Generation X Takes Over the Murdoch Empire
Eighty-four-year-old media titan Rupert Murdoch is finally handing over the reins to his son James—whose ascension might seem obvious today but was far from assured a few years ago.
In a rare public acknowledgement that he won’t live forever—his mother Dame Elisabeth, after all, only made it to 103—84-year-old Rupert Murdoch is finally preparing to relinquish the keys to the kingdom to the next generation of media moguls whose last name is Murdoch.
At next week’s corporate board meeting, Rupert’s second son, James, a 42-year-old Harvard dropout and former hip-hop record producer, will reportedly be designated the next chief executive of 21st Century Fox.
According to multiple reports on Thursday, James will likely be named CEO at Fox by 2016 or even earlier, while his father and older brother, Lachlan, 43—who once was expected to occupy the throne but left the company for nearly a decade amid sharp-elbowed turf wars—will serve as co-executive chairmen, with the three Murdochs running things cooperatively and deferring when necessary to Dad.
Chief Operating Officer Chase Carey, widely considered a talented executive who has contributed mightily to Fox’s success, is expected to step down mid-contract and take an advisory role. James’s and Lachlan’s older sister, Elisabeth—all children of Rupert’s second ex-wife wife, Anna—apparently won’t be in the mix; nor will Rupert’s two daughters with his third ex-wife, Wendi Deng.
“It’s hardly a surprise—it was only a question of when,” said a top media industry veteran of James’s promotion, speaking on the condition of not being named. “He’s a member of the lucky sperm club, but James has paid his dues. Blood runs thick, so he’s going to have his shot.”
This media veteran, who has dealt with the Murdoch family for years, added that “James is savvy, smart, and a modern guy. He’s up on all the digital stuff. It’s a lot of responsibility, but they have a pretty big infrastructure of people around him. He knows his way around the company and he knows the individual operations. He’s been chomping at the bit to do this.”
Fox’s head of communications, Julie Henderson, didn’t respond to an email seeking comment. CNBC’s David Faber was first to reveal the elder Murdoch’s plans on Thursday.
The publicly traded $67 billion global empire comprises cable, broadcast, and satellite television networks, including the Fox broadcast network and the Fox News Channel; a Hollywood studio, 20th Century Fox; and various digital video properties, among other businesses.
Fox was spun off into a separate company from Murdoch’s $8.3 billion collection of print properties in 2013, in the aftermath of an ugly Fleet Street phone-hacking scandal in which James was a central figure and which resulted in criminal investigations, arrests, convictions, and jail time for Murdoch editors and reporters, as well as the abrupt closing of Britain’s popular News of the World tabloid.
Rupert and James—who in 2011 as the scandal exploded was chief executive of News International, the London-based Murdoch subsidiary that included News of the World—were hauled before a special board of inquiry and a parliamentary select committee to explain what they knew and when they knew it concerning their employees’ illegal intrusion into the voicemail messages of a murdered girl’s cellphone and also the cell phones of showbiz celebrities, sports stars, members of the royal family, and other public figures.
A scathing House of Commons committee report in May 2012 concluded that Rupert’s claims of ignorance of the hacking going on at his newspaper were “simply not credible” and added that he “he is not a fit person to exercise the stewardship of a major international company.”
The report continued: “On the basis of the facts and evidence before the committee, we conclude that, if at all relevant times Rupert Murdoch did not take steps to become fully informed about phone hacking, he turned a blind eye and exhibited willful blindness to what was going on in his companies and publications.”
As a result of negative press from rival media outlets and intense public outrage, the Murdochs were forced to withdraw their bid to take full ownership of the profitable BSkyB satellite television service, of which Fox continues to own 39.1 percent. It was, to say the least, a searing ordeal for James, who was compelled to resign as chairman of BSkyB, a company he helped build.
These days News Corp., as Fox’s corporate sibling is known, comprises newspapers and magazines in the United States, the United Kingdom, and Australia—many of them financially strapped—and includes the New York Post and The Wall Street Journal in the U.S., The Sun and The Times in the U.K., and the book publisher HarperCollins.
Unlike his father, who has a legendary affection for newspapers and printer’s ink in his veins, James by most accounts has little interest in the dead-tree properties—which in any case are not part of 21st Century Fox. In a brief interview with The Daily Beast on a different subject last October, he volunteered the opinion that news magazines “are out of time, an anachronism.”
Observers say he has been focused on developing Fox’s strengths in digital video and tapping the revenue prospects of programmatic advertising. He is said to have been instrumental in last December’s $200 million acquisition of the True[X] online advertising technology firm, and he is widely credited with the successful expansion into India and China of Star TV, another 21st Century Fox property. It is likely, say observers, that he will focus on how to make the most of Fox’s 31 percent share in Hulu, the ad-supported online video service.
While his elevation at Fox may not seem so shocking today, it was a different story three years ago in the midst of the hacking scandal. Media observers, notably Andrew Neil, a longtime Murdoch critic as former editor of the press lord’s Sunday Times as well as founding chairman of Sky television, predicted that James would be toast.
As Neil told CNN in April 2012: “The dynasty dream is over. The siblings are not going to take over this company—particularly James, after what happened.”
Thursday’s development suggests Neil’s dire prophecy won’t be realized—indeed, quite the opposite is apparently occurring—but he insisted in an email to The Daily Beast on Thursday: “James is still toast in the U.K.” Neil added in his email that Rupert’s plan of succession is “a corporate governance dog’s breakfast…Murdoch stays as Executive Chairman and is still the big enchilada, but one of his sons becomes CEO and the other co-chairman!!”
As for James’s unpleasant crucible, “Everybody makes mistakes,” the media industry veteran told The Daily Beast. “It wasn’t like he planned the phone hacking thing. But he was kind of fried for not defending it properly. You can argue that it wasn’t his finest hour.”
Yet the media industry veteran noted that “James has had a resurrection. He did a lot for the company in Asia and the U.K. while his brother Lachlan was on a gap decade down in Australia—something for which he doesn’t seem to have paid a very high price. The question was always how those two guys were going to slice it up.”
Born in London, James grew up in Manhattan and attended the elite Horace Mann School in the Riverdale section of the Bronx. After studying film and history at Harvard, he dropped out and founded in the mid-1990s, with two high school classmates, Rawkus Entertainment, a small music company that signed groundbreaking artists like Mos Def, Talib Kweli, Eminem, Common, and Whoregasm, and was based in what The New Yorker described as “a funky Tribeca loft situated between a porn shop and a falafel joint.”
“Lanky, myopic, and dressed in a moth-eaten sweater and thrift-shop corduroys,” James, then 23, insisted to the magazine that he had no plans to join the family business.
“Though his ears reddened at the mention of his father,” the magazine said, “he set his jaw and discussed nepotism with the mild irritation of someone who will be answering certain questions for the rest of his life…”
Maybe, it turns out, not the rest of his life.