Tag: Water

“Rupert has shown a rare sign of weakness,” says one longtime Murdoch watcher. “There is something of the smell of blood in the water.”

In the space of two weeks the 92-year-old’s media empire has taken a reputational hammering on both sides of the Atlantic, putting a renewed focus on the future shape of the global conglomerate’s businesses – and who will run them.

Theories abound about what may happen when control of the empire moves to Rupert’s children – the Murdoch family trust owns 39% of the voting shares in News Corp and 42% in Fox Corporation – with Lachlan, James, Elisabeth and Prue holding equal power.

Scenarios not out of place in HBO’s Murdoch family-esque hit drama Succession, which Lachlan reportedly believes his younger brother James leaks plot lines to, include James, Elisabeth and Prue eventually coming together to oust their sibling.

Earlier this week, the Duke of Sussex, the “spare” royal on a mission to bring tabloid newspapers to account over phone hacking, presented a string of headline-grabbing allegations in a case against the Sun that threatens to put Murdoch favourite Rebekah Brooks back in the spotlight.

Since being found not guilty of phone hacking at a criminal trial almost a decade ago, Brooks, the former Sun editor who runs Murdoch’s UK business including the Times, TalkTV and Virgin Radio, has focused on rehabilitating her corporate image with a future eye on a global role in New York.

“Rebekah is going to be spending a lot more time in New York,” says one source. “She has always been a significant adviser, very much a right-hand person, but every time there is a gap between wives she spends more time with Murdoch.”

Earlier this month, Rupert called off his engagement to his would-be fifth wife, Ann Lesley Smith, just two weeks after proposing, having finalised his divorce from Jerry Hall less than a year ago.

The 54-year-old Brooks started her career in the family publishing empire as a 20-year-old secretary at the News of the World, where she would work under Piers Morgan.

From humble beginnings – her father was an odd-job man and she attended a comprehensive school near Warrington, between Liverpool and Manchester – Brooks would rise to become editor of the News of the World in the early noughties and the first female editor of the Sun from 2003 to 2009.

Brooks is one of the most powerful women in media, having served two stints as chief executive of Murdoch’s British media empire. She was forced to resign in 2011 after the Milly Dowler phone-hacking scandal that resulted in the closure of the News of the World.

During her time outside the Murdoch empire she received more than £16m in compensation before returning as boss in 2015, a year after being cleared of any wrongdoing.

Brooks is part of the “Chipping Norton set”, which includes former UK prime minister David Cameron and the former Top Gear presenter Jeremy Clarkson, who introduced her to the racehorse trainer Charlie Brooks, whom she married in 2009 while editor of the Sun. The couple had a daughter via a surrogate mother in 2012.

She had divorced the former EastEnders actor Ross Kemp, with whom she had a fiery relationship, in 2002.

Brooks’s ambition to rise further is unlikely to be thwarted by the prospect of executives including Murdoch being called to testify – more than $1.5bn (£1.2bn) has been spent keeping cases from going to trial to date. “They will make a big payout to Harry, that’s what they do,” says the source. “What difference is [Harry] going to make, ultimately?”

It is the fallout from Murdoch’s almost $800m 11th-hour settlement to stop a public trial over Fox News’s role broadcasting false claims of election rigging during the 2020 US presidential election that has more bearing on dynastic succession and executive musical chairs.

“Before this they only ever settled sexual harassment and phone-hacking lawsuits; this is a moment of weakness I’ve never seen,” says one former senior executive. “It is the right strategy, but it is still a stain on the company and there has been something of a cultural shift against Fox in the US, temporarily at least.”

Fox, which is run by Murdoch and his eldest son Lachlan, is facing a shareholder legal action stating that bosses breached their governance duties by knowingly following a pro-Trump conspiracy line on-air.

The company is also facing a $2.7bn defamation suit by Smartmatic, a voting machine company, although sources say that it is seeing off the much more dangerous Dominion case that matters most. If Murdoch chooses to settle out of court with Smartmatic – Fox has said it is ready to go to trial – a figure of less than $500m has been rumoured.

