Damage Control: James Murdoch and the Family Business

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Photo: David Moir/Reuters

Britain's phone-hacking scandal has already closed a 167-year-old paper, wounded the British prime minister, and may yet cause Rupert Murdoch to jettison a favored lieutenant. But could it split the Murdoch family?

Succession seemed settled after James was elevated to News Corp.'s deputy chief operating officer and the chairman of News International. But that was before the current scandal gained its full momentum, with the revelation that the company's reporters had hacked the voice mail of a teenage murder victim and committed other acts of journalistic mayhem.

As head of the division that operated News of the World, James has significant exposure to the scandal — not the hacking itself, but the aftermath, including the approval of out-of-court settlements to phone-hacking victims. "I now know that I did not have a complete picture when I did so," he said in a statement on Thursday. "This was wrong and is a matter of serious regret."

James either knew the extent of the scandal and hoped to keep it contained by settling out of court, or he was ignorant and left Rupert exposed — a competence issue, if not a cover-up. He is surely hoping that by killing News of the World and getting ahead of the scandal, he can diffuse the outrage.

The irony is that James has never been a newspaper guy; he has no affinity for ink. James ran satellite broadcasters BSkyB in London and Sky TV in Hong Kong. He sees newspapers as a dying business and a drain on News Corp.'s eventual transition to a pure television and film company. And the News of the World scandal is threatening to derail News Corp.'s politically sensitive acquisition of BSkyB, with the U.K. regulator's approval hanging in the balance.

Newspapers are central to Rupert Murdoch’s News Corp., but James doesn't share his love for the political juice that flows from owning printing presses (this may be what so endears Rebekah Brooks to Murdoch — it’s a game she seems to understand). James hates gossip. Rupert loves it. And this scandal shows James's discomfort with the way News Corp. does business.

Best-case scenario for James is that he isolates the hacking to Rebekah Brooks and Andy Coulson, who is due to be arrested on Friday. But James has made himself the point person for managing a volatile and politically charged scandal: a very dangerous place to be.

Is it only a matter of time until James's older brother Lachlan, seemingly passed over in the succession drama, is on his way back from Australia?