James Murdoch has been handed a new senior role working closely with his father, Rupert, at News Corporation, the $60bn company whose interests extend from 20th Century Fox films to newspapers such as The Times and the Wall Street Journal, in the clearest sign yet that the media mogul's son is being lined up to take over his empire.
James, 38, the youngest of Rupert Murdoch's three children from his second marriage, will move from London to New York to take up the newly created role of "deputy chief operating officer and chairman and chief executive of international operations" at News Corp. He is currently based at the company's London offices, where he has overseen News Corp's controversial bid to take full control of BSkyB.
Rupert, 80, has been under increased pressure to name a successor. James's new position is similar to a role once held by his elder brother Lachlan, 39. But Lachlan walked out of News Corp in 2005, effectively ruling himself out of the ultimate succession.
Rupert Murdoch, who made a disastrous venture into the digital world with the purchase of MySpace, is believed to have felt the lack of a family figure at his side since Lachlan's departure.
The former Sunday Times editor Andrew Neil, who was also the founding chairman of Murdoch's Sky TV, said: "So James takes over Lachlan's old job, there's talk of Lachlan returning to the fold, and [daughter] Elisabeth is brought back with the purchase of [her production company] Shine. Rupert is doing what he loves best: watching his kids play for position."
In his new role, James Murdoch will oversee the company's media assets in the US and throughout the world, as well as retaining responsibility for operations in Europe and Asia.
James Murdoch has worked inside the family business for 15 years. After creating and then selling on a hip-hop record label to his father, he was placed in charge of new pay-television ventures in Germany and Italy.
After successfully reorganising the company's Star Asian satellite television business, he was parachuted into BSkyB as chief executive in 2003, a promotion that singled him out as News Corp's most likely future boss.
Under his leadership, BSkyB drove up subscriptions and extended the business into broadband and telephony. He took over the company's UK newspaper operations in 2007 but his reign has been marred by the News of the World phone-hacking scandal. Company sources insisted that his move to New York was unconnected to the revelations, which have prompted a fresh police investigation into the affair.
Direct responsibility for the company's UK newspapers will remain with Rebekah Brooks, the News International chief executive.
Mr Murdoch, who lives with his wife and two children in Notting Hill, will retain his London office to help him deal with his continuing responsibilities as head of News Corp's Europe and Asia operations. In his New York role, Mr Murdoch will report to Chase Carey, News Corp's deputy chairman. The heir apparent will explore new digital opportunities. He will also use his experience in Asia to expand News Corp's business into new international markets.
The appointment suggests that News Corp is planning a post-Rupert business strategy. "James will spend more time in New York and Los Angeles, but those are mature markets," the source said. "Fifty per cent of the company's revenues are generated outside of the US."
Mr Carey called James Murdoch "a shrewd and decisive operator who can deftly navigate complex issues to transform businesses," and praised him for his understanding of digital media. James Murdoch said he felt "extremely fortunate" to get the job and hailed Mr Carey's "extraordinary leadership".
Meanwhile Jeremy Hunt, the Culture Secretary, has defended his decision to approve News Corporation's takeover of BSkyB, claiming that the deal would boost the diversity of British media. He told the Commons Culture Select Committee he was confident the plan, which includes splitting off Sky News, would increase plurality as it "strengthens the independence of Sky News over and above where it is now".
Mr Hunt confirmed he met James Murdoch twice in the run-up to approving the moves and said he would not publish further details of the meetings until the deal was finished.
He did admit that the existing check on media plurality "may not be as robust as it should be". He said that News Corp's plan to fund Sky News for 10 years as part of the deal would guarantee the channel's security.