Are the Mur­dochs at war?

Pos­si­ble as­set sale to Dis­ney casts doubt over fa­ther-son re­la­tion­ship

The Guardian Weekly - - Finance - Graham Rud­dick

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

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