All Rupert Murdoch had to do to reposition his eldest son Lachlan as his successor, which is what he always wanted, was break up his media empire.
Lachan, Rupert, and James Murdoch (from left to right)
Jim Urquhart / Reuters
The house of Murdoch is back in order.
For the small price of dividing his media empire into two separate companies — one consisting of its high-growth cable networks, film studio and television business and the other its declining legacy newspaper operations — Rupert Murdoch got to reposition his eldest son, Lachlan, as his likely successor.
Lachlan today was named Non-Executive Chairman of both 21st Century Fox and News Corp. His younger brother James, who serves as a director on the boards of both companies, was elevated to Co-Chief Operating Officer of 21st Century Fox.
"Rupert has wanted Lachlan back for a very, very long time," said one source close to the company. "But I did not see him coming back at this high of a level."
Lachlan, 42, had long been seen as the heir apparent to his father until he was unceremoniously forced out of News Corp in 2005. And while he has remained a board director since his departure, his involvement was minimal. He moved back to Australia and instead struck out on his own, founding an investment firm called Illyria and running a television business called Ten Network.
Lachlan's elevation caps perhaps one of the most tumultuous periods in the history of Murdoch's empire. The family seems to have weathered, at least from a corporate perspective, the News of the World phone-hacking scandal that nearly brought it to its knees — though former executive Rebekah Brooks is still on trial in London facing various charges, among them bribery of a public official and obstruction of a police investigation.
Murdoch also emerged from the divorce of his third wife, Wendi Deng, relatively unscathed from a corporate perspective, having only to give up properties in Beijing and New York as part of the settlement, but not any additional equity or voting control of his company.
The biggest concession forced upon Murdoch by the phone-hacking scandal, aside from humbling appearances before Parliament, was having to split his company in two, a long-wished for division by executives on the TV and film side who were tired of seeing their profits and cash flow used to prop up the declining newspaper assets. Ironically, the separation is likely what opened the door for Lachlan's return.
Dave M Bennet / Getty Images
After Lachlan's departure, attention focused on his brother James, who at the time led News Corp's European and Asian operations, as the next in line to succeed his father. But the phone-hacking scandal nearly tore the family apart and cost James, 41, his job. Reports said Elisabeth Murdoch, the older sister of the two brothers from Rupert's second marriage, openly pushed for his removal from all executive positions at News Corp (he ended up relinquishing some). At the height of the phone-hacking scandal in 2012, Liz gave a scathing speech at the Edinburgh TV Festival, calling for more responsibility and ethics from the press — strongly implying that James failed in both capacities.
Coming shortly after she sold Shine, her television production company, to News Corp, the perception was that her actions were an attempt to argue her case to succeed Murdoch. But while Liz is considered by many to be a better operator than James and manager than Lachlan, astute News Corp observers knew that she never really had a shot at usurping either of her brothers at the top of the company — Murdoch, 83, has always preferred to have one of his two sons take over for him.
"Liz did the only thing she could do," said the source. "Her life is in London, she has the Prime Minister to her house, wrapping her arms around Rupert and James would have meant giving up her whole life."
The net effect of her actions is that Liz, despite having an equal say in the voting control in the company as her brothers, is once again on the outside of the Murdoch family inner circle. More importantly, a byproduct of the phone-hacking scandal is that it pushed Lachlan and James closer together.
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