Despite the embarrassing disclosures and reputational damage wrought by the Dominion case, which resulted in the shock firing of Fox News’s biggest star, Tucker Carlson, days after the settlement was reached, the fallout is viewed by some as cementing Lachlan’s position as Murdoch’s ultimate successor.

“Shareholders may say there is one pickle after another,” says Claire Enders, a co-founder of Enders Analysis. “They are not through this crisis yet, there will be a further elements of a clean-up operation, but they have been here before. The fact is there is always a constant movement of pieces in Rupert’s conglomerate.”

From this point on, Fox News, which was already swinging toward the new and less controversial Republican star Ron DeSantis, will have to show more careful editorial oversight of the content of its broadcast output – as will more extreme rivals such as Newsmax and One America News Network (OANN).

Seeing off lawsuits and a future with less chance of legal action at the immensely profitable Fox, which makes about $3bn in underlying profits each year, could ultimately strengthen Murdoch’s case to prove the merits of his desire to recombine his TV and newspaper empires to sceptical investors.

After recently scrapping the planned merger of Fox and News Corp, which Murdoch was forced to split a decade ago after the phone-hacking scandal, a multibillion-dollar side deal to sell a lucrative property listings business in the US to a rival also fell through.

The move into property listings in the US and Australia, championed and engineered by Lachlan, has proved a masterstroke, accounting for up to a third of News Corp’s profits. Despite the US deal falling through, the real estate business is expected to be the focus of future corporate activity when macroeconomic conditions improve.

The performance of Murdoch’s newspaper operations is much more hit and miss. The Wall Street Journal remains a juggernaut with 3.78 million subscribers – 84% of whom are digital-only – with analysts ascribing a standalone value of $10bn to its parent company Dow Jones. Murdoch acquired the business for $5.6bn in 2007.

In the UK, the Times and Sunday Times have also grasped the digital future transforming a £70m loss in 2009 into a £73m profit last year. However, the Sun continues to struggle, doubling pre-tax losses to £127m last year, mostly due to charges relating to phone hacking. Stripping this out, the Sun made £15m.

Ever the arch-pragmatist, Murdoch has shown that he is willing to make tough decisions to ensure the long-term survival of his empire.

In 2018, he sold 21st Century Fox, which ultimately also meant his crown jewel Sky, to Disney and Comcast respectively, after failing to engineer a takeover of Time Warner to give his entertainment business the global scale it needed to compete in the streaming era.

However, a recent expose by Vanity Fair revealed a string of worrisome health problems in recent years – including breaking his back, seizures, two bouts of pneumonia, atrial fibrillation and a torn achilles tendon – and has once again raised questions over whether it is time to hand the reins to the next generation.

“I don’t think the fallout in the US hurts Lachlan; he is still the heir apparent,” says the former executive. “Not least because James isn’t interested in the company with Fox part of it and Elisabeth and Prue certainly don’t want to do it.”

The 51-year-old Lachlan, who still hankers after a life in Australia despite buying the most expensive home in Los Angeles, also has a good relationship with Brooks.

News Corporation, which as well as the UK papers owns titles including the New York Post, the Australian, and the crown jewel Wall Street Journal, is run by Robert Thomson.

The 62-year-old Thomson, who shares a birthday with Rupert, has been his right-hand man for decades.

“Lachlan is ambivalent to Robert, which is not to say he hasn’t done a good job,” says the former executive. “But Lachlan gets ever more powerful, every day this is more Lachlan’s company. And that would mean that at some point it is Rebekah’s job.”

But with the newly single nonagenarian once again energetically throwing himself into work, the time for plotting and scheming may still be some way off.

“I felt Rupert was very impressive in terms of what we saw in documents released relating to the Dominion case,” says Enders. “His answers were sharp and he showed perfect recall, and didn’t get himself in a perjury situation. With Joe Biden running for president 80 is the new 60, and for Rupert 92 is the new 80. He doesn’t look as if he is going anywhere soon.”