This is one of the clearest indications yet that the News Corp Deputy COO — and Rupert Murdoch’s son – has lost his once formidable clout at the media giant. “I am aware that my role as Chairman could become a lightning rod for BSkyB and I believe that my resignation will help to ensure that there is no false conflation with events at a separate organisation,” James said — referring to his involvement in News Corp’s UK phone hacking and bribery scandals. Rupert and COO Chase Carey kept their game face on in a statement about the news: “We are grateful for James Murdoch’s successful leadership of BSkyB.  He has played a major role in propelling the company into the market-leading position it enjoys today – and in the process has been instrumental in creating substantial value for News Corporation shareholders.” They added that they look forward to ”BSkyB’s continued growth” under Nicholas Ferguson, who replaces James Murdoch as chairman. James will remain on the board as a non-executive director.

Word of the possibility that James might leave his powerful role at the UK pay TV service had begun to spread yesterday. News Corp owns 39.1% of BSkyB’s voting shares, which means it effectively controls the company. Rupert Murdoch hoped to buy the entire enterprise until last year when he became engulfed in the UK newspaper phone hacking and bribery scandals. Yesterday, the thinking was understood to be that James’ position as his family’s leading representative at BSkyB would become tenuous if Parliament’s Culture, Media and Sport Committee censures him for not fully investigating the hacking that went on during his tenure as the head of News Corp’s UK media arm, News International. The committee’s findings are expected shortly after Easter. A critical finding could have led regulator Ofcom to extend its investigation into whether Murdoch was a “fit and proper” person to oversee the pay TV company. Board members at BSkyB were said to be fearful that a negative report would force Murdoch to leave with a tarnished reputation. (That threat would now appear to be erased, although Ofcom is also understood to be weighing the “fit and proper” question with regard to News Corp itself.) Murdoch recently resigned as executive chairman of News International and has also stepped down from the boards of GlaxoSmithKline and Sotheby’s. At the time of his News International resignation, Murdoch, who had moved to New York, said, “I look forward to expanding my commitment to News Corporation’s international television businesses and other key initiatives across the Company.”