Rupert Murdoch picks a son in the real-life succession battle

0:00Emily Bell:This is The Guardian.

0:08Emily Bell:Today, how the new Murdoch successor will shape global media.

0:21Emily Bell:The scene was the Washoe County Courthouse in Reno, Nevada. Last September, private jets buzzed over the states' mountains and deserts, met by convoys of blacked-out SUVs. Inside, Rupert Murdoch and his four adult children gathering behind closed doors to try to settle a bitter family feud. A succession battle in Nevada over the future of one of the world's most powerful media empires might remind you of an award-winning TV drama. Succession, anyone? One billionaire publisher, Rupert Murdoch, wants just one of his children to succeed him. And three of his other kids are trying to stop him from doing that.

1:00Emily Bell:The saying goes, Vegas is where you get married. Reno is where you get divorced. And whilst this wasn't technically a divorce, this was a climactic moment in the Murdoch Empire succession battle that pit Rupert and his chosen son, Lachlan, versus his three siblings, James, Elizabeth and Prudence. Media mogul Rupert Murdoch arriving Monday for evidentiary hearings as he tries to change the terms of his family trust. Now, a year on, a massive financial settlement has been reached that cements Lachlan's control of the family media empire. The Murdoch family announcing today that Lachlan Murdoch, Rupert Murdoch's eldest son and chosen heir, is walking away with the keys to the kingdom.

1:45The shares of siblings Prudence, Elizabeth and James, bought out.

1:54Emily Bell:so who is Lachlan Murdoch and what does it mean for his father's legacy and the global media landscape at large from the Guardian I'm Lucy Hoff today in focus the Murdoch's bitter succession battle finally comes to an end

2:13Emily Bell:Emily Bell you are a Guardian contributor and you're also professor at Columbia Journalism School in New York, and you have covered Rupert Murdoch and his empire extensively in the last few years. Could we start with a recap about Murdoch and the scale of that empire? If you are in America, you principally know him as the owner of Fox News, which is the largest, most influential cable news channel. He also owns the Wall Street Journal, which is probably the most influential, certainly sort of financial news title. The News International stable in the UK is very well known. So, you know, his ownership of the Times, the Sunday Times, he's the person who set up and grew Sky.

2:57It's an empire that's really been sort of growing from its Australian roots in the 60s. He's really the last remaining old style media mogul. Do you like the feeling of power you have as a newspaper proprietor, of being able to formulate policies for a large number of newspapers in every state of Australia? Well, there's only one on a chance of that, of course, and that's yes. He is not like another company. He is very much personification of Murdoch himself in a lot of his media titles and his proximity to power in the markets he operates in. And we've seen that particularly in America. And we've obviously seen it and experienced it over many years in the United Kingdom as well.

3:36Emily Bell:Yeah, and it's that personification, isn't it, of the media empire that's made the battle to find Rupert Murdoch's successor so crucial. So before we turn to the deal that's been agreed in the last few days, let's go back to the late 1990s when this succession battle began. This began when Rupert Murdoch was divorcing his second wife, Anna, and a family trust was set up with his four adult children that controls the two Murdoch businesses, Fox Corporation and News Corp. What were the terms of that trust? So the important thing about the first trust was that it was constructed with equal voting shares to his, as you say, four adult children who were Prudence, Lachlan, James and Elizabeth.

4:21And the idea was that he foresaw this, the succession of the company as really sitting between those four children. And at the time, all of them, apart from Prudence, were engaged actively in managing parts of the company or had aspirations to become managers in part of the company. So it really was a kind of succession battle. And the idea was that these would be the people who would carry the company forward. And the other important thing about the trust was it was an irrevocable trust. So in other words, the idea was that it would be set up this way and whatever happened then down the line, it couldn't necessarily be changed.

4:59But the equality of the children on the trust meant that whoever was leading the company, for instance, as it turned out, Lachlan became the heir apparent. If the other shareholders, the other children within the trust decided that they no longer wanted him to be running the company, they could get together and vote him out. So at that point, you had an equal trust, which saw the unity of the children as a key part of the future of the company. But this is in 1999. That was a long time ago and an awful lot happened since then.

