Rupert Murdoch has board backing

News Corp independent directors are fully behind Rupert Murdoch, a board member told Reuters on Monday, as his iron grip on his vast media empire came under question because of the hacking scandal that already has consumed his London newspaper company.

His son James Murdoch's position as chairman of British Sky Broadcasting was thrown into doubt on Monday after minority investors called for a corporate governance health check of its board. Added to this was increasing speculation that Rupert himself may step aside from the CEO role at News Corp while retaining the chairman's job as the company seeks to contain the crisis.

There has been talk for the past few days that Chase Carey could take over from Rupert Murdoch, and Bloomberg reported that there had been discussions on Monday by independent directors on whether to replace Murdoch. That was denied by a board member who said the independent directors are fully behind the 80-year-old Australian-born media magnate.

The board member and another person familiar with the company's plans also denied a Bloomberg report that suggested the board is considering replacing Murdoch depending on his performance before the British Parliament committee on Tuesday. The report said the News Corp board met on Monday to discuss replacing Murdoch but both people denied this.

There was no meeting of independent directors. This board totally supports the top management. We're united behind him, the board member said.

The second person said the board has had a succession plan in place for some time and it regularly reevaluates those plans. Suggestions that a plan is being accelerated or implemented are inaccurate, the person said.

Carey, a 23-year News Corp veteran and long-time lieutenant of Rupert Murdoch, is favored by investors in the United States to take control of the business if Murdoch, 80, stands down.

Until a phone hacking scandal at News Corp's UK papers started escalating over the past three weeks, James Murdoch, who is deputy chief operating officer, had been seen as his father's successor.

The growing uncertainty around News Corp and its future has hurt its share price and the company had lost more than $6 billion in market capitalization value since the UK phone hacking issue erupted on July 4.

But signs that investors might starting to recover a little confidence in the company after dropping more than 17 percent in the US.

The stock rose 2.8 percent in mid morning trade in Australia after rising as much as 3.7 percent earlier.

I think they're doing everything they can to try and dampen this situation down, said Burrell & Co dealer, Jamie Elgar.

But looking at the press in the UK, this scandal is not dying down at all

Reuters is a competitor of Dow Jones Newswires, the financial news agency that News Corp acquired along with the Wall Street Journal in 2007.

(Reporting by Yinka Adegoke, additional reporting by Megan Davies; Editing by Gary Hill)