(New throughout, adds more details about the move)
By Kate Holton and Jennifer Saba
LONDON/NEW YORK March 26 Rupert Murdoch has
returned eldest son Lachlan to the leadership of his media
empire and promoted younger son James, paving the way for the
83-year-old tycoon to pass the reins to the family's next
Lachlan, 42, will become non-executive co-chairman of both
entertainment company 21st Century Fox and publishing
operation News Corp, sharing both roles with his
father. He rejoins the company after quitting as deputy chief
operating officer nearly 10 years ago amid friction with other
News Corp executives.
James, 41, will become Fox's co-chief operating officer
alongside longtime Murdoch stalwart Chase Carey, the latest step
in the younger son's comeback after he was forced to relinquish
some roles during a phone hacking scandal in Britain.
"I think it underlines the fact that it remains a family
dynasty in spite of being a listed company," media commentator
and former Murdoch editor Roy Greenslade said in a telephone
interview. "The two boys are being prepared to inherit."
Each son has at various times been seen as heir apparent,
and it is unclear how well they will work together when Murdoch
finally hands over the companies.
The Murdoch family controls both Fox and News Corp through a
trust that has a 38 percent ownership stake of Class B shares
with voting rights.
"If there is any surprise, perhaps it's bringing Lachlan
back into Fox," Evercore analyst Alan Gould said in a telephone
interview, referring to the movie studio and broadcaster split
off last year from the News Corp media holdings. "I would assume
it does set up a little bit of a bake-off as to who will
ultimately succeed at Fox."
A source familiar with the companies said that the plan to
elevate Lachlan and James had been in the works for a while and
that a tussle over control would be unlikely.
It was largely expected that Lachlan might return to the
newspaper and publishing arm of his father's empire - which
includes the Wall Street Journal, Australian newspaper and TV
assets, and book publisher HarperCollins.
James will have responsibility for Fox Networks Group, the
U.S. broadcast and cable channels business, and strategic
oversight of Fox's businesses in Europe, Asia and the Middle
East. He will continue to report to Carey, 60, who analyst Gould
called one of the best operating officers in the industry.
"As long as Chase Carey is still there and continues to run
the cable networks, that is critical," Gould said.
Still, it remains to be seen if Carey will stay with the
company long-term. His contract is up for renewal this June 30.
A Fox spokesman said in a statement that the company is in
the process of finalizing Carey's extended employment agreement.
"We are confident it will be completed shortly," he said.
The announcement of Lachlan's return is a boost to Murdoch,
who has always said he would like his children to be involved in
the running of his sprawling media conglomerate.
"Lachlan is a strategic and talented executive with a rich
knowledge of our businesses," his father said in a statement.
"James has done an outstanding job driving our global
television businesses," Murdoch added.
"Our collective future has never been brighter."
Guessing who will replace Murdoch has been a game among
media watchers as his children have jockeyed for position over
Daughter Elisabeth, who like Lachlan and James is a child of
Murdoch's second marriage to Anna Murdoch Mann, founded and sold
her television business Shine Group to News Corp in 2011.
She was set to become a board director at the company in
2011 before the corporate split but decided not to pursue the
nomination following the furor over the hacking scandal.
Lachlan had been expected to succeed his father at the helm,
but in 2005 stepped down from his role as deputy chief operating
officer of News Corp after clashing with executives in New York.
In 2011, James replaced Lachlan as the favorite when he
became deputy chief operating officer of the old News Corp. But
his reputation suffered during the scandal at Britain's News of
the World Sunday tabloid, where some staffers hacked into
voicemail messages for stories.
James, who had also been head of the British newspaper arm,
eventually stepped down as chairman of British pay-TV company
BSkyB, where he built his career. He said he did not
want to act as a lightning rod for the wider hacking scandal.
All Murdoch's four adult children including Prudence, his
only child from his first marriage, hold voting rights in the
trust. Grace and Chloe, two young daughters from Murdoch's
marriage to Wendi Deng, hold shares but no voting rights.
Murdoch and Deng divorced in 2013 after 14 years of
Fox said on Wednesday that Lachlan would split his time
between his home in Sydney and News Corp's offices in New York
and work with senior management to develop the businesses. Those
roles are more commonly associated with an executive position
despite his new non-executive chairman title.
During his time away from the head office, Lachlan had
remained as a director at News Corp and Fox. He had also focused
on interests in Australia through his private investment company
Illyria Pty Ltd, which owns various media assets.
Until recently, he also served as non-executive chairman of
Australian TV network Ten Network Holdings, whose
shares are down 72 percent over the past three years.
Before Wednesday's promotion, James had been Fox`s deputy
chief operating officer, as well as chairman and CEO of its
"It is every investors' expectation that at some point one
of Rupert's kids will succeed him," Gould said.
(Additional reporting by Paul Sandle in London, Arnab Sen in
Bangalore and Lincoln Feast in Sydney; Editing by Joyjeet Das,
Christopher Cushing, Mark Potter and Jonathan Oatis)