How the Murdoch family got into a legal fight over Fox’s future

Sarah Ellison, Jeremy Barr
| Washington Post

By stepping away from the family business, James Murdoch has made it clear that he does not approve of the direction the company is heading.

Leaving his executive position and later his board seat, the younger son of conservative media mogul Rupert Murdoch issued statements criticizing the coverage of Fox News and other Murdoch properties — in particular, denouncing the “continued denial” of climate science by their Australian newspapers during the wildfire season. He quickly established himself as a center-left benefactor, donating to environmental and democracy causes.

But even in unofficial exile, James still posed a potential threat to his father’s plans to link the company’s future to his eldest son and ideological soulmate, Lachlan, chairman of News Corp and executive chairman and CEO of Fox Corporation.

Now, their attempt to ensure that James’ more liberal political views do not affect the right-wing market positioning of the company’s jewel, Fox News, has escalated into a larger conflict for the Murdoch family.

The revelation of a secret legal battle pitting James and his two older sisters against their father and brother in Nevada probate court, first reported by the New York Times, has sparked widespread speculation about what the siblings would do with more influence over the company. Would they try to move Fox News and other media companies closer to the center?

But people close to James say he and his sisters, Elisabeth and Prudence, are primarily interested in challenging what they see as an exercise of authority by their brother and father.

“It forced them into a position they didn’t really want to take,” said Paddy Manning, Lachlan Murdoch’s biographer.

The dispute is set to go to trial in Nevada in September after attempts at previously unpublicized settlement talks failed, according to two people familiar with the dispute, who spoke on condition of anonymity to discuss sensitive family matters.

Similar discussions failed many years ago when Lachlan tried to buy out his brother and sisters’ shares.

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Rupert Murdoch, now 93, started out as a newspaper publisher in Australia and has built a global powerhouse that influences politics and culture on three continents, including Fox, the Wall Street Journal, the New York Post, the British tabloid Sun and a host of television stations and other businesses.

Yet in a sense, this dispute raises the same questions and tensions that surround every family business:

Who takes over? To what extent can the founder rule from the grave? And perhaps most important: how do multiple heirs agree on what to do with their inheritance?

“A lot of the difficult drama in family businesses happens within a generation – between siblings,” said Jeffrey Sonnenfeld, a professor at the Yale School of Management.

Although Murdoch has long stressed that he would like one of his children to succeed him, it was never a foregone conclusion that it would be his eldest son.

Lachlan, now 52, effectively left the family business for almost a decade after feeling undercut in a corporate dispute with some of his father’s more experienced executives in 2005. Meanwhile, James Murdoch, now 51, rose to become CEO of the family’s European and Asian operations, often seeking to expand the company. But his ambitions were undermined when a wiretapping scandal involving the family’s London tabloids prevented them from taking over the UK’s largest pay-TV provider.

Eventually, in 2015, Rupert gave both sons the executive roles – James as CEO and Lachlan as co-CEO. When he realized the brothers were increasingly at odds, he resolved the issue by selling 21st Century Fox to Disney – leaving James with no role, which initiated his eventual departure.

Although he has officially left the company, James has the same voting rights as Lachlan in the Murdoch family trust that controls the business, as do their sisters, Elisabeth, 55, who worked for the company briefly, and Prudence, 65, who has never worked for the company.

The only Murdoch child still working in the family business, Lachlan was also the only one of the four eldest children to attend his father’s wedding in June to his fifth wife, retired molecular biologist Elena Zhukova. (Murdoch also has two daughters in their 20s from his third wife, Wendi Deng, who have equal financial interests in the trust but no vote.)

And he is the person who most shares his father’s conservative political views.

Rupert Murdoch is trying to change the trust structure, arguing in sealed court documents that the only way to preserve the company’s value for his heirs is for Lachlan to become its sole trustee, according to three people familiar with the family feud.

One of those people told The Washington Post that the billionaire made clear in court documents that maintaining the company’s conservative stance was key.

All three said his concern was that after his death, his three remaining adult children might outvote their brother.

The Times cited a sealed court document it had obtained describing Rupert Murdoch’s concerns that the “lack of consensus” among the siblings “would impact the strategic direction of both companies, including a potential realignment of editorial and content policies.”

Last month, Nevada’s probate commissioner said if Rupert Murdoch could prove he was acting solely in the interests of his heirs, he could change the trust’s terms, according to two people familiar with the family discussions.

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But changing the trust deed is a highly emotional issue for Murdoch’s children, these people say, even though it will only affect their voting rights, not their financial interests – something they have fought hard against in court.

When her father told Elizabeth Murdoch of his plans to change the fund’s structure, she responded with colorful words to express her displeasure, according to a person familiar with the conversation, first reported by The Times.

“There was never a conspiracy to take Lachlan down,” said one person close to the Murdoch family. “But (Lachlan and Rupert) created what they feared by filing suit.”

A spokesman for Elisabeth Murdoch, who runs the London-based production company, declined to comment.

She does not share her brother Lachlan’s conservative political views, but she is also not interested in getting involved in the family business again, according to two people who have spoken to her in recent months.

She finds Murdoch’s property policies “obscene,” one said, “but she has managed to draw the line at it and distance herself from it.”

“Liz was trying to get Rupert to focus on his legacy,” biographer Manning said, adding that she had been trying to “be a peacemaker” and “build bridges between the siblings, and now this.”

Less is known about Prudence’s political views, which are mostly overshadowed by family disagreements but which she maintains a close relationship with her sister.

James, while an environmentalist, has also raised concerns about the role of conservative media outlets in promoting false claims of voter fraud in the 2020 election.

“The destruction of the Capitol is compelling evidence that what we thought was dangerous is actually very, very dangerous,” he said in a 2021 interview. Without naming Fox News — which has faced significant defamation lawsuits from voting technology companies and last year paid $787.5 million to settle one — he added that “those media outlets that spread lies to their audiences have unleashed insidious and unchecked forces that will be with us for years to come.”

A spokesman for James Murdoch declined to comment.

It is not clear, however, whether the siblings are primarily guided by political considerations in their opposition to their father and brother.

James’s insiders note that he managed Murdoch’s interests in Europe when he backed Conservative candidate David Cameron over Labour’s Gordon Brown. He and his wife Kathryn are now major funders of Bulwark, a conservative anti-Donald Trump publication.

Meanwhile, he has told associates in recent years that he was disappointed with the strategic decisions his brother oversaw at Fox Corp and News Corp.

Media experts say any attempt to move Fox News, especially toward a center-right position, could ultimately hurt its viewership and hurt the company’s bottom line.

Fox News experienced such an audience revolt when its political analysts correctly called Arizona for Joe Biden on election night in 2020, and some viewers temporarily abandoned it in favor of channels they saw as more aligned with Trump. Emails and text messages released as part of one defamation lawsuit showed that top executives — including Rupert Murdoch — noted the trend with concern.

“At some point, you become afraid to do anything that might offend your audience,” said Charlie Sykes, a former conservative radio host who is now a contributor to the liberal cable network MSNBC. “If you deviate from what the audience wants, there will be enormous retaliation and consequences. And if the audience demands that Fox News become a safe MAGA space, there will be enormous pressure.”

Bill Grueskin, a Columbia University journalism professor who served as deputy editor of the Murdoch-controlled Wall Street Journal, said he sees a path for Fox that emphasizes reporting from a conservative perspective.

“I believe there is a way for there to be a conservative news channel that doesn’t fall into the mire of rancor that has already cost Fox $787.5 million in claims,” he said.

But, he added, “it all depends on who’s running the company. It sounds like if it’s Lachlan, not much will change, but if it’s James, a lot will change.”