The Daily - The Secret Succession Fight That Will Determine the Future of Fox News

Episode Date: August 2, 2024

For years, Rupert Murdoch seemed content to let his children battle it out for control of his conservative media empire once he’s gone.Jim Rutenberg, who writes about media and politics for The Times, discusses how a secret change to that plan by Mr. Murdoch touched off an ugly family squabble that could influence how much of the world sees the news.Guest: Jim Rutenberg, a writer at large for The New York Times and The New York Times Magazine.Background reading: Mr. Murdoch has moved to preserve his media businesses as a conservative force. Several of his children are fighting back.The 93-year-old media tycoon spent the past 70 years building a global media empire that gave him influence in journalism, politics and pop culture. Here’s how.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.

From The New York Times, I'm Sabrina Tavernisi, and this is The Daily. For years, Rupert Murdoch seemed content to let his children battle it out for control of his conservative media empire once he's gone. But as my colleague Jim Rutenberg found out, Murdoch's feelings have now changed. Today, how Murdoch's secret choice touched off an ugly family squabble that could influence how much of the world sees the news. It's Friday, August 2nd. So you have become, Jim, one of the world's leading experts on the Murdoch family, certainly the expert for The New York Times on the Murdoch family. This is, of course, the family that owns Fox News. You've recently uncovered quite an unexpected turn

in the tale of this family. Tell us what you found. Well, I have to say that, yes, I've been covering this family for a long time. I thought I'd seen it all, and apparently I hadn't. The Murdochs have tried to keep a lot of this out of public view, but my reporting partner, Jonathan Mahler, and I got access to a single sealed court document. What we learned is that for many months in an obscure probate courthouse in Nevada, the Murdoch family has been battling it out for control, not only of their family fortune, but for Rupert Murdoch's huge global media empire,

this conservative media juggernaut that's best known for its crown jewel, Fox News. It's classic. So on the one side, you have the patriarch Rupert and his favorite son, Lachlan. On the other side, it's Rupert's remaining three adult children, James, Elizabeth, and Prudence.

And whichever faction ends up winning is going to have control over what we all know to be this huge media empire that has incredible influence on our politics. Jim, this sounds familiar. Sounds like one of my favorite shows, the HBO series Succession. Well, it does. And maybe that's because the family at the heart of that show

is clearly based in part, at least, on the Murdochs. But while Succession may be a compelling cable drama, we all love it, this family fight is very much real. And unlike the show, this has real-world consequences. Okay, so before we get into this current fight, I think it's worth going back to the last time you were on the show to talk about the Murdochs. It was a few years ago. Remind us where we left off at that point. Well, interestingly, we left off right where this action picks up,

quite literally. Rupert's two sons, Lachlan and James, for their entire lives, almost, they had been fighting it out to succeed their father. And for a long time, James Murdoch was the ascendant son. James is younger than Loughlin. He's the younger brother, a technocrat, and increasingly as he grew older, a political moderate.

At the same time, Murdoch's favorite son, Loughlin, his eldest, was really Rupert Hart's desire. Rupert had wanted Loughlin to run the business when he died, but eldest, was really Rupert Hart's desire. Rupert had wanted Lachlan to run the business when he died, but Lachlan and Rupert had had a fight earlier. So Lachlan had gone off to Australia to do his own thing. James was ascendant. Then comes the hacking scandal. This morning, James Murdoch told a public hearing he did not know his reporters were hacking cell phones. I was given the same assurances as they gave outside. I've been very consistent about it. In the summer of 2011, several of Rupert Murdoch's newspapers are found to have been

hacking celebrities and the Royals and sports stars, even a 13-year-old girl who had gone missing. News of the world executives and legal advisors warned in detail of what was happening. Yet Mr Murdoch said he had never been made aware and he didn't ask. It's a cataclysmic existential crisis for the company, the biggest crisis in the Murdoch empire's history. The media mogul Rupert Murdoch has arrived in London

to help sort out the mess. To some observers, it's his son, James Murdoch, who's left with egg on his face. And James is the one in charge and takes the fall. And Lachlan returns to the fold to help his brother cope with the scandal around hacking. And Rupert tasks the two sons now to lead the business together. And you have some tension here. asks the two sons now to lead the business together.

And you have some tension here. The tension in part is Fox News in the Trump era. The America that we know and love doesn't exist anymore. Massive demographic changes have been foisted upon the American people. As Trump rises, Fox really starts moving more and more to the right. This is a flat-out invasion. It had always been conservative, of course, from its very first days.

