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More than his father's son: As James Murdoch returns to Sky, will a renewed Murdoch takeover bid follow?

By Paul Connew, Media Expert

January 29, 2016 | 9 min read

'James Murdoch is to make a surprise return to the helm of Sky' was how Sky News itself announced their old boss's return to the chairman's chair.

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Really? Well, no surprise to me as I'd forecast it in a Drum column last year, along with the prediction that James Murdoch's restored influence at the top of 21st Century Fox as chief executive would lead to a renewed bid to fully takeover Britain's biggest pay-TV broadcaster.

It was hardly coincidence that the announcement of James's return – which will inevitably be controversial – was delivered to the London Stock Exchange on the day Sky PLC's healthy half-year results (operating profits up 12 per cent to £747m) were being unveiled.

Inevitably, too, there are many who will view it as a classic case of nepotism and portray James as the ultimate comeback kid, solely by virtue of his surname. True maybe, but only up to a point.

As someone who has appeared as a contributing media commentator for Sky for years, I can honestly testify that James Murdoch was held in high regard by the hard-nosed, hard-working crew of professional journalists and producers at the company during his previous voyage at the helm.

There was genuine regret (albeit acceptance of why he had little choice) when he stepped down as chairman in 2012 at the height of the phone-hacking scandal fallout, with Murdoch junior declaring he wanted to avoid being a 'lightning rod' for the crisis enveloping the company and which had forced it to abandon its £8bn bid to take full control.

Personally I think it's the respect James Murdoch still commands from TV professionals at the Sky coalface that marks his return as a smart, legitimate business move rather than a shameless display of nepotism. That said, however, it still represents something of a gamble in terms of the court of public, political and potentially regulatory opinion.

David Cameron may well have attended Rupert Murdoch's Christmas drinks party and still take serious note of how the Times and Sun treat him, but it's a fair bet too that he's got enough on his plate with the EU referendum looming not to be overjoyed at the prospect of a political dogfight over a fresh Murdoch bid for Sky (even if this time it would be under the 21st Century Fox banner rather than NewsCorp).

There are certainly MPs who will be quick to remind him of the damning 2012 parliamentary report that said James Murdoch 'showed wilful ignorance of the extent of phone hacking' and found him 'guilty of an astonishing lack of curiosity' over the issue.

It will be fascinating to see how the new Labour leadership reacts in the coming days and weeks to James Murdoch's appointment and – when it eventually comes – the politically explosive revived bid to mount a full Sky takeover. Jeremy Corbyn has regularly been savaged by Rupert Murdoch's newspaper arm, even if Rupert did tweet praise for Corbyn's stance mocking the Google/HMRC tax deal that George Osborne had so disastrously labelled a 'victory' for the UK. Quite what Corbyn thought of being saluted as 'on the money' by the tycoon he normally regards as an arch-enemy, or Rupert's depiction of 'posh boys in Downing Street' surrendering to Google power, is anyone's guess.

Not that the Murdochs have much chance of Labour, for all its internal strife, doing anything but vigorously opposing the idea of Fox turning its 39.1 per cent stake in Sky to the 100 per cent James Murdoch hinted in a US interview late last year remains his ambition.

But an early taste of what's likely to be coming down the line came with the tweet from onetime Rupert Murdoch right-hand man, Andrew Neil, now the BBC's toughest political interrogator: 'Murdoch's Return of the Disgraced: first he reappoints Rebekah Brooks as CEO News UK, now son James is back as Chairman of Sky'.

There's a hell of a lot more to come along those lines, of course, but it's a sign of the resurgent confidence of the Murdochs that they can ride out the storm, and my money's on that turning out to be a winning gamble, even if it's some way short of a racing cert.

As one senior Sky journalist told me as the news broke: "James Murdoch is a bloody good TV man, he understands the business from top to bottom and across the spectrum. He's innovative, big-thinking, flexible and that's why he was respected when he was chief executive, then chairman before. OK, he had to go when the phone hacking scandal erupted, but that didn't diminish the positive view many of us in television held of him.

"So, is his return to the top job at Sky pure nepotism? Only to the extent that someone whose surname wasn't Murdoch probably wouldn't have survived at all (Rebekah Brooks, excepted) to make a comeback. But, in terms of his real talent as a dynamic, visionary, still-young TV chief, the vast majority of the journalists and creative staff here will welcome him back.

"There is also a feeling that Rupert Murdoch owed James one, in a sense. Pushing him into the executive chairman role at the newspaper division, as part of Rupert's succession plan, was a poisoned chalice... he didn't love newspapers the way his father did, didn't really care about them, took his eye off the ball in a game he never really wanted to play and paid the price for it. But he's proved with his performance as chief executive of 21st Century Fox – another controversial appointment at the time – that he's a major player and a winner."

Unsurprisingly Sky CEO Jeremy Darroch was quick to brush aside the anticipated controversy James Murdoch's appointment would trigger. "Without doubt he's the right man for the job," Darroch pronounced in a media conference call. "The board was unanimous in support of James. At the time he stepped aside he felt he was putting the interests of the company ahead of his own. Since then he has been consistently re-elected by shareholders as a non-executive director. It was a smooth process and got to a good outcome. His knowledge of the international media will be a big asset," declared Darroch.

Critics and cynics would argue that's all predictable PR spiel or an example of board members and shareholders dancing to the Murdoch empire's mood music. Within hours, one significant Sky shareholder, Royal London Asset Management, which owns a £50m stake in the broadcaster, branded James Murdoch's appointment "inappropriate". Its corporate governance manager Ashley Hamilton Claxton pointed out that "it wasn't so long ago that Sky's own regulator Ofcom" had been heavily critical of James Murdoch's position during the phone hacking affair and accused him of "poor judgement" and "questioned his competence".

Also swift into the attack – but to no one's surprise – were Hacked Off with leading figure Evan Harris, the former Liberal Democrat MP, claiming that "no normal company's" corporate governance system would have cleared James Murdoch's restoration as chairman.

But neither of those assaults will have come as any great surprise to James Murdoch or his father and would have been factored in to their strategic planning for the future. All the more reason, arguably, to take note of the positive view working TV professionals, at various levels, express about James Murdoch's past leadership.

Worth noting, too, that in the US the voices of dissident shareholder groups who loudly opposed James Murdoch's boardroom survival and promotion have either changed their tune, or toned down their hostility, in the light of his more recent performance level at the Fox helm.

The reappearance of James Murdoch as Numero Uno at Sky (while continuing as chief executive of the 21st Century Fox cash cow) will also trigger speculation about the succession when Rupert Murdoch finally calls it a day. (Don't count on that happening anytime soon, even though the newly-engaged media mogul is spending more time in London socialising with fiancee Jerry Hall). In the aftermath of the phone-hacking scandal, the scathing criticisms and the momentous decision to split the empire's publishing and broadcasting arms, older brother Lachlan was widely perceived to have emerged as the likeliest successor to his father. Some analysts now believe that James, the Comeback Kid, is in with a 50/50 shot at the biggest job of the lot.

Quite how Sky News handle the stormy times ahead will, of course, represent a big test of the award-winning station's well-deserved reputation for objectivity and balance. Rest assured, however, that rival broadcasters and Rupert Murdoch's print rivals will be watching closely. Not least because the alliances forged to oppose the Murdochs' original Sky takeover ambition (well before they were gifted the phone hacking scandal) will be girding their loins ready for a new battle.

Paul Connew is a media commentator, broadcaster, former Murdoch newspaper executive and co-author of the book 'After Leveson'

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