Image copyright Getty Images

Rupert Murdoch is preparing to step down as chief executive of 21st Century Fox, sources close to the company say.

His son James will take over the role, while his other son Lachlan will become executive co-chairman.

The 84-year-old Rupert Murdoch will remain as executive chairman at the company and still have the final say in matters.

The company said the matter of succession would be discussed at the next board meeting.

It would not comment further.

James Murdoch, 42, has been acting as co-chief operating officer at Fox after leaving his job running BSkyB. His new role will entail running the day-to-day business of Fox.

As executive co-chairman, Lachlan will effectively be James' boss.

Image copyright Getty Images Image caption Lachlan, Rupert and James Murdoch

Analysis: Robert Peston, BBC economics editor

What do these changes all mean?

First and foremost it does not mean Rupert Murdoch is bowing out.

He, too, will be an executive co-chairman.

And I am told that he will continue to be the most powerful individual in the sprawling entertainment empire.

But it will represent the latest stage in the rehabilitation of James Murdoch, whose reputation was damaged by his stint as head of News Corporation in Europe and Asia when the News-of-the-World phone hacking scandal broke.

However, it also shows that Lachlan will probably end up as the most powerful of the Murdochs - as and when Rupert Murdoch stands down - which, according to those close to him, is as remote a prospect as ever.

Chief operating officer, Chase Carey, will step down and take on a role as adviser to the company.

Entertainment firm 21st Century Fox was created two years ago after being split up from Murdoch's less profitable media firm, Newscorp.

It owns the Fox Hollywood studios and television businesses.

In the last quarter, 21st Century Fox reported net income of $975m (£629m), while News Corp, which owns the Wall Street Journal, The Times and The Sun, made a profit of $23m (£15m).