James Murdoch: The rising son

By Raymond Snoddy Less than a decade ago not many would have put much money on James being in his present position of power

The only issue was whether the 32-year old boss, and Rupert Murdoch's younger son, was now heir apparent to the News Corporation throne following his brother Lachlan Murdoch's decision to stand down and return to Australia. And if so, was James Murdoch about to pack his bags and move to a grander role in New York, closer to the centre of power in the family firm?

"It was THE question all the way from A to Z," noted one of those involved.

The previous day at the dress rehearsal that all big companies put their executives though before letting them loose to face journalists and City analysts, there was a relentless focus on Topic A. The question was put to James Murdoch in every conceivable form by his colleagues and advisers to ensure he was properly prepared.

They needn't have worried. Unlike his father, who is more than capable of a string of indiscretions if journalists dangle the right bait in front of his nose, James Murdoch, despite his relative youth, says only what he intends to say. Journalists who have tried to push him that little bit further have quickly encountered the Murdoch steel not far beneath the low-key, reasonable exterior.

On Wednesday, first up was Dan Sabbagh, media editor of The Times, part of News Corp's international media and entertainment empire.

"You're stuck with me. I am going to keep my head down and run this business [BSkyB] for the long term. That's what I focus on exclusively," insisted the younger Murdoch. Two other journalists tried to get round the back with questions seeking to unravel why Lachlan, the "first among equals" in the News Corp succession stakes, had decided to turn his back on what could have been his destiny. They didn't get very far and the attempts were batted away with familiar talk of refusing to comment on speculation.

Of course, James knows absolutely why his elder brother Lachlan has decided to give up his executive responsibilities on the News Corp board. The two are close and almost certainly would have discussed the dilemma posed by trying to establish the right balance between corporate responsibilities, personal ambition and family life.

It is, however, something that the adult Murdoch children would never discuss in public. They have said little on where they might reside on any succession pecking order or their relationships with their father, and, indeed, the image of siblings battling it out for the favours of the great man is largely a media creation. The reality is that all of his children will be very rich one day whether they are running News Corp or not. The family stake of around 30 per cent in the company that owns everything from the Fox film studio in Hollywood to the Fox News television channel and The Sun newspaper is already held in trust for them.

Although he would never admit it in public, and perhaps not even in private, it has been a very good week for James Murdoch. BSkyB's results were at the top end of City expectations and its share price rose. Rather more significant in the longer term, James Murdoch had indeed become the most likely to succeed to the highest office within News Corp should he wish to do so. With first Elisabeth, and now Lachlan ruling themselves out, largely because they want to create something for themselves, it has suddenly become a one-horse race.

Less than a decade ago not many would have put much money on the chances of the third child of Rupert Murdoch's second marriage to Anna Murdoch being in his present position of growing corporate power. If anything, he had the mark, if not of the black sheep of the family then of the college dropout, even if the college was Harvard and he was known to be clever. Instead of the corporate suit there was the beard, the eyebrow stud and the involvement with friends in Rawkus, a hip-hop record label.

Yet if there ever was a rebellion against his possible fate and the need to establish an independent life then James Murdoch got it out of his system early. With an eye to the longer term Rupert Murdoch, who has always been quite open about his dynastic ambitions, enticed him into the family business by playing to his interests - putting him in charge of News Corp's modest involvement in the music industry and its uncertain grasp of the implications of the internet.

It was in May 2000, four years after joining News Corp, that things started to get serious. At the age of 28, James Murdoch was asked to run News Corp's loss-making satellite television business in Asia - Star TV. It was the first real sign that his father rated his management potential.

When he left Asia for London nearly two years ago Star had moved into profit for the first time and James Murdoch had learnt some valuable lessons - among them the importance of other languages and cultures. In an Edinburgh Television Festival lecture he publicly attacked the idea that English-language media companies could ever be truly global while ignoring world languages such as Mandarin, Hindi and Spanish. The young Murdoch had liked both the relative invisibility of Hong Kong and the opportunities it offered to indulge his interest in outdoor sports such as mountain biking.

It was still a shock to all concerned - not least City investors - when it became clear that Rupert Murdoch was absolutely determined that the next chief executive of BSkyB, a publicly quoted FTSE 100 company, should be his younger son, then barely 30. There would have to be due process of course. Headhunters would launch an international trawl. And then, of course, James Murdoch would get the job.

