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 Fox Chief Operating Officer Chase Carey will step into an advisory
role as part of a generational shift at the parent company of Fox
News and movie studio behind "X-Men" and other series, the source
said, adding that James Murdoch and his 43-year-old brother Lachlan
would work as partners.
The elder Murdoch, whose media career spans the better part of a
century, will take on the role of executive chairman, according to
published reports.
While New York-based James will have day-to-day control of the
company, Lachlan, who will be moving from Sydney to Los Angeles,
will play an integral role as the company's co-executive chair.
The wheels of this partnership were set in motion when Fox announced
the brothers' promotions - Lachlan to non-executive co-chairman of
both Fox and publishing operation News Corp and James to co-chief
operating officer of Fox together with Carey - in March 2014.
This will be the first time that only Murdoch family members will
occupy the top three positions at the company.
Fox said on Thursday it would take up the succession issue at its
next board meeting, which the source said would take place next
week.
CNBC reported earlier that the elder Murdoch would still have the
final say in whatever transpires at Fox. It was unclear whether the
reorganization would take place this year or at the start of 2016,
CNBC said.
'CAREY MUST NOT LEAVE'
"The most important thing in the immediate term is that Chase Carey
not leave,” said Needham & Company Inc analyst Laura Martin. "Wall
Street really cares about Chase Carey running this business. So if
the implication of Rupert handing the title to his son is that Chase
Carey leaves in the near term, we would expect that to negatively
impact the stock prices."
As of April, the Murdochs owned 39 percent of voting shares in both
Fox and News Corp, which operates newspapers like The Wall Street
Journal and book publisher HarperCollins, through a family trust.
Fox split from News Corp in 2013.
A Harvard University dropout, 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 23 and soon ran
the company's Asian assets. He was later named CEO of BSkyB, now
known as Sky, that is 39 percent owned by Fox.
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Some key investors have been warming to the idea that James has the
ability to run Fox, describing him as curious and a risk-taker like
his father.
They also cite two big differences that they like: James is less
sentimental about certain assets than his father is, and more
enthusiastic about courting shareholders.
TIMING A SURPRISE
The reported executive moves were not surprising, but their timing
is, Cowen & Co analysts said in a note to clients, noting that Fox
could soon cut earnings estimates. That could set a new, lower bar
for a new chief executive to target.
"We have always viewed Rupert as an empire builder who is more
concerned with accumulating assets than with delivering shareholder
returns, highlighted most recently by the aborted attempt to take
over Time Warner," the Cowen analysts said.
Time Warner thwarted an $80 billion advance by Fox last year, in
part by denigrating the non-voting stock that Rupert Murdoch was
offering.
Big acquisitions have long been standard operating procedure for
Murdoch, who took an Australian newspaper chain and turned it into a
global media superpower, buying storied properties such as the Times
of London, The Wall Street Journal and Fox.
He has also been no stranger to controversy with a baldly partisan
approach at holdings from Fox News to the New York Post and a
sometime role as political kingmaker.
Fox fell 0.2 percent to close at $32.90, while News Corp shares
slipped 0.5 percent at $14.58.
(Additional reporting by Supantha Mukherjee, Subrat Patnaik and
Sayantani Ghosh in Bengaluru; Writing by Nick Zieminski; Editing by
Christian Plumb and Howard Goller)
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