The long-awaited generational shift has begun with Mr Murdoch, 84, preparing to step down as CEO of the Fox film and television channel business, with the title going to his younger son James, 42, according to family sources.
The senior Murdoch will remain as executive chairman of Fox, with eldest son Lachlan, 43, as co-chairman.
The title change was seen as hugely significant by analysts. “This will be the biggest generational shift of any media company,” said Rich Greenfield, media analyst with BTIG Research.
The Fox transition is due to take place next year with sources suggesting that Mr Murdoch’s hope is that James and Lachlan, currently non-executive co-chairman, will run the company jointly.
Whilst James will take the CEO title, allies of Rupert said the veteran would remain actively involved in the day-to-day management of the company. “He’s not going anywhere,” a source told Variety.
The plans have been openly discussed with the two brothers whose new roles in Fox were described as a “partnership.”
Chase Carey, the veteran Fox COO who effectively ran the business with Mr Murdoch, is also stepping down but will remain with the company as an adviser.
His departure means the entertainment business will be run as a “troika” by the three Murdochs, without any executive influence from outside of the family.
Under pressure from investors after the phone-hacking scandal, the Fox empire, which holds a 39% stake in the Sky satellite business and includes the 20th Century Fox film studio and Fox TV channels, was split off from the less-profitable News Corp publishing business in 2013.
Rupert Murdoch stepped down as chief executive of News Corp, owners of The Sun and The Times newspapers but remains as executive chairman.
James Murdoch’s elevation marks a stunning return to favour for the former executive chairman of the company then known as News International, who quit during the hacking saga and was investigated by regulators on both sides of the Atlantic.
Ofcom found that said Mr Murdoch’s actions when he was BSkyB chairman “repeatedly fell short” of what was expected but found the broadcaster a “fit and proper” company to hold a licence.
Rupert Murdoch, who maintains a close interest in the newspaper wing of his business, has masterminded an inheritance plan involving both his sons.
Last year Lachlan, 42, became non-executive co-chairman of the News Corporation and 21st Century Fox, returning to his father’s side after a nine-year absence. James was appointed co-chief operating officer at 21st Century Fox.
Rupert believed that James had shrugged off the hacking saga and was ready to resume his climb to the summit of the family business. James used his new role to familiarise himself with the Hollywood film studio business and took control of several Fox TV channels, in readiness for today’s further elevation. However he has previously clashed with Roger Ailes, head of the profitable Fox News division.
By Adam Sherwin
