Michael Wolff on Fox's Shakespearean Drama as James Murdoch Grabs the Throne
For two decades, Rupert Murdoch grew a $70 billion business with two channels of power — his adult children and the lieutenants who openly heaped derision on them — that sometimes overlapped. Murdoch, in his way, even may have used his executives in a long cat-and-mouse game to help hold his progeny — at times divided even among themselves — at bay.
This story first appeared in the June 26 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
A member of his inner circle described for me the difference between a job with Rupert Murdoch and one at some other media company as "feeling the power more." Working for Murdoch, you are working for one man, famously dubbed by Andrew Neil, a former Murdoch editor, as the "Sun God."
But a key aspect of working for an enterprise with such a singular power center is resisting it, too. Many believe the Murdoch businesses have achieved their stature because of the rise of a generation of professional executives in the company, people who have been able to temper, guide and even distract the boss as well as act in his stead.
A significant part of the job of these current and past longtime executives — among them, COOs Peter Chernin and Chase Carey, CFO David DeVoe, general counsel Lon Jacobs, corporate communications director Gary Ginsberg, BSkyB head Sam Chisholm, Australia head John Hartigan, News International chief Les Hinton and Fox News' Roger Ailes — involved resisting the Murdoch children.
Murdoch, in his way, even may have used his executives in a long cat-and-mouse game to help hold his children at bay. So James' and Lachlan's ascendancy, while in one sense preordained, is, in another, a triumph over great odds.
The war between the Murdoch companies and the Murdoch children first broke out in London in the late 1990s. Murdoch was touting his daughter, Elisabeth, as his heir, and he sent her, at just 27, to work as the No. 2 to BSkyB chief and TV legend Chisholm (Chisholm called her his "intern"). In a seesawing battle for Murdoch's ear and support, Chisholm won out. Angry and frustrated with her father, who had promised her his backing, Elisabeth quit the company in 2000.
Murdoch then shifted his focus to his son Lachlan — who, out of college, had been given the job of running his father's newspaper empire in Australia. Murdoch brought Lachlan to New York as deputy chief operating officer, reporting to Chernin. It would be difficult to describe the incredulity with which company executives regarded Lachlan or the derision they openly heaped on him.
In 2005, Chernin and Ailes effectively made Murdoch choose between them and his son. He chose them. Lachlan quit and returned to Australia, though not without unleashing a petulant attack on the company in an article in New York magazine organized by his sister Elisabeth's husband, British PR man Matthew Freud. (During this period, Murdoch tried to accede to wife Wendi's demand that he give their two young children equal standing in the company with their older siblings, a move — successfully resisted by his adult children — that might have made Wendi, acting for her children, the controlling shareholder.)
After Lachlan's leave-taking, Murdoch anointed son James — who, at 31, was installed as CEO of BSkyB, after Chisholm was forced out — as heir. James became his father's key adviser during the takeover of Dow Jones in 2007. In early 2008, overriding Chernin, Murdoch appointed James CEO of News International with control of all the company's businesses outside of the U.S. (except Australia, which Murdoch reserved for Lachlan).
That spring, Chernin came to London in what James and his lieutenant Rebekah Brooks believed to be an effort to intervene in the hacking controversy that was just beginning to roil the company. As much to take the issue from Chernin as to silence the scandal, James authorized a secret settlement payment of more than 1 million pounds to one of the most vociferous hacking victims.
Before the scandal unraveled, James was able to put pressure on his father and achieve the exits of Chernin, Jacobs and Ginsberg. A public campaign even was launched against the unassailable Ailes, with brother-in-law Freud issuing a broadside attack against Ailes in The New York Times. (At Murdoch's insistence, the family then backtracked from this via other media and left Freud as its sole author — hardly fooling or mollifying Ailes.)
But then, hacking crashed down. Virtually every senior executive at the company, save only Rupert himself, held James responsible for at the very least bad management, if not high perfidy. What's more, his siblings held him responsible, too.
At this point in succession planning — an issue that occupied Murdoch's attention and worry — his executives were adamant in their opposition to further roles for his children. What's more, his four adult children — the four, including older sister Prudence, each holding one of the votes that ultimately controls the company — were bitterly divided among themselves.
Carey, who replaced Chernin as COO, seeing the Murdoch newspapers as both tainted by the hacking scandal and, too, a drag on News Corp's earnings, quietly insisted that the company split its Fox entertainment assets — the lion's share of the company — from Murdoch's beloved papers.
It was, arguably, the lowest point of Murdoch's power in his own empire. Murdoch himself largely had been relegated to the smaller newspaper company. His son James had a title at Fox but was blocked from any real responsibility (press accounts now trumpet the deals James made at the time, like his investment in Vice Media or in TrueX, but within the company, these were regarded as insignificant, make-work deals).
His daughter Elisabeth — whose company, Shine, Murdoch bought in 2011 to finally bring her back into the fold — was at odds with both Fox executives and her own family (talking to The New Yorker, in an article organized by Freud, she dissed her father and "stubborn" brother James and proclaimed her independence) and distanced herself from the company. Murdoch tried to return Lachlan as designated heir, urging him to run the newspapers, but Lachlan refused.
And yet, Murdoch's mission remained clear: to mollify his children, to take back the power that circumstances had handed Carey, to rehabilitate James, to re-engage Lachlan, to find common ground with Elisabeth, to set up the final act.
He accepted the humiliation of publicly ending his marriage to Wendi Murdoch — a move his children had been urging. He financed the most expensive trial in British history in an effort to defend his executives, including Brooks, in the hacking affair — and Brooks' exoneration effectively ended years of scandal. (The U.S. Justice Department investigation, which insiders believed might have cost the company as much as $1 billion, collapsed with it.)
Elisabeth, in a move friends understood to be influenced by the greater family detente, divorced Freud, whom Murdoch had come to loathe. He began a courtship to once again bring his daughter home to the company. In 2014, he created new titles of inevitability for his sons — James as co-COO, theoretically equal to Carey, and Lachlan as nonexecutive chairman. And he began the negotiation with Carey, who, finally, has little choice but to surrender his job to James and go into the good night of an advisory role.
During the past 20 years of the company's greatest growth, Murdoch executives have kept the Murdoch children from the company they control. But now the hour has come round, as all knew it would. And yet the story is not done. James, the new CEO, and Lachlan, executive co-chairman, have both themselves and their siblings to battle and one last, ultimate Murdoch executive to oust — the most tenacious and wily one of all.
Michael Wolff is a frequent contributor to THR and the author of The Man Who Owns the News: Inside the Secret World of Rupert Murdoch.
Murdochs by the Numbers
Television subscribers reached each day by Murdoch properties in 50 languages worldwide.
Profit at 21st Century Fox in 2014 on $31.9 billion in revenue. News Corp made $237 million on $8.57 billion in revenue.
Voting shares of 21st Century Fox and News Corp owned by the Murdoch family trust, which Rupert controls.
Amount Murdoch reportedly offered to purchase Time Warner in July before being rebuffed.
Rupert’s net worth in 2015, according to Forbes, but his wealth is tied to the stock prices of Fox and News Corp.