James Murdoch steps down at News Intl.

Exec quits as exec chairman of U.K. publishing company

James Murdoch has stepped down as executive chairman of News Intl., News Corp.’s beleaguered U.K. newspaper group following his recent move from London to New York, the latest twist in a saga that’s seen his stature dip and caused many to question his future as heir apparent at the giant conglom.

He remains deputy chief operating officer and head of international at News Corp., reporting to COO Chase Carey, but will focus on the worldwide television business, not the British newspapers that have been pummelled by a phone hacking scandal resulting in dozens of arrests and lawsuits.

In a statement, Murdoch said, “I deeply appreciate the dedication of my many talented colleagues at News Intl. who work tirelessly to inform the public.”

Murdoch headed News Intl. for five years and the move plucks him from the messy situation that unfolded partly under his tenure. News Intl. COO Tom Mockridge will run the division, reporting to Carey.

In Gotham, Murdoch will work in close proximity to Carey, other top News Corp. execs and members of chairman-CEO Rupert Murdoch’s inner circle of advisors. “James will continue to assume a variety of essential corporate leadership mandates,” the elder Murdoch said in a statement, thanking his son for “leadership at News Intl. and across Europe and Asia.”

James Murdoch was conspicuously absent earlier this month when his father visited News Intl. to announce the green light for the Sunday Sun. Instead his older brother, Lachlan, accompanied the News Corp. chairman as he toured the Sun’s newsroom.

Lachlan, the original heir apparent, is said to have clashed with previous chief operating officer Peter Chernin and ultimately left the company.

However, Lachlan is steeped in the newspaper business, while James had considerable success with pay TV. News Corp.’s global television biz includes Blighty’s BSkyB, Star TV in Asia, Sky Deutschland and Sky Italia.

Although the scandal has shocked the U.K. to its roots, where a variety of public enquiries may eventually reshape practises in the media world and impose ownership limits, it hasn’t impacted News Corp.’s U.S. media and entertainment businesses.

Rupert Murdoch has come under some pressure Stateside to offload his troublesome British tabloids, but he’s unlikely to do so having just bowed the Sunday Sun.

Indeed, investors aren’t particularly concerned about the scandal and won’t be unless it spills over to the U.S., or if costs in the U.K. skyrocket. So far they’ve been modest for a company of News Corp.’s size.

If anything, the scandal is a boon, some Wall Streeters say, since it has forced Murdoch to advance cautiously, avoiding pricey acquisitions or overly aggressive moves.

In the U.K., James Murdoch’s role at News Intl. has looked compromised since last summer when the extent of phone hacking at the now defunct News of the World emerged and News Corp. shuttered the paper.

Now the Sun appears to be in police crosshairs with two rounds of arrests of journalists there. No charges have been filed.

James Murdoch has been grilled twice and Rupert Murdoch once by British politicians as part of the probe into allegations of illegal practices. He has consistently denied that his knowledge of phone hacking extended beyond one so-called “rogue reporter,” the News of the World’s royal editor Clive Goodman, who was jailed for eavesdropping on private messages in January 2007.

Earlier this week British police chief, Sue Akers, revealed details of six-figure payments by Sun journalists as part of what she described as a systematic “culture of illegal payments” at the paper.

“If I was James, I’d be celebrating a blessed release from a snake pit,” said U.K. media analyst Claire Enders.