Speaker 1: From Schwartz Media. I'm Daniel James. This is seven AM.
Speaker 1: Rupert Murdoch's attempts to secure his son Lachlan's control of
Speaker 1: the family empire have hit a major legal roadblock. Escathing
Speaker 1: ruling from a Nevada commissioner against the patriarch's attempts to
Speaker 1: reshape his family trust has thrown his succession plan for
Speaker 1: his eldest son into disarray. The ruling and a seemingly
Speaker 1: divided family have cast a doubt over the future of
Speaker 1: the Murdoch media empire. With the implication of the Nevada
Speaker 1: Court's decision yet the play out Today. Director of the
Speaker 1: Center for Advancing Journalism at the University of Melbourne, Andrew
Speaker 1: Dodd on the ruling, the fallout, and the next chapter
Speaker 1: in the Murdoch trust saga. It's Friday, December thirty eight, Andrew,
Speaker 1: thanks for joining us.
Speaker 2: Thank you, Daniel.
Speaker 1: Obviously we all know that the drama series Succession was
Speaker 1: inspired by the Murdoch family, but I've heard that this
Speaker 1: saga of the Murdoch family's trust was itself actually inspired
Speaker 1: by an episode of Succession. Is that right?
Speaker 2: Well, apparently that's what's been revealed by the new York Times.
Speaker 2: They reckon that Elizabeth saw the episode where Logan Roy
Speaker 2: dies that prompted her to get in touch with her lawyer,
Speaker 2: Mark Devereaux, and Mark Devereaux wrote what's called the Succession Memo,
Speaker 2: which triggered all.
Speaker 1: Of this episode. Then again, according to these filings and details,
Speaker 1: were only learning because of the court clash, led.
Speaker 2: One of Murdoch's children, the daughter Elizabeth, to write.
Speaker 1: A succession memo to help avoid a real life repeat
Speaker 1: of that fictional and imagined situation.
Speaker 2: So that then led to Lachlan seeking to revoke the
Speaker 2: Eravoke Trust.
Speaker 1: Can you tell me about the trust itself, when it
Speaker 1: was established and what it was initially set out to do?
Speaker 2: Yes, it was initiated by Rupert's second wife, and she
Speaker 2: did it to protect her kids. Apparently she agreed to
Speaker 2: take a smaller share as a settlement if it was
Speaker 2: guaranteed that the children, meaning her children but also Prudence
Speaker 2: from the first marriage, would all be protected equally under
Speaker 2: the terms of the will. And what then subsequently happened
Speaker 2: to the trust was that as it was being developed,
Speaker 2: Wendy Deng's children came along. They were given an equal
Speaker 2: share of the assets of the company, but were not
Speaker 2: given voting rights, So the trust has locked that in
Speaker 2: and it's done in such a way irrevocably, so that
Speaker 2: it can only be changed if all of the beneficiaries
Speaker 2: agree to the change, and the changes are for the
Speaker 2: benefit of all the beneficiaries. So that's what's been in question.
Speaker 1: And it's become more of a question as the golf
Speaker 1: and perspective between the four siblings has seemed to have
Speaker 1: become wider. Can you give us a brief overview of
Speaker 1: Lachlan's position compared to Prudence, Elizabeth and James's.
Speaker 2: Yeah. Sure, So there's been a lot of inning and
Speaker 2: outing from the company. So Lachlan has come and gone,
Speaker 2: James has been in the company and left, Elizabeth went
Speaker 2: her own way, formed her own business and created a
Speaker 2: quietness to a successful media company, and Prudence has been
Speaker 2: somewhat aloof. But they've all had an association with the
Speaker 2: company over their lifetimes, and what we now know about
Speaker 2: them is that Lachlan seems to be the favored son
Speaker 2: because his politics are more aligned with Rudbert's, and James,
Speaker 2: although initially showing that he was quite right wing, seems
Speaker 2: to have become less so perhaps due to the marriage
Speaker 2: to his partner, who is a climate activist, and he
Speaker 2: has moved away from the company and expressed his dismay
Speaker 2: at its reportage of bushfires in Australia and other climate
Speaker 2: related matters. He endorsed Karmela Harrison the last election. He's
Speaker 2: spoken out openly against Fox's coverage of the big Lion,
Speaker 2: Donald Trump, and we know from that that he's eager
Speaker 2: to see some change in the company. And that's why
Speaker 2: he's known internally as the troublesome beneficiary, because he's got
Speaker 2: those views. So the question really is does he have
Speaker 2: the support of Elizabeth and Prudence and can the three
Speaker 2: of them going up against Lachlan if it comes to that.
Speaker 1: And so this attempt to change the trust is to
Speaker 1: really give Rupert control of his businesses from beyond the
Speaker 1: grave through his eldest son Lachlan.
Speaker 2: Yeah, that's one way of reading it, and he's quite explicit.
