Extracting information from the Murdoch family about succession and
News Corp shareholding issues has never been easy, but the Sun King has added a
new chapter in a television interview on The Charlie Rose Show that aired on PBS in America last Thursday.

Julia Angwin from The Wall Street Journallatched onto the story overnight with her interpretation that Rupert has backed down on a proposal to give Grace and Chloe, his
two infant daughters with third wife Wendi Deng, full voting and financial rights
on the family trust. That is also the line that has been followed by The Daily Telegraph in London, but is slightly different from the perspective taken by Reuters last Friday which suggested all six children will be treated equally in financial terms.

So what did Rupert actually say? Firstly, he claimed the dispute has
been “very happily” resolved. But does that mean the divorce agreement
with second wife Anna Torv holds and Rupert’s four adult children will
hold all the cards after the Sun King moves on?

“If I go under a bus tomorrow, it will be the four of them (that) will have
to decide which of the ones should lead them,” Murdoch told Rose, but then we had this exchange:

Rose: If something happens to you, if you’re run over by a bus when you
leave this studio, the four kids have to decide who will be the heir apparent?

Rupert: In terms of power, yes. In terms of leadership, they’ll all get treated equally
financially.

Therefore, it does look like Wendi’s land grab has been successful
and her two daughters will get a bigger slice of the pie. But their
power in determining what happens to the empire has seemingly not been
enhanced in this compromise agreement which presumably included Anna as
part of a formally negotiated settlement.

Rupert was also busily talking up James Murdoch’s chances of succeeding
him at the top of News Corp by claiming he “is writing a fantastic
record as the chief executive of
BSkyB”.

And there was more detail on the painful departure of Lachlan last year, with Rupert saying: “He had wanted to go on a couple of
occasions in the previous six months, and I’d talked him out of it, and I
failed at talking him out of it a third time.”

Given the importance of the Murdoch family and succession planning
to the long-term future of News Corp, shareholders really are owed a
fuller explanation of what has happened. If the family has done a new
deal then it should be properly explained.

At the moment it looks like the divorce agreement holds in the sense
that Rupert’s four representatives on the eight person family trust
will resign when he dies and then representatives of the the four adult children will then call the
shots. But rather than getting about $2 billion each, it looks like their shares have
been financially diluted by 50% if Wendi’s children have indeed muscled
in to secure equal financial entitlements.

Given that Wendi will control their stakes until their adult years, she
alone will be the biggest financial beneficiary if Rupert dies in the
next few years, but she won’t have the numbers to force a break-up of
the empire if she wants to actually control the $4 billion or sell
assets and turn it into cash.

Peter Fray

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