So where does Rupert Murdoch go from here?

The media magnate's son Lachlan was the heir apparent. But last week he quit, and now his ageing father must work out a new future for the News Corp empire.

Rupert Murdoch sits astride a global communications behemoth more powerful than the BBC. The 74-year-old News Corporation proprietor is the 21st century's media mogul supreme, with fingers in every pie - print, television, film and the internet.

There is only one aspect of his character that harks back to traditions established by previous, print-only barons such as Lord Beaverbrook and the Astor family.

Murdoch, like them, believes in the hereditary principle. It was the former editor of the Murdoch-owned Sunday Times, Andrew Neil, who best expressed this apparently sentimental weakness in Murdoch's famously ruthless personality.

"In the end," said Neil, "picking the people to run a company on the basis of their genetic make-up is not the best way to survive."

Murdoch seemed determined to do it anyway. Three decades ago, he achieved the traditional aristocratic goal of breeding "an heir and a spare". Much of his time since has been spent setting Lachlan, now 33, and James, 32, challenges to determine which of them can best replace his father.

On Friday, Lachlan appeared to bow out of the contest. Resigning as deputy chief operating officer of News Corp, Rupert's first son revealed that he intends to spend more time with his wife, ex-Wonderbra model Sarah O'Hare, and their eight-month-old son. Lachlan will retain his seat on the News Corp board.

Rupert's response revealed no anger. He was "particularly saddened by [his] son's decision".

Lachlan responded by thanking his father for "all he has taught me in business and in life".

He added: "It is now time for me to apply those lessons to the next phase of my career."

Rupert has only himself to blame. He has been uncharacteristically indecisive about his retirement plans. Two and a half years ago, he revealed that his sons were the only executives at News Corporation that he would trust to tell him he was past it.

"I don't know what the time frame will be," he said, "but if they knock on the door and say, 'Dad, you're losing it' - which they would not shrink from - I'll go."

That seemed to confirm that Lachlan and James would have the ultimate say over the timing of their own succession. But then their father recanted.

Apparently rejuvenated by his third marriage to Wendi Deng and daily workouts in the News Corp gym, Rupert told shareholders at his company's 2003 AGM that his retirement plans had been put on hold "forever". He would have to be "carried out".

The same vacillation has infected Rupert Murdoch's assessment of Lachlan and James's relative merits.

In a 1997 interview, he said: "Currently, it is the consensus that Lachlan will take over."

But that was before the collapse in May 2001 of the Australian telecoms company One.Tel, in which Lachlan had masterminded News Corp's A$575m investment. Closure left 1400 people jobless and Lachlan was attacked for what some derided as an arrogant, "rich brat" response.

Rupert appeared to forgive him, but he gave his younger son the chance to prove he could do better.

In November 2003, James Murdoch was appointed chief executive of the British satellite broadcaster BSkyB. There was initial shareholder disquiet. James was catapulted into a job that made him the youngest ever chief executive of a FTSE 100 company, with little of the experience normally required.

At first, the concern seemed legitimate. Subscriber growth had tumbled, the share price plummeted and James did not allay fears when he revealed that his daily schedule included a telephone call to his father.

At BSkyB's 2003 AGM, the new CEO faced an inauspicious task: crushing a shareholder revolt. He survived, and Rupert's second son has proved much more effective than critics of the hereditary principle expected.

In the past 12 months, he has presided over continued growth in Sky's subscriber numbers, which remain on target to hit eight million by the end of 2005. Prior to Friday's announcement of Lachlan's resignation, James's success had prompted claims that he had replaced his older sibling in his father's succession plans.

Earlier this year, when Rupert Murdoch told a conference of American newspaper editors to embrace the internet or suffer dire consequences, James hinted that his father's conversion to new technology might be based on his advice.

So - James was in the ascendancy anyway and Lachlan's decision is little more than a recognition of reality?

That is one reasonable conclusion, but executives who have worked with Rupert Murdoch suspect that he will not take quite so sanguine a view of Lachlan's decision.

He has now seen two of his children indicate a preference for their own projects over his. His daughter Elisabeth was the first to spread her wings. After being groomed as a highly effective executive within her father's empire, she quit to try her hand at making money on her own.

She has proved an adept entrepreneur and now runs her own successful television production company, Shine.

There can be no guarantee that James will not, one day, be tempted to try the independent route himself. He has done it before. He dropped out of university to launch a hip-hop record label, Rawkus Entertainment, with a student friend. It failed and his father paid James's debts. But that was not his only break for freedom.

As a student, he contributed a rather impressive cartoon, "Albrecht the Hun", to the satirical magazine Lampoon.

Last month, Rupert Murdoch gave a reading at St Bride's Church in Fleet Street, in which he extolled the value of family and left the congregation in little doubt that he yearns to bequeath control of the empire he has built to someone of his flesh and blood.

Former News Corp insiders say this attitude has long been apparent from his failure to groom other executive talent for top jobs. As analysts ponder the future of Rupert Murdoch's businesses following Lachlan's resignation, a nagging question persists.

What if all his adult children have inherited Rupert's ferocious independence and share his desire to prove themselves against the world? Will any of them be satisfied with inheriting a business empire rather than creating one for themselves?

Cynics suggest that the most malleable offspring may prove to be Grace and Chloe, his two toddler daughters by Wendi Deng. In 20 years' time they should be ready to take control, under the careful supervision of their mother. Rupert Murdoch will only be 94.

- INDEPENDENT