Rupert Murdoch's succession saga will affect us all

Published Sep 17, 2024, 7:01 PM

Over the next week, while you and I are sleeping, members of the Murdoch family will be duking it out in an American courtroom over control of one of the most powerful media empires on the planet.

It’s the latest escalation in a civil war that has been building within the family for years.  

Today, media writer Calum Jaspan, on why Rupert Murdoch has pitted one of his children, Lachlan, against three of his other kids. And how the outcome of this case will impact all of us.

From the newsrooms of the Sydney Morning Herald and The Age. This is the morning edition. I'm Samantha Cylinder Morris. It's Wednesday, September 18th. Over the next week, while you and I are sleeping, members of the Murdoch family will be duking it out in an American courtroom over control of one of the most powerful media empires on the planet. It's the latest escalation in a civil war that has been building within the family for years. Today, media writer Callum Jaspin on why Rupert Murdoch has pitted one of his children, Lachlan, against three of his other kids and how the outcome of this case will impact all of us. So Callum, a highly secretive court case has begun this week in Reno, Nevada, of all places, and it centers around the media mogul Rupert Murdoch, who is seeking to change the terms of a family trust. So can you walk us through what is he seeking to do?

The Murdoch clan were seen overnight. So Tuesday morning, our time arriving at the Washoe County Probate Court. They're arriving for a week of evidentiary hearings, which he's looking to amend his irrevocable family trust. And he's trying to ensure that control of his vast empire, which is tied up in that trust, is passed down to his eldest son, Lachlan, in the event of his death. So last year, Lachlan was officially anointed as the heir apparent. He was appointed sole chair of both News Corp and Fox Corp when Rupert stood down to become what they're calling chairman emeritus.

Breaking news this morning, a new line of succession at Fox News.

The news that Rupert Murdoch probably never wanted to break the end of a 70 year career in which he built an international media empire with huge power and influence he was never afraid to use.

He's making his way for his son, Lachlan, marking the start of a new era for the global media empire.

Lock and key essentially won out a long battle with his siblings, Elizabeth and James to be that internal candidate, while prudence never really had any involvement with the family's media assets. The purpose of this process is just to secure or ensure that after Rupert's death, Lachlan cannot be ousted by James, Elizabeth or Prudence, who he fears essentially being more moderate politically, would maybe want to try and oust Lachlan with those voting shares. So essentially there's eight votes in the family trust. Each of those four siblings hold one each, while Rupert holds four. In the event of his death, all four of them would be equally distributed amongst the siblings. Meaning that if they wanted to, they could essentially outvote him 3 to 1.

So just to be clear, what Rupert Murdoch is seeking to change is the possibility that were the trust to stay the way it is now and all of the children, all four of these children have equal voting rights, that Lachlan, who is the most conservative politically out of all these four children, could essentially be overruled by three of his siblings who have more moderate political views. They could gang up and they could overrule whatever choices he wanted to make with the Empire going forward.

Yeah, it's quite it's quite funny in a way, because he would only really be doing this and it's quite, you know, an extensive, laborious process. He would only really be doing this if he thought there was a chance that that might happen. But what it appears to have done is sort of galvanized the three together and only increase the chance that if he's unsuccessful, that it might happen.

Tell us, why is this court case actually taking place in Reno, Nevada. I mean, as I can tell, none of the Murdochs actually reside there, so why there?

It's largely because of the privacy the court system in that state allows. Those carrying out matters like these to have meaning. They can go through a legal process almost in secrecy. And that was the case with this story until it was broken by The New York Times, where some court documents were leaked to them a few months ago. And until then, the court listing for the case was entirely nonexistent. There was a last minute push by six news outlets, including The New York Times, to open up the case, which was rejected, while a petition was also filed to allow the proceedings to be televised by a local software engineer and legal activist. And that was that was also unsuccessful.

And so can you walk us through just why Rupert Murdoch really does want to give Lachlan Murdoch his voting rights? We've touched on it a little bit there that their political ideologies seem to align. But I mean, how much do they align in comparison with Lachlan's other three siblings who are involved in this court case?

