James Murdoch: The prodigal son

The chatterers of the Square Mile have been frothing for weeks about a certain young man who may or may not soon be elevated to become chief executive of one of Britain's most powerful FTSE-100 companies, the cash-rich pay-television concern BSkyB. You don't have to ask why. The candidate in question is James Murdoch, the youngest son of Rupert Murdoch, the septuagenarian head of the mighty News Corp empire. With one voice, they have railed: shock, horror, nepotism of the worst possible kind! Send him packing before he even arrives.

There are genuine reasons for wondering if this 30-year-old of limited experience would be the smartest choice to replace the admired outgoing chief executive officer, Tony Ball. Stories of his unruly youth - the Harvard dropout who sported peroxided hair and pierced ears - have been widely told. Nor is it any secret that he cost News Corp shiploads of money in the late 1990s when he tried to steer it into the forefront of the doomed dotcom revolution. But the protests are nonetheless disingenuous.

With the possible exception of BSkyB shareholders themselves, everyone in the City is aching for James to get the job. Because he is a leading man in the long-running soap opera of the News Corp succession - and London gossips would have a front-row seat.

Even the best-informed insiders cannot tell you whether James will land the BSkyB job. The company's board is well aware of the furore about nepotism, and has told its nominating committee to search far and wide for candidates, among whom James will be one name. A choice must be made by mid-November. But just the fact that his name is in the ring, with the obvious approval of his father, has re-energised gossip about the one big question concerning News Corp: who is the favoured son? James or his elder sibling, Lachlan?

Not so long ago, the answer seemed simple. Even Rupert himself once described Lachlan as "first among equals". James was still trying to escape his rebellious past and prove himself. Elisabeth Murdoch, the other child born to Anna, Rupert's second wife, left BSkyB, where she was director of programming, to set up her own business beyond the family fold. Prudence, from his first marriage, has never been considered a contender. Meanwhile, Chloe and Grace, the two little girls from Rupert's current marriage to the former StarTV executive Wendi Deng, are presumably too young.

It is true that James has not always endeared himself to the man he now telephones every day and calls "Pops". There was the episode when, at just 15, he took a summer job at the Sydney Mirror, where his father had cut his newspapering teeth. James was snapped sleeping on a sofa during a press conference and the photograph was splashed across the competing Sydney Morning Herald. In his early adulthood he studied in Rome and pondered becoming an archaeologist. Then came Harvard, where he studied film and edited a satirical magazine, Lampoon. It was a job, Rupert remarked at the time, "that has more do with drinking than journalism". When James dropped out after a year to start a hip-hop record label called Rawkus with some friends - that was the blond hair, baggy trousers period - his father was perplexed. Far more upset, though, was his mother, Anna.

Rawkus was bought by Rupert in 1996. The meaner version of events will tell you that the label was floundering and rich daddy had to come to the rescue. The reality is that James, born 13 December 1972, had some success in the hip-hop world, finding new talents, and Rawkus was moderately profitable. Rupert made his move for another reason. Having sat back and watched his son experiment for years, he concluded that the time had come to bring him into the family business. Murdoch and his family hold 30 per cent of News Corp's voting shares. News Corp, in turn, has a 35.4 per cent stake in BSkyB. He made James head of News Corp's rather negligible music division. And, quite soon, James made it his mission to engage the company in all things dotcom.

In that role, he had some measurable disasters. He almost persuaded his father to buy a company called Pointcast for $450m (£270m). Happily, the deal did not go through: Pointcast was later sold for $7m. He also engineered News Corp's purchase of WebMD, an online site for doctors and patients that appeared to have huge potential, but ended up losing the company hundreds of millions. But the context to all this is that executives all over the world were making just the same errors which were revealed as such only when the dotcom balloon finally deflated. More importantly, he was starting to win over his father. "Even though he made some mistakes, in reality, he was quite impressive, even then, in his ability to grasp markets and talk fluently about them," says one executive who worked with him at the time. "And he began to show his ability to have strategic vision."

It was enough, at least, to bring him his one big break: Rupert's decision in 2000 to put him in charge of StarTV, News Corp's Asian satellite TV business. James moved to Hong Kong and word began to filter back to New York that he was making a serious fist of a daunting position. Travelling constantly throughout the region, he developed both the commercial and political skills to increase audience market shares. Like his father, he did not shy from stirring political waves to ingratiate StarTV to the right governments, most notably when he condemned the Falun Gong, the quasi-religious group that has been persecuted by Beijing. "Clearly the group does not have the success of China at heart," he said.

Human rights groups were livid. From the years in Hong Kong, a new James Murdoch has surfaced. In 2001, he got married to a quietly spoken marketing executive, Kathryn Hufschmid, and the couple now have a baby daughter. All remnants of rebellious youth have vanished. James has a sleeker, more serious look. More importantly, StarTV has ended years of heavy losses to turn in a small profit last year for the first time. James's success has been especially notable in India, where his Hindi channels now account for 48 of the most popular 50 programmes in the country. He has a dry wit, which can be acerbic, but not to the extent that he wilfully upsets people. And he is considered erudite, with a wide knowledge of music and the arts. Even after he moved to Hong Kong, James continued drawing cartoons for the American men's style magazine Gear.

It is not true, associates insist, that he is daddy's puppet. Rupert has always left his children to make their own mistakes. During those daily phone conversations, he gives advice, for sure. But he insists that the decisions, big or small, are for them to take. At StarTV, it seems, James has been making mostly good ones.

If he gets control of BSkyB, the succession riddle will still not be solved. The fact is that Lachlan and James complement each other. They are different parts of their father. Lachlan's first loves are Australia and the newspapers. As a senior vice-president of News Corp, he oversees its publishing interests. James is quieter, less interested in glamour, and much more engaged by television and the potential of new technology. They would work perfectly as a pair to run News Corp when the old man finally fades. Which may just be what Rupert has in mind.