Michael Wolff on Rupert Murdoch: How the Children Solved the Hollywood Problem (Analysis)

AP Images/Invision
James and Rupert Murdoch

The elevation of his sons James and Lachlan to the ultimate corporate spots in this company is part of his effort to once and for all resolve the Hollywood issue — in his favor.

Hollywood is an unresolved issue in Rupert Murdoch's career. He may be the single most important person in movies and television, but he has never been at home in Hollywood. He doesn't like the town and he doesn't feel the town likes him.

The elevation of his sons James and Lachlan to the ultimate corporate spots in this company is part of his effort to once and for all resolve the Hollywood issue — in his favor.

Hollywood has been the alternative power base at News Corp. It was perhaps most symbolized by Peter Chernin, the Hollywood-based News Corp. COO from 1996 to 2009, building himself a pharaoh-style office on the Fox lot, confounding and infuriating Murdoch, who works in New York in a generic box. (Early in his Hollywood career, Murdoch begrudgingly felt he had to get a private plane because Barry Diller, then head of Fox, had one.)

Murdoch's awkwardness and particular difficulty in getting along with talent — there was a period in which executives believed that any meeting he showed up for resulted in a failed deal — meant he had to give studio people more power and independence. At the same time, the newspaper side of the company was shrinking in importance. On an ever-increasing basis, Fox executives controlled the lion's share of his business, operating more and more beyond his control.

"There's spheres of influence here, I guess," Murdoch explained to me once, in clear frustration, meaning he often found himself outside of what was the most important sphere of his business.

Chernin, and after him, Chase Carey, the current Fox president and COO, delivered strong growth and, buoying the stock more than the businesses Murdoch himself spent most of his time on, became Wall Street darlings. In 2005, Chernin, with Fox News chief Roger Ailes, used his near-untouchable status in the company to help oust Lachlan — whom Chernin openly ridiculed — then his father's designated heir, from the company. Then he forced Murdoch to contractually provide that Chernin would be the CEO if Murdoch stepped down.

In 2009, confident that his son James — now running the international side of News Corp. and getting ready to buy the remaining 60 percent of BSkyB, the giant satellite broadcaster, that the company did not own — had built a sufficient power base, Murdoch refused to renew the CEO provision in Chernin's contract, causing Chernin to leave. Chase Carey then took the job as the acknowledged place-holder for James.

But by the summer of 2011, the phone-hacking scandal in Britain had not only destroyed James' base — including wrecking the BSkyB deal — but, it seemed, his career. Indeed, the scandal, in a move spearheaded by Carey, caused the company to be divided between its newspaper-focused assets and its entertainment assets. While Murdoch would hold control of both, they would be run independently. Murdoch, although he held the title of CEO of Fox, had little interest in or feel for television or movies, but a continuing passion for newspapers, where he naturally focused his time — meaning Carey became ever stronger. Murdoch ran a little company; Carey a big one.

James was brought back to the U.S. in 2011 but, even though Murdoch certainly regarded him as a seasoned television executive, he was largely blocked by Carey and other Fox executives from taking a direct management role, becoming something of a shadow presence in the company.

Murdoch's daughter, Elisabeth, who had created one of the world's largest independent television companies, Shine, was, Murdoch felt, ready to run Fox too. That's one of the reasons Murdoch had bought her company at a premium price — for his own daughter's talents. But Elisabeth found Fox largely inhospitable. (Nor did it help that she was feuding with her brother James.)

Murdoch made his first aggressive post-hacking move in 2014, making James co-COO with Carey, and naming Lachlan "nonexecutive co-chairman." And yet, two seminal phone-hacking issues remained unresolved: the trial of key Murdoch executives in London, and the Justice Department's investigation of the company under the Foreign Corrupt Practices Act. Fox, run by entertainment business professionals without the taint of direct Murdoch management, was much better positioned to withstand another round of hacking-related crisis.

And yet, to Murdoch, it was also a race against time. If the 84-year-old Rupert died without a Murdoch running Fox, that would make it all the harder for a Murdoch to step into the top job. In fact, the Murdoch children themselves, sitting on the Fox sidelines, were divided about the company's future. The Murdoch Family Trust allocates each of Murdoch's four adult children (his eldest daughter Prudence, not in the media business, holds the fourth vote) one vote, without a tie-breaking mechanism. Murdoch believed it would be more likely that they would sell the company or even divided it among them if they were not already running it.

But the unexpected acquittal of the most significant Murdoch executives in London a year ago, and, accordingly, the collapse of the Justice Department investigation, suddenly opened the way for the Murdoch family to take over management of the company. If Fox and Hollywood had never entirely bent to him, quite unlike his newspaper businesses, now, using his children, and realizing his patriarchal dream, he could wrestle back the control that he had so annoyingly lost.

But, fittingly, the overriding issue in this suddenly possible succession plan was Murdoch's own title. As much as Murdoch has shepherded his children's careers, as much as every aspect of their careers is bound up in their relationship with him, one of their main efforts has been to push him away. The Murdochs are famous for their interfamily negotiations, and in some sense this might be the one with the highest stakes.

I'm told Murdoch proposed that James take Carey's COO title, and with it all of Carey's vast operational authority. As everyone knew, the COO title at Fox was effectively the CEO job — so what's the difference. But James, with his brother Lachlan's support, said no go. His father would have to step down. Murdoch Sr.'s compromise was to add Lachlan to the mix as co-executive chairman — a tripartite power structure having more wiggle room than a bilateral one.

Murdoch's sons, running the happenstance entertainment empire that was only ever supposed to be the second city in his newspaper kingdom, at least get rid of those ever-irksome Hollywood interlopers. Now, like every father, he only has the problem of his children.