Michael Wolff: Why Rupert’s Really Splitting Up the Family Business
When the media titan unloads the bulk of Fox to Disney rather than letting it pass to his heirs, it proves he has always had a favorite Murdoch — himself.
At least since he nearly went bankrupt in the early 1990s, Rupert Murdoch has been obsessed with handing his business to his children. He has navigated this course through vast turmoil in the media industry, multiple marriages, frayed family dynamics, occasional signs of shareholder rebellion at such family entitlement in a public company, and even the resistance of his own children. He seemed to have succeeded in this quest — elevating his oldest son, Lachlan, cajoled back from Australia, and his youngest, James, miraculously rehabilitated for his part in the phone-hacking scandal in the U.K., to the top of his company in 2015. But now, all of a sudden, he appears ready to abandon his dream of a Murdoch dynasty.
In a $52.4 billion deal announced Dec. 14, Murdoch will unload the bulk of his assets to The Walt Disney Co., a transforming event in the media industry and, by many reports, a direct rebuke to his son James, who had aggressively maneuvered to position himself as his father’s heir. In fact, while Rupert, 86, has tried to game his children’s future, he also has speculated about how they — variously at odds with him and one another — might frustrate his plans.
The facts on the ground have never been especially hospitable to a Murdoch dynasty. His older children — Lachlan, 46, and James, 44, their sister Elisabeth, 49, and half-sister Prudence, 59 — each share an equal voting interest in the Murdoch Family Trust, which controls the family holdings. They divide their economic interest with their younger half-siblings, Grace, 16, and Chloe, 14, Murdoch’s children with Wendi Deng, who are denied a vote under the terms of the divorce agreement with his second wife, Anna. (Originally they were denied an economic interest, but, with a cash payment to his older children, Murdoch negotiated their participation). The trust has no tie-breaking mechanism: Three often-squabbling siblings must agree.
The corporate-family dynamic that’s developed is one in which James has become the most tenacious and dominant member of the family, but the sibling the others get along with the least. Indeed, his power has often come from opposing his family — including his father and brother, both of whom he has often publicly contradicted and criticized. Everybody, resentfully, gets out of James’ way.
Murdoch’s children have become less like voracious empire builders than competent vertical managers finding a niche in their father’s horizontal company. Lachlan’s interest is in the news business, James’ in the distribution business, Elisabeth’s in the TV content business. Prudence has no media interest, except insofar as her children now are beginning careers of their own. For Murdoch senior, an inveterate political handicapper, this has meant a wide set of possibilities beyond his house-of-Murdoch dream scenario.
Elisabeth, the only one of his children to successfully start her own business, is, after the sale of her independent television production company, Shine — which, conveniently, her father bought in 2011 for $673 million — the wealthiest of his children. Her father has speculated that she one day might buy out the interests of one or more of her siblings. Lachlan, who in 2005 fled the family company to go out on his own in Australia, might, his father has thought, buy the company’s Australian operation, which owns 70 percent of Australia’s newspapers as well as a big pay TV business. James has succeeded most as CEO of the U.K.’s Sky Television — a business where the Murdochs control only 39 percent — and has sought to reassert his leadership there.
Murdoch, who might like to see himself as a family sentimentalist, is, of course, a famously coldhearted realist. In 1994, he forced his mother and siblings out of the company — founded by his father — in an effort to prepare it for his heirs alone. In a sense, it has never really mattered to him who runs his company, other than that it be one of his children. And, indeed, after several years of his sons’ co-stewardship, it might rather seem clear to him that dynasty-by-committee, a constantly bickering one, is not a promising approach.
The outlines of the $52.4 billion deal now awaiting regulatory clearance — selling most of the cable properties, the film and TV studios, the interest in Sky and Hulu, and retaining Fox Broadcasting, Fox News Channel and the sports programming assets — is quite an efficient plan for managing the family dynamic. In effect, Murdoch is selling the James-focused assets, creating a path for James to either travel with them to Disney or set out on his own, proving himself as the self-actualized media executive he believes himself to be. In the sale, the details of which many believe have been leaked by James over the past several weeks either to frustrate the deal or position himself in it, he could become, or at least he would like to see himself become, an heir apparent to Disney chief Bob Iger. (Iger needs an heir but likes an excuse to fire his heirs, which an abrasive James might naturally provide.)
Keeping the news and network assets preserves a company for Lachlan to lead — more willing than James to let their aging father plan and plot. Indeed, Fox News has been a particularly contentious family issue, with James hotly opposing the heavy-handed Trump tilt advocated by his father and Lachlan willing to go along with his dad.
What’s more, selling many of the company’s choice assets creates the financial wherewithal to buy back full control over the now smaller company and, perhaps, recombine it with News Corp, the newspaper group spun off as a Murdoch-controlled independent entity in 2013, whose future Murdoch very much wants to secure. Now may be his opportunity to double down on news, his real interest — he never was much interested in entertainment — and even to try to save the newspaper business.
The Disney deal also lets Murdoch unlock cash that, in the remaining years of his life, will allow him to efficiently divide his estate. Murdoch has continued to feel guilty about the political disenfranchisement of his two younger children — now they might be freed from his adult children’s control. His daughter Elisabeth long has been at odds with her brother James and now might have the cash to pursue her media goals.
The Murdochs are scattered and lesser, surely, in the media future. Or, in a final transforming act in a career of ever-altering the form of the media business, Rupert Murdoch sees the top of the market, the end of monoliths, a timely retreat to core talents and, with a defiant cackle, a media business full of his competing children.