The Daily - The Battle to Control the Murdoch Media Empire

Episode Date: April 5, 2019

Through his media empire, Rupert Murdoch has reshaped the politics of countries across the English-speaking world, pushing their governments to the right. We look inside the struggle over who will control that empire once he’s gone. Guests: Jonathan Mahler and Jim Rutenberg, who spent six months investigating the Murdoch family for The New York Times Magazine. For more information on today’s episode, visit nytimes.com/thedaily.

From The New York Times, I'm Michael Barbaro. This is The Daily. Today. Through his media empire, Rupert Murdoch has reshaped the politics of countries across the English-speaking world, pushing their governments to the right. Inside, the bitter struggle between his sons over who

would control that empire once he's gone. It's Friday, April 5th. So the story begins in January 2018 with Rupert Murdoch, 86 years old, the most powerful media mogul in the world, with his fourth wife, Jerry Hall, Mick Jagger's ex, and they borrow his son Lachlan's 140-foot yacht. I mean, yacht doesn't even begin to describe it. It is a floating pleasure palace. Jim Rutenberg and Jonathan Mahler spent six months investigating the Murdoch family for the Times Magazine. There's one room that has all the stars of the sky in the ceiling. One switch turns on the southern hemisphere constellations.

The other one turns on the northern hemisphere constellations. The cockpit turns into a swimming pool because you never know when you want to take a dip. There's even a rock climbing kind of training apparatus. So you set that up on the deck and practice your rock climbing. So this boat is kind of a floating portrait of luxury. Yes, but it's also a sailboat. And Rupert Murdoch is an 86-year-old man, and it's not easy to navigate a sailboat, especially in the middle of the night.

So, Rupert Murdoch is on his way to the bathroom in his cabin, and he trips, and he falls, and he can't move. He's stretchered off the boat. He is initially seen at a hospital in the Caribbean. They saw how serious his condition was, that it was potentially fatal. And he's airlifted to Los Angeles, to the UCLA Medical Center,

and ultimately goes into emergency surgery. So at this point, Jerry Hall, his fourth wife, begins calling the children. Lachlan, James, Elizabeth, and Prudence, who live different parts of the world, and they all fly in to Los Angeles to be by their father's bedside. And there's a whole sort of subtext here. They've literally spent their entire lives jockeying and competing with each other to become the heir to this empire. So the subtext is, who is going to run this company when our dad is gone?

That not only are they all coming to possibly say goodbye to their father, but the whole Murdoch empire is up for grabs. Because it sounds like there is no plan in place if Murdoch dies at this moment. Correct. I mean, everything is now up in the air. dies at this moment. Correct. I mean, everything is now up in the air. Okay, so just how big and important is this media empire that's now hanging in the balance?

It is enormous. It is a massive Hollywood studio. It is multiple TV stations. It is dozens of newspapers. It's really media outlets across the English-speaking world. In the U.S., of course, it's Fox News. America needs just one channel that has a somewhat different point of view. But it's also the 21st Century Fox movie studio.

It's the New York Post. It's the Wall Street Journal. It's the Dow Jones Wire. Order! In the U.K, it's leading newspapers like the tabloid UK Sun and the more establishment Times of London. It's Sky News, cable news, and it's Sky Satellite Service, which is gigantic. Well, thanks for coming in this morning, Will. No problem. And in Australia, their media power is at its most undiluted. The Murdoch Papers account for 60% of newspaper sales,

and they have a cable news service as well. So what all of these outlets add up to is more than just kind of a media company in the traditional sense. It's a media empire all controlled by one man who can use them as a tool of influence to shape political landscapes all across the world. I mean, he's an empire builder in the kind of original sense of the term. He wants to continuously grow his empire. And that works perfectly with his influence because it enables him to knock down any barriers to growth that he needs.

