Rupert moves to cement Lachlan as heir

In January 2021, Fox News quietly fired its political editor Chris Stirewalt. He had made the decision two months before calling Arizona for Joe Biden in the 2020 election. Media titan Rupert Murdoch was furious about the ruling. So were many of the network’s viewers, who fled to Newsmax and One America News after Donald Trump denounced Fox News as disloyal. Ratings plummeted during that time.

“I hate our Decision Desk people!” Murdoch wrote on November 7, when his network was predicting a Biden win.

To win back viewers, Fox News began circulating reports that the election was rigged. Ratings soon stabilized.

That decision to parrot Trump's election conspiracy might have looked different if a certain segment of Murdoch's children, who have expressed apprehension about the internet's further rightward drift, had called the shots. And they may soon have that chance if they prevail over their father, now 93, and his brother Lachlan, the chosen heir, in a succession battle worthy of the TV show he partly inspired, which could determine the editorial direction of Fox News and The Wall Street Journal.

A two-week saga is set to begin in a Nevada probate court on Monday over a petition by Murdoch to change the terms of the irrevocable family trust, the vehicle through which he controls News Corp. and Fox, to ensure that Lachlan remains in charge of his media empire after his death, according to documents leaked to The New York TimesThe trust, as currently structured, gives equal voting rights to his four eldest children. Although Lachlan is currently chairman of News Corp., he could be stripped of his title by his brothers, who are widely seen as more politically moderate and have banded together to oppose overhauls of the trust.

To cement Lachlan as his successor, Murdoch will have to demonstrate that the changes are being implemented in good faith, with the aim of benefiting all members of the trust, according to the Times report that cited a probate judge’s order. The crux of his argument in the case, which is under seal, revolves around maintaining Fox as a conservative political media force by ensuring that Lachlan’s brothers and sisters won’t be able to wrest control of the company from him and moderate its coverage.

Robert Strauss, an attorney specializing in business succession planning for high-net-worth families, points out that the key issue in the case is whether the revisions are favorable to Everything is fine beneficiary. “It’s hard to see how taking away control from someone is beneficial to that individual,” he says.

Murdoch believes Lachlan is best positioned to stick with the current editorial direction of Fox, which has seen ratings rise over the past year even as pay-TV viewership has plummeted. The network has historically followed a Republican majority, so as the party embraced far-right topics during the Trump era, so have many Fox hosts. In a memo to employees when he stepped down from the boards of Fox and News Corp., Murdoch said his eldest son is politically aligned with him and will continue the networks’ conservative stance.

“The fight for free speech and ultimately free thought has never been more intense,” he wrote. “My father was a firm believer in freedom and Lachlan is absolutely committed to the cause.”

On the other hand, James, who was once seen as the heir apparent to his father’s media empire but lost a power struggle with his brother, has taken aim at his family’s conservative media giant. He resigned from News Corp.’s board in 2020 over “disagreements over certain editorial content published by the company’s news outlets.” He may have been referring to Fox’s coverage that the election was stolen, which led to at least three shareholder lawsuits against the board, plus a $787.5 million payout to Dominion Voting Systems. Voting technology company Smartmatic continues to pursue a $2.7 billion defamation lawsuit against the network.

Stacie Nelson, a partner at the law firm Holland & Knight, notes that the probate court may consider whether naming Lachlan as sole successor would benefit his brothers by increasing the value of their shares, despite losing their voting rights.

“It is possible that the court may consider the future direction of the news agencies as part of the fact that Lachlan will be the best administrator, so that it is still in [other beneficiaries’] interest,” he says.

Strauss notes that the court is unlikely to grant Murdoch's petition to change the trust if the sole purpose is to “reduce the stock of a people or take away their voting control.” He adds that the “definition of a bad reason is if [the amendment] would give one trustee an advantage over the others.”

There’s also the question of whether a succession battle will unnerve investors. In a September letter, activist investor Starboard Value noted that Murdoch’s heirs have “very different worldviews,” which could be “crippling to the strategic direction of the company” after Murdoch’s death. It added: “This is clearly not the appropriate governance structure for a public company and we believe it has exacerbated News Corp’s valuation discount to its intrinsic value.” Giving Lachlan the keys to Murdoch’s media empire in perpetuity could remove that uncertainty.

The media and entertainment industries are no strangers to high-stakes succession dramas. At the height of their feud, Sumner Redstone tried to buy out his daughter Shari’s stake in National Amusements, which was controlled through a trust. They later reconciled.

Unlike that battle, the Murdoch matter will be played out in closed court. On Friday, Probate Commissioner Edmund Gorman Jr. rejected a petition from a coalition of media organizations, including The New York Times, The Washington Post and The Associated Press, to declassify court proceedings and records. It found that the hearings will remain closed to prevent disclosure of classified information.

Alex Weprin contributed to this report.

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