Speaker 2: He says that the company really only survives financially if
Speaker 2: it retains its right wing politics, and that's because it
Speaker 2: thinks it's found that corner of the market, and that
Speaker 2: corner of the market is lucrative for Fox for example,
Speaker 2: and that's what keeps the company afloat, And there's a
Speaker 2: certain amount of truth to that. I mean, Fox is
Speaker 2: by far the most profitable part of the empire. It
Speaker 2: made one point five billion US dollars last financial year alone,
Speaker 2: and it is propping up a lot of the loss
Speaker 2: making newspapers. So you can see the argument. But the
Speaker 2: counter argument to that is, well, they haven't tried another approach,
Speaker 2: and who's to say they can't bring that audience with
Speaker 2: them as they move a little close to the center
Speaker 2: and produced journalism that's a little less damaging for society
Speaker 2: in general.
Speaker 1: So the fight day of the trust went to a
Speaker 1: closed court in Nevada and the court ruled against the
Speaker 1: attempt to change the trust. So what did the judge
Speaker 1: say when he made the ruling.
Speaker 2: Well, he was scathing. Edmund Gorman, who is the trust commissioner,
Speaker 2: said that what Lachlan and Rupert had put together was
Speaker 2: a carefully crafted charade done in bad faith. They criticized
Speaker 2: the lawyer who represented those members of the family as
Speaker 2: acting somewhat dishonestly. So he's left no doubt as to
Speaker 2: his position on this. He says that it doesn't benefit
Speaker 2: effectively all of the members of the trust and therefore
Speaker 2: can't change under the current rules. The trouble is, though,
Speaker 2: that it is just a recommendation and it now needs
Speaker 2: to be ratified by a district court judge and then
Speaker 2: could be subject to litigation beyond that.
Speaker 1: Right, So there's a potential that Lachlan and Rupert could
Speaker 1: appeal eventually.
Speaker 2: Yeah, well that said, they will and they've got too
Speaker 2: much at stake. Of course they'll appeal this. But I
Speaker 2: think the important thing is that the ruling, the initial
Speaker 2: ruling by Gorman, is so strong that it's going to
Speaker 2: make what look like a weak case before even weaker.
Speaker 2: It would be a rogue district judge, I would think,
Speaker 2: who would disavow this ruling by its own commissioner. So
Speaker 2: it seems to me that they're on even more shaky
Speaker 2: ground than they were beforehand.
Speaker 1: Rupert hasn't been afraid to make radical business decisions to
Speaker 1: change the future of his companies before. Apart from appealing
Speaker 1: this decision, is there anything else that Rupert could do
Speaker 1: to sway the balance in Lachlan's favor?
Speaker 2: Well, yeah, he can do all sorts of things while
Speaker 2: he's alive. Of course, he can try and engineer some
Speaker 2: sort of settlement within the family that changes this. I'm
Speaker 2: sure there are other legal avenues open to him that
Speaker 2: he can explore to do that. But really now I
Speaker 2: think the question is can the family maintain some cohesion
Speaker 2: through this. I mean, this has been a very bruising
Speaker 2: battle for them. Elizabeth and prou are saying now that
Speaker 2: the emphasis should be on trying to restore or repair
Speaker 2: family relations, and I think it'll come down to whether
Speaker 2: or not, in fact the three siblings have been scheming
Speaker 2: against Lachlan, and whether Lachlan can convince them that there's
Speaker 2: another path. And this is a course where it all
Speaker 2: begins to look very much like succession.
Speaker 1: After the break, the fallout, and what it means for
Speaker 1: the Murdock Empire. So Andrew Rupert Murdock's attempt to challenge
Speaker 1: his family trust was ruled against him resoundingly. So this
Speaker 1: will now go to the district court, as you mentioned,
Speaker 1: and as you also mentioned, it doesn't seem to have
Speaker 1: a very strong case. So what are the implications of
Speaker 1: this decision now for the business empire?
Speaker 2: So if we default to the position that this is
Speaker 2: lost and we can, then I think start exploring what
Speaker 2: news Corp could look like after Rupert's death, and let's
Speaker 2: imagine the four of them get together and the three
Speaker 2: siblings to throne Lachlan. Then there are all bets off,
Speaker 2: so News Court becomes a very different entity. But then
Speaker 2: it's got a weigh up all sorts of things. It
Speaker 2: has to weigh up what the market does in response
Speaker 2: to that, and they will be no doubt spooking the
Speaker 2: market if they do that. So I imagine they've got a
Speaker 2: bit of a game plan developing and if not, will
Speaker 2: soon be developing it where they try and bring their audiences,
Speaker 2: their shareholders, and their advertisers and subscribers with them through
Speaker 2: gradual change. That I think is effectively the only way
Speaker 2: they can retain the company with the market capitalization that
Speaker 2: it currently has, and in such a way as to
Speaker 2: gradually bring about change needs to be very carefully and
Speaker 2: very strategically.
Speaker 1: So when you take stock of Rupert Murdocks and media
Speaker 1: around pie, how has it been performing overall in recent
Speaker 1: years from a business perspective.