5:35Emily Bell:It sure has. And in the years since 1999, a clear successor has emerged, although there have been twists and turns along the way, which we'll come on to. But can we fast forward to September 2023, when Rupert Murdoch made the shock decision to step down as chairman of News Corporation, he handed over to his son Lachlan. Why did he make that move and how did it go down with his family? So, first of all, he's getting on a little bit. So I think that part of this was about just, you know, the passage of time, but part of it was also a worry about whether or not News Corporation, and particularly Fox, would be ideologically oriented in the same way after Rupert Murdoch's death.

6:20And that was something that he clearly worried about. He was thinking that Lachlan was ideologically aligned with him, ideologically aligned with Maga Wright in the United States, and that the other children were not. And not only were not, but in some cases, Murdoch had a very different relationship to them compared to 1999. So, for instance, James, who for a long time was seen as an heir apparent within the company, actually was no longer in the company at all. Not only not in the company, but effectively not really speaking to his father at all, completely estranged. So you have this confluence of family, political and business imperatives, which really meant that one clear leader could emerge and that that leader would be Lachlan.

7:13I'm conservative economically on the economics of the policy. I'm more liberal on social policy. What I do find is that when people tell me to think a certain way or that I shouldn't think a certain way, I'm more inclined to think a different way.

7:28Emily Bell:And crucially, in order to give Lachlan full control, Rupert would need to change the terms of that trust signed in 1999. There has been since September 2023, a very bitter legal battle which began behind closed doors in a courtroom in Nevada. How did the Murdoch family end up there? So there's a really fantastic detail about how they all ended up in court in Nevada. It was written about by a journalist called McKay Coppins in The Atlantic magazine, where the older children involved in the trust, certainly Prue and Elizabeth and maybe James, had been watching separately the episodes of Succession where Logan Roy dies.

8:15So what we do today will always be what we did the day our father died. so let you know let's grieve and whatever not do anything that restricts our future freedom of movement and afterwards i believe it was uh prudence calls her sister and says oh my god we haven't sorted any of this out they were actually inspired by that episode of of succession to really focus on what was going to happen to them. Because in some ways, it was a dramatisation of their own lives that tracked so closely to the issues of succession that it prompted them to realise that they had to act and make sure that the irrevocability of the trust stood.

9:07So in other words, what they wanted to do was they wanted to contest this idea that Murdoch could change it and could change the voting rights. And they wanted to do it now and make sure that it couldn't be overwritten. That ended up in court in Nevada.

9:21Emily Bell:I mean, extraordinary for Jesse Armstrong and the other writers of Succession to realise that they've played such a crucial role in the real life saga of the Murdoch family. So from what you're saying, Rupert Murdoch was trying to change the terms of the trust and the other kids having watched the final season of Succession on their TV screens decided to fight back. And that's how we ended up in Nevada. But why there? And what did the judge decide? Nevada is a place where I think it was anticipated that Murdoch would get the result that he wanted when it was contested by his children, saying that he shouldn't be allowed to change the terms of this trust.

10:02They were looking for a court that would say it could be changed. And it could have been changed had the Nevada Commissioner decided that the changes were made in good faith. What happened, though, was that the Nevada Commissioner found that Murdoch had actually acted in bad faith in trying to change the terms of the trust. The Nevada Commissioner ruled that Murdoch and Lachlan acted in bad faith, according to a leaked court ruling. James, Elizabeth and Prudence welcomed the decision, saying in a statement obtained by the BBC that they hope to move beyond this litigation to focus on strengthening and rebuilding relationships among all family members.

10:46Emily Bell:OK, so the three siblings win that case in Nevada and deny Rupert and Lachlan the ability to write them out of the terms of the 1999 trust. So instead, Rupert and Lachlan try to reach a financial settlement with those siblings to buy them out. they've now managed to do that. What's happened and how big is the payout? So the financial settlement that they were able to secure has given them just over a billion dollars each. And that seems like a reasonable amount actually for your share in a family company. Though I have to say, when you think about the tremendous amounts of money and the huge wealth of Silicon Valley these days, in some ways it's actually, I was a little bit surprised that the number was that low because it feels as though it's a real reflection of where you have somebody like Elon Musk who owns X, etc., is worth$350 billion.

