James Murdoch, the youngest son of media mogul Rupert Murdoch, is poised to take over much of News Corp.'s U.S.-based television operations despite his tarnished reputation for his handling of the phone-hacking scandal in Britain, according to people familiar with the plans.
He is expected to oversee the Fox broadcast network, FX cable channel, regional sports networks, Fox International networks and National Geographic channels — some of the most profitable assets in the $34-billion-a-year media conglomerate.
On Thursday, News Corp. cleared a significant hurdle in its quest to put the phone-hacking scandal behind it. A powerful British regulator found that News Corp. was a "fit and proper" holder of a broadcast license, and renewed its permit to run the satellite TV operation British Sky Broadcasting. The Office of Communications, known as Ofcom, found no criminal wrongdoing by either Rupert Murdoch or his son.
In its report, however, Ofcom issued a scathing critique of the younger Murdoch's handling of the phone-hacking mess.
Ofcom faulted James Murdoch, the former head of BSkyB, for his weak response. Ofcom said he "repeatedly fell short of the conduct to be expected of him as a chief executive officer and chairman" of News International, the British arm of News Corp. After the scandal erupted, News Corp., which owns 39% of BSkyB, was forced to abandon its bid to take full control of the satellite broadcaster.
There is no set time frame for when Murdoch would assume his new duties, people close to the company said. Instead, News Corp. is waiting for criminal and civil probes related to the scandal to be resolved before making a potentially controversial realignment. Investigators are looking at how widespread the alleged corruption and coverup were within the company.
The 39-year-old Murdoch, who moved to New York from London during the last year, already is the deputy chief operating officer at News Corp., the No. 3 executive behind his father and Chief Operating Officer Chase Carey.
But in the wake of the ethics scandal that has engulfed the company's British newspaper division, Murdoch's role was significantly diminished.
He has relinquished key posts and was called before a committee of the British Parliament to defend his management of the company's U.K. operations, including the newspapers at the center of the scandal.
In pursuit of juicy scoops, reporters with the now-closed News of the World tabloid listened to cellphone voice mails of thousands of people, including celebrities and members of the royal family.
In his new position, Murdoch would not have oversight of two of News Corp.'s most prominent television assets, the Fox News Channel and 27 television stations that reach about 40% of the country. Both of those units will continue to report to Roger Ailes, the powerful chairman of Fox News. Ailes reports directly to Rupert Murdoch, one of only a handful of executives with that arrangement.
Peter Rice, chairman of Fox Networks Group, would report directly to James Murdoch rather than Carey as he currently does. During the last nine months, Rice has worked closely with James Murdoch as Murdoch has increased his visits to Los Angeles to learn more about the television business.
Providing James Murdoch with a more defined portfolio with key assets would resume Rupert Murdoch's long-held plan to entrust the global media company that he built over the last half-century to the next generation of Murdochs. James Murdoch had long been considered the heir apparent to his father, but the taint of the scandal had appeared to reduce his chances.
The 81-year-old mogul's dream to position his children for key positions was abruptly put on hold last year after the phone-hacking scandal exploded into front page headlines.
During the next 12 months, one of the biggest questions will be how the conglomerate can solidify its leadership team for two News Corp. entities. The company is in the process of spinning off its publishing empire, which includes the Wall Street Journal and the HarperCollins book publishing house.