And this instinct, this sort of desire for territorial conquest, he learned it from his dad. And who is his dad? Well, his father, Sir Keith Murdoch, was a newspaper man himself. He worked for and basically led what became the first national news chain in Australia. His father's also very conservative. He had written a paper as a young man

about the need for a white Australia. A white Australia. Yeah, he was a member of the Royal Eugenics Society. I mean, he was a proto-white nationalist. And he's willing to use his newspapers to push into office people who do his bidding, people who will help him grow his media business and suspend regulations. And young Rupert is taking all of this in, in the family house, learning the ways of the business from dad.

Then he goes off to Oxford as a young man, but his father dies abruptly. And, you know, Rupert at this point has sort of, you know, not only has he grown up studying the newspaper with his father, but he's done an apprenticeship on Fleet Street. So he... Which is kind of the media center of London. It's the media center of London, and it's also the media center of tabloid London and the populist idea, essentially. So Rupert kind of has that in his blood already. And he returns home to Australia at the age of 22 to inherit a single newspaper with a circulation of, you know, around 100,000,

a regional newspaper, a small newspaper. And this becomes the beginning of the Murdoch empire. Over Sydney Harbour Bridge by Rolls-Royce. Rupert Murdoch on his way to his office. He uses his one newspaper to wield power and get what he needs, influence politicians, clearing anti-monopoly rules out of his way so that he can buy another newspaper. Murdoch inherited the basis of his newspaper empire from his father, built on it and enlarged it effectively a media monopoly in Australia. He's chubby-cheeked and open-faced, but underneath, say those who know him, he's a man of steel.

Ruthless in getting his own way, iron-willed in seeing that his plans are carried through. Murdoch essentially develops what becomes the Murdoch playbook. Do you like the feeling of power you have as a newspaper proprietor of being able to sort of formulate policies for a large number of newspapers in every state of Australia? Yes. Reward your allies and punish your enemies. And, you know, he has a growing empire with which to do that. And tell me how this playbook works in practice. Well, let me tell you a story, an early story of Murdoch's origins. If the News of the World deal goes through, he'll transfer his base to London.

Rupert Murdoch, having gotten his empire underway solidly in Australia, returns to London. He says the News of the World organization is now ripe for expansion into TV or possibly a new daily. And in the late 60s, buys the News of the World a major tabloid. He buys the UK Sun another big tabloid. He takes an active part in what goes into his papers, even going into the composing room

to supervise what's in the page proofs for next day's edition. He wants more. He wants to own the Times of London, the kind of establishment broadsheet that speaks to the elite, so he has the whole market kind of covered. But he runs into a problem. The United Kingdom had strict media rules. They don't want one person to own that much influence. They have so many newspapers in a single market,

London. But... What a contrast with us. A labor's pessimistic, we are full of hope. He finds a solution in getting behind Margaret Thatcher, conservative icon, rising right-leaning star of British politics. We rise to the challenge, to the excitement and the adventure. Puts his tabloids behind her. Literally like editorial stories. Yes. I mean, just throws the weight of his tabloid behind her. And this is a very influential tabloid. And creams her rivals and creams the left-leaning Labour Party.

And when she gets into office, lo and behold, the regulators who could get in the way of a deal like buying the Times of London look the other way. So now he's got three giant newspapers in London, cycle complete. So now he's got three giant newspapers in London, cycle complete. The New York Post is a classic tabloid, brash, outspoken, controversial. A few years later, Murdoch imports this same playbook to the United States. Has made its share of headlines, thanks to owner Rupert Murdoch. And he buys a newspaper here, the New York Post. Good evening. I'm here tonight to announce my intention

to seek the Republican nomination for president of the United States. So in 1980, Reagan's running for president, and Rupert Murdoch wants him to win. He puts the New York Post behind him. I believe that together, we can keep this rendezvous with destiny. He helps actually deliver New York State to Ronald Reagan. Reagan is enormously grateful, and a relationship is forged. Thank you, and good night.

