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Rupert Murdoch Expected to Hand Reins of 21st Century Fox to Son James Rupert Murdoch to Put Media Empire in Sons’ Hands
(about 4 hours later)
Rupert Murdoch is planning to hand over the job of chief executive at the media conglomerate 21st Century Fox to his son James, multiple people briefed on the plans said on Thursday. Rupert Murdoch’s long-held plan to hand over his media empire to his sons is now being realized.
James Murdoch is expected to take over as chief executive, and his 84-year-old father will remain at the company as executive chairman. Another son, Lachlan, is moving from Australia to Los Angeles to become co-executive chairman, said the people, who spoke on condition of anonymity. Mr. Murdoch is expected to name his son James to succeed him as chief executive of 21st Century Fox, the sprawling entertainment company that includes cable and broadcast television networks, film studios and satellite companies, multiple people briefed on the plans said on Thursday.
The exact timing for the changes is unclear, but it is said to be part of Mr. Murdoch’s long-term succession planning with the board. The changes are expected to be discussed at a board meeting next week, one person said. He also is expected to elevate his son Lachlan to the role of co-executive chairman of the company. Lachlan, 43, is moving from Australia to Los Angeles and will work in partnership with James, 42, these people said.
The elder Mr. Murdoch is expected to continue to provide broad strategic oversight for the company and come into the office regularly, one person said. He is not ill, and he still appears to be energized, this person added. The Murdoch family trust controls almost 40 percent of the voting shares of both 21st Century Fox and News Corporation, and Rupert Murdoch has more rights in the trust than his children. Rupert, 84, will remain at the company as executive chairman.
As part of the reorganization, Chase Carey will step down from his role as chief operating officer at Fox and work as an adviser to the company. Mr. Carey, who has worked as the second-highest executive at Fox since 2009 and is widely respected on Wall Street, played an integral role in the succession plans, one person said. To ease the transition, he built flexibility into his contract with Fox last year when he agreed to a two-year contract extension through June 30, 2016. The exact timing for the changes is unclear. They are said to be part of Rupert’s long-term succession plans and are likely to be discussed at a board meeting next week, two people said.
People with knowledge of the family say that James and Lachlan Murdoch have a good relationship. But while the move appears to signal that James will take control of the company, one person knowledgeable about the family dynamics, who spoke on condition of anonymity, said the announcement had not completely clarified the situation. The person said that tension could still arise over which of them would truly succeed their father, and even perhaps which will end up at 21st Century Fox, a lucrative business, and which at News Corporation, which faces the same powerful headwinds as other traditional journalism companies. While his sons are stepping into the spotlight, Rupert is expected to continue to provide broad strategic oversight and will retain ultimate control of the company, said the two people. The family effectively controls both 21st Century Fox and News Corporation, the other half of the Murdoch media empire, through its ownership of almost 40 percent of the voting shares in both companies. Rupert Murdoch has more rights in the family trust than his children.
Thursday’s developments do not directly concern News Corp., the other half of the Murdoch empire, which owns The Wall Street Journal and a portfolio of British newspapers. The two companies separated in 2013. But the elevation of James Murdoch, 42, will most likely raise concerns that when his father finally steps aside completely, the print businesses may come under more skeptical scrutiny. He is not ill, still appears energized and is expected to come into the office regularly, they said. The people who spoke of the plans spoke on the condition of anonymity so as to discuss private company matters.
The moves, first reported on Thursday by CNBC, were largely expected on Wall Street, and some analysts called James Murdoch an experienced executive who has vision for where the fast-changing world of media is headed. “James didn’t just graduate from high school,” said David Bank, a media analyst at RBC Capital Markets. “He is a pretty seasoned global media executive. His strength comes out in exactly the environment we face today and exactly the changes that we face in the ecosystem.” “This is still Murdoch’s company at the end of the day,” said Rich Greenfield, a media analyst with BTIG Research.
No imminent changes are expected at Fox News, which is a big revenue driver and whose chief, Roger Ailes, has in the past conflicted with Lachlan Murdoch. Mr. Ailes, president of Fox News, will continue to report to Rupert Murdoch, one person briefed on the plans said. As part of the reorganization, Chase Carey will step down from his role as chief operating officer at Fox and work as an adviser to the company. Mr. Carey, who has worked as the second-highest executive at Fox since 2009 and is widely respected on Wall Street, played an integral role in the succession plans, one person said. To ease the transition, he built flexibility into his contract with Fox last year, when he agreed to a two-year contract extension through June 30, 2016.
People with knowledge of the family say that James and Lachlan have a good relationship. While James is taking on the chief executive title and Lachlan is taking on the chairman post, their father’s plan is for his sons to run the company in tandem, as he and Mr. Carey have, one person said.
Still, another person with knowledge of the situation said that tensions could arise over which son would ultimately succeed their father, and even perhaps whether one would end up at 21st Century Fox, a lucrative business, and one at News Corporation, which faces the same headwinds as other traditional journalism companies. Thursday’s developments do not affect the hierarchy at News Corp.
No imminent changes are expected at Fox News, which is a big revenue producer for the company and whose chief, Roger Ailes, has clashed in the past with Lachlan. Mr. Ailes, president of Fox News, will continue to report to Rupert, one person briefed on the plans said.
The moves, first reported Thursday by CNBC, were largely expected on Wall Street and Fox shares ended flat on Thursday.
