James Murdoch: Rising son

A one-time rebel, he now has a reputation as a shrewd operator who succeeds by consulting people

It was an annual general meeting of Sky TV last month and Rupert Murdoch had just finished speaking. Immediately, reporters gathered round the podium, hoping to prise some more nuggets from the lips of the most powerful media magnate on earth. But their way was barred by an equally formidable figure Rupert's son James.

The father would have felt in safe hands, and not just because James is a black belt in karate. His son was also being groomed to succeed the great patriarch, and this week his elevation was confirmed.

At 76, Rupert Murdoch is finally poised to relinquish the reins of power at mighty News International the arm of his empire that includes all his British newspaper titles. Taking over at just 34 (he turns 35 next week), will be the youngest of his three children, and the one who for many years looked the least likely of them to step up. A one-time rebel, apparently determined to go his own way, James Murdoch finally fell into line, and now he commands the high ground from which so many battles political and commercial have been fought, usually with far greater casualties on the other side. It's a job for a true commander. Will James prove to have what it takes?

His new position makes him master of all he surveys, and the view stretches a very long way. He will step up to replace his father role as chairman of BSkyB he has been chief executive of the company since 2003 and will also take up a new role as chairman and chief executive of News Corporation's European and Asian businesses. This gives him control of The Times, The Sunday Times, The Sun and News of the World, and the pay TV companies Sky Italia and Star TV, the Asian satellite TV giant.

James Murdoch's elevation is no surprise. Ever since his brother Lachlan turned his back on his father's business in 2005, James has been considered the odds-on favourite to inherit the family jewels. Rupert was always determined to ensure that a Murdoch remained at the helm of News Corporation, and so it was more a case of when, rather than if, James Murdoch made the move up to the "mother ship", as one City analyst put it. Everything looked in place when James was asked to accompany his father to a crucial meeting this summer with members of the Bancroft family to help to persuade them to sell Dow Jones, owner of The Wall Street Journal, to News Corporation. Yet less than a decade ago, both Lachlan and their elder sister Elisabeth were considered much stronger candidates.

James was born in Wimbledon in 1972 during a crucial time in his father's career, following his acquisition of the News of the World and The Sun. He was educated in New York where he attended the Horace Mann High School. Although he ended up at Harvard, the youngest of that generation of Murdoch children spent time in Rome pondering a future as an archaeologist.

Despite his famous name and Ivy League education, James Murdoch was deemed something of a black sheep especially when he dropped out of Harvard three quarters into a visual arts degree. That was to launch a record label focused on hip-hop after he had spent several months following the Grateful Dead around. Elisabeth and Lachlan were already established at News Corporation, with Elisabeth working her way up to be head of programming at Sky. At that time James sported a beard, an eyebrow stud and two tattoos, including one of a lightbulb on his arm, and was still mostly remembered for falling asleep at a press conference in Sydney during a brief stint as a reporter in his teen years.

Who knows what his father made of hip-hop, but Rupert Murdoch eventually bought his son's label, Rawkus Records, and appointed his youngest child to lead the media giant's music and internet strategy in the lead-up to the tech boom. Yet despite James being brought into the fold, News Corporation lost billions after the collapse of the tech market and he was shipped out to the Far East to run the company's ailing Star TV satellite division. It was no small task given that Star has 300 million customers across 14 countries but James succeeded in turning around the company and Star recorded its first profit under his rein.

Despite his middle name being Rupert, James was rarely considered to be the child that would succeed his favour until older brother Lachlan spectacularly quit News Corporation two years ago. The older Murdoch boy was reportedly frustrated with his position at the company and followed his sister in leaving the family business.

James is a much less confrontational character than his older brother, but leaves Sky with a reputation as a shrewd operator that fosters a very consultative approach to running companies. Rather than the top-down approach that his father has made famous, James Murdoch has built a reputation as an energetic and passionate leader who is not afraid to take strategic risks.

Yet he has had to work hard to prove his calibre since taking over at Sky. There was uproar when he was appointed to lead the company in 2003 as accusations of nepotism were rife. At 31, James Murdoch was to become the youngest chief executive to run a FTSE 100 company; at a rowdy annual general meeting in November 2003, 17 per cent of the company's shareholders voted against his appointment a record at the time. Worse was to come. The new chief executive's first annual results presentation proved to be a debut from hell as 20 per cent was wiped off the company's share price in one day equating to about 2bn in lost shareholder value.

