Timing, scandal are factors in whether he takes on Fox Nets Group

James Murdoch’s star may be rising again at News Corp.

News Corp. topper Rupert Murdoch and prexy-COO Chase Carey are weighing whether to give him formal oversight of the Fox Networks Group unit that houses most of Fox’s U.S. networks as well as the Fox Intl. Channels division.

News of the move for James Murdoch, who is deputy chief operating officer under Carey, was first reported Thursday by the Financial Times. Sources close to the situation said nothing is set in stone yet. In fact, there’s concern from a corporate governance perspective about the timing of any decisions involving James as the company still faces ongoing litigation in the U.K. related to the phone-hacking scandal that enveloped News Corp.’s U.K. newspapers last year.

Word that James may take on specific oversight of Fox Networks Group came Thursday, the same day that U.K. regulator Ofcom issued a report saying it found no evidence that James deliberately engaged in wrongdoing but that his conduct “repeatedly fell short” of what would be expected as chairman and CEO at News Group Newspapers. But News Corp. insiders are still sensitive to the criticism of the company and its governance policies and are trying to avoid giving the impression that the company views the scandal as having passed.

A News Corp. spokeswoman declined to comment.

Despite the lingering cloud of the phone hacking, industry observers said that putting James in charge of the TV network operations is a logical move for News Corp. now that he has relocated to Gotham to work closely with his father and Carey. James’ background is in TV, and sources noted that he has been a growing presence in recent months in meetings in Gotham and L.A. involving Fox Networks Group units. That division houses Fox Broadcasting Co., FX, National Geographic Channels, Fox Sports’ regional cablers and other channels. It does not encompass Fox News Channel or the 20th Century Fox film and TV production operations.

If James Murdoch assumes oversight of Fox Networks Group, it would cap a series of restructurings of various Fox operations since Carey returned to News Corp. in mid-2009. In July, Fox Broadcasting chief Peter Rice added Fox Sports and Fox Intl. Channels to his domain with his promotion to chairman-CEO of Fox Networks Group. The studio side underwent a reorg just last week as Tom Rothman was eased out as co-CEO of 20th Century Fox (as of Jan. 1).

Rice and James Murdoch are known to be personal friends, so it’s unlikely Rice would balk about reporting to the younger Murdoch or perhaps to both James and Carey. And insiders said it’s clear that James Murdoch’s role at Fox Networks Group would be one of corporate oversight and would not usurp Rice’s operational authority.

It’s also no surprise that the elder Murdoch would push for ways to give James specific duties, as his role at the company has been hazy since he relocated from London to Gotham. The decision to have James join Carey on a conference call with investors last quarter for the first time was seen as a clear signal News Corp. was preparing to give him a higher-profile management role.

Last year, as the phone-hacking charges mounted in the U.K., News Corp. was forced to shutter its weekly tabloid News of the World and withdraw its bid to take on full ownership of satcaster BSkyB. James Murdoch was forced to resign as chairman of BSkyB and detach himself from News Corp.’s U.K. operations.

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