News Corporation confirmed this afternoon that Murdoch, the son of Rupert Murdoch, will no longer chair the board at the group that includes companies publishing The Times, The Sunday Times and The Sun.
He has been widely criticised for his handling of the phone hacking scandal that led to the closure of the News of the World last year, including question marks over how much he knew about the scale of criminal behaviour at the UK newspaper publisher.
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Last November, Murdoch quit the board of two newspaper publishers - News Group Newspapers (NGN), which publishes The Sun, and Times Newspapers Limited (TNL), which publishes The Times and The Sunday Times, along with the board of drugs giant GlaxoSmithKline.
However, he remains chairman of pay-TV giant Sky, and will also continue as deputy chief operating officer of News International parent group News Corporation.
Tom Mockridge, the former Sky Italia boss who joined News International as chief executive officer following the resignation of Rebekah Brooks, will continue in his post, but now report directly to News Corporation president and chief operating officer Chase Carey.
"With the successful launch of The Sun on Sunday and new business practices in place across all titles, News International is now in a strong position to build on its successes in the future.
"As deputy chief operating officer, I look forward to expanding my commitment to News Corporation's international television businesses and other key initiatives across the Company."
Rupert Murdoch, the chief executive and chairman of News Corporation, said that his son will now focus on expanding the company's pay-TV businesses.
"We are all grateful for James's leadership at News International and across Europe and Asia, where he has made lasting contributions to the group's strategy in paid digital content and its efforts to improve and enhance governance programmes," he said.
"He has demonstrated leadership and continues to create great value at Star TV, Sky Deutschland, Sky Italia, and BSkyB.
"Now that he has moved to New York, James will continue to assume a variety of essential corporate leadership mandates, with particular focus on important pay-TV businesses and broader international operations."