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 "James is a giant!" said Alwaleed, a Murdoch family ally and one of
Fox’s top shareholders with a 6.6 percent voting stake, in an
interview. In particular, Alwaleed points to what he says is James'
ability to grasp the digital world and understand how it is
transforming the media landscape, adding: "I really love him!"
The billionaire prince's seal of approval - and increasing
acceptance of James by other shareholders - may be laying the ground
for Fox to give the 42-year-old day-to-day control of the company
sooner rather than later.
One person familiar with the family's thinking said James, who is
currently co-chief operating officer with Chase Carey, could take
over fully from Carey - who also holds the title of president - as
early as the end of this year.
The source cautioned that the change hasn't been formalized and
could be subject to delay. It is also unclear what title James would
take or whether there is any possibility that Rupert Murdoch, 84,
would relinquish the Fox CEO position to him anytime soon.
Carey's contract is set to expire on June 30, 2016, but he can leave
the company as early as the end of this year with six months notice.
Fox declined to comment. James Murdoch declined to be interviewed
for this article.
What is clear is that some key investors seem to be warming to the
idea that James has the chops to run Fox. That was not always the
case.
In interviews, some top investors who know James, and other people
familiar with the company, describe him as curious and a risk taker
like his father. But they also cite two big differences that they
like: James is less sentimental about certain assets than his dad
and he is more enthusiastic about courting shareholders.
In 2013, James and his older brother Lachlan, 43, were elected as
directors of Fox – but only on the strength of votes cast by the
family. Assuming the Murdoch family and Alwaleed voted for the two
sons (the prince has previously said he tends to vote with the
Murdochs), it means that 71 percent of the rest of the shareholders
voting opposed James – and 90 percent cast their votes against
Lachlan.
In contrast, after James was made co-COO and Lachlan co-chairman of
Fox last year, only 24 percent of the independent stakeholders
voting opposed both their board nominations if the same voting
assumptions for the family and Alwaleed are correct. Fox declined to
comment on those assumptions.
James "really works hard just like his father," said Saad Mohseni,
chairman and CEO of the Afghan media company Moby Group, in which
Fox holds a stake. "He doesn't get the benefit of the doubt. For
him, every step of the way he has to prove himself."
If James gets Carey's role he will be running the day-to-day
operations of a sprawling media behemoth with a market value of
close to $73 billion. It owns cable assets, broadcast networks and
movie studios, including Twentieth Century Fox movie studio, Fox
News and Star India.
The Murdochs own 39 percent of voting shares in Fox and News Corp,
the company that operates newspapers like The Wall Street Journal
and book publisher HarperCollins, through a family trust. Fox split
from News Corp in 2013.
The prospect of a Fox completely run by the Murdochs does still
concern some investors.
Many shareholders say they have great respect for Carey, 61, a
long-time Murdoch lieutenant who has worked in the role since 2009.
The thinking: Carey is not only a good operator but he also keeps
the family in check - especially when acquisitions are concerned.
"We are very happy with how things are now," said one top Fox
shareholder, adding that having the Murdochs running the show in the
top three positions without having anyone to provide an alternative
voice wasn't a comfortable prospect.
PHONE HACKING SCANDAL
A Harvard drop out, James spent his early career as a cartoonist and
co-founder of hip hop label Rawkus Records, which was bought by News
Corp.
He joined News Corp in 1996, at the age of 23 and was soon installed
as head of the company's Asian assets, including Star India. Four
years later, he was named CEO of BSkyB, now known as Sky, that is 39
percent owned by Fox.
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People close to James said one of his weaknesses was that he wasn't
humble about getting big roles at the company from such an early
age. He never quite accepted that he only got those jobs because he
was Rupert's son, said one of these people. Still, they said James
has now matured and that while he may have been brash at times when
he was younger he was successful in improving the group’s businesses
in Asia and Europe.
By far the biggest setback James faced was when he was in charge of
News Corp's British newspapers and he had to deal with the phone
hacking scandal at its UK tabloid newspaper The News of the World,
which was closed as a result. Some of the paper's journalists were
alleged to have illegally tapped phones and bribed officials in
pursuit of stories.
While the alleged hacking occurred before James took charge, his
critics said he failed to recognize the significance of the problem
and didn't conduct as thorough an internal investigation as
necessary. In one oversight, he admitted he didn't fully read an
email sent to him in 2008 detailing allegations against the paper
that were made by the English soccer players union.
However, a British parliamentary committee cleared James of any
wrongdoing and the U.S. Department of Justice declined to prosecute
News Corp and Fox after an investigation. James left London for New
York in 2012.
FACEBOOK NO MORE?
For the past three years, James has worked with Carey and other Fox
executives to learn about the U.S. media market and repair the
damage to his reputation. He has started to emerge at industry
functions like the annual media mogul confab in Sun Valley and as a
keynote speaker at industry conferences.
One person who knows the family said that Rupert has been
indifferent to investors his entire career. "James is more
sensitive," this person said. Rupert Murdoch has often been
perceived to do what he likes, especially as it concerns
acquisitions, several investors said. One example that is often
raised is News Corp’s $5.6 billion purchase in 2007 of Dow Jones,
the publisher of the Wall Street Journal, an investment that was
later written down by half.
Several sources say James played a key role in the decision not to
make a hostile bid for Time Warner last year. He assured investors
that Fox was going to be cautious on how fast and how aggressive it
would be in its pursuit of Time Warner, fearing that it could
overpay.
He was instrumental in last year's consolidation of its European
pay-TV assets that led to BSkyB buying Fox’s stakes in Sky
Deutschland and Sky Italia, resulting in a new pan-European pay TV
company Sky according to people familiar with the matter. Along with
those big investments he was also involved in some of Fox's digital
investments in the next generation of advertising and TV viewing,
including the purchase of a 5 percent stake in Vice, the acquisition
of True [X], which helps broadcasters sell digital advertising, and
an investment in Roku, the streaming video player, sources said.
"Every time I look behind me or I look ahead of me, I see James,"
said David Zaslav, CEO of Discovery Communications.
Prince Alwaleed even says if James had been at the helm he could
have prevented one of the Murdoch empire's most embarrassing
stumbles - News Corp's failure to develop MySpace after buying the
social media site in 2005. "MySpace would now be flying," Alwaleed
said, "and there would be no Facebook today."
(Additional reporting by Nadia Damouni; Editing by Hank Gilman and
Martin Howell)
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