Extract from ABC News
Analysis
As a deeply divided America prepares for an election, Lachlan Murdoch is under immense pressure. (Supplied: Lionel Hanh Picture Group for Fox Sports)
At the eye of the storm, Lachlan Murdoch looked calm enough as he strode through the press pack and up the steps of the courtroom in downtown Reno, Nevada, where a probate commissioner could decide the future of the family business once and for all.
But as the battle raged inside the court – closed to media and the public – Lachlan was undoubtedly seething at having to fight his siblings for a succession that he believes is rightfully his.
Lachlan arrives with wife Sarah for the first day of court hearings. (Reuters)
After being tapped on the shoulder by his father Rupert more than a decade ago, after running Fox Corporation for the past five years, and after being formally anointed the successor when Murdoch Senior retired in September, Lachlan believes he has been working to enrich his siblings and is entitled to the prize – unassailable control of the Murdoch Family Trust, just like his father enjoyed for the past 25 years.
Under the terms of the family trust, set up in 1999 following Rupert and Anna Murdoch’s divorce, each of Rupert’s children at the time – Prudence, Elisabeth, Lachlan and James – would have equal say in the fate of the businesses when Rupert dies.
Perhaps Lachlan now has cause to regret his decision not to buy out his siblings when that option was seriously contemplated a few years ago. It’s reported that documents were drawn up but Lachlan baulked at the price. He would have had to raise billions of dollars and reasoned that it was not really necessary to pay for control of the trust because he already had it.
Of his three siblings with a voting stake in the trust, half-sister Prudence was uninterested, older sister Liz was out of the business, and his younger brother James was bitterly estranged from their father. What threat could they pose?
Rupert arrives with wife Elena Zhukova Murdoch at the Second Judicial District Court in Reno. (AP: Andy Barron)
As the years rolled by, however, the prospect that his politically moderate siblings might use their combined votes to roll Lachlan 3-1 once Rupert dies has only become more real.
As one Wall Street analyst told me when I was researching my biography on Lachlan Murdoch, in a line that triggered international headlines, it would be “fair to assume that the day Rupert dies is the day Lachlan gets fired.”
'Succession' plays out in US court over Murdoch media empire
Will Lachlan buy out his siblings?
Having taken over the business, Lachlan faces a conundrum: the better he does at growing the profits of Fox and News Corporations, the more valuable those businesses become and the harder it gets for him to buy out his siblings.
Rupert himself faced a similar fork in the road back in the 1990s and decided to buy out his three sisters. They were not fans of everything published and broadcast in the Murdoch media and were certainly averse to the risks he liked to take, such as building a fourth broadcast television network in the US or betting the whole empire on the launch of the Sky satellite television business in the UK.
Rather than suffer their criticism, or absorb their nervousness, he bought them out of the family entity that controlled News Corporation entirely, so that his children, and his children alone, could inherit control.
Media observers say the battle for the Murdoch empire isn't about money, but power. (Getty Images: Stephanie Keith)
Maybe Lachlan wants the same thing. But can he afford to do it? Nobody outside of the family can be sure of the value of the trust's holdings but the combined stakes in Fox and News Corporations alone are reportedly worth $US6 billion ($8.8 billion) and the whole trust is estimated to be worth considerably more.
To buy out Prudence, Elisabeth and James – and completely eliminate the risk of being rolled after Rupert's death – would cost at least $US3 billion ($4.4 billion). Given Lachlan's fortune was estimated at $US2.4 billion ($3.5 billion) by The Australian earlier this year – and much of that is invested in shares and property, not cash – it is by no means clear he could fund it.
And does he even want to? Despite the current bitter family feud, there has always been an ambivalence about Lachlan when it comes to the succession. He walked out of the empire in 2005 and moved to Australia, saying he was happy to “paddle his canoe in quieter waters”, building his own mini media empire via his private firm Illyria.
Rupert had to coax him back into the top job, in a real-life version of the scene at the end of the third season of the HBO series, Succession, where Logan Roy turns to his son Roman and tells him he wants him to run ATN, the series’ equivalent of Fox News:
Logan: "I need a fire-breather. A ruthless f**k who will do whatever it takes ... "
Roman: "... You really want me at ATN?"
Logan: "More. I need you."
That’s how it happened with Lachlan and Rupert, who felt neither Elisabeth nor James were plausible chiefs of the deeply partisan Fox News.
A matter of principle or profits?
