Tony Ball, chief executive of satellite broadcaster BSkyB, is to quit his post amid speculation he will be replaced by Rupert Murdoch's son James.
Mr Ball will continue to work for BSkyB as a consultant
Mr Ball, who has been in charge since June 1999, has been credited with returning BSkyB to profit and increasing subscriber numbers.
He also oversaw the transition from analogue to digital services and cemented BSkyB's lead in the UK's pay TV market.
In a statement, BSkyB said Mr Ball would continue as chief executive "until a successor is appointed".
But, it added, that was likely to happen "well before" his current contract ends on 31 May next year.
BSkyB chairman Rupert Murdoch, who owns 34% of the company, said Mr Ball had shown himself to be "one of the outstanding businessmen in Britain".
"Under his leadership Sky has successfully brought digital TV to millions of British homes.
"The company now stands ready to reap the rewards of its investments," he said in a statement.
A nominations committee, headed by Lord St John of Fawsley, has been appointed to find Mr Ball's successor.
But many observers believe Rupert Murdoch has already chosen its heir apparent.
"James Murdoch looks like the odds-on favourite," said SG Securities analyst Anthony de Larrinaga.
James Murdoch, who is already on BSkyB's board, is being groomed to run News Corporation's broadcasting interests, while his brother Lachlan learns the publishing side of the business, said Paul Richards, of Numis Securities.
But, Mr Richards added, Rupert Murdoch may be forced to step down as BSkyB chairman as the price for his youngest son becoming chief executive, to allay investor fears about corporate governance.
Although some investors were concerned about James Murdoch's relative lack of experience, he would be inheriting a company in very good health.
BSkyB had an "unassailable market position" in pay TV services, Mr Richards said, and very strong prospects going forward.
Mr Ball had also "assembled a very strong management team around him," he added.
Mr Ball will continue to work as a consultant for Mr Murdoch's News Corporation "across all of our television platforms" until the end of May 2004, the company said.
Mr Ball said he had enjoyed his time at Sky "enormously", and was "very proud of the achievements
of the whole team".
[Mr Ball] courted controversy last month by suggesting the BBC should auction off its most successful programmes to commercial rivals
"I leave with many happy memories and a firm belief that the
company is now well positioned to continue to deliver on its operational and
financial targets," he said in a statement.
Mr Ball's basic salary of £762,000 was supplemented in the last financial year by a £1.5m bonus.
No details of any pay-off were given.
Under Mr Ball's stewardship, BSkyB subscriber numbers have doubled to almost seven million, with revenues doubling to £3.19bn.
He courted controversy last month by suggesting the BBC should auction off its most successful programmes to commercial rivals, to clear room in the schedules and raise money for investment.
News of his departure had been widely expected in the City. BSkyB shares were up 3% at 639 pence in afternoon trade.
The stock has fallen from about 660p since speculation about James Murdoch taking over from Mr Ball first surfaced this month.
The 30-year-old famously dropped out of Harvard to found the hip-hop record label Rawkus before returning to the family business.
He ran News Corporation's internet units until he became chief executive of Mr Murdoch's Asian satellite broadcaster, Star TV, in 2000.