Yeah. So, um, I guess while some say that the Australian newspapers don't make a lot of money, as things stand, I don't think there's really much of an argument to be made that Murdoch hasn't been profitable over the seven or so decades he's been a central player in the media industry worldwide. He's also made quite a bit of money through things that don't necessarily hinge on that conservative stance. Um, you know, you could point to the sale of 21st Century Fox to Disney, um, at the end of the last decade for around 71 billion USD. But now with with those assets sort of on are gone now, um, Fox News is one of the biggest cash cows that the family sort of has. James, Elisabeth and Prudence, as we said, are sort of considered to be much more politically moderate than Lachlan, who's renowned to have grown increasingly conservative since he arrived in Australia as a hip, young. Tattooed rock climber in the 1990s. But yeah, James is probably the most publicly outspoken in opposition to both Fox and News Corp. He's criticised Fox's role in the January 6th Capitol insurrection. He accused News Corp of propagating climate misinformation around the time of the 2020 bushfires in Australia, and he's also recently endorsed Kamala Harris. He wiped his hands with the company entirely in 2020. So now it really is just Lachlan left and people say, you know, it's sort of a bit of a trope at this point. People say Lachlan is even more conservative to his dad, but Rupert's arguing that if the other kids were to tone back the conservative output of those vast media assets, the commercial returns would be diminished. And, you know, therefore, Lachlan most closely aligning with Rupert, he thinks he's the man for the job.

I mean, that's the interesting thing here. That's really the crux of this, isn't it, that Rupert Murdoch, is he actually in order to win this case, he's arguing this isn't actually about politics specifically. It's actually about profitability. And that in order to preserve the ongoing profitability of the newspapers and television networks that he owns, which, as we know, includes the Wall Street Journal and the Fox News Channel, they actually have to continue to have a conservative bent. That's Rupert's argument, isn't it?

Yeah. It is. And, you know, that's how he's made a lot of money over the years through quite often sensationalist journalism. And, you know, Fox News is now sort of considered one of the most profitable news organizations in the world and continues to sort of buck trends with people moving away from cable television consumption and things like that. But, you know, on the other hand, some are saying that it's more just about power. There are many takes on it. One of our own business Columnists Elizabeth Knight wrote in July that the real motivation most likely centers on power and control. I mean, you could view this as Rupert's attempt to rule from from the grave by appointing one of his children that most closely resembles himself, that being Lachlan.

We'll be right back.

And so we really need to get into this. I mean, just how powerful is the Murdoch empire? How much of the news does the family actually control, whether it's here or overseas?

The newspaper assets which formed the foundation of of that empire certainly aren't as powerful as they used to be in the days where they could swing an election, both in Australia or the UK, where they could say publicly on their front page, it's the sun wot won it? Um, I think that was a reference to the 1992 British election, or when a prospective prime minister like Tony Blair would somewhat bend the knee to him in exchange for the backing in future elections. But they do still control vast media assets around the Western world. In Australia, they have the most news assets of any company, with daily newspapers and the majority of Australian cities. They've got the largest free news website in the country, news.com.au. They control Sky News Australia. While that does remain somewhat fringe to most Australians. Um, but those assets still mean that they demand significant influence over politicians and the like. And the jewel in the crown, as we mentioned, is Fox News in America. And we've seen the influence they can wield through that, through the Trump presidency and everything that has sort of come beyond that in American democracy.

For Rupert Murdoch to win this case and change the terms of the family trust, he's actually going to have to prove that by giving his voting rights to just one of his kids, Lachlan, that this change would actually have to benefit all of the beneficiaries of the family trust, and that's all of his children. So do we know anything further about how he plans to actually make his case?

I think the secrecy around the whole case means that we don't actually, and we might not ever get a real insight into, um, into how he's actually going to argue that case. But as you say there, it's important to note that his two youngest kids from his third marriage, um, Chloe and Grace, who were in their early 20s, have an equal financial stake in the family trust. Um, but they just don't have any actual voting power. But they they could be called on, or we might see them feature in some way in this hearing this week to to maybe back up Rupert's argument that it's probably in their interest, considering they don't have a chance to get a say on, you know, how things happen voting wise. But if he can't convince the probate Commissioner, whose name is Edmund J. Gorman, that he's acting in good faith and for the sole benefit of his heirs. The likely result will just be that the trust remains as it is, although as we sort of touched on before, it appears that the damage may be done in terms of him uniting those three siblings together, and what possibility there was of those of that trio voting to oust Lachlan. Um, after Rupert's passing, and maybe more concrete. Now they may choose to run the company together, install either James or Elizabeth and run it with a more moderate outlook, or they may even choose to sell those assets while they've still got value.

And there really has been a lot of conflict and jostling over power, I guess, among the kids over the years. I was wondering if you could take us a bit through this because, you know, at one point many, many years ago, Lachlan Murdoch actually left the business and then he came back, I think it was in 2014 or 2015. So is he sort of the prodigal son in this scenario? And how do the other kids feel in terms of their jostling for power?

