Murdoch Shake-Up: Fox Employees Caught Off Guard by CNBC Leak

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Rupert Murdoch

The media mogul is entrusting the future of his empire, including 20th Century Fox, to sons James and Lachlan.

Early Thursday, CNBC reported that Rupert Murdoch's family friendly succession plan is finally underway, putting his sons firmly in control of 21st Century Fox, parent company of 20th Century Fox.

The CNBC story wasn't a planned leak, and caught executives and employees on the Fox lot in Los Angeles off guard, several insiders told The Hollywood Reporter. Everyone has known of the succession plan for more than a year, but this makes it real and gives them new bosses who are unproven at overseeing a Hollywood studio.

"We all knew it was coming, but it felt rushed," says an insider with close ties to the studio.

Under the plan, the 84-year-old Australian media mogul will step down from the CEO post at 21st Century Fox and bequeath the top job to James Murdoch, 42, who made a dazzling corporate comeback in surviving Britain's hacking scandal. Rupert Murdoch will continue to serve as executive chairman of Fox, while his other son, Lachlan Murdoch, 43, will be promoted to executive co-chairman.

Sources say that 21st Century Fox hadn't planned to announce the changes, including when they will take effect, until an earnings call in early August.

By early Thursday afternoon, there was still no official communication from 21st Century Fox confirming the news to its employees, although links to various stories were uploaded to the company's intranet. It's possible 21st Century Fox can't make any statement until after a board vote next week, according to another source.

In the 30 years that Murdoch has owned 20th Century Fox, it hasn't been uncommon for him to place personal calls to division heads with a question about marketing or distribution, for example, inspiring loyalty and stability among rank-and-file executives. Now, the studio is facing a regime change. (Sources didn't immediately know whether he logged calls to top executives at the studio following the CNBC break.)

As part of the shake-up, 21st Century Fox COO Chase Carey — to whom 20th Century Fox Film chairman-CEO Jim Gianopulos reports — will step down and serve in an advisory role until his contract expires in mid-2016. When Carey leaves, Gianopulos will likely report to James Murdoch, a significant change, says an insider. Co-chairman Stacey Snider, who was hand-picked by Rupert Murdoch, reports to Gianopulos.

On the TV side of the aisle, Peter Rice, chairman-CEO of Fox Networks Groups, has reported to James Murdoch since Murdoch was promoted to co-COO alongside Carey in March 2014 as part of the succession plan. (Rice started out on the film side running Fox Searchlight.)

It was long assumed that Rice, who is English and a Murdoch family friend, would step into Carey's role as COO, but at least one source says that won't happen right away because of the troubles at Fox Broadcasting, where Rice, alongside Fox Television Group co-chairmen Gary Newman and Dana Walden, are working hard to turn things around. Walden and Newman are expected to continue to report to Rice.

James and Lachlan Murdoch have certainly been spending more time on the Fox lot this past year and have both bought homes in Los Angeles (the former purchased his father's estate above Beverly Hills for $30 million). James Murdoch will remain based in New York, while Lachlan Murdoch will relocate to Los Angeles from Australia.

"Rupert has been very quiet lately, while James and Lachlan have been much more involved," says one source. "But both need to get to know people at the studio. If you're not Jim, Stacey, Peter, Gary or Dana, they don't know you."

Adds another source: "Rupert is the one who built this studio into what it is today. James is a very smart guy and he's worked under his father for a very long time."

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