After going through five marriages and having many children, Rupert Murdoch has reached a critical point in the family’s inheritance.
On September 21st, the 92-year-old “media mogul” announced that he will officially resign as the chairman of the board of two of his companies in November this year and become the honorary chairman of both companies.
Unexpectedly, Murdoch’s eldest son, Lachlan Murdoch, will become the sole chairman of News Corp and will continue to serve as the executive chairman and CEO of Fox Corporation. This means that Lachlan will become the successor of the family business.
Murdoch has two sons and four daughters. Previously, his youngest son, James Murdoch, was once considered to be his father’s successor. However, he suddenly resigned as a director of News Corp and left the family’s media empire, citing disagreements with some of the editorial content and strategic decisions of the group’s media.
However, this succession arrangement is not the end of the Murdoch family’s inheritance, but it may be the beginning of family disputes.
In the family trust established by Murdoch for the inheritance, apart from himself controlling 40%, the four adult children share the control equally. This may set a time bomb for the future inheritance of the children, who will compete for a fortune of more than 20 billion US dollars.
Market analysts believe that Lachlan is currently favored by his father and controls the situation together with his father. Once his father hands over power, if any two of the other three people join forces against Lachlan, his work after succeeding will be doomed to be difficult.
# 01
# Equal division does not mean equality
Rupert Murdoch, originally from Australia, later became a U.S. citizen. He started with a newspaper in Australia in 1954 and went on to acquire The World News, The Sun, The Times, The Wall Street Journal, The New York Post, and others.
In 2013, Murdoch officially split the film and publishing businesses of News Corp into two separate entities, News Corp and 21st Century Fox Film Corporation.
To plan and pass on his family’s wealth, Murdoch controls News Corp and Fox through a family trust based in Reno, Nevada. The trust holds about 40% of the voting shares in both companies. Murdoch and his children jointly hold eight voting rights in the trust.
Murdoch’s own intention was to divide his estate equally among all his children. However, his net worth of over $20 billion seems to have destined a fierce competition among his heirs.
Murdoch has been married five times and has six children with three of his ex-wives. They are his daughter Prudence from his first wife Patricia Booker, his daughter Elisabeth and two sons Lachlan and James from his second wife Anna Torv, and his two daughters Grace and Chloe from his third wife Wendi Deng.
Among Murdoch’s six children, except for the two “post-2000” children he had with Deng, who are still young, the other four are fiercely competing for the family’s voice.
Before agreeing to divorce, Murdoch’s second wife Anna insisted that he break family rules and give the four eldest children equal voice in the family business. This also set the tone for the later establishment of the family trust.
Murdoch’s four adult children have essentially equal voice, three of whom were born to his second wife Anna Torv. Wendi Deng once tried to fight for equal rights for her two children, but was unanimously opposed by the four older children.
It is understood that considering Murdoch’s lifespan and the voice designed by the trust, it will be “expired” in about ten years. After Murdoch’s death, how his four votes will be distributed and how his children will form alliances will affect the family’s inheritance issues.
“If the children fight hard enough, the entire family trust may collapse,” Murdoch said with regret.
# 02
# Eldest son took over twice in 15 years
The Murdoch family’s mainstay is primarily its three children with his second wife, Anna, the first of whom is named Elisabeth Murdoch. She has been working in the family business for decades and has played a leadership role. At the end of the last century, Elisabeth served as the general manager of Sky Networks in the UK, but after taking on the role of CEO at the beginning of the 21st century, she was ignored by Murdoch himself.
Murdoch believed that women with children could not focus 100% of their energy on work, especially in leadership positions. Since then, a rift has continuously emerged between Murdoch and Elisabeth, leading Elisabeth to start her own independent production company, Shine. In 2011, the company was acquired by News Corp.
Anna’s second child, the eldest son Lachlan, was born in London, UK, and has been influenced by Murdoch since childhood, immersing himself in the world of media. In an interview with the Australian Broadcasting Corporation, Lachlan said, “Every morning, before getting on the school bus, I would read The New York Times, Daily News, and The Wall Street Journal with my siblings, especially the stories my father was interested in, he would command us to read.”
From the experience, it can be seen that Murdoch adopted a strategy of “Tian Ji’s horse racing” and gave both sons from his second marriage the opportunity to develop and cultivate their successors.
In 1999, Lachlan became the deputy chief operating officer of News Corp, responsible for managing printing and publishing businesses. However, a conflict in 2005 led Lachlan to leave. Lachlan returned to his hometown of Sydney and founded his own company. At that time, including Lachlan himself, it was believed that there was no hope for succession in the future.
In the following decade, the status of the second son, James, soared, and he was exposed to more businesses, leading News Corp to invest in well-known media companies such as Hulu and National Geographic Channel.
However, James’s subsequent political stance and decision-making errors led to Murdoch losing patience, including the phone scandal in 2011 and his liberal political stance that was contrary to Murdoch’s views.
In 2015, there was another reversal in the succession of the Murdoch family, and after 15 years away, Lachlan returned to the Murdoch Group.
Throughout history, the struggle for power in “imperial families” has always been the source of brothers turning against each other. Lachlan’s return and the competition for the top position are bound to cause a rift in the relationship between the two brothers. In 2019, Murdoch sold the film production company 21st Century Fox to Disney, which became the fuse for their relationship breakdown.
Before the sale, Lachlan had always been opposed, believing that the sale would affect his own company’s voice within the group, and he was also worried that James would gain a higher status and popularity after the acquisition. However, after the transaction, Lachlan took over James’s position and once again led the Fox Group.
# 03
# Murdoch may leave a “trouble root” after a hundred years
According to BBC news, James Murdoch, the second son, is waiting for an opportunity to potentially join forces with other family members to stage a “comeback” after Rupert Murdoch’s death.
At present, the Fox Group has made a smooth transition, but Lachlan’s “throne” is not stable, and there are undercurrents beneath the calm surface.
According to Reuters, the real battle for succession in the Murdoch family trust has not yet begun. The transfer of executive power has not resolved another potential power struggle that may occur after Rupert Murdoch’s death.
The trust fund, located in Reno, Nevada, lists scenarios for potential acquisitions. The elder Murdoch controls News Corp and Fox Corporation through this tool, holding about 40% of the voting shares in each company. Murdoch also holds a small number of shares in the company outside the trust.
After Rupert’s death, the voting shares of News Corp and Fox Corporation will be transferred from Murdoch to his four adult children – Prudence, Elisabeth, Lachlan, and James. However, there may be fierce struggles surrounding the future of the two companies.
The Murdoch family trust has eight votes: four are controlled by Murdoch, and the remaining four are controlled by his four children from his first two marriages.
Murdoch’s two younger daughters, Chloe and Grace, from his third wife, Wendi Deng, do not have voting rights in the trust.
Alice Enders, the head of research at Enders Analysis, said that after the succession, the four older children will equally inherit Murdoch’s voting share of the trust.
Reuters said that both Fox and News Corp use a dual-share system, which includes non-voting Class A shares and voting Class B shares. Murdoch’s children own a combination of both types of shares in Fox and News Corp through the trust.
This means that there is still a lot of uncertainty about the company’s equity and voting rights in the future.
(Source: Family Office Standard Research Institute)