The company, for its part, said it had nothing to announce. “The matter of succession is on the agenda at our upcoming, regularly scheduled board meeting,” Nathaniel Brown, a Fox spokesman, said in a statement.The company, for its part, said it had nothing to announce. “The matter of succession is on the agenda at our upcoming, regularly scheduled board meeting,” Nathaniel Brown, a Fox spokesman, said in a statement.
The moves were the latest in a series of incremental steps by Mr. Murdoch to ensure that his companies — publicly traded, with a combined market capitalization of nearly $80 billion — are handed over to his children. It was a prospect that seemed remote, if not impossible, a few years ago, when James had been tainted by the phone hacking scandal that engulfed the company while he oversaw the British businesses, and Lachlan showed little interest in returning permanently from his native Australia to the corporate boardrooms of Britain and the United States. James and Lachlan are ascending to the top of Fox at a time of rapid change on the media landscape. This might be their father’s company — started in 1954 with a single Australian newspaper — but the industry is transforming, and the brothers will have to navigate a complicated new world of digital distribution and advertising technologies in the years to come.
James, in particular, seemed to have a difficult path to the top ranks of the company after being battered throughout the hacking crisis that erupted in 2011. Along with his father, he was called before Parliament to answer grueling questions and discuss embarrassing emails related to the scandal. James soon departed London for New York in an effort, those close to him said, to distance himself from the fallout and rebuild his reputation. Media executives and analysts describe James as a seasoned executive who has the experience of operating media companies in different countries while also providing a fresher, younger perspective on the business. They pointed to his role in encouraging his father to take a stake in Vice, the brash young media company, and acquire TrueX, an advertising technology company.
The succession saga has played out in glossy magazines, books and British tabloids, partly because of intrigue surrounding Mr. Murdoch’s second wife, Wendi Deng, who at times was a source of tension between the father and his adult children. Mr. Murdoch completed his divorce from Ms. Deng in 2013, removing another obstacle to a neat succession. “His strength comes out in exactly the environment we face today and exactly the changes that we face in the ecosystem,” said David Bank, a media analyst at RBC Capital Markets.
Lachlan Murdoch decided in 2005 to leave his position as chief operating officer of News Corp., which at the time encompassed all of Rupert Murdoch’s holdings, after clashes with other executives. It was viewed, perhaps by all but his father, as a rejection of the leadership role for which he was being groomed. News of the appointments was not a surprise to executives inside and outside the company, who said that the succession plans have been in the works for a while and publicly discussed. Analysts said that the change could lead the company to alter its strategic approach. One big question is whether it will become more active in deal making, given that it is sitting on about $9 billion in cash. Last year 21st Century Fox made an unsuccessful bid to acquire Time Warner. Some executives close to James predicted that he would continue to seek deals big and small.
But the elder Mr. Murdoch had worked over the years to bring Lachlan back to the businesses, two people with knowledge of the matter said. Last year the elder Mr. Murdoch named him nonexecutive co-chairman of News Corp. and 21st Century Fox, while elevating James to co-chief operating officer of 21st Century Fox. Another focus is what the company will do with its minority stakes in the online streaming service Hulu and the telecommunications group Sky.
James Murdoch, long seen as the most likely heir to his father, dropped out of Harvard in 1995 to start an independent music label, Rawkus Records. He subsequently moved to the family business and was widely praised for turning British Sky Broadcasting, the satellite television company, into a broader communications company. The moves are the latest in a series of incremental steps by Rupert to ensure that his companies — publicly traded, with a combined market capitalization of nearly $80 billion — are handed over to his children. That prospect seemed remote, if not impossible, a few years ago, when James was tainted by the phone hacking scandal in Britain that engulfed the company while he oversaw the companies there.
Some raised eyebrows when, in his 30s, he was elevated to run News Corp.’s international businesses. And their misgivings seemed justified when he became embroiled in the hacking scandal. He and his father were called before Parliament to answer grueling questions and discuss embarrassing emails related to the scandal. James soon departed London for New York in an effort, those close to him said, to distance himself from the fallout and rebuild his reputation.
He appreciated his brother’s support during that scandal, two people with knowledge of their relationship said, speaking on condition of anonymity, and had encouraged Lachlan to return to the fold. Lachlan decided in 2005 to leave his position as chief operating officer of News Corp., which at the time encompassed all of Rupert’s holdings, after clashes with other executives. It was viewed, perhaps by all but his father, as a rejection of the leadership role for which he was being groomed.
James Murdoch has long been focused on assets other than the print holdings that his father holds so dear. He encouraged Rupert Murdoch to take a small stake in Vice, a company that has grown dominant in online video. And he was often seen on 21st Century Fox’s Century City lot in California. But Rupert worked over the years to bring Lachlan back to the businesses. Last year Rupert named Lachlan nonexecutive co-chairman of News Corp. and 21st Century Fox, while elevating James to co-chief operating officer of 21st Century Fox.
Rupert and James Murdoch will be based in New York. Lachlan Murdoch will be based in Los Angeles. Their sister Elisabeth maintains her position in the trust but is not involved in the business, one person said.
James dropped out of Harvard in 1995 to start an independent music label, Rawkus Records. He subsequently moved to the family business and was widely praised for turning British Sky Broadcasting, the satellite television company, into a broader communications company.
He has long been focused on assets other than the print holdings that his father holds so dear. In addition to pushing the acquisitions of Vice and TrueX, he was often seen on 21st Century Fox’s Century City lot in California.
“James is not a caretaker,” said Jonathan Miller, a venture capitalist and former News Corp. executive. “He is a mover and a shaker.”