Trial by fire for heir James

Hours earlier,he had prevailed on his father,Rupert,and his chief lieutenant,Chase Carey,in a phone call from London,according to two people briefed on the matter. Under pressure to quell the scandal and preserve a lucrative deal for a pay-television company,James argued that closing the paper was necessary to restore respect to the company,they said.

Now James faces a new test as he jockeys to one day run the company and salvage the biggest deal in the Murdochs history,a 12 billion takeover of BSkyB. With the scandal mushrooming,he could emerge as the decisive new leader of the company,or as the tainted son who mismanaged one of the greatest crises the family business has faced.

The struggle is both a generational shift and economic one: how best to respond to changes that face the news industry,and who at News Corporation is best equipped to decide.

James appeared to act quickly to close the News of the World,Britains largest-circulation Sunday paper,which his father has owned for more than four decades.

Yet the decision was nearly four months in the making,and was as much an effort to shed jobs and save money in a beleaguered industry and shift resources to broadcasting as it was a response to the outcry over the scandals new revelations,according to the two people briefed on the matter,who spoke on the condition of anonymity to discuss internal concerns. Some employees are expected to move eventually to the Murdochs other tabloid,The Sun,when it expands to publish on Sunday,they said.

James suddenly finds himself a target of the British political and business establishment that his father influenced by wielding the power of his newspapers to decide elections and tarnish or burnish reputations. When PM David Cameron was asked Friday if James should be questioned by the police,he said anyone,no matter how high or low, was fair game for investigators.

The issues of dynasty and succession always surrounded the intermingling of scandal and commerce,as James,38,sought to keep the slow-boil investigation from infecting the deal for BSkyB.

Over the past few years at its New York headquarters,the News Corporation has slowly purged executives,including Peter Chernin,the former president,and Gary Ginsberg,the top communications adviser,who were close to Rupert Murdoch and seen as stabilizing influences on him and a counterweight to his conservative politics. James and a handful of executives close to him have sought to fill that power vacuum,with an abrasive style that has alienated many longtime associates of Rupert Murdoch.

He has a very binary personality, said Claire Enders,a prominent media analyst in London,earlier this year. Love or hate.

The closing of News of the World carries the symbolic weight of transition from one generation to the next. James has never reveled in the tabloid culture his father adored; he is drawn to technology and pay televisions dependable revenue streams. This is a grand gesture, said Emily Bell,a journalism professor at Columbia who used to cover the Murdochs as a reporter in London. Its trying to demonstrate that James is running a very different business that things will change in the future.

James could face criminal charges in Britain and US

James Murdoch and News Corp could face corporate legal battles on both sides of the Atlantic that involve criminal charges,fines and forfeiture of assets,the Guardian reported on Saturday.

Murdoch has admitted he misled parliament over phone hacking and there have also been reports that employees routinely made payments to police officers,believed to total more than 100,000,in return for information. The payments,the Guardian said, could leave News Corp and possibly James himself facing the possibility of prosecution in the US under the Foreign Corrupt Practices Act FCPA legislation designed to stamp out bad corporate behaviour that carries severe penalties for anyone found guilty of breaching it and in the UK under the Regulation of Investigatory Powers Act 2000 which outlaws the interception of communications.