Thursday’s news stories about Rupert Murdoch’s “plans” for succession at his media conglomerate won’t be taken very seriously by those who have followed the career of the “genocidal tyrant.” He’s been shuffling the children of his second marriage — James, Lachlan and Elisabeth — into and out of his corporate deck for two decades, and every time he gives one of them a promotion, a demotion or the snake-eye, the press dutifully rushes to file stories about the new palace intrigue in the court of Murdoch.
Feel free to ignore the coverage. Murdoch’s succession plans have always been written in sand. His latest rewrite may be corporate theater, designed to calm investors who worry about the post-Rupert future at his companies, 21st Century Fox and News Corp (which were once one but split apart in 2013). Given the vagaries of the stock market, it may be beyond Murdoch’s powers to determine who runs 21st Century Fox and News Corp after he dies.
According to today’s fresh reports, which were either leaked, planted, or leak-planted, Murdoch “is preparing” to bestow his CEO position at 21st Century Fox (film and TV) to James, who is already co-chief operating officer there, and make Lachlan its co-executive chairman. Lachlan is already nonexecutive co-chairman at Murdoch’s News Corp (newspapers and books).
Murdoch has no plans to leave the company, as the New York Times puts it, explaining that he “is expected to continue to provide broad strategic oversight for the company and come into the office regularly.” According to CNBC, which broke the story: “It’s unclear whether the reorganization would take place this year or at the start of 2016.” James and Lachlan may be in line to wield great new powers, but from my vantage it looks like title inflation.
Murdoch is an old hand at moving the succession pieces around the chessboard. For example, the September 24, 1996, Sydney Morning Herald cast Murdoch’s assignment of eldest son Lachlan to run the company’s Australian subsidiaries, as “accelerated succession plans for his global media empire.” A year’s worth of “Lachlan shall be king!” stories followed, but by mid-2005, Lachlan was gone, and James became the heir presumptive until 2012 when he became a casualty of the phone-hacking scandal in England. Then Lachlan was back in spring 2014, when he regained his position inside the family conglomerate. Meanwhile, Elisabeth’s status has risen and fallen inside the company; she has often been mentioned as a dark horse ruler of the kingdom.
How secure is Murdoch family control of 21st Century Fox and News Corp? As veteran Murdoch-watcher Neil Chenoweth of the Australian Financial Review wrote in February, Murdoch and four of his heirs own about 14 percent of each of the two companies, but hold about 39 percent of the voting stock in each. This “dual-class” share structure gives the Murdoch family effective control of both enterprises. Once Murdoch dies — and he has said he has no such plans — the heirs might be able to maintain that control as long as they stick together. But with the top job open, will they self-destructively break ranks and lose control of the companies to outside shareholders?
But sticking together may not be a perfect prescription for keeping the two companies in family control. As Chenoweth writes: “If the Murdoch family shares remain tied into a single bloc after Rupert dies, News Corp is almost takeover proof.” If not, “News Corp would be the classic takeover and break-up target.” The House of Murdoch came under attack last November when independent shareholders proposed at a stockholder meeting that the company end its dual-class share structure. The measure failed, but not dramatically so, with 47.4 percent of the votes going against the family.
News Corp shares, speculates Chenoweth, “could be worth 25-30 per cent more than they trade for today” if the company became vulnerable to a takeover, which would naturally follow the dissolution of the dual-class set-up. That’s plenty of incentive for a new push against the Murdochs. Earlier this year, the family lost an important ally when it was reported that Saudi mogul Alwaleed Bin Talal, a long-time friendly investor in Murdoch’s companies, had sold most of his enormous stake in News Corp. This makes the next challenge to dual-class structure at News Corps — and Murdoch family control — stronger. (Alwaleed has not shifted out of his 21st Century Fox holdings. Yet.)
In a November piece titled “News Corp’s New Reality: Rupert Murdoch Losing Grip on Empire,” the Sydney Morning Herald speculated that there “is always the possibility that activist shareholders are staging a dry run — practicing for the really big prize: 21st Century Fox.”
The story that interests me is not which Murdoch will succeed Murdoch, but whether his ultimate successor will be a Murdoch at all.
Jack Shafer is Politico’s senior media writer.