Can James Murdoch still take over from his dad?

While the bruised figure of Rupert Murdoch remains at the centre of the News Corp story, pressure is mounting on his son James, currently deputy chief operating officer of News Corp globally and chairman of the 39 per cent-owned BSkyB.

Some observers feel his hope of succeeding his father as chairman and CEO of News Corp looks untenable. Elsewhere, there is pressure on him to stand down as chairman of BSkyB.

Murdoch's flagship newspapers on both sides of the Atlantic - the Times in London and the Wall Street Journal in New York - both reported their boss's decision to abandon for the time being his bid for BSkyB as a "damaging" blow.

The Times, owned by Murdoch since 1981, said the 80-year-old media tycoon had been "obliged to abandon one of the biggest deals of his career" in the face of "near-unanimous public and political hostility".

The Wall Street Journal, purchased four years ago after a lengthy battle for control, admitted that Murdoch had found himself "politically isolated" in Britain.

The WSJ also reported that the demise of the BSkyB deal was a "setback" for James Murdoch. "He had played a central role in the proposed purchase, and has acknowledged shortcomings in his and other executives' prior responses to the scandal that ultimately undermined it."

James, said the WSJ, was widely seen as the leading candidate to succeed his father at the helm of the media giant and "continues to enjoy the support of many of the company's shareholders".

That's putting a positive spin on James's popularity if you look at what some non-Murdoch owned papers and websites are reporting.

The New York Times says the decision to withdraw the bid for BSkyB was made "as a contentious family drama played out in recent days".

The paper claims James Murdoch wanted to press ahead for regulatory approval of the deal but that his father and chief operating officer Chase Carey - James's direct boss - overruled him. More than that, says the NYT, "they consulted him only after the decision was all but final".

James had been the principal champion of the purchase within News Corp - hardly surprising given that as deputy COO he runs News Corp's European and Asian operations, and, with full ownership of BSkyB, his portfolio would have accounted for nearly half of all News Corp's global revenue.

This would have put him in a good position to take over as chairman when the proverbial bus - or too much jogging? - takes the Digger from us.

The Australian Business Spectator says the phone hacking affair will damage perceptions of James's credentials to succeed his father. But while the views of outsiders might not worry the Murdochs, the potential for internal opposition "might be more disconcerting" for father and son.

"James's links with the carnage in the UK and the damage that has caused to News Corp and its ambitions have made him vulnerable and created an opening for any within News Corp who see him as baggage for the corporation or as a roadblock to their own personal ambitions."

Back in Britain, there's pressure on James to resign his position as chairman of BSkyB. According to the Daily Telegraph, institutional investors in the broadcasting company are being urged to act to remove James in favour of a chairman free from connections with News Corp.

The call comes from Alan MacDougall of Pensions & Investment Research Consultants (Pirc), advisers to institutional investors.

"It is time for the board to review whether BSkyB and its shareholders would benefit from a new, independent chair. And if shareholders agree it is time for reform, they should say so.

"Questionable governance practices have been tolerated at BSkyB for a long time, and unfortunately many shareholders have not effectively challenged them. That must change."

One major investor told the Telegraph: "BSkyB has been run as an arm of News Corp. This was tolerable with the bid situation. It's not any more. Change needs to happen - and from the top." ·