So as Prudence, Liz and James rolled up to the Nevada court in a Succession-grade convoy of black SUVs – a striking statement of unity – Lachlan might see only passengers and hypocrites, lining up to divide the spoils of a business that they loathe and condemn and distance themselves from at every opportunity. Why should they benefit from the years of work he has put in, on top of Rupert’s seven decades of prodigious toil?
James and Elisabeth Murdoch arrive at court for day two of the hearing. (Reuters: Jackie Luna)
Lachlan hopes the Nevada probate commissioner will give him control of the Murdoch Family Trust … without him having to put his hand in his pocket. After all, it’s what Rupert wants, and he built the business.
The siblings, of course, see things very differently.
When I wrote my unauthorised biography of Lachlan in 2022, I was guided by various well-placed sources that the role of Fox News in particular had become so controversial inside the family that control of the trust was no longer just about profit and loss. It was in the long-term interests of democracies around the world, I was told, for there to be four shareholders in the family trust who are active owners in the business.
The siblings, in other words, did not trust Lachlan to run such a powerful media empire, and their stakes in the trust were no longer for sale at any price.
Fox News will play a key role in shaping the debate for this year's presidential election. (Supplied: Picture Group for FOX)
For all the principle involved, however, it remains entirely possible that a settlement is reached – it could come any day – and the beneficiaries of the family trust agree to give Rupert and Lachlan what they want.
It is also possible that whoever loses this case will appeal and the dispute could drag on for months, even years.
In the meantime, in just six weeks there will be a US election – arguably the most consequential in our lifetime. What bearing does the Murdoch family dispute have on the election? More than you might think.
Lachlan Murdoch finally realised his ambition to take over the family empire in November (Australian Story)
'American democracy is on the line'
While it is impossible to know what is going on in a sealed courtroom, we know from reporting in the New York Times that the Nevada probate commissioner has to decide whether Rupert is acting in “good faith” in his effort to amend the trust to hand control to Lachlan, and whether it is in the best interest of all beneficiaries that he do so.
Rupert's rationale for amending the trust is that only Lachlan can be trusted to keep Fox News on its hard-right trajectory. (Reuters: Rick Wilking)
Rupert and Lachlan will argue that the commercial success, and therefore the economic value, of the Murdoch media assets, in particular Fox News, is intrinsically tied to their conservative editorial stance.
It is not hard to imagine Prudence, Liz and James arguing that a more responsible editorial line at Fox News – not so much left-leaning like CNN or MSNBC but shed of disinformation and conspiracy theories like Trump’s Big Lie about the stolen 2020 election – would add more value.
They might argue that it would no longer be necessary to write $US787 million ($1.1 billion) cheques to settle egregious defamation cases such as that brought successfully by Dominion Voting Systems.
This is where Lachlan Murdoch, having taken over from his father, faces the most important test of his life. Will the world see on Fox News, through election 2024 and its aftermath, a repeat of what we all saw in 2020? This time the responsibility rests with Lachlan and nobody else.
Fox News is the most-watched cable news station in the states. (AP: Mark Lennihan)
On all current polling, the US election will be close. Only last week, reports gave vice-president Kamala Harris an edge in the national popular vote but put Donald Trump ahead in the race to win the required 270 electoral college votes.
If Trump loses narrowly, like last time, and if his campaign disputes the result, like last time, the coverage on Fox News will be critical to acceptance of the election result among Republicans. Will Fox News again undermine the legitimacy of the election result?
Former Fox News conservative political commentator Tucker Carlson and former President Donald Trump. (AP: Seth Wenig)
New York Times’ writer-at-large Jim Rutenberg, who broke the story of the Murdoch family trust dispute in July, told Australian Story that, “there's an evidence-based case to make that American democracy really is on the line, because democracy only works if the losers accept defeat … How Fox News treats this election if it comes down to a Trump loss and a Trump refusal to accept that loss will be critical.”
As former New York Post political editor Gregg Birnbaum, who worked for Lachlan Murdoch two decades ago, told Australian Story in June: “Here's a chance for Lachlan Murdoch to tell the story to the Fox viewers, whether they want to hear it or not.
"Tell them the truth, tell them what's going on, be honest, do great journalism and let that journalism take you to the truth.
"And I think that would really show that, hey, Fox has moved in a new direction … and that will go a long way toward making things right.”
Apart from anything else, doing the right thing might strengthen Lachlan’s hand in the Murdoch’s family trust dispute.
For all of us, the stakes – in Nevada, and in November – are incredibly high.
Murdoch Part 1 on YouTube
Watch the final episode of the Australian Story special Making Lachlan Murdoch at 8:00pm (AEST) on ABCTV and ABC iview
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