‘Carefully crafted charade’: How it all fell apart for Rupert Murdoch in Nevada

A Nevada commissioner ruled resoundingly against Rupert Murdoch’s attempt to change his family’s trust to consolidate his eldest son Lachlan’s control of his media empire and lock in Fox News’ right-wing editorial slant, according to a sealed court document obtained by The New York Times.

The commissioner, Edmund Gorman, concluded in a decision filed on Saturday that the father and son, who is the head of Fox News and News Corp, had acted in “bad faith” in their effort to amend the irrevocable trust, which divides control of the company equally among Rupert’s four oldest children – Lachlan, James, Elisabeth and Prudence – after his death.

The ruling was at times scathing. At one point in his 96-page opinion, Gorman characterises the plan to change the trust as a “carefully crafted charade” to “permanently cement Lachlan’s executive roles” inside the empire “regardless of the impacts such control would have over the companies or the beneficiaries” of the family trust.

Lachlan Murdoch and wife Sarah arrive for the probate hearing in Nevada in September.Credit: NYT

A lawyer for Rupert, Adam Streisand, said that they were disappointed with the ruling and intended to appeal. A lawyer for James, Elisabeth and Prudence did not immediately respond to a request for comment.

The battle over the family trust is not about money – Rupert is not seeking to diminish any of his children’s financial stakes in the company – but rather about future control of the world’s most powerful conservative media empire, which includes Fox News, The Wall Street Journal, The New York Post and major newspapers and television outlets in Australia and Britain.

Rupert, now 93, has long intended to bequeath these sprawling media conglomerates to his children, much as his own father had passed on his vastly smaller media company to him and his sisters. But he is also determined to preserve the right-wing bent of his empire, and reconciling these two desires has become a growing challenge for him.

Over his long career, Rupert has made a point of fusing his family and his business affairs, with Lachlan, James and Elisabeth all at one point in consideration to succeed him. (His eldest daughter, Prudence, has been the least involved in the family business.) By 2019, though, it was clear that he wanted Lachlan to lead the company after his death. The problem was the structure of the family trust.

James and Elisabeth are both known to have less conservative political views than their father or brother. If Rupert fails to lock in Lachlan’s leadership of the company, he will be unable to ensure that Fox News will remain a right-wing news outlet after his death, putting in jeopardy the legacy of the conservative empire he has spent his life building. In seeking to consolidate Lachlan’s control over this empire, Rupert has argued that maintaining the political bent of his outlets – and stripping the voting power of three of his children – is in the financial interest of all his beneficiaries.

The fight over the trust has further inflamed tensions inside the famously fractious family. Internal disputes have riven the Murdochs before – most notably, during the phone-hacking scandal in Britain in 2010 and 2011, when Elisabeth tried to persuade her father to fire James, who was overseeing the company’s British operations at the time.

But this particular battle, which began with a stealth legal manoeuvre to change an inviolable trust, is unparalleled in the family’s history. It has surfaced after decades of shifting ideologies and allegiances, while making Rupert’s preference for his eldest son unmistakably and painfully clear to his other children. They have been forced into a courtroom in Nevada to retain some semblance of control over a family business that has become inseparable from the family itself.

The legal manoeuvring came to a head during several days of sealed, in-person testimony in Reno in September by Rupert, Lachlan, James, Elisabeth, Prudence and a number of their representatives on the trust. The proceedings revealed that Rupert’s children had started secretly discussing the public relations strategy for their father’s death in April 2023. Setting off these discussions was the episode of the HBO drama Succession, the commissioner wrote, “where the patriarch of the family dies, leaving his family and business in chaos”. The episode prompted Elisabeth’s representative to the trust, Mark Devereux, to write a “Succession memo” intended to help avoid a real-life repeat.

The commissioner’s ruling, while significant, is not the final word in the case. The commissioner acts as a special master who weighs the testimony and evidence and submits a recommended resolution to the probate court. It falls to a district judge to ratify or reject that recommendation. Even then, the losing party is free to challenge the determination, which could precipitate an intensive new round of litigation.

If Rupert and Lachlan do not succeed in court, they could pursue other means to consolidate Lachlan’s power. One way would be for Lachlan to buy out his siblings’ stake in the company.

After the Times reported on the legal battle over the family trust in July, the paper, joined by several other news outlets, filed a motion to unseal the proceedings, citing the significant public interest in its outcome. That case is ongoing.

Rupert Murdoch established the Murdoch Family Trust in 2006, years after he had married his third wife, Wendi Deng, and they had two children of their own, Grace and Chloe. Under the trust, he retains control over the business until his death, at which point his voting shares will be distributed equally among his four oldest children.

