James Murdoch steps up as News Corp heir apparent

By Kate Holton and Kenneth Li

LONDON/NEW YORK (Reuters) - Rupert Murdoch's younger son James is to return to News Corp NWSa.N to head its Asian and European operations cementing his position to eventually take over the global media empire.

Murdoch, 34, will become chairman and chief executive of Europe and Asia at News Corporation, taking charge of its broadcasting, print and Internet divisions including Hong Kong-based Star TV, Britain's Sun newspaper and Sky Italia.

He will rejoin the News Corp board and step down as chief executive of Britain's pay-TV firm BSkyB (BSY.L), but remain with BSkyB as non-executive chairman, replacing his 76-year-old father Rupert. BSkyB Finance Director Jeremy Darroch will become CEO.

News Corp's announcement on Friday is part of a wider shake up the media empire which spans newspapers, film studios, satellite television services and Internet properties such as MySpace.

Some investors are betting James Murdoch, who has repositioned Sky to cope with the ever-changing media environment, can do the same in challenging areas of the company like China.

"The biggest problem has been Star TV and China. They've changed strategies a bunch of times," said Larry Haverty, a portfolio manager at News Corp investor Gabelli & Co. "There's work to be done for James in the area. It gives him a chance to fill in his resume."

Consolidating management in Europe and Asia is seen improving the growth outlook for News Corp, which already generates about 50 percent of its revenue outside of the United States, UBS analyst Michael Morris said.

James Murdoch, who served on the News Corp board from 2000 to 2003, will report to Peter Chernin, News Corp's president and chief operating officer. He will be based in London, taking up his role immediately.

Les Hinton, executive chairman of News Corp.'s UK newspaper group News International, is to become chief executive of Dow Jones DJ.N, taking up the position when News Corp.'s acquisition of Dow is completed next week.

Rupert Murdoch will step down as chairman of BSkyB and from its board. He became a director of the company in 1990 and has served as chairman since 1999. Shares in BSkyB closed down .58 percent to end the Friday's trade at 601 pence.

"James is a talented and proven executive," his father Rupert said in a statement. "He has transformed Sky."

"His experience at Sky, combined with his track record in Asia while running Star, and prior roles, make him uniquely qualified to take forward these exciting businesses that have grown so much over the last decade."

SUCCESSION

The reshuffle, which confirms what a source earlier told Reuters, appears to address the long-term speculation of who will eventually take over the media and communications conglomerate from the 76-year-old media mogul.

Rupert Murdoch's older son, Lachlan, 36, had initially been seen as the leading contender during his time at News Corp but he left the group in 2005 to start a new venture.