Elisabeth Murdoch is emerging as the strongest family contender to take over at the helm of her father's empire after reports that she had pushed for Rebekah Brooks's resignation against the wishes of her brothers James and Lachlan last week.
The revelation comes as James Murdoch, the News Corporation deputy chief operating officer and heir apparent to Rupert Murdoch until he was engulfed by the phone-hacking scandal, is facing calls to stand down as chairman of BSkyB.
Reports in the Murdoch-owned Sunday Times claimed that the family were divided over how to deal with the growing crisis last week and how to respond to the growing clamour for Brooks's resignation.
The paper reported that last Tuesday Rupert Murdoch, the News Corp chairman and chief executive, reluctantly agreed that Brooks, the former News International chief executive who resigned on Friday, should take "leave of absence" but not stand down completely. This would give her time to "clear her name" and return to the News Corp fold after a suitable period.
At that point Rupert Murdoch also reportedly decided that Les Hinton, the New York-based chief executive of Wall Street Journal publisher Dow Jones, would have to walk the plank as he too was contaminated by the phone-hacking scandal, which happened during his tenure as Brooks's predecessor.
However, tensions within the family were emerging on the strategy for Brooks as the contagion spread to the US and Elisabeth, and Murdoch's first daughter, Prudence, decided the only option was a complete severing of ties, according to the Sunday Times.
"If the aim had been to replace Brooks temporarily as chief executive, the plan was going awry and the family was divided. James and Lachlan supported the plan to give her leave of absence. Elisabeth and her half-sister Prudence – Murdoch's eldest daughter from his first marriage and a director of Times Newspaper Holdings – argued for a resignation," the Sunday Times reported.
It quoted a source saying: "Elisabeth felt the company really needed to show it was sorry if it was to start restoring its integrity."
By the end of the week, Murdoch's eldest son Lachlan, once the heir apparent and still a member of the News Corp board, had flown in from Australia and on Thursday the News Corp founder finally relented and agreed to accept Brooks's resignation.
The Sunday Times revelations will have been read as confirmation of reports late last week of tensions at the heart of the Murdoch empire.
Although dismissed as "absolute lies", Murdoch biographer Michael Wolff tweeted at the weekend that Elisabeth had been overheard saying that "James and Rebekah fucked the company" at a book launch party hosted by her husband, PR man Matthew Freud.
In a radio interview on Irish radio on Monday, Wolff said he believed Murdoch must be now face up to a very real possibility that none of his children will be considered competent to take over at the helm.
James Murdoch has seen his stock plummet because of his handling of the phone-hacking crisis and could damage his chances further if he performs poorly before MPs at the Commons culture select committee hearing on Tuesday.
He is also facing calls to stand down as chairman of BSkyB, which he successfully ran for four years as chief executive.
The company's independent directors, led by private equity investor Nick Ferguson, will take soundings from shareholders this week about James Murdoch's position. Non-executive directors hold the majority of seats on the Sky board, which has its next scheduled meeting on 28 July, the day before the company unveils what are expected to be another impressive set of full-year results.
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