Troubled times for a global dynasty

News Corporation, the global enterprise controlled by Rupert Murdoch, has a history of living by its own rules and operating beyond consequence. That ended last week.

Murdoch, long a spectral presence who made his plays on a chess board of his own making, was brought low before a committee of the British Parliament composed of people he could not have been bothered with three weeks ago.

He is very sorry. Sorry that one of his tabloids hacked into the voice mail of a 13-year-old murder victim. Sorry that the scandal threatens to derail his plans of succession. And sorry to find himself suddenly in the public stockade. Is he sorry that he and his employees created a culture and a business where all that seemed cricket? Probably not so much.

His family and the board of his company are sorry as well. The protective instincts of the family were on display last week.

His son, James, sought to leap in front of every hard question. His wife, Wendi, inserted herself into the fray when someone tried to shove a shaving-cream pie at her husband.

Rupert has his own protective streak when it comes to his family. But what his sons and daughters could soon find out is that if Murdoch is forced to choose between the family and the company he has built, he will choose News Corp.

"Rupert may end up having to make a choice between his son and the company, which is fairly biblical," said a friend of the family who works in the media business and who declined to be identified.

James Murdoch is done. He and his father both know that. His testimony curdled as he emitted it, and within two days a couple of former News Corp executives publicly challenged it. The hooks are still in him, as the British Prime Minister, David Cameron, made clear when he said James still had "questions to answer".

Oddly, News Corp's stock began to rise during the hearings as Rupert Murdoch testified. But it was less about his performance than about the clear message that emerged: an era had ended.

While the family reign seems certain to fracture, News Corp's own fortunes are less predictable. A report by the analyst Michael Nathanson, of Nomura Capital Investments, nicely captured the moment. The market does not care if you have done bad things; it cares when you get caught.

"While we remain disappointed by the actions of a muckraking newspaper and frustrated that perhaps the least valuable asset in the News Corp portfolio could cause this much value destruction," Nathanson wrote, "we continue to believe that the risk/reward for News Corp investors remains positive."

Nathanson said later that News Corp had been cornered into doing the right thing. The fact that the company moved swiftly to buy back its stock - approving $US5 billion ($4.5 billion) of the oodles of cash the company has on hand - calmed the markets, if not the troubled waters that the company now finds itself in.

"The loss of the BSkyB deal is significant and not good for the company but, in the long term, I think this will force the company to take a hard look at where they are putting capital," he said.

Historically, Murdoch has used the digital and broadcast parts of his empire to make money, and the more quotidian assets - newspapers, family influence and raw political power - to create running room for the rest. That was fine as far as it went.

The hacking scandal changed the dynamics. Suddenly Murdoch's fetish for newspapers looked like an ill-advised indulgence. News Corp's prized relationships with 10 Downing Street and Scotland Yard became liabilities, with all of the cosiness on view for inspection.

Significantly, Murdoch has lost the ability to punish.

His support structure is badly damaged as well. To make room for his children, he pushed out Peter Chernin, the former chief executive, and Gary Ginsberg, the former communications executive. Lachlan Murdoch flew in from Australia to back up his father but he will not choose this moment to show up on his father's behalf.

Elisabeth may end up in the middle of things but why would she choose to grab the baton when it is on fire? The best case is that Chase Carey, the deputy chairman, president and chief operating officer, will grab the tiller until things calm down.

"The board has talked and will continue to talk about Rupert stepping aside as CEO and serving as chairman with Chase Carey becoming chief executive, but Rupert would never do that at the point of gun," said a person who is close to both Murdoch and the board.

"Not in a million years. Not in 2 million years. Six months, nine months or a year from now, that may happen, but it will not happen in the current circumstances."