Media Headliner: Murdoch heir supplies Sky's broadband vision

James Murdoch, once the black sheep of the family, has vindicated his father's faith as the head of Sky, Alasdair Reid writes.

It has been rather easy to underestimate James Murdoch these past few years. When he was eased by "Pops" into the position of BSkyB chief executive in succession to Tony Ball back in 2003, the groans emanating from the City were almost audible right across town in the media industry's West End watering holes.

Pops (as James refers to him: he's known as plain old Rupert Murdoch to the rest of us) had clearly become a fond and foolish old man, willing to sacrifice solid business sense in his desperate determination to perpetuate a family dynasty started by his father, Keith Murdoch. This was not likely to be a story with a happy ending.

How they (both father and son) have proved us all wrong - and last week's Sky Broadband initiative caps a satisfying three years for Murdoch Junior, during which he has kept customer growth ticking over nicely (under the circumstances, given the parallel growth of Freeview), while also introducing premium products such as Sky+ and high-definition TV.

James Murdoch hailed this latest departure as a "transformational new initiative for Sky" and most observers agree - although there were clearly pockets of nervousness in the City as the share price wobbled. The transformation period will, after all, knock at least £400 million off Sky's profits before the new broadband service begins breaking even, some time in 2009 or 2010.

But, along with last year's acquisition of Easynet, it positions BSkyB as a truly convergent media company with interests straddling programming content and delivery infrastructure. It also strikingly underlines the company's brand positioning as a leader in technological innovation.

All of which is forcing everyone to rewrite the earlier chapters of the James Murdoch biography. Previously, the story was that, as the youngest child of Rupert Murdoch's marriage to his second wife, Anna, James managed to stay the corporate distance, where his elder siblings Lachlan and Elisabeth had not, largely because he was more malleable to his father's will.

Lachlan, in particular, had been groomed through the late 90s as Rupert's successor as he rose through the ranks to become the deputy chief operating officer of News Corp. But he was determined to be his own man and clashed frequently with his father, not least over the decision to relocate News Corp's headquarters from Sydney to New York. Lachlan spent decreasing amounts of time in the New York office before deciding to bow out altogether.

So if Lachlan was the heir, James, born 1 January 1973, was clearly the spare. The old version of the story casts James as something of a wastrel or a feckless dilettante, drifting in a dream world and prone to passing fads and fancies - there's a story, probably apocryphal, of him visiting Rome as a young man, clocking all the antiquities and deciding on the spot he was going to be an archaeologist.

The anecdotes about James' formative years have built over the years into a substantial mythology. For instance, his desire as a child, under his mother's influence, to become a painter; or his first summer job, aged 15, on the Sydney Mirror, where he fell asleep at a press conference and the picture was splashed across the front page of the competing Sydney Morning Herald.

Then came Harvard, where he studied visual entertainment, with a special interest in puppet theatre, but spent most of his energies producing the Harvard Lampoon satirical magazine. "More to do with drinking than journalism," Rupert growled at the time, when he dropped by to monitor the boy's progress. His spell on the title was best known for the cartoon he contributed, Albrecht the Hun.

His parents were distraught when he dropped out of Harvard in 1995, complete with surfer's bleach-blond hair, beard, grunge gear and an eyebrow stud, to launch Rawkus, a hip-hop record label. Rupert reclaimed his son by buying the label and installing him as head of News Corporation's small music division.

The new version of the James Murdoch story takes some of this basic material and puts a wholly different spin on it. Here is the classic case of a young man getting all sorts of distractions out of his system early on - and, thus cleansed, he has proved himself even more worthy of high office.

The colourful past and somewhat unconventional present (few other members of the world's business elite would number mountain biking and karate among their interests) are now presented as evidence that he is no dull corporate drone from the accountancy and business admin school of management thinking.

But his credentials as a man with a vision are now established. And perhaps we shouldn't be all that surprised that this vision embraces the internet - he was, after all, placed in charge of News Corp's digital media assets in 1997, shortly after Pops lured him back into the family circle.

We tended to forget that important part of his track record; just as some City analysts have always tended to discount his successful years as the chief executive of Star, News Corp's Asian pay-TV service, in the three years before he joined BSkyB.

And the launch of Sky Broadband proves that his vision has substance, Robert Horler, the managing director of Diffiniti, argues. The big players in the broadband market - BSkyB's direct competitors include BT, AOL, Talk Talk and Orange - will spend the next couple of years effectively buying market share, which they will become increasing successful at monetising. That, in turn, will be good news for advertisers.

Horler says: "It's going to offer a lot more choice for customers and it will fuel (the growth in penetration of) broadband. Once Sky has secured its broadband customer base, it will be offering multiple services to consumers - and it will be offering packages to advertisers across all the platforms it has. That will offer more integrated advertising opportunities, which will come to represent very good value. The trick will be to build critical mass - but, given Sky's track record and its commitments to market it heavily, I'm sure that will be achieved."

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