Is James Murdoch Really the Odd Man Out in the Disney-Fox Merger?

James Murdoch - Getty - H 2018
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Wall Street weighs in on his possible next career steps, with one person saying, "I doubt there is any role" for him at the remaining Fox businesses.

Is a set of Mouse ears in James Murdoch’s future once Disney purchases big parts of 21st Century Fox for $52.4 billion?

If not, he could be the odd man out, since co-executive chairmen Rupert and Lachan Murdoch are expected to remain with what’s now being called New Fox, consisting of Fox News Channel, Fox Business Network and the Fox broadcast network.

"I doubt there is any role [for James] in the remaining Fox assets," said Hal Vogel, CEO of Vogel Capital Management and a former Wall Street entertainment analyst. Rupert, in fact, said in a recent Sky News interview that he hoped his older son, Lachlan, would run those remaining businesses as CEO.

Observers say Rupert’s younger son, James, the Fox CEO who turned 45 in December, has roughly all of 2018, maybe longer — given that the deal review is expected to take up to 18 months — to consider his options with Disney, where CEO Bob Iger is sizing him up for a role, and elsewhere.

Among the assets Disney is purchasing is Star India's and Fox’s 39 percent interest in satellite TV giant Sky, both of which James is an expert at. His experience with international media could also come in handy for the global push being made by National Geographic, an asset that Disney is buying and for which insiders say he has a special affinity.

Any international role at Disney could mean James may have to report to Disney International chairman Andy Bird, unless he gets a different setup. Some insiders say James wants to report directly to Iger, so that he’d have a shot at getting considered as successor when the CEO retires at the end of 2021.

“If James Murdoch is appointed or otherwise tipped as a successor, we think this would be positive for Disney because of his experience running large media enterprises and because of the pairing of long-term vision and an entrepreneurial streak,” said Pivotal Research analyst Brian Wieser.

James also has been closely aligned with Fox’s technology initiatives, and Wieser notes he’d be handy as Disney creates two new streaming services, one for entertainment that will compete with Netflix and another for sports that will be ESPN-branded.

But, says Vogel, “The most obvious and easiest is to run Sky and the India operations. After that, it is not clear. He will have to prove and distinguish himself apart from his family interests.”

Thus far, Iger has been cagey about an executive title for James post-merger, if there is to be one.

“James and I have had a lot of conversations about the future of these companies," Iger told analysts during a call Dec. 14. He said James would have a hand in planning for the integration of the companies, adding: "And during that period of time, he and I will continue to discuss whether there is a role for him here or not.”

Naysayers note that James comes with baggage, given that harassment issues at Fox News that brought down star talent Bill O’Reilly and former CEO Roger Ailes occurred on his watch as CEO of the parent company, and he presided over the European assets during a phone-hacking scandal that ended News of the World. But, Wieser says, “it is unlikely any CEO candidate would emerge without some shortcomings.”

Financially speaking, James won’t need a job, of course, given his share of the Fox-Disney mega-deal will be worth roughly $1 billion, but people familiar with his thinking don’t expect him to remain idle should Iger not offer him a position he considers worthy of his stature.

He could use a portion of the windfall to found his own company, though he has little experience in doing so, outside of launching music label Rawkus Records, which signed hip-hop artists like Mos Def, Talib Kweli, Hi-Tek and Company Flow, after dropping out of Harvard. Rawkus was considered a success in an exceedingly competitive industry and it was eventually purchased by his father's company.

The three Murdochs are set to receive nearly 88 ?million Disney shares, making them, collectively, the company’s largest individual shareholders, sparking speculation that if James were to launch a media-technology firm he might do so with Disney as an early investor.

"James is in the catbird seat," Hollywood mogul Jeffrey Katzenberg said on CNBC last month. “He is one of the smartest, most articulate, most intelligent media executives today." The former CEO of DreamWorks Animation added: ”He's young, he's bold, he's been an entrepreneur, he's got a bunch of billions of dollars."

Of course, James could simply focus on his board roles — at Fox, sister company News Corp, Tesla, Yankee Global Enterprises, Vice Media — and his humanitarian work.

As to the latter, he and his wife, Kathryn, in 2014 launched Quadrivium, which supports a variety of initiatives involving natural resources, science, civic life, childhood health and equal opportunities for women. Some expect James and Kathryn to sink more assets into Quadrivium after the Disney-Fox deal closes in an effort to make it one of the premier charitable organizations in the world.

James also signaled a willingness to wade into political issues, possibly via Quadrivium, when he pledged to donate $1 million to the Anti-Defamation League after he was disappointed in President Donald Trump’s reaction to riots in Charlottesville, Va., that claimed the life of a woman allegedly at the hands of a white supremacist.

In an email that James addressed to “friends,” he encouraged others to donate, as well. “The presence of hate in our society was appallingly laid bare as we watched swastikas brandished on the streets of Charlottesville and acts of of brutal terrorism and violence perpetrated by a racist mob,” he wrote.

“We hardly ever talk about our charitable giving,” he continued, referring to himself and his wife, “but in this case I wanted to tell you and encourage you to be generous, too.”