Michael Wolff on Elisabeth Murdoch: Rupert's Daughter at a Crossroads

Elisabeth Murdoch Illo - H 2014
Illustration by: Kyle T. Webster

Elisabeth Murdoch Illo - H 2014

Out at Shine Group, the company she founded, and splitting from the husband her father dislikes, the media mogul's dynamo daughter has become the family’s most intriguing question

This story first appeared in the Oct. 17 issue of The Hollywood Reporter magazine.

Elisabeth Murdoch, Rupert Murdoch's 46-year-old daughter, lost her job at her family's company Sept. 30 and is losing her husband — both of which fit nicely into her father's campaign to settle scores, ensure his legacy and do a little business at the same time.

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There is a starkness to the facts: Rupert bought Elisabeth's company, Shine Group, for $673 million in a 2011 sweetheart deal to lure her back into the fold; after she offered more grief than fealty, he later decided to spin it off. Equally brutal, there is nothing but satisfaction for Murdoch in his daughter's decision, revealed via British media Oct. 4, to divorce Matthew Freud — great-grandson of Sigmund — the most famous PR man, fixer and influence peddler in Britain, a man whose ambition and drive seem uniquely compatible with Rupert's. Perhaps that is the reason Freud, 50, might be the person Murdoch, 83, dislikes most on Earth. (A flush and pulsing at the temples take over Murdoch's face when he talks about Freud.)

As happens so often for Murdoch, family matters intersect with business interests, and as happens equally often for his children, the way they choose to live their lives invariably becomes part of his company's internal drama.

In this instance, Murdoch's belief that the television business is about to be transformed by a surge of consolidation — a key reason for his recent run at Time Warner — aligns perfectly with his hopes for his daughter. Likewise, for Elisabeth, deep ambivalence about her father's long shadow, and now her split from one of his nemeses, again scrambles family and company politics.

Shine, which Elisabeth founded in London after leaving Murdoch's employ in a huff nearly 15 years ago (as a relatively junior employee at Sky Television, she was mad that her father sided with the CEO over her in a dispute) and which has grown into one of the world's largest independent television companies, soon will be combined with Endemol and Core Media to form a TV-franchise supergroup in which Fox will have a major interest. Details of the deal were announced Sept. 28, with Murdoch turning the much-criticized Shine acquisition into a win and his daughter formally losing control of her company and her job at it.

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Elisabeth Murdoch — tall, thin and blond, striking for her looks as well as her name — is regarded by many in Murdoch's circle as a uniquely talented media executive. She alone among her siblings has built a significant independent business. Her brother Lachlan, 43, once the heir apparent, left News Corp. in his own huff in 2005 to, as his father once put it to me, "sit on his ass." As for brother James, 41, the phone-hacking scandal in London — the worst chapter in Murdoch history — occurred under his watch as chairman of News International.

In their father's view, it doesn't matter who takes over his company, as long as the person is named Murdoch (each of his three children in the business variously has been tipped as the heir apparent). Even that will not quite be satisfactory if the other Murdochs don't work for the company, too. Before the family and News Corp. were riven by Hacking-gate, Murdoch foresaw James as CEO, Lachlan as head of newspapers in Australia, where he lives, and Elisabeth as queen of television in Hollywood. (He openly discussed this vision and, during a 2008 interview, asked me — as part of a constant effort to dismiss Freud and his accomplishments — if I might have ideas about a job for his son-in-law in Los Angeles after his daughter moved there to take over Fox.) Hacking complicated that plan. James took much of the blame for mishandling the scandal, and Elisabeth's relationship with James and Rupert was frayed, with Freud openly plotting to undermine his wife's relatives. In Freud's plan (which included a long interview with the couple in The New Yorker, enraging Rupert), Elisabeth would reposition herself as the anti-Murdoch, ready to take over the company from her discredited family.

In some ways, Freud was right about Elisabeth's leverage and potential. Ultimate control of Murdoch's holdings rests with the Murdoch Family Trust, with equal votes divided among his four oldest children: Elisabeth, Lachlan, James and their older half-sister, Prudence, who is not involved in the business (Murdoch's two younger children with his most recent wife, Wendi Deng, have economic participation in the trust but no vote). Many believe the reliable vote alignment has been Elisabeth with Lachlan, with Prudence in the middle. Curiously, there is said to be no tiebreaking mechanism.

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But Freud's miscalculation was in his estimation of the power of ambition over blood and, too, his father-in-law's wiles. Rupert's marriage to Deng had been floundering for several years but was kept intact — despite the urging of his older children, who barely could tolerate Deng — for the sake of his younger children and to spare his own embarrassment. But he relented and divorced her in 2013, a gambit in his bid for family unity. What's more, suggestions by the Murdoch camp that Deng might have had a relationship with Tony Blair effectively isolated Freud, one of the former British prime minister's longtime PR men and confidants. At some point during the summer, when friends say Elisabeth and Freud stopped living together at their London home in Primrose Hill, Elisabeth's choice became clear.

As part of his recovery from Hacking-gate, Murdoch is back to making his children's succession plans, despite active and passive grumbling from core executives at Fox — no small matter because these executives actually run Fox, while Murdoch largely spends time at News Corp, his newspaper company. He formally has repositioned his sons as successors in the corporate hierarchy. The Time Warner deal, which many believe Murdoch is a long way from giving up on, not only might make Fox the pivotal player in television consolidation — his current business obsession — but also could create opportunities for James to assume independent leadership responsibility within the operating structure.

Which raises the question of Elisabeth's future. 21st Century Fox is a public company effectively controlled by Murdoch, but in a post-Rupert world, succession is going to depend on a united Murdoch front. Rupert very much needs his daughter. With her divorce, a major obstacle will be removed.

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Of course, he isn't playing only one game. Murdoch bought Shine for a lavish price to bring his daughter back into the company. He wanted her to be part of the greater empire — not just part of, in fact, but central to. (He never has wanted his children to be on their own. When Elisabeth was accepted to Stanford's Graduate School of Business during the '90s, Murdoch said he could teach her more himself and sent her to work at BSkyB in London.) Moving Shine into a joint venture — in a good deal, to boot — gets rid of a distraction.

Murdoch, as dazzled by his children as most fathers — perhaps more so — believes his daughter is among the great television minds of her generation. He believes, too, that opportunities in TV never have been greater — indeed, that the coming consolidation portends another great Murdoch age. That is what he wants to bequeath to his daughter, now free of her husband and her sideshow business. If only she would come home.

Michael Wolff is the author of The Man Who Owns the News: Inside the Secret World of Rupert Murdoch, based on hours of interviews with Murdoch.