Rupert Murdoch’s ‘bad faith’ bid to change family trust fails

Rupert Murdoch’s bid to alter the fate of an irrevocable family trust has been blocked and smacked down as a “carefully crafted charade” in a ruling by a Nevada probate commissioner on Saturday (US time).

The 96-page sealed ruling, obtained by The New York Times, scorched Murdoch’s attempts to alter the trust, which holds the voting power for both News Corp and Fox News-owner Fox Corp, remarking it was done so in “bad faith”.

Rupert Murdoch, pictured in October, wants his eldest son, Lachlan, to get full voting power over the family trust.Credit: GC Images

The move to cement the 93-year-old’s eldest son Lachlan as the family empire’s controlling figure after his death and secure its media assets’ conservative positioning was an ambitious one, and was, in fact, instigated by Lachlan himself, the ruling said. Rupert Murdoch arrived in Sydney last week and attended Lachlan’s Christmas party on Thursday.

The trust would divide control of the company equally among Rupert Murdoch’s four oldest children – Lachlan, James, Elisabeth and Prudence – after his death. Without change, Lachlan’s siblings could effectively remove him from his position of control – something both Lachlan and Rupert have become increasingly paranoid could happen.

They fear James, who left the company in 2020, wants to return to lead News Corp and take its editorial voice in a more moderate direction. He has been critical of both News Corp and Fox News’ coverage in the past and endorsed Kamala Harris in November’s US election.

Lachlan Murdoch and wife Sarah on a yacht in Sydney Harbour last Friday.Credit: Louie Douvis

If successful, Murdoch would have sought to alter only the voting power held in the trust, rather than the financial share each sibling will receive. His youngest children (from his third marriage), Chloe and Grace, have a financial stake but no voting power.

In his opinion, Commissioner Edmund J Gorman Jr said the plan to change the trust was a “carefully crafted charade” to shore up Lachlan Murdoch’s position inside the empire “regardless of the impacts such control would have over the companies or the beneficiaries” of the family trust, the Times said.

The hearing in Reno, Nevada, which began in September, was highly secretive, with no media in the courtroom. However, the new sealed document offers a rare insight into the family’s relations, including how a popular television show influenced planning for Murdoch’s death.

The siblings started to discuss a public relations strategy for their father’s death in April 2023, prompted by an episode of the HBO show Succession – thought to be inspired by the Murdoch dynasty – where family patriarch Logan Roy abruptly dies, “leaving his family and business in chaos”.

This led to Mark Devereux, a representative on the trust for Elisabeth, preparing a document titled the “‘Succession’ memo”.

Adam Streisand, a lawyer for Rupert Murdoch, said the media tycoon and Lachlan were disappointed with the ruling and intended to appeal, the Times reported, while a statement from James, Elisabeth and Prudence said that they “welcome Commissioner Gorman’s decision and hope that we can move beyond this litigation to focus on strengthening and rebuilding relationships among all family members”.

The high-stakes battle is set to determine the fate of one of the world’s most influential conservative media businesses and potentially shift the direction of an expansive media network that includes Fox News, The Wall Street Journal and The Australian. News Corp is already running a process to sell Foxtel.

Murdoch Sr argued that by conserving the right-wing positioning of the media assets, it would preserve their commercial power and as a result help all beneficiaries of the trust.

Following the decision, Australian stockbroker Angus Aitken and outspoken proponent of News Corp stock said both Rupert and Lachlan have a long history of successful business transactions, whereas other members of the Murdoch family do not.

“I cannot think of a single major successful investment for either News Corp or Fox you could attribute to a family member other than Lachlan or Rupert, so hence we would have no interest in supporting either business if they were run by other family members,” Aitken said.

“Would you replace Ronaldo in a UEFA Cup Final with a 4th division bloke from Huddersfield? No. So why do it in these businesses?!”

Lachlan Murdoch is News Corp’s chairman and the executive chairman and chief executive of Fox Corporation, following his father’s decision to stand down last year.

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