Are the Murdochs at war?
Possible asset sale to Disney casts doubt over father-son relationship
Rupert Murdoch’s relationship with his younger son, James, is being called into question in the aftermath of the revelation that his 21st Century Fox company was considering selling its film studio and stake in Sky to its rival Disney.
The potential sale of Fox has already been interpreted by financial analysts as a recognition by the Murdochs that the company is not large enough to compete with global technology giants in a Silicon Valley streaming-media era.
However, it also raises the prospect that Rupert has become disillusioned with James’s strategy at Fox and the Sky deal. According to the Hollywood Reporter, Rupert has been telling people that the Sky deal risks distracting Fox and is “James’s baby”, as well as that he is concerned his younger son is too fired up, with Lachlan Murdoch the steadier hand.
Alice Enders, director of research at Enders Analysis, said that if the Sky deal collapsed in the face of a lengthy regulatory process and political opposition, then it would be seen as a failure for James. “We think that a lot of things could be on the table if the deal does not go through,” she said. “If it doesn’t go through it would compromise the position and the strategy James has taken, it would be a failure.”
Until recently it had been presumed that James and Lachlan had an equal role in running the media mogul’s empire. James is chief executive of 21st Century Fox and chairman of Sky but a non-executive director at News Corp, the Murdochs’ news and publishing business. Meanwhile, Lachlan is co-chairman of Fox and News Corp.
That set-up positioned James as the entertainment head and Lachlan as the news chief, which made sense given that Lachlan began his career in Australian newspapers while James was a successful chief executive of Sky.
However, the sale of large chunks of Fox, including the movie studios and the stake in Sky, would dramatically disrupt this apparent equilibrium, taking away the parts of the business that James seems to enjoy most.
The deal with Disney would have left the Murdochs with an empire that revolved around Fox News, the Fox TV network and News Corp.
Fox News is the single biggest profit-driver for the firm, so it would still be valuable even after the sale of the film studio. The Murdochs could then have tried to reunite the remnants of Fox with News Corp, helping Rupert’s beloved UK newspapers to be part of a larger company. That would leave Lachlan best placed to lead a news and sports-focused empire.
Odds on whether Lachlan, James or their sister Elisabeth or half-sister Prudence will succeed their father have fluctuated in the past. Vanity Fair wrote in 2011 that the siblings even had counselling in an attempt to deal with the issue of succession.
Initially, the heir presumptive was Lachlan, until he suddenly quit as an executive at News Corp in 2005; then it was James until he became caught up in the phone hacking scandal after moving from Sky to become executive chair of News International in the UK.
There has been speculation that the Murdochs are trying to rekindle their $80bn bid to buy Time Warner, with the Trump administration expressing its opposition to AT&T’s takeover of the firm. The talks with Disney could be a way of sending a message to Time Warner shareholders that Fox is open to a deal. However, the Murdochs tried to present a united front when Fox published solid results for the last financial quarter last Wednesday.
During a conference call with investors and analysts, Lachlan and James declined to comment about talks with Disney but expressed their confidence in the Sky deal and said that Fox is big enough to compete with rivals.
“We’ve got a great set of brands and a great set of assets that we really like,” James said. “These are big brands that really matter for their customers and we like where we are.”
“James, that’s 100% correct,” Lachlan added. “Look, I think historically, the truth is, we’ve always been asset builders … we operate these businesses to build them and to grow and we will continue to do so.”
‘I think historically, the truth is, we’ve always been asset builders’
United? Rupert Murdoch with his sons Lachlan, left, and James Getty