In January 2021, Fox News quietly fired politics editor Chris Stirewalt. He had made the decision two months earlier to call Arizona for Joe Biden in the 2020 election. Media titan Rupert Murdoch was irate at the judgment. So, too, were many of the network’s viewers, who fled to Newsmax and One America News after Donald Trump denounced Fox News as disloyal. Around that time, ratings plummeted.
“I hate our Decision Desk people!” wrote Murdoch on Nov. 7, when his network projected Biden to win.
To win back viewers, Fox News started to circulate reports that the election was rigged. Ratings soon stabilized.
That decision to parrot Trump’s election conspiracy may have looked different if a certain segment of Murdoch’s children, who’ve expressed apprehension over the network drifting even further to the right, were calling the shots. And they may soon get that chance if they prevail over their father, now 93, and brother Lachlan — the chosen heir — in a succession battle worthy of the TV show he partly inspired that may determine the editorial direction of Fox News and The Wall Street Journal.
On Monday, a two-week saga is set to start in a probate court in Nevada over a petition by Murdoch to change the terms of the irrevocable family trust — the instrument through which he controls News Corp. and Fox — to ensure that Lachlan remains in charge of his media empire after his death, per documents leaked to The New York Times. The trust as currently constructed gives equal voting shares to his four eldest children. Although Lachlan is currently chair of News Corp., he could be stripped of his title by his siblings, largely seen as more politically moderate and have banded together to oppose revisions to the trust.
To solidify Lachlan as his successor, Murdoch will have to prove that the changes are being implemented in good faith, with the purpose of benefiting all of the trust’s members, according to the Times report that cited a probate judge’s order. The thrust of his argument in the case, which is under seal, revolves around maintaining Fox as a conservative political media force by ensuring that Lachlan’s brothers and sisters won’t be able to wrest control of the company from him and moderate its coverage.
Robert Strauss, a lawyer who specializes in business succession planning for high net worth families, stresses that the key question in the case is whether the revisions are favorable for every beneficiary. “It’s hard to see how taking control away from someone is beneficial for that individual,” he says.
By Murdoch’s thinking, Lachlan is best-positioned to stick with the current editorial direction of Fox, which has seen its ratings rise over the past year even as the number of pay TV viewers have fallen off a cliff. The network has historically followed the Republican majority, so as the party embraced far right talking points during the Trump era, so did many Fox hosts. In a note to employees when he retired from the boards of Fox and News Corp., Murdoch expressed that his eldest son is politically-aligned with him and will carry on the the networks’ conservative stance.
“The battle for the freedom of speech and, ultimately, the freedom of thought has never been more intense,” he wrote. “My father firmly believed in freedom, and Lachlan is absolutely committed to the cause.”
On the other hand, James, who at one point was seen as the heir apparent to his father’s media empire but lost a power struggle to his brother, has taken aim at his family’s conservative media juggernaut. He stepped down from the News Corp. board in 2020 due to “disagreements over certain editorial content published by the company’s news outlets.” He could have been alluding to Fox’s coverage that the election was stolen, which has led to at least three shareholder lawsuits against the board, plus a $787.5 million payout to Dominion Voting Systems. Voting technology company Smartmatic continues to pursue a $2.7 billion defamation lawsuit against the network.
Stacie Nelson, a partner at law firm Holland & Knight, observes that the probate court could examine whether appointing Lachlan as the sole successor will benefit his siblings by increasing the value of their shares, despite being stripped of their voting power.
“It’s possible the court can consider the future direction of the news outlets as being part of whether Lachlan will be the best steward such that it’s still in the [other beneficiaries’] interest,” she says.
Strauss notes that the court is unlikely to grant Murdoch’s petition to change the trust if the sole purpose is to “reduce a peoples’ shares or take away their voting control.” He adds that the “definition of a bad reason is if [the amendment] would benefit one trustee against the others.”
There’s also the issue of whether a succession battle will unnerve investors. In a September letter, activist investor Starboard Value underscored the Murdoch heirs having “widely differing worldviews,” which could be “paralyzing to the strategic direction of the company” after Murdoch dies. It added, “This is clearly not the appropriate governance structure for a public company, and we believe it has exacerbated News Corp’s valuation discount relative to its inherent value.” Giving Lachlan the keys to Murdoch’s media empire for good could eliminate that uncertainty.
The media and entertainment industries are no strangers to high-stakes succession drama. At the height of their clash, Sumner Redstone tried to buy out his daughter Shari of her stake in National Amusements, which was controlled through a trust. They later reconciled.
Unlike that battle, the Murdoch matter will play out in court behind closed doors. On Friday, probate commissioner Edmund Gorman Jr. denied a petition by a coalition of media organizations, including The New York Times, The Washington Post and The Associated Press, to unseal court proceedings and records. He found that hearings will remain closed off to prevent the disclosure of confidential information.
Alex Weprin contributed to this report.