It's tempting to look around James Murdoch's office at STAR's Hong Kong headquarters and see evidence of a transformation, of a young man who has left teen rebelliousness behind and joined the corporate world, subjugating his personality to his father's corporate vision. Though not the biggest office at star, it is sizeable, with a bank of televisions on one wall and a window overlooking the harbor. The nondescript desk is uncluttered, and the shelves are weighted down with books on media and technology.
Traces of the playful kid still linger: as well as a photo of James with former President George H.W. Bush, there are vintage comics and a framed 1977 Time cover of Rupert Murdoch towering over Manhattan, with the headline: aussie press lord terrifies gotham. James also admits to keeping a Dewback, a Star Wars creature, in the office, "still in the box because I can't decide - they are always more valuable in the box. But I kind of want to take it out." But the scraggly hair and Buddy Holly glasses are gone: today James is wearing slacks, a dress shirt with the sleeves rolled up, and glasses with stylish wire frames.
It's unlikely that anyone else with his track record - Harvard dropout turned independent producer of rap-metal records - could have snagged the top post at a $2.5 billion company that beams its signal in eight languages to 53 countries ("I don't think TV gets harder than star," says chief programmer Steve Askew). Yet two years ago, just as giants like AOL Time Warner, Sony and Disney came rushing in, Rupert Murdoch chose his youngest son as his lieutenant in Asia. Over the past few months, James has given Time a glimpse of himself on the job, in Hong Kong and in India. He comes across as bright, confident, driven and irreverent. By turns guarded (especially about that pesky succession question) and candid, humble and sarcastic, he's a paradoxical character. He likes to cast his upbringing and his family as "normal," but to almost everyone else, his life and his station are extraordinary. To date, star has thrived under his watch, but many questions remain, among them: How does a 29-year-old conquer multimillion-dollar markets in India and China while securing a future in the Murdoch empire? What has James Murdoch learned? And what will it mean for Asia?
In a London restaurant, just before Christmas 1999, James got a phone call from his father. They talked for a while, caught up. Then the senior Murdoch said: "Think about China." Days later, when both were in New York, James went to see his father. "Do you like Chinese food?" he was asked. "And that was kind of it," James recalls. "It had been decided."
Murdoch Sr. had bought star in 1995 for $950 million. A perpetual money loser, it initially looked like News Corp.'s albatross. star has no shortage of viewers - it beams its satellite signal to 300 million people in over 50 countries from Saudi Arabia to Indonesia - yet gets virtually no revenue from subscribers. Instead, it is heavily dependent on advertising. But star was a pioneer in these vast new markets. And it was central to Murdoch's vision of constructing a global satellite network - a dream foiled recently by his failed bid for U.S. broadcaster DirecTV.
After leaving college, James had shied away from News Corp., founding Rawkus, a record company that specialized in rap-metal bands. He also had a brief dalliance with cartooning, producing a strip whose antihero, "Albrecht the Hun," preferred literature to raping and pillaging. But James eventually set aside his artistic impulses and joined the family fold. He first took over News Corp.'s small but troubled music division in 1996. Next, with investors clamoring for Internet plays, he was put in charge of News' Web operations. Neither venture produced the kinds of results that launch careers. The severely pared-down music division is now on the verge of being sold, and News recently took a $300 million write-off on dotcom investments that James had championed.
Besides the short résumé, James had no experience in TV or in Asia. But his father wasn't looking for an expert: he wanted a loyal and trusted emissary. In Asia, where family connections carry tremendous weight, someone with the Murdoch pedigree makes an ideal ambassador. Besides, Rupert already had somebody who knew about TV and Asia: himself. "You put someone in charge without any practical experience running a large business and you'd think it would be a prescription for disaster," says a senior News executive in New York. "But James came in listening very intently to his father."
The skeptics weighed in early. ("As a young corporate executive, he has a long way to go. He hasn't become important yet," huffs a senior Chinese media figure.) James says he ignores them: "People say, 'He's a Murdoch. He doesn't know what he's doing.' People have always said that. But we deal with it. My brother [Lachlan] deals with it, my sister [Elisabeth] deals with it." He talks often about how lucky he's been, and about the responsibilities that come with good fortune. "I'll probably have my head on a platter if I don't deliver," he says. "But it's a tremendous opportunity." And what is he expected to deliver for his $1 million salary? Ratings. Advertisers. Partnerships. Diplomatic breakthroughs. Profits.
Nearly two years on, he says "my credentials are in our results." In that regard, he can be forgiven a boast or two. star's broadcast operations are profitable in every market except China. Vivek Couto, an analyst with Media Partners Asia, says star has cost News Corp. close to $650 million since 1995, but losses are shrinking and break-even could come in 2003. star's programming is less and less Hollywood; instead it is made in and for its target markets. That strategy has been particularly successful in India, where, after lagging for years behind Zee-TV, star is pulling in record advertising revenues with Hindi-language hits like Who Wants to Be a Millionaire and slickly produced soap operas. It has also invested in local FM radio and Tamil-language TV.
James is eager to share the credit with his seasoned managers. Kunal Dasgupta, ceo of Sony TV, star's other Indian rival, praises James' willingness to stand back and let capable executives perform. "James didn't screw it up by trying to be different or impose himself," he says. James also acknowledges his debt to his father - "The Boss," he calls him - with whom he speaks almost daily: "Look, I talk to him as much as I can, right? He's great at all this."
But in the turbulent world of Asian broadcasting, James is proving himself a smart tactician in his own right. His biggest battle so far has been against India's "cable wallahs," who wire subscribers to the network and then pocket most of the fees. (U.S. cable broadcasters typically receive 35% to 40% of subscriber fees collected by cable operators; last year star collected about 6% in India, 12-14% in Taiwan, and almost nothing in China.) Breaking the cable wallahs' hold - if necessary by cutting off their connections before popular broadcasts like cricket matches - is one of James' top priorities. "Because of our scale, we've got the opportunity to decide how this market will develop for everyone to be a catalyst," he says.
Another battle is looming against AOL Time Warner, parent of this magazine, which is making a big play for viewers in India and China. Last October, aol-owned cetv edged out star to become the first foreign broadcaster to win the right to provide cable programming on the mainland; in India, aol is in talks with star's rival Zee-TV.
The Murdoch team has already made some countermoves. In China, star has sought permission to launch a Mandarin entertainment channel, star Gold, that would compete with both cetv and its own partner, Phoenix. In India, Zee is looking for a 50% partner; while it is distracted, James hopes to steal market share.
About one battle James begs not to be questioned. But when the issue of the Murdoch succession is broached, he confesses that he doesn't see family dynasty as such an old-fashioned notion after all. Neither, apparently, does his 70-year-old father, who has openly encouraged the contest for the top job at the $35 billion company he built. For years, Elisabeth and Lachlan vied openly for his approval, with James cast as a dark horse candidate. Then Elisabeth bowed out, leaving Lachlan in the lead.
Lately, though, James, once termed the outsider, is showing more signs of being his father's son. He may not yet be ruthless, as his father is often called, but he's moved aggressively in Asia and is slowly mastering its complex overlays of business and politics. Asked point blank if Lachlan will be the Murdoch to inherit the throne, James is cagey, pointing out that Rupert has said that if something happens to him in the near future, current ceo Peter Chernin will take over as chairman. "And after that," James adds, "who knows?"