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Rupert Murdoch talks about anointed son James

The report that Rupert Murdoch is stepping down as CEO of 21st Century Fox and handing the reins to his younger son, James, is big news in the media world. It’s also family planning as expected—and as the 84-year-old Australian mogul laid out to Fortune in an exclusive interview a year ago.

In the only wide-ranging interview with the press that Rupert Murdoch has done since 2009, he had the following to say about James, 42, whose reputation had been tarred by Britain’s phone hacking scandal while he was overseeing the family’s British newspaper assets: “Everyone talks about hacking in London. That all happened long before James took charge,” Murdoch told Fortune, who then praised his son’s management skills. “He took STAR television and [made it] the No. 1 broadcaster in India, with about eight channels, and is making a big difference to that country. And then he went to BSkyB, where people said, ‘Oh, that must be nepotism.’

“But in fact, he went through a lot of tests,” Murdoch said about James. “And when we took him out of his day-to-day role there and made him chairman, the same shareholders complained and said we can’t lose him. He completely changed BSkyB and lifted the bar there in every way—and added huge value to News Corp.”

James Murdoch, who was interviewed by Fortune‘s Adam Lashinsky in 2013, emerged as his father’s favored son in 2005, when elder brother Lachlan quit News Corp. over clashes with senior management and returned to Australia to build his own empire. After Lachlan’s exit, James served his father loyally and, over the past decade, grew in his favor. For all his bluster, Rupert Murdoch admitted to Fortune that he felt dismayed by his frayed family relationships—including tensions with his daughter Liz, after she expressed public disapproval about her father’s handling of the hacking scandal. It was at Allen & Co’s 2013 media powwow in Sun Valley, Idaho that Murdoch’s frayed family ties were mended. There, over a meal, Murdoch told Fortune, “Lachlan and James and I had a very serious talk about how we can work as a team.”

Last year, Rupert Murdoch named Lachlan, 43, nonexecutive chairman of News Corp. and 21st Century Fox, the two publicly traded family-controlled businesses. Now Lachlan is taking on a new title: co-executive chairman of 21st Century Fox, and he will reportedly move to Los Angeles from Australia. This shift and James’ new CEO role tightens the grip of family members, rather than outside professional managers, on the Murdoch empire’s future. Chase Carey, Rupert Murdoch’s close lieutenant since 2009, is stepping down as COO of 21st Century Fox but is expected to remain as an advisor to Rupert Murdoch at least until his contract expires June 30, 2016.

News Corp. and 21st Century Fox existed as one company until 2013, when Rupert Murdoch split the business into two publicly traded corporations. News Corp. (NWS) owns the owns the Wall Street Journal, the New York Post, the Times of London, the leading newspapers in Australia, and book publisher HarperCollins. 21st Century Fox (FOXA) holds a global array of entertainment assets: the Fox broadcast network, cable channels such as Fox News and ESPN rival Fox Sports 1, the 20th Century Fox movie studio, and satellite broadcasting operations across Europe, Asia, and the Middle East.

Correction: An earlier version of this story said that Chase Carey would likely leave 21st Century Fox by the end of the year.