Murdoch sons aim to modernize empire
Generational change of guard at Fox is one factor in the departures of Ailes, O’Reilly
The sun was setting in New York as James Murdoch stepped before 350 guests in a glass-walled concert hall and waxed poetic about his pet TV channel and its dedication to “scientific literacy.”
The event Wednesday night was an advertising showcase for National Geographic, which Murdoch, 44, has doted on since becoming chief executive of its parent company, 21st Century Fox. As a person who cares deeply about “issues related to the environment, conservation, exploration and education,” he told the crowd, “I’m personally grateful for the important work National Geographic does.”
Across town at that same moment, his 86-year-old father, Rupert — who once called climate change “alarmist nonsense” — was still dealing with fallout at his most cherished channel, Fox News. Bill O’Reilly, the pugnacious and top-rated talk show host, had been ousted that day after allegations of sexual harassment involving multiple women. It was James Murdoch who had most aggressively moved against O’Reilly. The same had happened in July, when Roger Ailes, who founded Fox News with Rupert Murdoch, was forced to resign amid his own sexual harassment scandal.
This is what generational change at one of the globe’s most powerful media conglomerates looks like.
With James and his elder brother, Lachlan, 45, who is the executive chairman of 21st Century Fox, firmly entrenched as their father’s successors, they are now forcibly exerting themselves. Their father remains very involved, but his sons seem determined to rid the company of its roguish, old-guard internal culture and tilt operations toward the digital future.
“They are both young enough to see and understand that the company has to change,” said Doug Creutz, a media analyst at Cowen and Co. “At some media companies, there is a feeling that people are being dragged kicking and screaming into the digital future. I don’t get that sense with the brothers at all.”
Over his storied career, Rupert Murdoch repeatedly showed that he was willing to trade workplace culture for profits — ride people hard, overlook putrid behaviour as long as the results are there, reward infighting. When his sons took over two years ago, however, they immediately set about creating a warmer and fuzzier workplace.
Employees at the Fox broadcast network said they were pleasantly surprised, for instance, to be summoned to a town-hall meeting where the brothers espoused transparency, workplace diversity and greater cooperation between divisions. In the fall, James and Lachlan introduced additional benefits, including more paid vacation, vastly enhanced reproductive coverage for women and “expanded coverage for our transgender colleagues.”
James and Lachlan overhauled their international networks business, a collection of some 350 channels; changed leadership at their film studio, home to the X-Men movies; and poured money into National Geographic. The brothers have even shaken up 21st Century Fox’s profile in Washington, replacing their father’s Republican lobbying chief with a Democratic one. As James and Lachlan move to modernize their company, several questions have emerged. The biggest: Can you truly change the culture without losing what made it so successful? “James has a lot of experience in senior management, and he is capable of running a business,” said Creutz. “Lachlan? I don’t know. People don’t know him as well. He is looked at a bit more skeptically by investors.”
Anthony DiClemente, an analyst at Nomura Instinet, challenged that notion. “As a manager, Lachlan has grown and developed quite a bit,” he said. “I think the brothers get along well, and that Lachlan’s views are falling into line with James’.”
Working together will be crucial if 21st Century Fox is going to navigate the shoals ahead. The conglomerate, like its competitors, is facing an extremely uncertain future. With competitors getting bigger — AT&T’s $85.4-billion (U.S.) purchase of Time Warner being Exhibit A — where does that leave the Murdochs?
“That’s a question I think they asked themselves and moved them to try to buy the rest of Sky,” said Michael Nathanson, an analyst at Moffett-Nathanson, referring to a pending $14.3-billion deal for 21st Century Fox to take full control of the British satellite TV giant.
At the moment, 21st Century Fox’s portfolio is relatively healthy. In its most recent quarter, 21st Century Fox reported income of $856 million, a27-per-cent increase from the same period a year earlier. Speaking of those results during a call with analysts in February, Lachlan noted moves the company had made to strengthen its business.
“We’ve been saying this for a while,” he said, “but actions and outcomes speak louder than words.”