How to pass on a global media empire

0:01NPR.

0:11A spotlight is shining down on a small court in Reno, Nevada, to settle a family squabble and decide the future of a global media media media. It reads like an episode of Succession, that dramatic behind-the-scenes battle between Rupert Murdoch and three of his children at... 93-year-old Rupert Murdoch and his children are embroiled in a court case over who will take control over Fox Corp and News Corp, the family businesses. We're talking newspapers, publishing, radio, and television. The empire includes Fox News, the New York Post, and the Wall Street Journal here in the U.S., the Times in the U.K., and the Australian in Murdoch's native land.

0:53Murdoch started all this with a local Australian paper that he inherited from his dad. Rupert Murdoch once agreed to divide equal control of his empire to his four eldest children. Now he wants just his eldest son Lachlan in charge of it all. But with pushback from his other children, the probate court will decide what's ultimately allowed and who will inherit control. This is The Indicator from Planet Money. I'm Darian Woods. And I'm Adrian Ma. Today on the show, how did the real-life Murdoch succession drama come to be? And what will this mean for the future of one of the most influential media networks on the planet and our political discourse?

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2:58The HBO hit show Succession seems to be playing out in real time here. Am I wrong? Theme song plays in my head at night. You know, put my head to the pillow and I can just hear it. It's absolutely what was happening. You have Rupert Murdoch and his elder son, high-powered attorneys for all, in a courtroom in Reno, Nevada, against his other three eldest children. And if this is not an older breakdown of familial and corporate bonds, I don't know what is. So the real life case, what are the origins of the succession battle between Rupert Murdoch's children? The irrevocable trust stems from Murdoch walking out on his second wife, the mother of Elizabeth Lachlan and James Murdoch.

3:45And she decides to strike a deal. Instead of suing him to try to get half of his worldly possessions, which would have been a whole lot of media holdings, she says, I'll take a lot less. That ends up being$110 million, which is a whole lot of money, but a lot less than she might have been able to get. She said, the rest of it, I want to promise that Murdoch's daughter from his first marriage and my three kids will share equally in the bounty of his legacy when Murdoch dies. And further, that they will share control equally. They will have equal shares of the Murdoch family trust. So it's about who sets the direction for News Corp in the future.

4:22He really pits his children and especially his two sons against each other for competition over decades. And this is the way they will prove their value to him. He has essentially conditioned his expression of approval and love for his sons through how they perform and how much they embrace what he wants. So Rupert Murdoch wants to revoke the irrevocable trust. How did Lachlan ultimately become his father's choice to succeed? Well, so there's been this back and forth, this push and pull, but particularly between the two boys over the decades. You know, Lachlan had been his father's right hand man.

4:57And James was also getting some flavor, but being seen as a bit more of a rebel. He created raucous records, wears an earring. He's seen more as a rebel at that time. Uh-huh. Uh-huh. Lachlan, you know, was ultimately, 20-some years ago, appointed to be the deputy chief operating officer, a term that I think exists at exactly zero other major American corporations. And so Lachlan gets experience. But Lachlan finds that these other top officials inside the corporation, including the head of Fox News, Roger Ailes, are undermining him at every opportunity. Roger Ailes had gone over Lachlan's head to talk to Rupert.

5:37And Rupert said something that got back to Lachlan, and that was, don't worry about the boy. Shipping him in the back and really making it very hard for him to prove himself. So he decamps for Australia. Rupert says, oh, this is a sign of weakness. Well, this is James's turn. James gets elevated. Although he's not interested in the newspapers, they prove to be his undoing. Right. This is when the UK's popular newspaper, News of the World, hacked into a ton of celebrities' voicemails, like Boris Johnson and Prince Harry and Gwyneth Paltrow. That's exactly right. So James gets caught up in this tabloid scandal in Britain.

6:15First of all, I would like to say as well just how sorry I am and how sorry we are to particularly the victims of illegal voicemail interceptions and to their families. It's a mess. James kind of recedes a bit. Lachlan emerges from exile and he comes back at his father's side. But Lachlan is clearly in step with his father about some key things. They were simpatico on politics during the Trump years. Rupert said, this is my son. He is in my image. We share a lot of the same conservative politics. Let's do this. Now, is this a company that one would want to take over? It's been a rough couple of years for the media conglomerate.

6:58I mean, there are a lot of people who look at the media and run fleeing in the other direction. Fox News, it is one of the most profitable properties in cable TV. Even at a time of cord cutting, it remains a resilient thing because its audience is large and its audience is passionate. News Corp, interesting, is fueled by the successes of the Wall Street Journal. So, you know, newspapers are limping around the world, but News Corp, I looked this up the other day, has really risen on the backs of the success of the paywall for the Wall Street Journal and its properties. James Murdoch argues, look, if you look at the way Rupert and Lachlan have run that company, their embrace of Trump and his lies about the 2020 election led them to have to pay nearly$800 million settlement over defamation of a voting machine company.

7:51And also, James would argue, hasn't helped Fox prepare for a future. It's basically desperately holding on as tight as it can to an ever-aging audience. And at some point, that audience will age out, and the people left aren't going to be subscribing to cable anymore. Now, going back to the court case, what is the court really deciding here? Doesn't Murdoch have the right to decide who inherits his empire? What the probate official said in Nevada was, you have the right to do this, Rupert Murdoch, but you have to convince me it is clearly in the financial best interest of all the beneficiaries.

8:31And so there are the three other adult children beyond Lachlan. And also there are two other children that he had with Wendy Deng, two daughters. So they would have to say Lachlan and Rupert clearly have a singular and best vision. Could Murdoch simply pay out the other three children? Such a good question. Over the years, he has paid out to soothe ruffled feathers, hurt feelings, to paper over family disputes. Problem for Lachlan is that Lachlan doesn't have the cash to buy them out. I'm told that there was some effort a couple years ago to look into this, and he found it very difficult to raise money to do it.

9:10And so back to business, what are the implications for News Corp and the conglomerate's other media assets if Lachlan's three eldest siblings took control instead of him in the U.S. and elsewhere? Well, I think the most interesting and visceral one is the direction of Fox News. James Merrick has made it clear that he thinks Fox is going off the rails, embracing conspiracy theories, pushing out things detrimental to the workings of democracy itself. He doesn't want MSNBC, but he wants something that he thinks would be more like Sky in the UK, more down the middle, more fact-focused. So huge implications for the family and also for the wider media democratic landscape.

9:52Oh, I think that's right. I mean, this is, you know, unquestionably the most influential and most important media conglomerate in the English-speaking world. And I think as it goes, so does a lot of our political discourse. And so goes a lot of framing of our understanding of the world around us. David Falcon Flick, thank you so much for joining us. You bet. This episode was produced by Cooper Katz-McKim with engineering by Gilly Moon. It was fact-checked by Sierra Juarez. Cake and Cannon edits the show and The Indicator is a production of NPR.

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