The young man bore the inevitable charges of nepotism with dignity and asked merely to be judged by results. Later a headhunter explained privately that what had appeared to be the assignment from hell had turned out much better than expected. The confidential references taken out on James Murdoch had all come back positive.

Obviously James Murdoch would never have got the chance to run a £10bn company at the age of 30 but for the chance of his birth. But even the most cynical accepted that Rupert Murdoch was far too canny an operator to put an incompetent - son or not - in charge of one of the most important parts of his business.

Murdoch has turned out to be a very different executive to some of his predecessors at BSkyB. Compared with the foul-mouthed tirades of Sam Chisholm as he banged BSB and Sky together in the early days, or the heavily target-focused Tony Ball, the young Murdoch is a very modern manager. He is thoughtful, quietly spoken and actually leads his team - often with a Coke in his hand. Top Sky programme executive Dawn Airey simply describes him as "very inclusive"

He comes in early, works hard but then goes home to have a life with his American wife Kathryn and their two children, both toddlers, and is ostentatiously not part of London's media circus.

So far, James Murdoch's numbers are speaking for themselves. Despite the increasing competition from Freeview, the free-to-air digital television service, BSkyB still managed to add 432,000 new satellite subscribers in the year to June taking the total to 7.8 million.

But quite apart from the threat from Freeview, which offers more than 30 channels for a single purchase of a decoder now costing less than £50, James Murdoch found a serious problem when he arrived at BSkyB. There were targets for subscriber numbers and the money those subscribers paid each year but there was no sign of a plan for what to do when the growth tailed off - when everyone prepared to pay for Sky Sports and Sky Movies has already been signed up.

James Murdoch, with the obvious support of his father the chairman of BSkyB, is now one year into an ambitious growth strategy costing hundreds of millions and designed to take the company to 10 million subscribers and beyond.

The BSkyB chief executive believes fervently that there is no intrinsic reason why as many as 80 per cent of UK homes should not ultimately sign up for pay television compared with the present figure of more than 40 per cent. After all, that is what has already happened in countries such as the US and Switzerland, although neither has anything quite like Freeview or indeed a powerful public service broadcaster such as the BBC.

Murdoch has launched a two-pronged attack involving both technology and heavyweight marketing. The marketing initiative has been designed to emphasise the diversity of viewing options in Sky's more than 300 channel line-up. The approach is designed to reach those who have been the pay-TV "refuseniks" until now - particularly women.

On the second battlefront Sky is using its technological advantage over Freeview and plans to launch a high-definition television service next year. It is also placing increasing emphasis on personal video recorders which can "freeze" live television if someone phones at an inconvenient moment and can record up to 80 hours of programmes.

Billions were wiped off the value of BSkyB a year ago when James Murdoch announced his radical plan but the verdict of the City now is a cautious "so far so good".

For James Murdoch personally a lot is now riding on his future strategy for BSkyB. If over the next few years he creates an unambiguous success story in London then it would be a very big step in the direction of winning the top News Corp job - if he wants it.

The best guess at the moment is that when the time comes the once unfancied runner will accept the challenge. For 74-year old Rupert Murdoch, whose children by his present wife Wendi are aged two and three, James Murdoch now represents his last chance to leave behind a corporate dynasty.

A Life in Brief

BORN 1 January 1973

FAMILY second son of Rupert and Anna Murdoch. Brother Lachlan. Sister, Elisabeth. Married Kathryn Hufschmid, former PR executive and model, two children.

EDUCATION Harvard University (dropped out after three years of four-year visual entertainment course).

CAREER Founded Rawkus Entertainment, hip-hop label with two Harvard friends, in 1995. Bought out by father in 1996.

CAREER WITH NEWS CORPORATION: 1997 president of digital media for the company. Chairman and chief executive of Star, News Corp's Asian pay TV service broadcasting, 2000-2003. Chief Executive, British Sky Broadcasting, 2003-present.

HE SAYS: "Here's the thing about me: I have a job and I do it."

THEY SAY "He's an incredibly intelligent guy - he got a lot out of college but he outgrew it," Mark Roybal, friend at Harvard.