But as Trump rises and as Trump becomes the nominee for the Republican Party, and certainly after he wins and moves into the administration, the network begins to parrot some of his more outrageous claims. It's really beyond what we had seen from Fox in all of its history. The point of mandatory vaccination is to identify the sincere Christians in the ranks, the free thinkers, the men with high testosterone levels, and anyone else who does not love Joe Biden and make them leave immediately. It's a takeover of the U.S. military. And in futility, James, who's watching all this in despair, tries to rein it in. He wants to kind of ground the network more, make it less wild.

But at the end of the day, the ratings are off the charts. It's like record after record. Rupert and Lachlan are thrilled. And after basically losing this fight, James is the one out in the cold. He's pretty much iced out. James leaves and Lachlan emerges as Rupert's true successor. But there's a catch. Lachlan's control is temporary.

Okay. Because really what's going on here is that Rupert Murdoch has set up a family trust in which all the family ownership of this global empire rests. It's all in this trust. So is it basically like a will? It's better than a will. And sorry, either you nor I will have one of these. It's about not only Rupert's billion dollar fortune, which under the terms of the trust will be split between all of his children equally. But so too will control of the global empire after Rupert Murdoch dies. Huge power. Huge power, but shared. Shared power.

So Lachlan's a successor as long as Rupert's alive. But once Rupert dies, Lachlan's place in the succession is now up for grabs. All four children will have an equal claim to succession and equal shares in voting power as to who it will be who will lead them. As Rupert Murdoch told Charlie Rose way back in 2006. While you have said you could see you would like to have a member of the family succeed you, right? Yeah, I think that's a natural design. Either sons or daughters, you'd like to have that. It will be up to them to decide who will lead them. If I go under a bus tomorrow, it'll be the four of them will have to decide

which of the ones should lead them. Your four children. They'll all be treated equally. Absolutely. And here's the thing. That trust is irrevocable. That is legally set in stone, cannot be changed. Okay, so the plot thickens. And this is a potentially really messy can of worms opening up in the event that Rupert Murdoch dies. Nothing ever stays settled in this family, just like succession. And the three children, James,

Elizabeth, and Prudence, started to form their own block. In fact, the three were basically upset at the turn of events where Lachlan is the successor. And so they actually went to their father and brother and said, okay, Lachlan can buy the three of us out. Take the trust, take the companies, we'll have more billions of dollars to play with. Sayonara. Got it. So just take the money and run. We're done with this.

Yeah, which makes a lot of sense. Makes sense to me. I'll take a few billion dollars. Thank you very much. Me too. But it doesn't happen. And it doesn't happen, we're told at the time, because he just couldn't come up with that kind of money.

I mean, this would be like several billion dollars. But in the end, the trust stays the same and all the siblings will still have an equal say in it after Rupert's passing. But there's a vestige of this that becomes very important. Because now you have the three siblings, James, Prudence, and Elizabeth, they're still in that trust,

acting as a separate block. And over the intervening years, there's increasingly talk that this block could do something here. That when Rupert dies, this block could move to shove Lachlan aside and take over the company. over the company. So instead of running away from the company, selling and getting out, they're actually going in the opposite direction, running toward the company, the power it potentially presents, and kind of wresting control away from Lachlan, the favored by Rupert, older brother. Theoretically, the thinking here would be, if we're in it, then we're in it,

but we don't want to own it in this form. And again, this is talk around them. There's a lot of speculation, but there's a lot of coverage of this in the press. And Rupert is a consumer of this coverage that they would do this, take the company from their brother and change it after Rupert's death. So, Jim, what would that look like? I mean, if they took over the company, obviously, we don't have a crystal ball here, but, like, theoretically, how are they different, and what would Fox look like if they did take it over? We have some history here to go on,

and it's all we have to go on, and the view we understand the best is that of James. Okay. And as we understood it, James and his sisters apparently are in the same camp. It was never talking about making Fox into MSNBC, certainly. Not even CNN. I mean, he understood, and I think they all understand,

that this is a right-leaning conservative empire. But the language around James, and when his view was explained to us, it would come through as words like responsibility, and ethics, and journalism, being grounded in journalism. And so you're looking at what would be a Fox that maybe wouldn't talk about an immigrant invasion. You wouldn't hear doubts about climate change and the human causes. You'd have way less conspiratorial thinking in the opinion sections of Fox, which over the years, especially in the Trump era, really went into places where Fox had never even gone.

So you'd see a more moderate, a more cautious Fox, still a conservative Fox, but more the Wall Street Journal editorial page and less InfoWars. By the way, I just want to note that children themselves are not saying this openly, but everyone in Murdoch's world talks about this all the time. What if this happens? It's just everywhere. You have to be like under a rock to miss this story. And Rupert's certainly not under a rock when it comes to his own family. That's been my question. As all of the swirl, the talk in that Murdoch world,

that these three would take over the company and vote out their brother, I always wondered as someone who's been covering this man for decades, is he just going to sit there and when that proverbial bus rolls him over, as he put it to Charlie Rose, is he just going to be okay that these four children are going to fight it out amongst themselves and maybe his chosen one loses? I just wondered, is he really going to let that happen? And two weeks ago, I got my answer. And the answer was a decided no. He was going to fight back. We'll be right back. Okay, so Rupert Murdoch decides to make a move.

