Murdoch succession: who wins from move to reunite Fox and News Corp? | Rupert Murdoch

Murdoch succession: who wins from move to reunite Fox and News Corp?  |  Rupert Murdoch

This week’s 200th anniversary of the Sunday Times gathered some of the biggest names in media at the headquarters of the British Academy of Film and Television Arts in London’s Piccadilly to celebrate one of the jewels of Rupert Murdoch’s empire.

But talk of famous covers and scoops among guests at Monday night’s event, where attendees included News Corp chief Robert Thomson and News UK chief Rebekah Brooks, was overshadowed by the news that broke three days earlier: the mogul’s plan to reunite his media empire. .

Murdoch succession: who wins from move to reunite Fox and News Corp?  |  Rupert Murdoch
Rebekah Brooks and Rupert Murdoch. Photo: Shutterstock

After a lifetime of deals, Murdoch, now 91, may be making his last play as he tries to merge News Corp – home of the Times, the Sun, the Wall Street Journal and the Australian – with Fox, the broadcaster of Fox News and the crown jewel of NFL games, as he leaves the running of his empire to eldest son, Lachlan.

While the 51-year-old heir, who shocked his father by abruptly leaving the family business in 2005 to move to Australia and pursue his own interests before being lured back a decade later, is poised to become chairman, there is much chatter over who will get the top job of running the day-to-day business.

Thomson had long been tipped to lead the combined group after a merger – he is Rupert’s right-hand man and the Australian regards him as a son. But with Lachlan in the driver’s seat, that’s not the case.

Quick introduction

Rupert Murdoch’s timeline: a lifetime of deals

Performance

1953

Rupert Murdoch takes control of his father’s Adelaide-based newspaper business after his death, eventually building it into the dominant player in the Australian market.

1968

Moves internationally and beats Robert Maxwell to buy the News of the World, Britain’s best-selling newspaper, from the Carr family.

1969

Extends influence in British media by buying the Sun and making it a tabloid. In 1977 it overtook the Daily Mirror as Britain’s best-selling daily newspaper.

1981

Buys the Times and Sunday Times newspapers, resulting in talks of too much media control.

1985

Entering the world of broadcasting, the movie studio buys 20th Century Fox and a number of local television stations, which will eventually become the Fox network.

1989

Launches Sky Television, the following year it merges with a rival to form BSkyB, and in 1992 changes the economics of British sport and broadcasting forever by bringing the Premier League to pay-TV.

1996

A year after closing the Today newspaper, which he had bought from Tiny Rowland in 1987, Murdoch launches Fox News. He had made an unsuccessful run at buying CNN, which was snapped up by Time Warner. In 2016, Fox News became America’s most watched channel on cable television.

2007

Buys Dow Jones, owner of the Wall Street Journal, for $5 billion, ending 105 years of Bancroft family ownership.

2011

Forced to shut News of the World as the 167-year-old title is sacrificed to try to stem the fallout from the phone-hacking scandal. Murdoch is hit with a shaving foam pie by a member of the public while answering questions about the hacking in front of a committee of MPs. The scandal derails Murdoch’s first attempt to take full control of Sky, resulting in his newspaper and broadcasting assets being split into separate companies, News Corp and 21st Century Fox.

2017

Murdoch announces a $71 billion deal with Disney to buy most of 21st Century Fox, a move that effectively cuts its CEO, James Murdoch, out of the running. Eldest son Lachlan remains as executive heir to the remaining empire, News Corp and the newly formed Fox Corporation.

2018

Comcast outbids a Disney-backed Fox to take control of Sky across Europe for £30 billion. Murdoch admits that the pay-TV company is the asset he is saddest to give up.

2021

A voting technology company is filing a $2.7 billion lawsuit against Fox News, three of its top hosts and former lawyers including Rudy Giuliani, alleging they conspired to spread false claims that the company helped “steal” the U.S. the presidential election of Donald Trump.

2022

Murdoch is proposing a total merger of News Corp and Fox, having vowed never to reunite the two parts of his empire, nine years after being forced to split them in the wake of the phone-hacking scandal. Mark Sweney

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Then there is Brooks, another Rupert favorite who has long had ambitions to rise further. However, she lacks international experience and has the issue of the phone-hacking scandal on her CV, with new allegations recently made relating to her tenure as Sun editor. (News UK has always denied hacking took place at that paper, saying it only happened under its sister title News of the World.)

“Lachlan is not going to be running the business on a day-to-day basis. The really interesting question is, who will be? said a source. “I think it will be Lachlan’s decision who does, not Rupert, and that makes it interesting. Robert has historically been protected, but Rebekka is also powerful – she’s the one person all the kids talk to. She’s like another sibling and is very close to Lachlan.”

