Murdoch may have to bail out son
TWELVE years ago, Lachlan Murdoch – the eldest son of Australian media magnate Rupert Murdoch – tried to emulate his father’s success in reverse. The younger Murdoch moved back to Australia, hoping to build a media empire as smashingly successful as the one his father made after immigrating to the United States. It didn’t work out. Ten Network Holdings, the television network Murdoch became chairman of in 2012, was placed in receivership, the corporate equivalent of bankruptcy, on June 30. Now speculation is rampant that Rupert Murdoch will buy his son’s company and try to turn the failure into a victory for the family-run business.
The now-45-year-old Murdoch bought 9 percent of Ten Network Holdings in 2010 from James Packer, a friend and fellow son of a media tycoon. With the support of several wealthy business allies, Murdoch became acting chief executive in 2011.
Ten was and remains Australia’s perennially third-ranked television network. Murdoch’s strategy to change that was to develop popular reality series, invest in morning TV and buy reliable youth-orient- ed shows like The Simpsons, reversing a previous strategy to reach slightly older and more wealthy viewers.
At first, it seemed like it might work. In 2011, Ten’s operating profit was roughly $159 million US dollars, according to a stockbroking analyst who asked not to be named for fear of retribution. “Ten’s turnaround strategy is well underway,” said Mur- doch to shareholders in 2012, when he asked them to invest $207 million.
Running a TV network made Murdoch an even more glamorous figure in Australia’s media world. Mixing with the business and political elite, Murdoch and his wife Sarah, a former top model, lived in a former French diplomatic residence in the expensive Sydney suburb of Bellevue Hill.
But Ten’s profits dropped to $85 million in 2012 – and kept on falling. Murdoch churned through chief executives, plunging the network into turmoil.
By 2014, according to the analyst, Ten was turning a $71 million loss. Murdoch, Packer and billionaire Bruce Gordon became the primary creditors for the network. As the company tried to restructure itself with help from consulting firm McKinsey & Company, Murdoch, Packer and Gordon finally lost patience and withdrew their financial support last month, pushing Ten into bankruptcy. With their shares worthless, Murdoch and his co-investors lost about $375 million at current exchange rates.
Stockbroking analysts think Rupert Murdoch may now to try to salvage some of his son’s investment by buying Ten and merging it with his Foxtel cable-television operation.