11:45The idea that you can give up a share in what was the great media empire of its day and it gets you a billion dollars. It doesn't seem like that much in that context, but it does seem like a pretty fair settlement in terms of, I think, certainly three people who were not necessarily ever going to really want to run the company. A new trust is going to be constructed, which brings in the younger children, Chloe and Grace, who are the daughters of Wendy Dang. It means that Lachlan has an unchallenged hold on the company. When Rupert Murdoch dies, he's in charge of it now. There can't be a challenge to him from the other votes on the trust.

12:30And the new trust lasts until 2050.

12:40Emily Bell:Okay, so let's talk about Lachlan Murdoch more broadly. He's been described by his father as the best to run the business because he's greatly respected inside and outside the company. He's also been reported to be Rupert's favourite son. What do we know about Lachlan and his politics? So what we know about Lachlan is that he has become, I think, probably more right-wing. In his youth, he had a stint actually at News International in London when he was going through the Rupert Murdoch training camp where all his children go to different divisions. I was talking to people who had worked with him at News International back in the day.

13:22And as a young man, I think that if you'd said he was going to turn into a very right-aligned media executive, they would have been quite surprised. He was very laid back and somebody who didn't seem to be particularly aligned with his father, great friends with people in the arts. And he actually had a spell where he left the company. He went back to Australia. He didn't really want to participate in the management of the company. And this was at a time in, I think, the 1990s, where it was thought that James would actually be the person who would be running the company. I think amid the tension of his brother's rise, Lachlan sort of almost kind of stepped back.

14:09In 2005, Lachlan, seen by many as the heir apparent, surprised many when he walked away from News Corp day-to-day operations to run his own TV network. That left the door open for the younger James to rise, first through British Sky Broadcasting and then up the ladder to include its UK newspaper properties. Fast forward, we have the phone hacking scandal. all. News International chairman James Murdoch has appeared again before British MPs to answer questions about a phone hacking scandal that led to the closure of the News of the World tabloid. James, who was really held accountable for that, not just externally, but certainly by his father, exiled to a minor office back in New York, stripped of any real roles within News Corporation.

14:57Lachlan at that point had come back into the business. So what we know about him is that he's Actually, he's revealed himself to be extremely ambitious, a real survivor in this environment, and has understood that if you want to run the company, you basically do have to do your father's bidding. You know, you have to cast yourself in that mould.

15:16Emily Bell:So James was essentially the fall guy for the phone hacking scandal, which was hugely damaging for News Corp and for Rupert Murdoch. James, as you say, was hung out to drive for that and sent into exile. But it wasn't just that issue, was it? it was that James was becoming more and more liberal with a small L compared to his dad's politics, right? I think that James, certainly through his lens as somebody who felt very passionately about the environment, that was a real ideological schism. And I do remember actually him talking quite passionately about things like energy use, which again, back, you know, 20, 30 years ago, people would not have expected executives to be talking about.

16:01He was openly critical of the line of the Fox companies in the news call companies in Australia who had been peddling climate denial through their broadcasts. And the same is true in America as well, where Fox News has been extremely climate denialist. And that ideological divide drove him, his wife, and I think ultimately, you know, his whole family away from Murdoch, not just as somebody he felt he couldn't be in the business with, but a family member that he became estranged from.

16:46Emily Bell:so in the couple of years since Rupert handed the reins over to his son Lachlan back in September 2023 how has Lachlan been faring in the running of the company and how central has he been to the operations? Well, I think it's a very top-down structure at both News Corp and Fox, so he's definitely been very central to it. He's been much less visible in some ways than Murdoch, I think, Rupert, than his father, possibly because the Murdoch family has always, for the last 30 years, has been the most interesting story in media. And now there's a shift in how the whole, particularly the whole right-leaning media universe is perceived.

17:29So I would say that Fox News continues to be reasonably successful. It hasn't changed its editorial line. The other companies are doing pretty well, but they are no longer the force they once were because that has just shifted. So I think we're at a really interesting inflection point for the business in terms of its influence in American politics. And Fox News here has had this lock on viewers over the age of 60 who are such an important voting bloc in any election, and particularly for the Republicans because they tend to lean Republican. But the influence now in American politics and the media influence has shifted to much younger people.