So now he has in the White House a friend, an ally, someone who owes him, and can help him kind of advance his agenda in the U.S. And so that agenda early on includes getting into television. And Rupert, you know, it was no problem for him to buy the New York Post, but in order to buy a TV station, you need to be an American citizen. It's federally regulated. So he has to get citizenship. Rupert Murdoch decided to become an American citizen so he could buy six American television stations. And so he turns to Reagan, who fast tracks his application. As president. As president and enables him to get into TV. And does he, to Reagan, who fast-tracks his application. As president. As president,

and enables him to get into TV. And does he, in fact, buy TV stations? He does, indeed. And in fact, launches what becomes the Fox Network. And we're not talking about Fox News, but the Fox Broadcasting Network, which becomes this unlikely competitor to the big three broadcast networks. Starting on April 5th, new views, new view Sundays and a whole new life. Right. So when I was growing up, it was ABC, CBS, NBC, and then suddenly there was Channel 5. Suddenly there was Channel 5, which was Fox, which was Rupert Murdoch. Which was Rupert Murdoch.

This is the Fox Broadcasting Company. Okay, so by using this playbook, Rupert Murdoch is able to create this Fox broadcasting network. And what happens after that? Well, he also buys what was then known as 20th Century Fox, massive Hollywood studio. The empire gets bigger and bigger and bigger. What do you think you're offering people that they would want to watch? Choice. Much more choice. And then in the mid-90s, he launches a 24-hour cable news channel, Fox News.

Hi, I'm Bill O'Reilly. Thank you for watching on our very first day. How did it happen? How did television news become so predictable and in some cases so boring? Which, you know, very quickly becomes this incredibly powerful force in American politics. Few broadcasts take any chances these days, and most are very politically correct. Well, we're going to try to be different, stimulating and a bit daring, but at the same time responsible and fair. President Bush winning more votes than any president in history. But after another hour of Barack Obama explaining his program, I still don't know what it is.

The man is incapable of breaking it down so that we the people can understand it. That's the crux of the matter. It's supplemental. It's elemental. It's crazy. Precisely is diversity our strength? Since you've made this our new national motto, please be specific as you explain it. Can you think, for example, of other institutions, such as, I don't know, marriage or military units, in which the less people have in common, the more cohesive they are?

And at a certain point, Rupert Murdoch is in many ways dictating Republican policy. He's leading the conservative movement in different directions. Sean Hannity, come on up. Sean Hannity. And in so doing is what it's really helping foment and add to is this populist wave. We want to control our own country. In the UK, it's anti-Europe.

We want Brexit. In the US, it's hell with all this PC culture and he gets behind Donald Trump. It's hell with all this PC culture, and he gets behind Donald Trump. So enter our times. Like, here we are, Brexit and Donald Trump. Build that wall. Build that wall. There are multiple forces behind all of this, and we'll be studying that for decades, but the common denominator is Rupert Murdoch and his media empire.

And so that is what his children are fighting over. It is this media empire which has the power to change politics and governments all over the world. That's what's at stake here when Rupert falls on his son's yacht. We'll be right back. Okay, so tell me about these children who were poised to take over the Murdoch media empire. So Rupert has six children, two teenage daughters,

four adult children, whom we already mentioned. And of those four, the only two who were really in the succession mix were the two boys. Either Lachlan, his eldest son, or James, his younger son. Okay, so who are these two sons who stand to inherit the company? Well, there's the firstborn, Lachlan, born in 71, mostly raised in New York. And history repeats itself. Learning at dad's knee, watching, going over the newspapers every morning.

He goes to Princeton. He studies philosophy. He's into Hegel and Kant. But he really loves Australia. He identifies with it. And he takes a series of jobs there where he becomes this kind of, this big figure in Australian media

because Murdoch's so powerful by then. And he's seen around town on his motorcycle. He's known for his cool armband tattoo. He's a rock climber. He's like, he'd even served as a jackaroo one of his summer jobs. What is a jackaroo? Well, I'm told that a jackaroo

kind of helps deal with the, really manhandles the animals on the farm. It's like herding. It's like sheep and goat herding and vaccinating. We heard he would literally physically vaccinate the sheep, like inject them. So kind of a swashbuckler. He's a swashbuckler. Very much, yeah.

