Murdoch’s court defeat creates uncertain path ahead for his media empire

In the mid-1960s, media baron Rupert Murdoch bought a single-storey stone house that sat on thousands of hectares of pastoral land, not far from Canberra, for $200,000. The estate, called Cavan, which sprawls along the banks of the Murrumbidgee River, now spans more than 10,000 hectares and is worth multi-millions. It is a working farm with thousands of sheep and cattle, and the stone house has been replaced with a palatial homestead, tennis court, pool and airstrip.

Cavan, which is about 30 kilometres from Yass, is where Murdoch once flirted with the idea of becoming a local member of parliament, according to his biographer William Shawcross. That is, before he decided to focus on building the world’s most powerful conservative media empire.

Rupert Murdoch and Elena Zhukova on their wedding day earlier this year.Credit: AP

Murdoch, who is now 93, hasn’t called Australia home since 1985, which was the year he became an American citizen. However, he’s here now visiting the country where he grew up. It’s his first visit to Australia since 2018, and accompanying him is his fifth wife, Elena Zhukova, a retired molecular biologist, whom he married earlier this year after a brief courtship.

Murdoch is expected to spend some of his time in Australia at Cavan, and it’s there that he will most likely reflect on the future of his companies, Fox and News Corporation, which own Fox News, The Wall Street Journal, The New York Post and major newspapers and television outlets in Australia and Britain, including The Australian and Sky News. How Murdoch’s companies will survive him once he dies is unclear.

Murdoch’s extraordinary competitive drive, his eerie grasp of numbers, his ambition and risk-taking have been at the core of Fox and News Corporation’s success. It is those attributes that have enabled him to turn a single Australian newspaper into two global companies. It is also what investors in his companies have banked on for decades, even though Murdoch has demonstrated little regard for shareholders. He treats them like second-class citizens, who pose a potential threat to the control of his empire.

But it’s nothing personal. Murdoch recently demonstrated equal disdain for the rights that three of his children, Prudence, Elisabeth and James, hold in the family’s trust. The trust is the vehicle through which Murdoch controls Fox and News Corporation, with about a 40 per cent stake in voting shares of each company.

Murdoch hatched a plan, with his eldest son, Lachlan, his chosen successor, to change that irrevocable trust, which would cement Lachlan’s control over the companies, and enshrine their right-wing slant. Prudence, Elisabeth and James argued such changes violated the trust’s original conditions, and they would be wrongfully disenfranchised.

When Murdoch dies, the trust is supposed to divide control of his empire equally among his four eldest children. He has six children but only four have voting rights in the trust, while all six have economic interests.

Murdoch senior dubbed his planned trust changes Project Harmony. It was the opposite. Prudence, Elisabeth and James fought Murdoch and Lachlan in court over the proposed amendment. A court ruled in their favour, according to The New York Times. It reported that a court had found that Murdoch and Lachlan, who is the head of Fox and News Corporation, had acted in “bad faith” and rejected their amendment of the trust.

Murdoch and his eldest son may yet appeal the decision. Meanwhile, Lachlan’s position has become more vulnerable. Potentially, after Murdoch dies, three of his heirs could out-vote a fourth, setting up a battle over the future of the companies.

His four eldest children may not agree on how to run his publishing and television empire. Lachlan shares his father’s conservative views, James is more liberal, and Elisabeth is somewhere in between. The complicated family dynamics and legal spat have caused deep fissures in the family, putting the stability and strategic direction of the companies at risk.

Lachlan Murdoch arriving at court earlier this year in a battle over the Murdoch family trust. Credit: Emily Najera/The New York Times

It also comes amid the most challenging time in history for traditional media companies. They are under attack from powerful global tech companies, which have made everyman his own publisher. The earnings, viewers and readers of media companies have fallen and fractured.

The court battle has also raised questions about whether the fate of Fox and News Corporation will follow that of other media companies, once controlled by influential families, such as John Fairfax and Sons and Dow Jones and Company.

Murdoch’s bid to ensure the media empire he built is run how he wants it after his death, comes as no surprise to those who know him well. He has always been a ruthless control freak, according to some of his executives who have given interviews over the years.

The attempt to retain control, even potentially from the grave, is rooted in money and influence.

Fox and News Corporation’s right-wing editorial slant, particularly at Fox News, has been a money-spinner for the Murdoch family and shareholders. Fox News has traded on outrage, offended, shocked and informed, and has been enormously successful. It has also been sued successfully for transmitting false information.

Murdoch’s conservative media empire has not only made him a billionaire but also one of the world’s most powerful men, feted and feared by presidents, prime ministers and captains of industry. His right-wing newspapers and television stations could influence the outcome of elections. He doesn’t want that to change.

Simpler times: Rupert with (from left) James, Elisabeth and Lachlan at a family gathering in London in 2007.Credit: Getty Images

For Rupert, it’s always been about influence. “I’m not about making money. Not in the sense of mega-money,” he told Shawcross in the biography, Murdoch. “It goes back to my father, to my background, having been brought up to believe that there was an opportunity to have influence and do something with that influence.”

According to Shawcross, Murdoch also believed all successful companies are built by individuals, not boards or committees. The corollary of this, according to Shawcross, was Murdoch never entertained independent-minded colleagues around him. Nor, it seems, members of his own family.

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