18:22And the right-wing media sphere is now essentially in Elon Musk's hands through Owning X, really turning that into a much more editorial product. And through this whole generation of podcasters and influences from Joe Rogan, who has America's largest podcast, has been sort of very much kind of somebody who's featured a lot of people from the Magiverse So I think there's a huge question now about just as Lachlan has all the voting rights, his father is gone from the boards, he is now in charge. This is not going to be his father's world.

19:05Emily Bell:We know that Rupert Murdoch is a very hands-on editor or certainly was back in his heyday. His son Lachlan is reported to have more conservative politics than his dad. But can we expect Lachlan to be the same sort of executive? I think it's very unlikely that he'll be the same sort of executive again. You talk to people who worked even quite recently, News Corp, and in some of their companies, somebody was telling me that they would quite often see Rupert in the office at six o 'clock on a Friday, asking where everybody was. their houses in the Hamptons no doubt so I can't think of a single case of a founder company like News Corp where you've had a second generation who have come in and been as present and as engaged and feeling as though they have because they haven't built it you know Lachlan did not build this company the other thing to say about Rupert was that he did have really quite good editorial instincts.

20:10I remember once talking to one of the editors at The Sun, again, back in the day when it was selling four or five million copies. And they said, you know, the really interesting thing about Rupert is that he arrives in town, he knows everything that's in the paper. And he has a sense of whether or not this is right for our readers. It's really important to understand that Murdoch, even though he inherited a small newspaper for business from his father in Australia, really built this empire ground up and was deeply involved in all this and loved journalists and journalism and newspapers. Lachlan and his siblings grew up, as somebody once said, in a goldfish bowl and with the actual distrust slightly of the press and wanting to keep away from them rather than engage with them, just had this completely different life experience, which means that he doesn't have the same granular instincts for his audience, I think, that Murdoch did.

21:09Emily Bell:Coming up, is this really the end of Rupert Murdoch's reign?

21:24Emily Bell:Rupert Murdoch is now, of course, 94. And with the succession battle apparently settled, do you think he'll really step back or will he still be pulling the strings? He's on the record as saying that he will never retire and that the day he retires is when they carry him out of the company in a box. He's recently remarried, believe it or not, I lost count. I think we're on wife number five. His mother was 103 when she died. He is mentally still, by all accounts pretty sharp. I don't think he has retirement in his vocabulary. I think one feels that whilst ever there is breath in his body that he is going to have some kind of say in what is going on in the company.

22:12I think the interesting thing is that generational shift though that if you look at the generation of politicians and Murdoch as being a very senior figure in that realm. We're now looking at a very different generation of businessmen and politician. J.D. Vance is in his early 40s. You're looking at Mark Zuckerberg, etc., where the economic power and communications influence lies in America. And they're all much younger. Lachlan's pretty senior, actually, in that company. Poor old Sol, already in his 50s. It feels as though things will inevitably be changed by time, if that's a diplomatic way of putting it.

22:51But things are also changing so dramatically, systemically, that we are definitely seeing, as I say, the transfer of power, but also the end of an era.

23:02Emily Bell:So the new family trust ends in 2050. So there's another 25 years. I think we can safely assume that Rupert Murdoch won't live another 25 years, although he might live another 10 more by the sons of his mother's age when she died. But does this really put an end, do you think, to the succession battles? Or can we expect, in your view, another round of Murdoch infighting as we approach that next deadline? I don't really see any of them having the appetite for a fight because increasingly, what are you going to be fighting over? It's going to be, I think, a much more challenging horizon. We're entering this completely different technical world where You can't say that the lens which will be put on the world will come through one TV station or through one set of newspapers.

23:53That world has gone. And financially, one feels as though Fox and News Corp have the same problem of reinvention. Who would want to fight somebody for control over that? I feel as though the adult children have taken the money and gone. The younger children don't have voting rights. So it does really feel as though this is now Lachlan's game. But is it a game that you would really want to participate in right now? It doesn't feel as though the future is going to be quite as exciting and powerful and successful as the past.

24:28Emily Bell:Oh, well, fascinating. Thank you so much, Emily. Thank you.