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Mar 27, 2014

Murdoch moves: Lachlan lured back, but which office does he get?

Lachlan Murdoch could be back stalking the halls of Holt Street within days. Rupert Murdoch's succession planning throws a spanner into the presumed media merger plays in Australia.


The Murdochs, arguably the most powerful family in the world, have produced a breathtaking power-sharing agreement that signals control will be shared by the male adults for as long as Rupert is at the helm and then ultimately passed to James and Lachlan Murdoch.

But don’t for a moment think the 83-year-old patriarch is winding down or that non-Murdochs have any say in these dynastic manoeuvres.

Past promises that Rupert would step back to be non-executive chairman of News Corp and that both it and the separated 21st Century Fox would have a “super-majority” (i.e. more than 75%) of independent non-executive directors have now been clearly broken. The supposedly independent directors of both companies — which are meant to represent the 86% of shares held by non-Murdochs — have clearly been treated like doormats once again as the gerrymandered 40% Murdoch voting bloc leaves them powerless.

As of today, the adult male Murdochs are swarming all over the senior posts at both companies — potentially proving a nightmare for senior executives such as Fox News boss Roger Ailes, 21st Century Fox president Chase Carey and News Corp CEO Robert Thomson.

Lachlan is now “co-chair” of both public companies but limited through being a “non-executive”, as opposed to his dad, who is “executive chairman” of both outfits and the world’s longest-serving public company CEO.

James Murdoch remains a non-executive director of News Corp but has now been given equal billing with the well-regarded Carey at Fox, where both will be “co-chief operating officers”. His ascension to the crown as global CEO still depends on the phone-hacking wash-up, which is likely to include a $1 billion-plus settlement with the US Department of Justice.

As with any power-sharing agreement, the question remains who ultimately will say yes or no to a proposed action. The answer, as it has been for 61 years, remains Rupert, but Lachlan has clearly negotiated himself significant delegated authority from his old man, especially in Australia.

The first issue to watch is whether the globally spread News Corp board allows Sydney-based Lachlan to move his primary office into News Corp’s Holt Street office in Sydney’s Surry Hills. Will Lachlan’s office be located next door to temporary News Corp Australia CEO Julian Clarke, who came out of retirement and relocated from Melbourne to Sydney when Kim Williams was fired last year?

The next question is whether Lachlan has been given the power to influence the national newspaper network with orders such as “take it easy on George Pell”, “do this hatchet job on Greg Hywood”, “terminate Julia Gillard” and “get behind James Packer’s Barangaroo casino”. Can he roam the Australian newsrooms, attend conference unannounced and ring editors to place stories or complain about the cropping of his photo? The message from yesterday is “yes”.

“Such a move would allow Lachlan to close Illyria’s office and become king of Australia in the Murdoch monarchy.”

This is where the power really lies, especially as Clarke is not one to direct Rupert’s editors. The future of people like Andrew Bolt and Chris Mitchell is now very much in the hands of Lachlan Murdoch.

However, it will likely be a different story globally. Ailes famously gloated about moving into Lachlan’s office when he spat the dummy in 2005 and headed back to Sydney with a $US10 million payout.

As the “co-chairman” of Fox will spend up to half his time in New York, office allocations between the three Murdoch men on the eighth floor of 1211 Avenue of the Americas will be one to watch.

Ailes, 74, shifted from his Fox News office on level 2 to the vacated Lachlan office right next to Rupert on level 8. He’s been there ever since, but is presumably starting to think about slowing down. My money is on Ailes departing before the end of 2015.

At the moment Lachlan’s private media company, Illyria, occupies a converted warehouse around the corner from Holt Street in Surry Hills. He also has a chairman’s office at Network Ten in Pyrmont, which will now be vacated with his resignation yesterday.

All the speculation has been about News Corp buying Ten, but this latest shuffle means it would probably be illegal under the current law, which limits media companies to “two out of three” of the radio, newspaper and free-to-air television markets in the Australian capital cities.

Lachlan’s elevation to “co-chairman” provides an immediate stumbling block to the presumed green light. They got away with arguing Lachlan was a humble News Corp non-executive director, sitting on no committees with no “control”, but a chairman and heir with an office at Holt Street will be a different story.

It is also hard to see the current or future Senate approving an end to the “two out of three” rule, especially given the battering Clive Palmer continues to receive from the News Corp papers. Why would he vote to increase Murdoch family media power?

Therefore, the more obvious related-party transaction that could be completed very quickly would be News Corp spending more than $250 million to buy Lachlan’s Nova Entertainment Group, which has performed well since he first invested in 2009. Rupert has a long history of buying businesses owned by his kids to get them back into the family firm.

Such a move would allow Lachlan to close Illyria’s office and become king of Australia in the Murdoch monarchy.

*Stephen Mayne is a former News Corporation journalist and editor and is now News Corp monitor and policy and engagement co-ordinator for the Australian Shareholders’ Association


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6 thoughts on “Murdoch moves: Lachlan lured back, but which office does he get?

  1. The Pav

    Thank gawd I got out of News Corp is all I can say.

    On the plus side of course is that News Corp is now in terminal decline which can only be good for the craft of journalism. Pity that it will take so long to collapse

  2. zut alors

    Terrific, this now has the potential to become an ongoing saga to rival ‘Dallas’.

    Not only will the Murdochs control news but they will become the news for their competitors. What a pity JR Ewing isn’t on the board of both companies, that would enhance the bunfight.

  3. DiddyWrote

    The next question is whether Lachlan has been given the power to influence the national newspaper network with orders such as “take it easy on George Pell”, “do this hatchet job on Greg Hywood”, “terminate Julia Gillard” and “get behind James Packer’s Barangaroo casino”

    I not sure that this is even required as the editors of Rupert’s rags appear to be well attuned to the wishes of their master. Maybe even too diligent in anticipating their lord’s wishes in some cases.

  4. AR

    The aging & decrepit spider at the centre of this web of wickedness is visibly deteriorating, post Wendi’s magic elixir.
    It may indeed be some years hence but the Great Unravelling will be joyous to behold when Mudorc finally karks it.
    Perhaps it could be declared a UN Day of Celebration for a Free Press?

  5. Malcolm Street

    How long are the other shareholders going to put up with this sh!t? Rupert’s offspring hardly fill me with anticipation at their competence.

  6. seriously?

    Agree wholeheartedly with @AR – would love to have ring-side seats when it all unravels. My only regret is that Wendi has been sidelined – she would give them all plenty of curry.


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