A decision hasn't been made and a move depends in part on Mr. Murdoch's performance before the U.K. Parliament Tuesday, said the people, who weren't authorized to speak publicly. Mr. Murdoch would remain chairman, the people said.
News Corp. executives who watched Mr. Murdoch, 80, rehearse for his appearance were concerned about how he handled questions, according to three people who weren't authorized to speak publicly. Mr. Murdoch and his son James are scheduled to discuss the company's role in the alleged phone hacking of murder victims, members of the royal family and others by the News of the World, which was closed on July 10.
"This will be a heavily reviewed performance," said Laura Martin, an analyst with Needham & Co. in Pasadena, California. "Who would have thought this could happen two weeks ago?"
Standard & Poor's said Monday it may lower the company's corporate debt rating because of risks created by the phone-hacking scandal.
Independent directors Monday weighed naming Mr. Carey CEO, according to a person close to the board. The independent directors, who didn't make a decision, discussed whether the stock market and investors would react favorably to a change, the person said.
There was no meeting Monday to elevate Mr. Carey, said a senior News Corp. executive who sought anonymity because the matter is private. Existing succession plans get re-evaluated from time to time, and any suggestion they have been accelerated or implemented are unfounded, the person said.
Board members and executives at News Corp. are concerned about Murdoch's ability to contain the fallout from the hacking scandal, the people said. It has swelled since the Guardian newspaper reported on July 4 that News of the World had hacked into the voicemail of a murdered teenager, Milly Dowler. The company's top publishing executive in the U.K., Rebekah Brooks, resigned last week as CEO of News Corp.'s U.K. newspaper unit and was arrested on July 17.
Independent directors must protect shareholders and act in their best interest, said Ms. Martin, who recommends buying News Corp. shares. Considering succession issues at this moment is "justifiable," she said.
Ms. Brooks is scheduled to give evidence to Parliament Tuesday as well.
The fallout has touched high-level politicians and police officials in Britain. Metropolitan Police Commissioner Paul Stephenson resigned over suggested police links to News Corp.'s U.K. unit and its hiring of a former journalist at News of the World as a consultant. Prime Minister David Cameron cut short a trip to Africa to prepare for a statement to Parliament on July 20.
By installing Mr. Carey, 57, as CEO, News Corp. would be relying on a trusted Murdoch deputy to help get past the hacking scandal.
Mr. Carey worked for 15 years as a senior News Corp. executive before becoming CEO of DirecTV in 2003. He returned in 2009 following the resignation of Peter Chernin as Murdoch's No. 2.
News Corp.'s independent directors, who hold nine of 16 board seats, have expressed frustration over the quality and quantity of information they've received about the scandal and concern about management's ability to handle the crisis given how slowly the company has responded, a person with knowledge of the situation said earlier.
According to News Corp.'s proxy filing, independent board member Roderick Eddington, the former CEO of British Airways, is the company's lead director. He has the responsibility to call meetings of the non-executive directors or independent directors and to serve as a liaison between the chairman and the independent board members.
"Rupert Murdoch controls the votes of the company through the Class B shares," Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, said this week in an interview. "He can just replace them if he wants. They may do something, but it will be temporary. Maybe he becomes chairman, but this is still his company and he can do what he wants. When he controls the stock, he controls the board."
Through a family trust, the Murdochs own 306.6 million shares, or 38.4%, of News Corp.'s Class B voting stock, according to the company's proxy statement. Including other family holdings, Rupert Murdoch controls 39.7% of the voting power, giving him effective control, filings show.
The value of the family's holdings has declined by almost $1 billion since the scandal erupted, according to Bloomberg data.
-- Bloomber News --