Once his father's heir apparent, James Murdoch stepped down Tuesday as chairman of British Sky Broadcasting, surrendering one of the biggest jobs in the Murdoch media empire in a bid to distance the broadcaster from a deepening phone-hacking scandal.
James Murdoch's credibility and competence have come under severe questioning because of the phone-hacking crisis and alleged bribery by British newspapers while he was in charge, and he faces further questioning in the scandal.
"I am aware that my role as chairman could become a lightning rod for BSkyB, and I believe that my resignation will help to ensure that there is no false conflation with events at a separate organization," said Murdoch, 39, younger son of News Corp. Chairman Rupert Murdoch.
Tuesday's announcement was just the latest in a string of setbacks for James Murdoch, who has been shedding titles since the scandal heated up.
At the end of February, he quit as chairman of News International, the company's troubled British newspaper subsidiary, a move cast as allowing him to focus on News Corp.'s extensive television holdings. He has also stepped down from the boards of auctioneer Sotheby's and pharmaceutical firm GlaxoSmithKline PLC.
Nicholas Ferguson, formerly deputy chairman, moved up to replace the younger Murdoch as chairman at BSkyB. Tom Mockridge, who recently replaced James Murdoch at the helm of News International, gained a new title of deputy chairman of BSkyB.
James Murdoch retains his roles as deputy chief operating officer of News Corp. and chairman and CEO of the company's international division. He also remains on the BSkyB board as a non-executive member.
"James Murdoch is a very good TV man. I think people there will regret his passing," said Paul Connew, a media consultant and former tabloid editor. "The bigger question it raises is, where does this leave News Corp. in relation to BSkyB?"
The phone-hacking scandal has already effectively killed a bid by News Corp. to take full control of BSkyB and raised questions about the Murdoch empire's fitness to control the satellite broadcaster through the 39 percent share it already holds.
The junior Murdoch's resignation comes a month after Britain's communications regulator, Ofcom, said that it was monitoring the hacking and bribery investigation to be sure that BSkyB was "fit and proper" to hold a broadcasting license.
The "fit and proper" test looks at the conduct of individuals who control and manage the company.
James Murdoch's resignation could either pave the way for News Corp. to divest BSkyB or take another run at taking full control of it, said Todd Juenger, a New York-based media company analyst with Sanford C. Bernstein & Co.