine that Lachlan will spend more time on publishing while James focuses more on entertainment. Analysts said Wednesday that Lachlan seemed positioned to eventually take over the chairman role for himself at publishing-centric News Corp, which is led day-to-day by CEO Robert Thomson.

As shares of both 21st Century Fox and News Corp were off 1 percent and 2 percent, respectively, about in line with broader markets on Wednesday, Wall Street began debating what the moves could mean for succession, a subject that has long been an issue.

"Both James and Lachlan are very talented and familiar with the businesses even if some find their initial opportunities suspect," said Wunderlich Securities analyst Matthew Harrigan.

Should Rupert Murdoch have to step down, the 60-year-old Carey still remains a likely bet to be his successor as CEO, the analyst argued. But, he added: "The more time goes by, the shorter any Chase Carey interregnum is likely to last, especially if Rupert remains in good health for a long time."

Indeed, succession plans are said already to be in place, though 21st Century Fox has yet to reveal them and they could change over time.

Anthony DiClemente, analyst at Nomura, said the latest steps continue to increase James' power. "James Murdoch has been increasing his visibility in the U.S., so it makes sense," he said. "I think it is a prelude to a smoother succession plan, if you will." While Carey will give up direct responsibility for the Fox Networks Group to James, Carey will still oversee other operations and continue to be a mentor for James, which DiClemente called "a good thing."

A few industry observers suggested that eventually James could run the entire company day-to-day as CEO, with Lachlan overseeing the board. "Sounds like [Rupert] wants Lachlan to ultimately serve as chairman with James actually running the businesses, which is probably the right outcome," said one source.

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Another source said the fact that James' role at the high-profile cable networks division will grow is another indication that he's being groomed, or at least tested, for the CEO spot. In that scenario, it's likely that Carey would become CEO while James waits his turn a few years down the road.

"For the succession, ultimately, one needs to build a management track record -- so this is good for James," said Claudio Aspesi, an analyst with Sanford C. Bernstein.

James, by far a more prickly personality than his brother, has a reputation for having an eye for detail. He has been known, for example, to quote data and statistics during investor conference appearances or in meetings.

Lachlan has enjoyed his life in Australia with his wife and kids. Lachlan founded investment firm Illyria in 2005 and has mostly focused on investments in his home country.

The Murdoch family controls both News Corp and 21st Century Fox via 39.4 percent voting stakes in each.

Not part of the news Wednesday is daughter Elisabeth Murdoch, who continues to oversee Fox-owned TV production firm Shine Group and has said that she isn't interested in leading the media empire.

Meanwhile, Harrigan said that there was important executive news Wednesday that was overshadowed by the Murdochs' promotions. "The big news is that Peter Rice has agreed to extend his employment agreement" as chairman and CEO of Fox Networks Group at 21st Century Fox," he said, arguing that healthy TV business trends will be key for the company.

Twitter: @georgszalai