And he's known early on to kind of identify with his father's politics, but those who work with him say he's even maybe more conservative than his father. Okay, so that is Lachlan. What about the other son, James? Yeah, well, James Okay, so that is Lachlan. What about the other son, James? Yeah, well, James is 18 months younger than Lachlan, and he's considered to be the family rebel when he was younger. He had dyed his hair, he pierced his ears,

he went to Harvard. Which is not so rebellious. Well, you know, you can't have everything. While at Harvard, he considers becoming a medieval historian. So he's considering maybe going into academia, which is kind of a sort of surprising notion for a young Murdoch. And he ends up dropping out of Harvard. He goes off to follow the Grateful Dead. He's like big deadhead. Wow. Yeah. And after that, he starts a hip hop label called Raucous Records. And the label, which actually does very well, I mean, they certainly have some pretty well-known hip-hop artists.

And after about a year with him at this hip-hop label, his father buys the label and brings James into the company. And that's sort of the end of James' kind of brief foray outside the business. And now he's sort of squarely part of the Murdoch empire and in contention for the throne. And what are his politics like? Yeah, James is far, far more centrist than Loughlin. He's a big, big environmentalist, really sort of focused on climate change. You wouldn't call him a liberal, but you would certainly call him a centrist, someone with moderate politics. He also had no attachment whatsoever to Australia.

It sounds like Lachlan and James are... Oil and water. Not exactly on the same page. Chalk and cheese is the way they put it in Australia. Yeah. And do they get along? No. Really no.

So you can imagine why they'd have two very different visions and want to take the company in two very different directions. And listening to you describe these two, it would feel almost inevitable that Rupert Murdoch would identify a bit more with Lachlan, the Australian-loving, conservatively inclined, firstborn son. So is Lachlan a kind of obvious choice to run the company? He is definitely the leading contender. And Rupert brings Lachlan back from Australia

and he sets up in New York and he starts working in television stations. He goes and works in LA and deals with the movie studios and gets to know the big executives, all of whom have their own ambitions, and see Lachlan and his brother, for that matter, as these entitled princelings. And kind of a threat to them.

Definitely a threat to them, and there's some resentment. So it's a frustrating period for Lachlan this time around. We've heard stories of executives rolling their eyes when Lachlan speaks. Finally, he has a very big clash with the famous chairman of Fox News, Roger Ailes, who's just a bombastic, larger-than-life character and wants nothing to do with Loughlin. And when he and Loughlin clash on a pretty small programming issue, Roger Ailes goes to Rupert and it gets back to Loughlin that Rupert says,

don't worry about the boy. Roger Ailes goes to Rupert and it gets back to Lachlan that Rupert says, don't worry about the boy. And right on the spot, Lachlan quits. And he up and just leaves the country right back to Australia. Okay, so at this point, does Rupert turn to James as the logical heir?

Yes, that's exactly what happens. Lachlan is gone. He's in self-imposed exile in Australia. And James now steps up and sort of seizes his opportunity to become the heir. And what is James' vision for this media empire? So James has a very different vision from his brother, certainly, and his father. He's sort of a Davos-style executive, a globalist, who wants to move the company into new markets, move the company away from this sort of purely kind of political identity, and become a kind of progressive, carbon neutral. He actually

leads an initiative to convert all of their offices to carbon neutral. That doesn't sound Murdochian. It does't sound Murdochian. It does not sound Murdochian, no. And in terms of the politics of the company, how it presents the world, the events it chooses to try to influence, what does he see? Well, he would like the company

to be more politically neutral. I mean, to be a centrist company that isn't pushing a political agenda, but rather is just kind of moving forward with its own agenda. So, I mean, it be a centrist company that isn't pushing a political agenda, but rather is just kind of moving forward with its own agenda. So, I mean, it's a very different vision than the one that his father had had for so many years during his decades of empire building and pushing his politics. So there's a moment where this company could be very different. And so how does that work out for James? Very different.

