Succession battle: son’s gradual retreat from media mogul Murdoch’s empire
The biggest surprise in James Murdoch’s departure from the board of News Corp is that it took him so long.
In May 2019, after the sale of most of the Murdoch television and film assets to Disney and his receipt of a $2bn (R34bn) cut, he planned to take “precisely zero” interest in what remains of the family business. His curt resignation, citing “disagreements over certain editorial content”, is confirmation of a permanent schism in the dynasty.
The most significant of those disagreements has been conducted in public. Earlier in 2020, James complained about the coverage of the devastating Australian wildfires by News Corp outlets. Newspaper columns had labelled suggestions of a link to climate change “silly” and “hysterical”, in line with 89year-old Rupert Murdoch’s long-standing views. James and his wife Kathryn declared they were “disappointed with the ongoing denial among the news outlets in Australia given obvious evidence to the contrary”.
By speaking out against News Corp and therefore his father, James underscored his gradual dislocation from the family business and therefore the family.
It has been a psychodrama that began with the phonehacking scandal, when his elder brother Lachlan returned to his father’s side after a stint as an independent and not entirely successful media investor in Australia. James’s friends argue he was meanwhile “thrown under the bus” to protect Rupert and News Corp from the worst of the ensuing crisis. James was nevertheless restored to a top job alongside Lachlan at 21st Century Fox, a new company spun out of News Corp under pressure from investors who wanted little to do with the tainted and struggling newspaper business. It suited him, too, as he had always been more interested in the technocratic and lucrative business of entertainment.
Yet, it became clear phone hacking meant James had lost the battle for succession and when the opportunity to sell arrived, he encouraged his father to seize the deal against Lachlan’s wishes. The $71bn sale set the brothers on the road to their final split. James stepped down from what remained of Fox, mostly American sports channels and Fox New. Its support for Donald Trump and promotion of climate change denial were more easily ignored by James when he had a Hollywood studio and international pay-TV businesses to run.
With the sun tipping over the horizon for Rupert, interest in the Murdochs has become global entertainment. Viewers of HBO’s brilliant fiction Succession and the BBC’s disappointingly shallow documentary The Rise of the Murdoch Dynasty will know there is always more
than meets the eye to dynastic moves.
While James’s complaint of editorial disagreements will grab the attention, his other concerns over “certain other strategic decisions” may have been the real final straw.
Though his appointment at Sky was highly controversial (one rival candidate still quips that he “failed the DNA test” to become chief executive) James proved adept at anticipating and embracing technological change. News Corp sources say frustrations about the company’s failure to change quickly enough played a significant part in his decision to resign. And again, Australia, where Murdoch media remain more influential than anywhere else, has been a flashpoint. Despite its dominance, News Corp has been struggling badly in its original homeland, where as well as newspapers it owns the majority of Foxtel, a declining payTV operator.
Even before coronavirus cratered advertising sales, there were boardroom disputes over how to overhaul the business, with the James camp believing Lachlan was excessively protective, having spent most of his career in Australia. The promotion last month of Damian Eales, the head of News Corp’s Australian publishing operation, to the New York headquarters in the new role of “global head of transformation”, was viewed by insiders as an assertion of dominance by Lachlan and effective dismissal of James’s concerns.
There remains potential for other dissenting non-executive directors to follow him out of the door, however.
As the brothers go their separate ways, Lachlan and News Corp must grapple with digital revolution in the midst of a spectacular global recession. Its British titles are beginning painful cost cuts, and there are bound to be more corporate ructions as old fiefdoms are merged and modernised. With a combined stock market value of only $23bn (R393bn), News Corp and Fox are minnows in a global media scene now dominated by tech giants with trillion-dollar price tags.
In 2017, Rupert suggested the two companies would one day be reunited. However, as he gained power in 2019, Lachlan said he saw “no benefit” in the idea. Fox is instead focused on the land grab in legalised American gambling.
James, who remains an influential shareholder in News Corp and Fox via the Murdoch Family Trust, is meanwhile building an independent empire with personal investments in alternatives to plastics, art fairs and Vice Media, a youth media brand eerily similar to one his Succession cipher Kendall Roy was forced to gut by his overbearing father before he took his revenge.
The Murdoch brothers have created plenty of scope for more drama. Their dynasty does not rise but ruptures.
Media Group