Sources close to Murdoch, who is also chief executive of News Corp in Europe and Asia, said Cable’s demotion was the “best Christmas present he could have wished for”.
Cable’s responsibilities for media, broadcasting and telecoms were handed to another cabinet minister, after he claimed to have declared war on media mogul Rupert Murdoch.
Referring to his power to block News Corp’s proposed takeover of BSkyB, Cable told undercover reporters: “I have declared war on Mr Murdoch and I think we’re going to win.”
As business secretary, Cable was supposed to decide whether News Corp’s proposed buyout of BSkyB would damage media plurality in Britain, although that job will now go to culture secretary Jeremy Hunt.
Although there was relief within News Corp at Cable’s demotion yesterday, senior insiders said the firm was considering mounting a legal challenge against his decision to refer the deal to media watchdog Ofcom on the grounds of public interest.
Earlier in the day, News Corp said it was “shocked and dismayed” by Cable’s comments.
Cable was also recorded saying his departure from government would cause the coalition government to implode.
“I have a nuclear option; it’s like fighting a war… If they push me too far then I can walk out and bring the government down and they know that.”
In the event, Cable’s claims proved more credible than many thought. Although David Cameron said his comments about News Corp were “unacceptable and inappropriate”, he stopped short of sacking him or moving him to another cabinet job.
But John Denham, the shadow business secretary, told City A.M. that Cable was a “complete lame duck”.
He added: “He doesn’t have the confidence of the Prime Minister and key decisions have been taken away.
“They’re keeping him for political cover, not for anything he brings to the job.
“If he were a minister in any other government he would have been sacked.” MORE: P2, P3, P5