After a 70-year career, Rupert Murdoch finally relinquished executive control of his business empire this month. Fronting News Corp shareholders at an annual meeting in New York on November 15, the mogul was asked if he had any regrets. In a growl, he answered: “Very few.”
At the annual meeting of his other company, Fox Corporation, Murdoch watched from the audience for the first time. Onstage was the Fox board, including newly appointed director Tony Abbott.
A five-minute video played as a tribute to Murdoch, tracing his story from inheriting a single newspaper in Adelaide in 1953, after the death of his father, Sir Keith, to building the world’s first global media empire, which included the 20th Century Fox film studios and the ever-controversial Fox News, still the top-rated cable network in the United States. Fox employees burst into applause at the video’s conclusion.
Lachlan Murdoch, who is taking over as executive chairman of both companies, thanked his father, adding that he looked forward to “your continued counsel and contributions for years to come”.
One of Rupert’s very few regrets, undoubtedly, was Fox Corp’s handling of the Dominion Voting Systems lawsuit filed in the wake of the 2020 US election. It related to baseless claims aired by Fox News that the election had been stolen as part of a conspiracy that included the voting machine manufacturers Dominion and technology company Smartmatic.
This case was raised by another small shareholder at the Fox Corp meeting, who asked whether the board had included any incentives in the executive compensation package to prevent a repeat of the outcome in the Dominion case, which Fox settled for a record US$787.5 million this year.
It fell to longtime Murdoch lieutenant and director Chase Carey, as head of the compensation committee, to deflect by replying that existing incentives “do capture issues like that” and were constantly being refined.
The meeting quickly moved on, and the whole thing was over in half an hour, but the shareholder’s question raised an awkward point. After an incredible career, Rupert Murdoch is stepping down under the cloud of the “Big Lie” and further pending lawsuits.
The central irony is that Rupert Murdoch’s legacy will come to be defined by the Trump presidency, even though there is abundant evidence Murdoch never believed the 2020 election was stolen and personally hates Trump. For at least two years, Murdoch has been trying to get the Republican Party to move on – tacitly endorsing Florida governor Ron DeSantis, and more recently Virginia Governor Glenn Youngkin – only to watch as Trump extends his massive lead in the race for the Republican nomination for the 2024 presidential election.
Suddenly, Murdoch looks powerless. His proximity to Trump during his presidency, along with Brexit and the worldwide populist upsurge since 2016, has masked a relative decline in the power of the legacy newspaper and pay-TV empire he controls.
At the big-picture level, that decline has been going on for some time. Arguably Murdoch’s power reached its peak in the early 2000s, when his empire reached three-quarters of the world’s population and spanned five continents. Almost single-handedly, this empire was able to tip the balance of global media coverage in favour of the Iraq War in 2003.
When Murdoch told The Bulletin magazine the invasion of Iraq would be good for the world economy, because it would lead to cheaper oil at $20 a barrel, all 175-odd News Corp mastheads worldwide parroted the line. The New York Times dubbed it “Mr Murdoch’s war”.
Then, after half a century of relentless expansion, the Murdoch media empire suffered a series of missteps and crises. Relocating from Adelaide to Delaware in 2004, the company was besieged by billionaire John Malone’s Liberty Media, which pounced on a substantial stake and held Rupert hostage, scotching his dream of a global satellite TV network and an American business model that would combine content with distribution.
Following this was the failure of the 2005 Myspace acquisition, which meant Murdoch missed the social media wave. Facebook and Google took over instead. The 2011 phone hacking scandal split the company, and his children. Rupert Murdoch responded to these accumulated setbacks with one of the best business deals of the century: selling the bulk of the business he had built to Disney for a top-of-the-market US$71 billion in 2019, before streaming turned from boom to bust, enriching his family by $12 billion in the process.
The businesses that remain, Fox and News, worth about US$27 billion combined, are the rump of the global empire Murdoch once controlled. The most profitable parts – Fox News, Dow Jones and online real estate giant REA Group – prop up a raft of barely profitable or loss-making legacy media businesses, including mastheads such as The Times of London and The Australian.
How to wring digital revenue and earnings growth out of this disparate but influential collection of assets is now Lachlan Murdoch’s challenge. At News Corp’s most recent quarterly earnings presentation, chief executive Robert Thomson fielded questions about the “conglomerate discount” that saw the company undervalued by investors, and whether News Corp would spin off its stake in REA. Thomson demurred, saying only that News would “intensify our institutional introspection on structure”.
Last month Lachlan brought together the directors and leadership of both Fox and News for a second strategy day at Chartwell, his US$150 million mansion in Bel Air. Not a word leaked, although it was known in advance there would be a heavy focus on the response to artificial intelligence – where News Corp is expecting to gain significant revenue as a result of negotiations with the likes of Google and Microsoft.
Paradoxically, though father and son are very different, there will be little immediate change in corporate strategy as Rupert hands over to Lachlan, who as Fox Corp chief has been running the most valuable part of the empire for four years and has maintained investor support despite the litigation and likely further payouts.
As leading media and communications researchers MoffettNathanson wrote this month, with its focus on live news and sports Fox “falls into a category unto itself. Even as the linear world changes dramatically around it, we feel Fox’s situation is more or less unchanged and arguably continues to even improve. And to give credit where credit is due, that is largely thanks to management’s foresight and bold maneuvering”.
A sign Lachlan’s leadership style might be evolving came with his decision last weekend to accept an invitation to meet the president of Ukraine, Volodymyr Zelensky, in Kyiv, bringing a Fox News reporter, Benjamin Hall – who last year suffered serious injuries in an attack in Ukraine that killed two of his colleagues – as well as Jerome Starkey, defence reporter for The Sun.
Lachlan’s visit jagged exclusive interviews for Hall and Starkey and sent a strong statement of support for Ukraine – not only to employees at Fox News and elsewhere in the empire but also to that extreme wing of the Republican Party opposed to further US support for the war against Russia.
In his prime, Rupert would have been up to his neck in congressional intrigue, phoning Republican powerbrokers himself. Lachlan’s approach is to go to Kyiv. He is shaping as a supporter of establishment Republicans, as opposed to election deniers. How that unfolds in 2024 remains the toughest question for the Murdoch empire.
A workaholic and inveterate meddler, Rupert Murdoch will not be able to let go completely, and in his new capacity as “chairman emeritus” will be able to weigh in whenever he wants. Rupert has a firm grip on the family trust for now and is determined to ensure Lachlan’s control of the family business. In particular, he seeks to protect Lachlan in case his three siblings – Prudence, Elisabeth and James – try to roll their brother after Murdoch dies. Any proposals to overhaul the structure of the empire, including a return to the proposal to merge Fox and News longer-term, will be designed to entrench Lachlan’s position at the helm.
Fellow mogul John Malone told CNBC a fortnight ago that these days Murdoch, his old friend and foe, was spending more time on his Montana ranch. “When I talk to him, that’s what he wants to talk about,” said Malone. “How many tonnes of hay does it take to carry cows through the winter?”
Schwartz Media’s six-part investigative podcast series Rupert: The Last Mogul is available wherever you get your audio.
This article was first published in the print edition of The Saturday Paper on November 25, 2023 as "The son king".
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