Yes, of course there is a need for scale in the media business. But as news broke Nov. 6 that 21st Century Fox had held talks with Disney to sell most of the $50 billion company, here are some of the other, more immediate elements behind the prospective dismantling of the Murdoch media empire:
• The likelihood that U.K. regulators will block 21st Century Fox’s acquisition of 100 percent of Sky television.
• The ongoing struggle for dominance between Lachlan Murdoch and his brother, James.
• Developments in Saudi Arabia.
• Rupert Murdoch’s legacy.
21st Century Fox’s bid for scale has been focused on its effort to consolidate its holdings in Sky, Britain’s satellite television and broadband company, and combine it with its other European and international television holdings. This has been the vision of James Murdoch, whose father installed him in 2003 as CEO of Sky, a company 39 percent owned by Murdoch interests. James was subsequently moved by his father into the top slot running his family’s international operation and then, following the British hacking scandal, repatriated to the U.S., where in 2015, he and his brother, Lachlan, were made co-leaders of the entire company, following the spinoff of its newspaper assets, under their father.
From the beginning, the relationship between the brothers was marked by a struggle, however civil, for dominance. Lachlan, 46, was aligned with his now-87-year-old father, whose pace, many believed, was slowing. James, 44, always more forceful than his brother, saw his future, and the future of the company, in instantly growing the empire by almost 50 percent with the acquisition of Sky — as well vastly expanding his own portfolio within the company. Getting the deal done was a large gamble for James, with his father openly telling people this was James’ baby.
The company’s other efforts to grow were effectively held in check by the Sky bid, launched nearly a year ago. In some obvious sense, it was always a quixotic leap. There is continuing bad blood toward the Murdochs in British media, an often hostile political environment, all the more so with recent Tory setbacks, and a strong backlash in the U.K. over the harassment scandals at Fox News. Despite James’ continuing promotion of the deal, the smart money has come to regard the chances of its completion as remote, especially since U.K. regulators ruled Nov. 6 that the Fox News shows Hannity and Tucker Carlson Tonight breached impartiality rules.
Lachlan and his father have been curiously sanguine. Murdoch Sr. has privately told friends that maybe it’s not the time and place for the Sky deal and maybe it’s best, in this moment of terrible uncertainty for the media business, for the company to preserve its cash. James, his father has said, is too all-fired-up. Lachlan is the steadier hand.
To this background, there also is the destabilization of the House of Saud and the increasingly uncertain status of Prince Al-Waleed bin Talal, the Saudi royal family billionaire whose holdings in 21st Century Fox have long helped guarantee the Murdoch family’s control. This spring, in a royal shake-up — actively supported, if not aided, by the Murdoch-backed Trump administration — the Al-Waleed-favored faction lost out to the modernizers, with 32-year-old Mohammad bin Salman becoming heir to the throne. Over the Nov. 3 weekend, Al-Waleed, with a catchall of other princes on the wrong side of the shake-up, was arrested. In part, Al-Waleed is being held to account for what many believe is his backing of radical Islamic groups.
There are two warning flags for the Murdochs and for 21st Century Fox as a public company: that one of the key shareholders and allies might be outed as a terrorism supporter, and that they may lose his key vote.
Hence, beyond the sudden urge for scale, there may be the more immediate need for the Murdochs to raise a lot of cash to take their company private.
Rupert is focused on nothing so much as the future — even one without him. Indeed, his singular preoccupation has always been to protect his and his family’s control of his company. And it is not just 21st Century Fox. It’s also News Corp., the company that was spun off in 2013, with all his beloved newspaper holdings. Without Rupert himself, and without the support of his entertainment assets, those newspapers, in a stand-alone company, are surely doomed. They could not be reabsorbed into 21st Century Fox as a public company. And they could not be reabsorbed if James, contemptuous of those papers, is in charge of Fox. But a private company, with a dominant Lachlan, who spent his early years in the newspaper business, might well be hospitable to his father’s News Corp.
Indeed, were many of the Fox assets to be sold, either to become the purview of Bob Iger at Disney or of certain other buyers who, tomorrow, will surely knock, Murdoch could relinquish the 21st Century Fox name, which he has never liked, and return the company to a once and future News Corp.
Michael Wolff is the author of several books about the media business, including a biography of Rupert Murdoch.