The initial trust arrangement was meant to be binding, the product of an agreement Rupert negotiated with his second wife, Anna – the mother of Lachlan, Elisabeth and James – who was concerned that he would bequeath an equal share of control and equity to the young children he had with Deng. Those youngest children were ultimately given an equal financial stake in Rupert’s multibillion-dollar empire, but no voting power. However, the language of the trust included a provision giving Rupert the right to make changes to it as long as he was acting in the best interests of his beneficiaries.

It was that provision that Rupert and Lachlan sought to exploit. In recent years, they have grown increasingly concerned that James – who has left the company and is hardly on speaking terms with his father and brother – was planning to lead a coup with Elisabeth and Prudence to oust Lachlan after their father’s death and change the editorial slant of the company. During the proceedings, Rupert and Lachlan’s lawyers pointed to a meeting that James, Elisabeth and Prudence held at Claridge’s Hotel in London in September 2023 as proof that they were scheming against Lachlan. But the commissioner ruled that accounts of the meeting were insufficient evidence of “plotting”.

It was Lachlan who initiated the plan to change the trust in the middle of 2023, according to the ruling. His and his father’s lawyers and advisers ultimately drew up a blueprint to consolidate Lachlan’s leadership by amending the trust. They called it – “perhaps too optimistically,” the commissioner quipped – “Project Family Harmony”. It singled out James as the “troublesome beneficiary”.

‘Today is about Dad’s wishes and confirming all of our support for him and for his wishes. It shouldn’t be difficult or controversial. Love you, Lachlan.’

A text message from Lachlan to Elisabeth on the morning of a pivotal family meeting last year.

One of the options contemplated, according to the ruling, was to simply “sever” James’ “sub-trust” from the larger trust, limiting his power. But Rupert and Lachlan ultimately decided that they could more effectively marginalise James by keeping his shares in the trust and thus under their control.

Rupert and Lachlan appointed new representatives to the family trust – including Bill Barr, the former United States attorney general – to give them the votes they needed to disenfranchise James, Elisabeth and Prudence. They also offered voting power to the children Rupert had with Deng, according to the ruling.

Rupert and Lachlan introduced their plan at a special meeting of the trust late last year. The ruling quotes a text message from Lachlan to Elisabeth on the morning of the meeting: “Today is about Dad’s wishes and confirming all of our support for him and for his wishes. It shouldn’t be difficult or controversial. Love you, Lachlan.”

Rupert Murdoch is desperate for Lachlan to have a firm grip over the world’s most powerful conservative media empire.Credit: Bloomberg

At the meeting, Rupert read a statement that said in part: “I love each of my children, and my support of Lachlan is not intended to suggest otherwise. But these companies need a designated leader and Lachlan is that leader.”

In order for their changes to the trust to pass legal muster, Rupert and Lachlan had to prove that they were being done in good faith and with the sole purpose of benefiting all of Rupert’s heirs. In court, they argued that locking in Lachlan’s control would ensure that the empire remained on its highly profitable conservative course, which would be in the best interests of all of Rupert’s beneficiaries.

James, Elisabeth and Prudence – referred to in the proceedings as the “objectors” – strenuously disagreed. They argued that they were being disenfranchised from their own family trust under what they maintained was a false presumption. They “disavowed any plan to oust their brother”, according to the decision, which also did not find “that they shared any singleness of purpose in changing the management of Fox News” or other outlets following their father’s death.

Gorman sided unequivocally with them, ruling that Rupert and his eldest son had ulterior motives – specifically, to give Lachlan the power to protect his father’s posthumous legacy by keeping the family empire on its conservative course. The Nevada commissioner found that they had operated in bad faith, undertaking their plan in secret for months – and only notifying James, Elisabeth and Prudence days before a scheduled vote at a special emergency meeting of the trust’s representatives.

He wrote that Rupert and Lachlan’s representatives on the trust, including Barr, “demonstrated a dishonesty of purpose and motive” in abetting their plan. Gorman criticises another one of their newly appointed representatives for his scant knowledge of the family and trust, writing that his research had been limited to “Google searches and watching YouTube videos about the Murdochs (or the fictional family in the show Succession)” as well as listening to a book by Michael Wolff about the family.

Characterising the effort to change the trust, Gorman concludes: “The effort was an attempt to stack the deck in Lachlan’s favour after Rupert’s passing so that his succession would be immutable. The play might have worked but an evidentiary hearing, like a showdown in a game of poker, is where gamesmanship collides with the facts and at its conclusion, all the bluffs are called and the cards lie face up.”

He added: “The court, after considering the facts of this case in the light of the law, sees the cards for what they are and concludes this raw deal will not, over the signature of this probate commissioner, prevail.”

This article originally appeared in The New York Times.

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