Tuesday, December 11, 2007

The son rises, again

James Murdoch's expanded role may help reinvigorate operations in India and China, write FT's Jo Johnson and Tom Mitchell:

James Murdoch’s expanded responsibility for News Corp's international operations reconnects him to Asia, where he was posted from 2000 to 2003 as head of Star TV, the Hong Kong-based satellite broadcaster.

People who worked with Mr Murdoch in the territory credit him with helping turn round Star, which had been losing money ever since his father first acquired it in 1993 from Hong Kong tycoon Richard Li.

“James is like a magnet. He pulls people’s focus together,” said one Star executive. “He put the focus back on finances and really put discipline into the whole structure. We definitely take risks – it’s part of our culture. But after James we looked twice before we leapt.”

Mr Murdoch concentrated the company’s efforts on India but, like Star executives before and after him, struggled to find an entry into the tightly regulated China market. “He was probably more passionate about India than China,” said a former Star executive.

“He found it tough going there. He just couldn’t see the light at the end of the tunnel.”

News Corp’s most recent quarterly filing painted a positive picture for Star. It showed that operating income rose by an undisclosed amount at the international TV business, which consists primarily of Star, for the three months to September 30 over the same quarter in 2006. This compared with an unspecified decline in the division’s operating income in the full year to June 30.

But Star has lost its lustre in India – its most important market – since 2003, when Michelle Guthrie succeeded Mr Murdoch as chief executive, and insiders at Star say that the return of a Murdoch would mean that the family could step in and stem the internecine management wars that have been such a characteristic of the Star executive suite in recent years.

Star was engulfed by a management feud bet­w­een Ms Guthrie, Steve Askew, then chief operating officer, and Peter Mukerjea, the respected chief executive of Star India. Mr Mukerjea was sidelined when profitability at his unit faltered and left to set up a rival network. Mr Askew and Ms Guthrie left the company earlier this year for no given reason. Ms Guthrie was succeeded by former Morgan Stanley banker Paul Aiello, Star’s recently appointed president.

“There is no one who understood the Asian viewer psyche better than James Murdoch,” said Suhel Seth, chief executive of Counselage, an Indian brand consultancy. “When Star was previously under him, he was not micro-managing it out of London, but was based in Asia and made a point of travelling to India once a month. To my mind there was at that point a far greater consumer connect which was lost [after his departure],” he said.

Mr Seth added: “James has the most non-Murdoch style of operating of all Murdochs in that he’s extremely engaging and humane and appreciates that business in India is done more as if you’re dealing with family members, with a pat on the back and a bit of hand-holding. It’s high time that Star returned to the high ground in India, where they’ve committed corporate hara kiri even though it is a critical market for them in terms of making their Asian numbers work as a group. His experience at Sky will be invaluable at a time when India is just about to start its love affair with pay per view. All these learnings will start to come to life.”

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