And so how does that work out for James? Well, he's on his way when... Media tycoon Rupert Murdoch didn't only deliver the news this week. Murdoch was the news. All of his efforts get completely undone by a massive scandal. Murdoch's journalists have been hacking into the cell phones of the owners and users of those phones. Police reports say there could be as many as 4,000 victims. Really the biggest scandal that the Murdoch family and empire has ever faced. The paper accused of hacking the phones of celebrities, politicians, and even the voicemail

of a murdered teenager. One of the Murdoch papers, the News of the World, has been hacking into the phones and stealing their personal messages for dirt to sell papers. The company's best-selling paper, the News of the World, has been closed down because it became too much of a liability. And that becomes an enormous, enormous international front-page scandal in the year 2011.

...London with the latest. Jeffrey, this story just continues to unfold at a massive rate. It sure does, Elizabeth. This scandal has rocked his media empire to the core. And James, at the time, is running the company, and it all sort of falls on him. The issue all along has been how much the management of the paper knew about the phone hacking its reporters

were involved in. James Murdoch had signed the check settling some of the claims. Really what happens here, you know, you might imagine in some families this might be a time for the father and son to sort of bond together and figure out how to fight this thing off. But what happens in the case of Rupert and James now is they basically blame each other for the hacking scandal. James feels like my father's company is a mess. The culture of this company is out of control. And now he's essentially throwing me in front of it, his son. And Rupert feels like I put you in charge of my operation over there. The scandal has been brewing for years and you have failed to contain it. How is that possible? That's right. It was a very public family drama, a dynasty scrambling to save itself from destruction. So it's complete chaos. James is blaming Rupert. Rupert is blaming James. The whole succession thing is now completely kaput. It's up in the air. There's no clear error apparent. And then Lachlan returns. He calls his father and says, I'm going to fly there from Australia. Lachlan arrives in London. He swoops into the

offices there. He is tan. He's fit. He's somehow miraculously looking rested, even though he's just flown halfway around the world. And he is sort of instantly a comfort to his father. And so suddenly he may, in fact, be back in the game as an heir to this whole thing. Correct. Lachlan Murdoch, it looks like, is going to emerge. One time the clear crown prince, then a dark horse, now back in the game. So for a couple of years, it seems as though Lachlan is now just kind of edging James out. As a result, many believe that this makes Lachlan the heir apparent to take over his father's media empire.

Also this seemingly reversal of fortunes for James Murdoch. But Rupert hasn't made a decision yet. To do so, for one, would sort of suggest his own mortality. But it's also entirely possible that he in fact doesn't trust either one of his sons to take over his empire. So that's where things are when he trips and falls on the yacht, and once again, everything is up in the air. So what ends up happening to Rupert Murdoch after this pretty bad fall? So not only does Rupert Murdoch recover,

he goes on to do something incredibly surprising, something incredibly dramatic. Well, there's Rupert Murdoch, and for more than 50 years, his media empire has been getting bigger and bigger. But today, all of that changed. And in fact, un-Murdochian. Let's start with one of the biggest deals the media industry has ever seen. He proceeds with

what is ultimately the single biggest deal of his life. And what's that deal? He sells. A mega merger to combine Disney with much of 21st Century Fox. He sells roughly two-thirds of the company 21st Century Fox, the massive Hollywood studio, to Disney. Two-thirds of his company in one deal? In one fell swoop.

And why is Murdoch doing this? So it's a solution really on two levels. On one, it's a solution to his business problem, which is that it's becoming increasingly difficult for him to compete with the new tech streaming companies like Netflix and Amazon and Apple. But it's also a solution to the succession problem. He's got these two sons. They're at each other's throats.

They don't get along. It's believed he doesn't necessarily even trust either one of them to carry the big company forward. So now he will shrink the company, give it to one of them to carry the big company forward. So now he will shrink the company, give it to one of the sons, and the other one can go on his merry way. So what's left of this company and who is to lead it? Which one of them? So what's left are really the tools of influence, a political weapon. It's Fox News. It's the Murdoch newspapers around the world. It's a diminished empire, but it's still a very politically potent empire.

And the man who is left to run it is Loughlin. He, at this moment, becomes the true heir. He takes the throne. And what does Loughlin do with these tools of influence that we know well, especially here in the United States, that he now has control over? I don't know about you, but I'm sick and tired of political correctness, censorship, and fake news. Well, he's clearly moving the company in the same direction that his father was taking it in. This is your nation. This is our nation. This is Fox Nation.