It was not the most auspicious start to his tenure as Sky CEO but the young gun has seen off his detractors and few, if any, would now argue that he has left the satellite company in a worse position than when he took over. Sky insiders argue that his passion for new technology has been crucial to the company's progress. Not only was the Sky+ service a huge hit with consumers, but the company's early move into high-definition TV also proved astute. Importantly, the technological innovation was accompanied by a renewed focus on what consumers wanted out of Sky, another hallmark of James Murdoch's time at Sky.

"He is a real evangelist for technology High Definition is a great example of that," one source says. "No one was interested in that four years ago, but James was. He saw it as something that would really matter to customers once it was available."

James Murdoch has also made a big impression by turning his company into one of the first carbon-neutral businesses. This is one of the few areas where his influence on his father's business is tangible, as he is credited with persuading Rupert Murdoch to screen the Al Gore documentary An Inconvenient Truth at a News Corporation summit last year which put the issue of climate change firmly on the parent company's agenda. His environmental focus is also evident in his personal life as he has forsaken the standard business luxury car in favour of a Toyota Prius hybrid.

Despite his ecological stance, James Murdoch is famously reticent about his political leanings, recently arguing that it was "really important to stay out of politics". However, he shares his father's disdain for regulation, accusing telecoms and media watchdog Ofcom of being "authoritarian". Speaking at an Ofcom event last year, Murdoch said the regulators' attitude would be "more at home in Rangoon than in modern Europe".

Yet it is in the area of competition where Rupert Murdoch's shadow has loomed large. James Murdoch's defining moment came when Sky snapped up a blocking stake in ITV, a move that stopped its arch rival Virgin Media then NTL from acquiring the free-to-air broadcaster. Most assumed the move had been instigated by Sky's wily chairman, given that it was a trademark aggressive move that pulled the rug from under its competitors, but it was later revealed to be the younger Murdoch's strategy, cooked up late at night on a trip to Barcelona with Sky's finance director Jeremy Darroch.

While the ITV stake purchase has courted yet another troublesome investigation by Ofcom, it proved to be the first step in seeing off the threat from a rejuvenated cable rival which had secured the backing of Sir Richard Branson. Sir Richard famously called the move "a threat to democracy", and Sky will almost certainly end up losing money on the investment in ITV shares if it is forced to sell the holding, as looks likely. Yet it will be a small price to pay given that Virgin Media has struggled to recover from a vicious public spat. It's not often that Sir Richard comes off second best, but James Murdoch proved too strong an adversary, given Sky's strong position.

Despite his smooth demeanour, James Murdoch has proved himself to be a fearsome competitor, and perhaps flying under the radar of his more fancied siblings for so long has strengthened his resolve. Married to an American model, Kathryn Hufschmid, since 2000, he and his wife have two children and keep their private life private.

It is his enthusiasm for the way the media is changing that holds out the prospect of his making a big mark on News Corporation. His role advising his father during News Corporation's acquisition of music-based social networking site MySpace and the way Sky has embraced the broadband market are examples of his lateral thinking. Compared with James Murdoch, traditional media executives have been slow to recognise how consumer behaviour has shifted in the age of the internet.

The changes at Sky over the past four years have convinced many in the City that James Murdoch could bestride the kingdom with equal panache when Rupert finally hands over the keys to it. A lot of people in media, politics and beyond will be keeping a close eye on his performance.

A Life in Brief

Born: James Murdoch, 13 December 1972

Early life: Attended school at New York's Horace Mann School, leaving in 1991. Worked as an intern at Sydney's Daily Mirror as a teenager. Studied at Harvard and took part in student journalism as a writer and cartoonist, but dropped out early in 1995.

Career: Set up a hip-hop record label, Rawkus Entertainment, with two college friends. Bought by News Corporation in 1996. Joined the company in the same year as the chairman of Australian music label Festival Records. Appointed head of News Corporation's internet operations in 1997, credited with sparking its interest in digital media. Moved on to become chairman and chief executive of Star, BSkyB's Asian pay TV operation, in 2000. Became chief executive of BSkyB in 2003.

He says: "If we [he and his father] disagree about something we will disagree, and we will hash it out."

They Say: "He is a very innovative thinker; he is like his father." Bruce Churchill, former business associate of James Murdoch