Lachlan Murdoch has had a lot to prove and the stakes just got quite a bit higher as Murdoch senior is set to depart the Fox and News Corp. boards, formalizing a transition underway for years.Lachlan will be sole chairman of both companies and succession, for years an open question, is firmly settled. But uncertainty still lurks. Rupert Murdoch holds 40% of Fox and News Corp. voting stock through a family trust, which, post-Rupert, will pass to Lachlan and his oldest siblings – James, Elisabeth and Prudence. If they wanted to, and it’s not clear they do, the three could out-vote Lachlan to sell Fox, restructure it, push him out. “I think that is a question mark,” said one analyst. “I have no idea how that is going to play out.”Liberal-leaning James left the family business over editorial and political differences and there may be a rift. “Who knows which way Prudence or Elizabeth will go,” said another analyst. “They could put the company up for auction.”That may be one reason Murdoch attempted unsuccessfully last year to merge News Corp. and Fox. The bigger the company, the tougher it is to sell.A new book on the Murdochs by Michael Wolff out on Sept. 26 delves into the clan dynamics of the family, said to have inspired HBO’s Succession.Meanwhile, Lachlan has a company to run. “I doubt he would be CEO if Rupert Murdoch wan’t his father,” said one analyst, stating the obvious. But, in his time at Fox, he’s delivered on live news and sports, the two most coveted landing spots in the media ecosystem now. He acquired Tubi, which is powering ahead, approaching $1 billion in revenue. He kept the company relatively debt free and nicely cash rich while bigger rivals piled up losses in streaming. And he didn’t spook analysts and investors with expensive acquisitions after Fox became a standalone company in 2019.On the flip side, litigation over Fox News’ 2020 post-election coverage was poorly handled and cost the company $787.5 million in a settlement with Dominion Voting Services. Departing former chief legal officer and longtime Murdoch confidante Viet Dinh took the fall for that. A second lawsuit by Smartmatic seeking $2.7 billion in damages still looms. Separately, shareholders have sued the board for negligence. Fox booted top-rated Tucker Carlson in the face of another, nasty suit as the conservative network juggles ratings and advertising. The broadcast and cable ad market remains soft, and the company’s fiscal 2024, which started in July, faces higher sports costs and other headwinds.The stock has not been a standout, although it rose 3% Thursday in a down market after the Rupert news.Insiders say father and son speak daily and Lachlan often taps Rupert for advice, which is not likely to change. Rupert, 92 and said to currently be in good health, will hold the title of chairman emeritus and continue to be involved with the company and political kingmaking.“I will be watching our broadcasts with a critical eye, reading our newspapers and websites and books with much interest, and reaching out to you with thoughts, ideas, and advice. When I visit your countries and companies, you can expect to see me in the office late on a Friday afternoon,” he said in a memo to employees.Fox Corp. is basically what was left after Murdoch sold most of the rest of the assets of 21st Century Fox to Disney in a brilliantly timed and pricey $71.3 billion deal. The purchase saddled Disney with a heavy debt load it still carries.Excluded from the package were station, broadcast network and sports businesses that overlapped and would have created regulatory headaches, and Fox News, which Disney didn’t want. Fox also held on to valuable real estate in the Fox studio lot in Century City.In his book The Role of a Lifetime, Walt Disney CEO Bob Iger recalled getting an invite to Murdoch’s Bel Air home in August of 2017. Iger thought Murdoch was probing him on whether he was considering a run for president in 2020 (which Iger was). But, in fact, Murdoch was hinting at a sale of many of his company’s prized assets including the film studio and most cable networks. “We don’t have scale,” Murdoch said several times, according to Iger. “The only company that has scale is you.”It has even less scale now, with the media landscape shifting rapidly and dominated by giants.It’s a typical paradox of the streaming era that even analysts who praise Fox for being financially prudent don’t see how that plays out longer term as linear television continues to decline. “The strategy of staying out of the high-priced streaming wars and focusing on live TV, sports and news, that has been the right strategy,” said one. “What no one understands is how Fox is going to make the leap when they have to [compete in] a streaming world.”As for Rupert’s timing, the announcement although not unusual for a 92-year old was still unexpected. Asked ‘Why now?’ a few observers and insiders suggested he wanted to go out “on top.” Some mentioned the late Sumner Redstone. The mogul’s insistence on leading quarterly earnings calls even as he descended into illness and dementia is stamped on the collective consciousness of the financial community. Murdoch hasn’t participated in conference calls in years. “Maybe he said, ‘Look what happened to Sumner’.”The Fox board without larger-than-life Rupert Murdoch is comprised of Lachlan, Paul Ryan, Chase Carey, Jacques Nasser, Roland Hernandez, William Burck and Ann Dias. With Rupert gone, said one Wall Streeter, “They are on their own now” — and Lachlan most of all.
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