One of the first things he does is he launches this new streaming service called Fox Nation. One of the first things he does is he launches this new streaming service called Fox Nation. And along with my Fox Nation friends, we're going to give you that place where your values, your communities, your voice is represented. And yes, at times it may be politically incorrect, but it will always be intellectually honest. And it's sort of built for Fox super fans. They pay subscriptions so they don't have to worry about advertising boycotts. So it can be even sort of built for Fox superfans. They pay subscriptions so they don't have to worry about advertising boycotts. So it can be even sort of edgier and even more right wing. Are you freaking kidding me? She thinks voting for someone other than her lying, email deleting, rotten self must be motivated by racism and white supremacy.

How absolutely false and disgusting. So he's basically moving the network even more directly toward the base. So he's basically moving the network even more directly toward the base. That's been her specialty and the only thing she's done since November 2016. And on top of that, it's easy to see how the whole empire could actually become more conservative now because 21st Century Fox was this massive liberal Hollywood studio, which served as a kind of check on some of the truly kind of hardcore right-wing impulses of the empire. So that's gone. And now, of course, James is gone. And James, as we know, was trying to push the company into a more politically neutral direction.

So those two impediments have been removed. And now it can really march further and more aggressively to the right. And Jim, what happens to James Murdoch now? He's interestingly going to join with his wife to, among other things, invest in programs that combat the things they worry about Fox causing. They are going to invest in programs to fight illiberalism around the world,

boost centrist political organizations, invest in voting and things that are really kind of counter-programming to the ideology that the empire he's leaving behind pumps out regularly. So it's no longer a succession drama. Succession has finally been resolved, but it's still a family drama because James is now going off on his own with every intention of investing in big initiatives to effectively undermine the political agenda of the Murdoch empire. Wow. And so essentially,

the war over this business will take a new form. Exactly. James will be on the outside, Lachlan will be on the inside, but the war will continue. the inside, but the war will continue. Jonathan, Jim, thank you very much. Appreciate it. Thank you, Michael. Thanks, Michael. Here's what else you need to know today. The crew performed all the procedures repeatedly provided by the manufacturer. Investigators have found that the pilots of a Boeing 737 MAX 8 that crashed in Ethiopia followed the emergency safety procedures recommended by Boeing, suggesting that pilot error was not a factor in the jet's crash.

The investigation has concluded that moments after takeoff, one of the jet's sensors began fluctuating wildly, erroneously indicating that the jet was about to stall, triggering an automated system that pushed down its nose, a situation that doomed the same Boeing model in Indonesia six months ago. The pilots in Ethiopia then did what Boeing recommends, cutting off electricity to the automated system. But the nose kept pushing down, and the jet quickly crashed, killing everyone on board. It is recommended that their craft flight control system

related to the flight controllability shall be reviewed by the manufacturer. And in a major reversal, the Mormon church said that it would no longer treat same-sex couples as unworthy of the faith and would end a ban on baptizing the children of same-sex couples. The decision rolls back a 2015 rule that has ripped apart Mormon congregations and driven away many church members. The Times reports that the change in policy is an attempt to bring those members back

and bring the Mormon church in line with mainstream American views. The Daily is produced by Theo Balcom, Lindsay Garrison, Rachel Quester, Annie Brown, Andy Mills, Claire Tennesketter, Michael Simon-Johnson, Jessica Chung, Alexandra Lee Young, and Jonathan Wolfe, and edited by Paige Cowan, Larissa Anderson, and Wendy Dorr. Lisa Tobin is our executive producer. Samantha Hennig is our editorial director. Our technical manager is Brad Fisher.

Our engineer is Chris Wood. And our theme music is by Jim Brunberg and Ben Lansford of Wonderland. Special thanks to Sam Dolnick, Michaela Bouchard, Stella Tan, and Susan Beachy. That's it for The Daily. I'm Michael Barbaro.

See you on Monday.