Lachlan, Rupert Murdoch ‘pleased’ as succession war ends with $5b buyout

The Murdochs have reached a deal cementing Lachlan Murdoch as the successor to the family empire, bringing an end to the decades-long battle against his siblings to control the media dynasty’s assets including Fox News, the Wall Street Journal and The Australian.

But while Rupert Murdoch has secured the fate of his businesses the fallout from “Project Harmony” has killed any possibility of peace between the members of the family, one longtime Murdoch lieutenant told this masthead in the aftermath, speaking on condition of anonymity.

Rupert Murdoch has ensured his media empire’s conservative editorial will continue after his death.Credit: Marija Ercegovac

Statements from both News Corp and Fox Corp on Tuesday morning said the mutual resolution on the legal proceedings rumbling on relating to the Murdoch Family Trust resulted in the termination of all litigation, and a severing of ties with three of Murdoch’s children.

Lachlan and Rupert Murdoch are “very pleased” with the deal, which was finalised in New York, a source with direct knowledge of the negotiations said, but not authorised to speak publicly.

But the former Murdoch executive told this masthead that everyone is a loser from this outcome. “It’s a tragedy it got to this point. The siblings put their feelings aside for the money and any harmony is now irretrievable,” the executive said.

The result is the creation of a new family trust, benefiting Lachlan Murdoch and his half-sisters Grace and Chloe.

Lachlan will have total control over the trust’s voting power over Fox and News Corp’s affairs, while Chloe and Grace will retain a purely financial interest.

The 54-year-old eldest son remains in charge of both News Corp and Fox Corp, and replaces his father as managing director of the family trust, which has been extended beyond the previous trust’s expiry to 2050. Grace and Chloe are Rupert’s youngest children, from his third wife, Wendi Deng.

Prudence MacLeod, Elisabeth Murdoch and James Murdoch, Rupert’s children from his first two marriages, had opposed their father and Lachlan in the family trial in Nevada. They will no longer be beneficiaries of any trust holding shares in Fox or News Corp, have agreed to sell any remaining shares in either company, and will be constrained from buying any more in the future.

According to The New York Times, the trio will each receive $US1.1 billion ($1.7 billion) for all their shares in the empire, roughly 80 per cent of the value of the stock when markets closed on Friday.

The children exiting the family trust will receive the cash compensation funded, in part, from the sale of about 16.9 million shares of Fox Class B stock and about 14.2 million shares of News Corp’s Class B common stock.

If the 94-year-old media titan had died before the current trust’s expiry date of 2030, the four eldest siblings would have had equal voting power over the estate, meaning the three in opposition could have ousted Lachlan and taken control themselves.

Rupert encouraged Lachlan in 2019 to use his personal proceeds of $US2.1 billion of Fox’s $US71 billion sale of its movie assets to Disney to buy his siblings out of the family business – just like the media mogul had done decades earlier with his own sisters to cement his control of News Corp.

However, Lachlan’s offer to buy them out at a 50 per cent bargain price failed. Rupert later proposed a plan to just buy James out, which Prudence and Elisabeth also rejected.

The deal cements Lachlan Murdoch’s control over the empire until at least 2050.Credit: New York Times

As tensions rose and James quit News Corp, publicly criticising its editorial output in 2020, Rupert and Lachlan began devising a plan to ensure the company did not fall into James’ hands, or his two elder sisters’, all three being considered more progressive than the conservative Lachlan.

They feared that James would take both Fox and News’ editorial voice in a more moderate direction. James endorsed Kamala Harris in the 2024 US election.

In 2023, Lachlan’s long-time consigliere, News Corp executive Siobhan McKenna, hatched “Project Harmony” – a bold plan to change the terms of the “irrevocable trust” by arguing Lachlan’s control was in the best interests of all trust beneficiaries, as he was most likely to preserve both companies’ conservative bent, which was proving a money spinner judging by the profits of the Fox News.

But their legal defence of the plan, held in a super-secretive family court in Reno, Nevada, was slapped down by probate commissioner Edmund J. Gorman, who said it had been carried out in “bad faith”.

With an appeal process underway and likely to drag on for months, settlement discussions resumed.

James gave a long interview to The Atlantic in February, where he let loose on details about his father and brother in relation to the bitter court fight that had been sealed until then. It proved to be a major turning point in reaching this week’s deal, a source with direct knowledge of the discussions told The Age and Herald.

McKenna and other loyal Australian executives worked on the details throughout the night to make the deal watertight for Rupert and Lachlan and get it across the line.

Having spent his life building the powerful media conglomerate, Rupert has now secured his goal of making sure the empire will continue in its current form after his death.

Locally, Australian executives were said to be happy with the certainty this outcome provides for the business.

Ironically, an embarrassing 12 months of damaging headlines for the family could have been avoided.

The outcome is similar to a deal proposed several years before “Project Harmony” began; however, in this iteration, the opposing siblings cannot have a financial stake in either company from here on.

The new trust for Lachlan, Grace and Chloe will hold the Murdochs’ stake in both News and Fox Corp, equating to 33 per cent of News Corp voting shares and 36 per cent of Fox voting shares, cementing their control over a number of highly profitable businesses, most prominently Fox News and The Wall Street Journal.

Lachlan, Rupert and James Murdoch in happier times. Credit: AP

While the Australian news business has faltered in recent years, this has been offset by the growth of digital real estate business REA Group.

The Murdochs’ stake in the media empire will be less than the previous family trust’s 43 per cent holding in Fox voting stock and 41 per cent of News voting shares – due to the share sale to fund the $5 billion siblings buyout – but is still enough to hold a controlling sway over the company.

A statement from News Corp’s board welcomed the arrangement, adding that the “leadership, vision and management” from its chair, Lachlan Murdoch, would “continue to be important to guiding its strategy and success”.

The siblings’ legal battle, fought in the Nevada court last September, catapulted the family drama into the global spotlight, aided by its parallels to the HBO hit series Succession, which is broadly based on the Murdochs.

The Murdoch siblings began discussing a public relations strategy for their father’s death in April 2023, prompted by an episode of Succession where family patriarch Logan Roy abruptly dies, “leaving his family and business in chaos”.

With Reuters

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.