Murdoch resolves succession drama - a win for Lachlan; a loss for public interest journalism

Rupert Murdoch has succeeded^[1] in securing his vision for the future of News Corporation, the global media empire he has always thought of as his family business.

To achieve this, he has torn apart his family. He has also ensured his media outlets, especially Fox News, remain committed to his hard right-wing views.

With hindsight, this deal was inevitable. The 94-year-old mogul had just one remaining job to do as chairman emeritus of News Corp: to ensure that when he dies, the company he built and moulded remains in his image.

This announcement says he has found a way, which may give him some comfort but is profoundly disappointing to anyone who cares about public interest journalism.

There’s no longer any prospect of his children from his first and second marriages, Prudence, Elisabeth and James, who are now known as the “departing beneficiaries”, staging a coup after his death to wrest control from Rupert’s chosen successor and elder son Lachlan, who has headed News Corporation and Fox Corporation since Murdoch stepped aside in 2023.

Lachlan has taken a lesson from Rupert’s dealmaking playbook. He has thrown money at the problem by paying his three siblings more than he had previously offered for their respective shares. According to The New York Times^[2], the three siblings will receive US$1.1 billion (A$1.7 billion) each for all their shares in the company.

Their agreement brings an end to the bitter battle^[3] the three siblings fought with their father and brother over the latter’s infamous attempt to revoke a seemingly irrevocable trust created at the end of Murdoch’s longest marriage, of 32 years, to Anna Murdoch (now Anna Maria dePeyster).

She had hated^[4] how her husband pitted their children against one another in the battle for succession, so she negotiated an agreement that would give each of the four children from the first two marriages a vote in the family trust. It also ensured Rupert retained enough votes in the trust so he could not be outvoted by his four (voting) children.

When Rupert anointed Lachlan his successor, upsetting the others, speculation was aired that when Rupert died, and his votes with him, the three siblings might oust Lachlan as chief executive and take control of the company. Worse, in Rupert’s eyes, they might change the editorial direction of the company, in particular Fox News.

That is what has changed. The family trust has also been re-engineered with an increased lifespan from 2030 to 2050, and folds in Murdoch’s daughters from his third marriage, to Wendi Deng – Grace and Chloe. This shores up the trust so they can’t sell out and dilute Lachlan’s shareholding.

Under the deal, a new company called Holdco, owned by Lachlan, Grace and Chloe, will own all the remaining shares of News Corp and Fox Corporation that previously had been held by the Murdoch family trust. The departing beneficiaries will sell their personal holdings in News Corp and Fox so none of them has any interest in either business. What’s more, they’ve agreed to a standstill clause that prevents them or their affiliates buying back in.

In 2019 alone, the company News Corporation made a reported US$71 billion (A$107 billion) from the sale of its entertainment assets to Disney. After that sale, the children were each given^[5] US$2 billion (just over A$3 billion).

Having already been referred to^[6] in the litigation as “white, privileged, multi billionaire trust-fund babies”, the three departing siblings have been made even wealthier by this agreement.

It was announced in a company press release on September 8 with an uncharacteristically sedate headline^[7]: “News Corp announces resolution of Murdoch family trust matter”.

It appears the decision to settle was in part driven by signals emanating from the probate court in Reno, which last year ruled in favour of Prudence, Elisabeth and James. Recently, however, the presiding appellate judge, Lynne Jones, appeared supportive of Rupert and Lachlan, saying “Who knows better than Rupert Murdoch the strengths and weaknesses of his family and his children?”

This may have weakened the three children’s bargaining power and forced them to accept some sort of buyout.

James may have contributed to this by granting an interview to The Atlantic which was published in February, in which he was highly critical of his father and gave away inside information from the probate hearings. Rupert and Lachlan’s lawyers pushed for James to be punished, a move that appeared to have support from the Reno court.

Clearly it was wishful thinking to believe Prudence, Elisabeth and James would stage a takeover and restore sensible programming to the Murdoch media. But it remains an irony, in a case replete with them, that it was James’ candid comments in an insightful 13,000-word profile casting much-needed light on a notoriously secretive family, which weakened the three siblings’ bargaining position.

Those comments helped ensure Rupert, and ultimately Lachlan, will be able to continue running their media empire as they see fit. Initially, that will mean little change, which is of course the problem. If News mastheads and Fox News continue as they have, we can look forward to more coverage denying the need to urgently act on climate change, more distortion of important issues and more support for assaults on democracy by the Trump administration. This is the kind of content that prompted James, if not all of the departing beneficiaries, to protest in the first place.

At least now we know the answer to this question: What choice would three multi billionaires make if they were offered another billion dollars each or the opportunity to transform a global media business for the better?

References

1. ^{^} has succeeded (www.theage.com.au)
2. ^{^} The New York Times (www.nytimes.com)
3. ^{^} bitter battle (theconversation.com)
4. ^{^} had hated (www.nytimes.com)
5. ^{^} were each given (www.npr.org)
6. ^{^} referred to (www.abc.net.au)
7. ^{^} an uncharacteristically sedate headline (newscorp.com)