Rupert Murdoch’s children saw a family counseling psychologist as recently as this past February to help them sort through their feelings about who should succeed their father as CEO of News Corp, Vanity Fair contributing editor Sarah Ellison reports in the magazine’s December issue. They agreed that James, who’s Deputy COO, should be first in line. But their opinions changed after the News Of The World phone-hacking scandal broke open in July. Elisabeth Murdoch, at Rupert’s suggestion, urged James to step aside before he testified that month at a UK Parliamentary hearing. Rupert changed his mind after a sleepless night. As talk grew about a possible arrest and jail time, Ellison reveals that Rupert’s estranged second wife Anna flew to London and urged her ex-husband to publicly back his son.

As for the NOTW case itself, Ellison supports an important claim by two of James’ chief opponents – ex-News International executives Tom Crone and Colin Myler — over whether they told him in 2008 that the scandal was broader than the company had acknowledged. Murdoch, who oversaw News International, says he believed that the lawbreaking was limited to a single “rogue” reporter as he authorized a $1.4M settlement with a hacking victim on the condition that he keep quiet about the matter. But Crone and Myler say Murdoch knew about an email in the case that showed a second reporter had been involved — suggesting that Murdoch’s settlement was a form of hush money. Murdoch testified in July that that they had not shown him the email. But Ellison says an email shows that before the settlement the executives “had agreed to talk to James about a ‘transcript of voice-mail messages’ that was devastating to News Corp’s case.” Yesterday, the Parliamentary committee investigating the scandal released letters that appear to back Crone and Myler.  Ellison says that the message between Crone and Myler “adds credence to the notion that the men did tell Murdoch what they claim they told him.” Whatever the outcome, “James will forever be linked to phone hacking,” she writes. He will return to Parliament to answer questions about the matter next Thursday.