You know, it's quite sinister to to an extent to which Rupert has sort of quite publicly played them off against each other over the years. And that was one of the reasons why this family trust was founded so many years ago was that Anna, his second wife, didn't want them to sort of have this somewhat succession battle, as we've seen. But Lachlan was placed into the company in his early 20s when he moved to Australia to run the Queensland newspapers, while his younger brother James took a different route and started up a music label. So Lachlan, who's renowned to sort of love the newspapers and really be a newspaper guy, really took it upon himself to to try and follow in Rupert's footsteps. While Elizabeth went off and did her own thing, she founded a TV production company, Um shine, which was eventually bought By the News Corp empire, and once Lachlan fell out with his father over a sort of disagreement with the then CEO of Fox News, a very powerful figure in the company, Roger Ailes, in the early 2000, and his dad took the side of Roger. He left the company, going on to move back to Australia, start up his own sort of media investment business, where he bought assets including the radio station Nova, um, and later went in with um, James Packer to buy Network ten, which didn't work out too well. But after all, the sort of fallout from the phone hacking scandal in the early 20 tens, Lachlan was brought back to the company as a sort of stabilizer and has since sort of edged out his brother James, who was who had sort of taken prime position in that meantime.

Okay. Now you've just mentioned the infamous phone hacking scandal. So I'm just going to remind listeners who might not remember, though they very well might. This was, of course, involving Rupert Murdoch's newspaper, news of the World in Britain, and it was shut down after it was revealed that the journalists at that paper, many of them, had hacked the phones of various celebrities and politicians in order to get exclusive stories. And some people are sort of revisiting that history and saying, well, it's a bit hypocritical that Rupert Murdoch wants this current case to play out behind closed doors, that it should be very secret, given the privacy scandals that he has been intertwined with in the past. So what do you think? Should we be able to listen to the intricacies of this court case as it plays out?

Well, you know, from a professional standpoint, I certainly believe we should be able to listen in. Um, and I think, yeah, it would certainly shine a light on some important things. There's significant public interest in the outcome of this case, considering it relates to control of some of the most influential media companies in the English speaking world. As you say, So several commentators have pointed out the the irony of sorts of this playing out in secret with, you know, papers like news of the world. The sun has been alleged to have taken part in similar activities over the years, which has consistently denied, um, yeah, its willingness to breach the privacy of many in the past through those phone hacking scandals. The Nevada judge, David Hardy, argued that the press access to the court would harm the parties legislatively protected confidentiality rights. But yeah, when you sort of look to the numbers, um, there's been more than 1300 phone hacking claims settled since that scandal was exposed just over a decade ago. And the payouts from the company, um, have tipped over the £1 billion mark. And that that includes, um, a recent significant sum paid out to Hugh Grant. So it seems like a pretty compelling argument, right?

Because my understanding is Rupert Murdoch's concern. I guess from the professional side is that the details shouldn't be heard by rival media outlets, that this might privilege them somehow.

Um, I think so, but I think if you were to get Rupert Murdoch's honest answer, if he was on the other side of the table, um, I'm sure he'd be pleading them to to knock down the door. Yeah.

Oh, absolutely. And you mentioned there, of course, that this we are talking about one of the most politically influential media brands in the world. And that's why it's it's safe to say that the outcome of this case really does matter. You know, especially with the timing. Now, the United States is only weeks away from a presidential election that could really drastically change the standing of the country and even impact the world's economy. So what will happen to the Murdoch empire if Rupert loses this court case and the family trust remains the same?

Well, I think in the short term, nothing will likely change as long as Rupert's alive and maintains that controlling voting power. But yeah, it does have the potential to see him, or at least the person he wants to control the company lose that control in the event of his death. Um, you know, it does seem to have galvanized the three siblings together to maybe what they might have previously not been so interested in doing, but now interested in in ousting Lachlan from that position of control, which he's currently got as chair of both of those companies. A potential second Trump presidency is an interesting strand to add to this. If Rupert does get his way, um, under Lachlan, they could double down on that conservative bent, buoyed by the prospects of a second Trump presidency. But yeah, one thing's for sure that while the hearings may end next week, um, I think this has got a little bit more time to drag on into.

Well, it's definitely going to be an interesting space to watch over the next week as this court case plays out. So thank you so much, Callum, for your time.

Thanks for having me.

Today's episode of The Morning Edition was produced by Kai Huang. Our head of audio is Tom McKendrick. The Morning Edition is a production of The Age and The Sydney Morning Herald. If you enjoy the show and want more of our journalism, subscribe to our newspapers today. It's the best way to support what we do. Search the age or Smh.com.au forward slash, subscribe and sign up for our Morning Edition newsletter to receive a comprehensive summary of the day's most important news, analysis and insights in your inbox every day. Links are in the show. Notes. I'm Samantha Salinger Morris. This is the morning edition. Thanks for listening.