Lachlan, who insiders say opposed the decision to downsize the empire by selling 21st Century Fox’s global entertainment assets to Disney for $71bn (£63bn) five years ago, is seeking to rebuild scale in an era of global technology and media giants .

Rupert, Lachlan and James Murdoch.
Rupert Murdoch with sons Lachlan (left) and James. Photo: Peter Nicholls/Reuters

“Lachlan was furious,” says one former executive. “I think that was the nail in the coffin then [his brother] James also supported it. James and Lachlan, no matter what anyone says, got along. After that they stopped talking. I think that is still the case now. A scaled-down News Corp is the opposite of what he wants.”

The sale of 21st Century Fox also cut the younger James, once seen as the heir apparent, out of the line of succession and ended any possibility of a future potential dynastic battle.

The 49-year-old resigned from the board of News Corp two years ago, citing “disagreements” over editorial content, understood to include coverage casting doubt on climate change, and cutting his last formal link to the empire created by his father.

A reunited News Corp and Fox, valued at $9.7 billion and $16 billion respectively, would create a more muscular $26 billion business. This would put it on par with the market value of the newly minted Warner Bros Discovery ($30 billion), albeit a relative minnow compared to beasts like Disney ($180 billion) and Comcast ($134 billion), which bought Murdoch’s Sky for $30 billion pounds four years ago.

Special boards of each company are now considering the merits of a merger, and the relative value of each company to each other in the proposed share deal, but banks and shareholders appear to have already made up their minds.

Investors in Fox and News Corp both believe they are undervalued – shares in each are down 30% in the past year – which analysts suggest a tie-up is unlikely to solve.

There is also the cautionary tale of the similar recombination of CBS and Viacom after 13 years of separation. The business, now called Paramount, is valued at $12.5 billion — less than half the value of the separate businesses before the deal.

“On a standalone basis, this transaction raises more questions than answers as we struggle to see the strategic rationale for combining these two companies,” said Jessica Reif Ehrlich, an analyst at Bank of America, summarizing the broader market reaction.

Some investors in the News Corp camp are concerned about the “toxicity” of right-wing Fox News, and the practicality of the two multibillion-dollar lawsuits it is facing over allegations that it promoted the spread of theories that the US election in 2020 was set. .

Meanwhile, some Fox investors refuse to tie the hugely profitable business to a primarily publishing business, regardless of the leaps and bounds it has made striking commercially lucrative ad deals with Silicon Valley giants like Google.

Analysts at MoffettNathanson put Fox on track for record profits of $3.3 billion next year, while News Corp posted a $1.6 billion profit in the year to the end of June, a 31% increase.

Getting a deal through would require a majority of non-Murdoch family shareholders.

“There will be some investors on the margin who will have a problem with Fox News in their portfolio,” another source said. “And the Wall Street Journal [staff] loathe Fox News, they see it as toxic, stupid and think it will hurt their brand. But at the end of the day, it won’t matter too much because Fox News is so damn profitable.”

But with the Murdochs’ family trust controlling 39% of voting shares in News Corp and 42% in Fox Corporation, there’s a good chance they’ll get their way if the plan gets as far as being put to a shareholder vote.

“I think this has been in the works for two years,” the former executive said. “I give it a 75% chance it will happen, 25% it will be blocked. It’s all about Lachlan. Rupert is in his 90s – this is his last deal, it’s succession planning.”

When the Rupert era ends, the power behind the family trust will be shared equally between his four eldest children – Lachlan, James, Elisabeth and Prudence – while his two youngest daughters, Grace and Chloe, are financial beneficiaries.

Whether such a set-up can produce a situation similar to HBO’s hit drama Succession, which features members of a powerful family vying for control of a sprawling media conglomerate that has drawn endless comparisons to the real Murdochs, remains to be seen.

But for now, for Rupert, merging the two businesses he was forced to split against his will nearly a decade ago after the phone-hacking scandal is about securing a family legacy after seven decades of deal-making.

“At a certain level of money, it’s control that matters most,” says Claire Enders, founder of Enders Analysis and a longtime Murdoch watcher. “What this transition is about is the future control and restoration of the original structure of News Corp and a long-term umbrella for the newspaper’s assets.”

Despite the negative sentiment from investors and Wall Street about the rationale behind the merger, sources close to Murdoch say the deal is about business, not family.

“The proposal is 100% based on business rationale that is a combination of complementary portfolios of premium content to create a global leader in news, live sports and information,” the source said. “Any comment that suggests it has to do with succession planning is absurd and comes from sources without knowledge of the strategy and intent.”

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