Speaker 2: Well, it is in fact two companies. So Fox is
Speaker 2: separate from News Corp. And Fox is a whole lot
Speaker 2: of media assets, not just Fox itself but other sports
Speaker 2: channels and other allied media businesses. And then there's news Corp,
Speaker 2: which is the more traditional aspects of the company. Mostly
Speaker 2: it's newspapers around the world, and generally can be said
Speaker 2: that newspapers lose money. Fox makes money. As well as that.
Speaker 2: There are all sorts of other allied businesses in sports,
Speaker 2: subscription and book publishing. For example, HarperCollins is a news
Speaker 2: Corp company. Overall, the company makes an enormous amount of money,
Speaker 2: but it can do so knowing that it's propping up
Speaker 2: businesses that aren't making money. So when people think about
Speaker 2: Post Rupert and news Corp, they're often thinking about what
Speaker 2: are the futures of the loss making aspects of the business,
Speaker 2: and by that they mean newspapers. The thing about Rupert,
Speaker 2: for all his faults, is that he is a fan
Speaker 2: of newspapers and he's kept many many people in work
Speaker 2: because he insists on keeping them running.
Speaker 1: Yes, so with that in mind, what would this decision,
Speaker 1: if it holds, mean for his Australian publications and other
Speaker 1: business interests.
Speaker 2: No idea. You may as well look at the entrails
Speaker 2: of a goat to work that out. Daniel, nobody knows
Speaker 2: that and I wonder whether in News Corp they even
Speaker 2: know that themselves, particularly as this entire ruling in the
Speaker 2: has thrown everything up in the air again. So I
Speaker 2: wouldn't even begin to speculate it about that. If they
Speaker 2: wanted to bring in an accountant slide rule to it,
Speaker 2: then they'd have to be looking very seriously quite a
Speaker 2: few publications in Australia that aren't making a lot of money.
Speaker 1: So there's a potential that there's a few chapters left
Speaker 1: in the Murdoch family drama. Just yet. When will the
Speaker 1: final season of that drama unfold?
Speaker 2: Well, of course I wish we're but a long and
Speaker 2: happy life, and if he's anything like his mum, there
Speaker 2: a few more years yet in that life. But I
Speaker 2: think that's when the next chapter really starts, unless we
Speaker 2: see some sort of overt kind of maneuvering going on
Speaker 2: while he's still able to control things. I mean, he
Speaker 2: has half the voting stock in the trust now and
Speaker 2: he and Lachlan together control it, so they will no
Speaker 2: doubt be looking at other ways to influence change, and
Speaker 2: they could do things like hive off parts of the company.
Speaker 2: They could divest it and put it in other sort
Speaker 2: of places, and they still have then to do that,
Speaker 2: but I suspect now they're going to try and work
Speaker 2: behind the scenes to come up with some other approach.
Speaker 1: And finally, Andrew, will the death of Rupert Murdoch also
Speaker 1: mark the end of Lachlan at News Corp.
Speaker 2: Well, that's certainly the thesis that Paddy Manning has put
Speaker 2: out in his book, and he's not alone in that.
Speaker 2: That's come from others as well. But that of course
Speaker 2: does rely on the other three ganging up on their brother.
Speaker 2: So in that sense, yes, it could happen. And whatever happens, though,
Speaker 2: there will be a reduction in his power, a massive
Speaker 2: reduction in that power. But you know, for me, I
Speaker 2: think that's when the next really interesting chapter of this
Speaker 2: company begins, and that is what it looks like post
Speaker 2: Rupert and whether or not we do see a gradual
Speaker 2: shift towards a company that is more socially responsible, produces
Speaker 2: more balanced journalism and frankly does less harm in the
Speaker 2: world than a currently.
Speaker 1: Danes Andrew, thank you so much for your time.
Speaker 2: Thank you, Daniel, And if.
Speaker 1: You want to learn more about the life and legacy
Speaker 1: of Rupert Murdoch, media's most powerful man, you can listen
Speaker 1: to Rupert the Last Mogul, a special series from Schwartz Media.
Speaker 1: Search for it wherever you get your podcasts. Also in
Speaker 1: the news today, Australia's unemployment rate has fallen to three
Speaker 1: point nine percent, down from four point one percent in October.
Speaker 1: The latest figures from the Australian Bureau of Statistics have
Speaker 1: been attributed to a growth in population as employment kept
Speaker 1: pace with population growth and platforms including Facebook, Google and
Speaker 1: TikTok could be forced to fund Australian journalism under a
Speaker 1: federal government plan to impose a new tax on the
Speaker 1: tech companies. The proposed tax would be applied to the
Speaker 1: platform's Australian revenue, but could be reduced to zero if
Speaker 1: they entered into pay agreements with news outlets. Seven Am
Speaker 1: is a daily show from Schwartzmabia and The Saturday Paper.
Speaker 1: It's made by Addigas Basto, Shane Anderson, Chris Stangate, Eric Jensen,
Speaker 1: Ruby Jones, Sarah mcviee, Travis Evans, Zolten Vecho and myself
Speaker 1: Daniel James. Seven Am will be back on Monday. See
Speaker 1: you then.