Has Rupert Murdoch found an heir outside the family?

It has been a week since Rupert Murdoch announced his latest mega-deal, this time with a company called Liberty Media with diverse holdings in both content and distribution. It was a complex transaction but one element stands out. Whither John Malone, the chief of Liberty and Murdoch's partner in the deal?

It has been a week since Rupert Murdoch announced his latest mega-deal, this time with a company called Liberty Media with diverse holdings in both content and distribution. It was a complex transaction but one element stands out. Whither John Malone, the chief of Liberty and Murdoch's partner in the deal?

There is a growing school that thinks Malone may be carefully inserting himself in News Corporation so that one day he can take it over. This gives a new wrinkle to the long-running speculation about the succession at News Corp. Mr Murdoch, who is 69, cannot go on for ever.

Mr Malone has a lot going for him. He is, for one thing, 10 years younger than Murdoch. He was for years the head of Telecommunications Inc, TCI, the Denver-based television cable giant that he sold last year to AT&T. The result of deal was the birth of Liberty. Malone may not be the buccaneer entrepreneur that Murdoch is, but he is taken very seriously by Wall Street. He and Murdoch, moreover, are old friends.

Nobody, it seems, quite knows what Murdoch and Malone are up to. Murdoch has long been grooming his two sons, James and Lachlan, who both have top-level jobs in News Corp, to run the company. Neither of them, however, is considered ready to take the throne. Then there is Peter Chernin, the president of News Corp and a long time Murdoch lieutenant. The money has been on Chernin to take over - until now.

Those who believe in John Malone may be getting ahead of themselves, of course. But the numbers from last week's deal are compelling. It gives Malone an 18 per cent stake in News Corp, compared to the 30 per cent held by the Murdoch family. That should make him a vital player in the future of News Corp.

"I think John is slowly chipping away at news Corp," Vick Khoboyan, an analyst at Financial Management Advisors, told the Bloomberg newswire. "I think he is using all the financial engineering he can. Murdoch is getting up there in age, and I'm not quite sure what he plans on doing afterwards. John Malone would like to have some say in that in the future."

For now, Malone's direct participation in the running of News Corp will be constrained. The shares he is getting under the deal will have only limited voting rights. Nor is it entirely clear that he will get a seat on the News Corp board. "This is a passive investment and, at this point, that's all it is," Malone told reporters. As to the board question, he responded, "I don't think that's been determined at this point."

The fencing in of Malone's influence in News Corp is ostensibly aimed at pre-empting any complaints from the free competition regulators. The government in the United States could query Malone assuming so much power both in the world of cable as part of AT&T and of satellite distribution of television with Murdoch. If those concerns can be answered - say by a sale of Liberty by AT&T - there will be little to stop Malone assuming a board seat and considerable new powers at News Corp.

Murdoch and Malone, meanwhile, are more than just friends. They have come to share a passionate commitment to satellite and electronic distribution of programming and other content. This, above all, may be what is bringing them together.

As part of the deal, Liberty will also take a 6 per cent stake in Sky Global, a whole new News Corp company that is meant to create a worldwide satellite broadcasting platform that Murdoch plans to take public later this year.

With the Liberty investment, Sky Global suddenly becomes much more valuable. Most interestingly, it is highly likely that Malone and Murdoch will be tempted soon to bid as partners for DirectTV, the US satellite broadcasting company which is owned by General Motors.