What does he do? Well, I can't get inside his head, but it's pretty clear that this talk of his three children ganging up on his one, the chosen one, and moving him aside and perhaps reorienting the company away from Rupert's vision, I mean, this is not good. But remember, this trust is irrevocable. So what can you do? Well, when you're a billionaire, what you can do is hire really good lawyers. And his lawyers start, from what we can tell, going through this thing, and they find a

loophole. Okay, so what's the loophole? Well, so again, the trust is presumably irrevocable, but it does contain this narrow provision that would allow Rupert to make changes to its structure as long as they're done in good faith and with a singular sole purpose, and that is to benefit its members. So how does he want to change the trust? Like, what are we talking about here? Well, if you remember, you have these four equal shares. Well, what Rupert decides he wants to do is basically disenfranchise the three, James, Prudence, and Elizabeth, so that Lachlan has sole control. But that seems to fly in the face of how the trust is structured, right? Like the changes have to benefit all four equally. Here, this seems to be clearly favoring just one of the kids, Lachlan. It's interesting that you would say that because in Rupert's view,

we understand that this internally was being described as Project Harmony. Okay. And it was Project Harmony because, okay, you could argue that it's Lachlan being raised above all others, but the argument apparently in Rupert world and Lachlan world is, no, no, no, this is for everybody's good.

It's Harmony. Lachlan's the guy, no fighting amongst yourselves. We're going to clean that thing up. Everyone can be happy and line up behind Lachlan. Well, when Rupert goes to formalize this, he actually does go in person to London to visit with, as we understand it, Elizabeth and Prue to inform them of Project Harmives. So where there are expletives, if you have money, there are lawyers. And so now where there were rumors of a three-child block against Lachlan, now there really is one. The three are now formally pushed together into a block. They hire a lawyer between them, and they push this thing into a court battle in Nevada,

where it will now fall to a judge to decide the key issue. Can Rupert do this? Okay, so what's Rupert Murdoch's argument here? I mean, I'm curious how he's actually presenting this to the court. It seems like it would be on his face, an uphill battle. Well, there are a couple arguments he's making. One is that allegiances are constantly changing. Who's friends with who in the family is always shifting. So you can't have that. This is bad for business. We need harmony.

We need one person and one person only. And that person is Lachlan. And in the court record that we've obtained, this is made very clear where in laying some of this out, what the Rupert side said was that Rupert, as the founder, knows these companies better than anyone and believes that Lachlan, as the founder, knows these companies better than anyone and believes that Lachlan is in the best position to carry on the successful strategy to be the leader of these companies. Now, what's the strategy? We know the strategy. The strategy is that so many of these Murdoch outlets are these right-wing sort of clarions. And so there's a

concern that the three would outvote the one and change the editorial orientation of the companies, which again would jeopardize the value of the companies. So what does that boil down to? Dad's doing this for you guys. I'm taking away your power, but you can thank me later. That's basically the argument. And what's the evidence that that's actually true? I mean, that it would jeopardize the value of the companies? Well, it's a great question. And just to preface my answer, I just want to make clear, we don't know how much that is going to be litigated in this court case, but it's a very important and interesting question. And what Rupert Murdoch could point to and Lachlan Murdoch

can point to is 2020. Election night has happened and Fox declares that Joe Biden has won the key state of Arizona, which really hurts Trump's ability to claim he's the true winner. And Trump is furious. His base voters are furious. And therefore, the Fox audience is furious. And that audience, for a time, flees the network. There's a cratering of ratings, okay? It's a crisis. And so Fox scrambles to get them back. It starts trafficking, its opinion hosts especially, start trafficking in some of the stolen voter conspiracy and having guests on who are talking about it and letting Trump make these arguments that the election was stolen. Now, they do that and they get their audience back, but they wouldn't have

been able to, presumably in this different direction, scramble to the Trump base and give them what they wanted, which is always the Rupert rule. Give them what they want. Okay. So there is something to Rupert's argument, right? I mean, there is value here in going in the direction that he says Fox should be going in. You know, if it leaves this spot where it is on the political spectrum, its viewership could suffer.

Well, yeah, and especially now, I want to say, because the viewers who fled Fox had somewhere else to go. They could go to Newsmax, which is a new right-wing rival to Fox. There was One America News that flanked it out to its right, was plenty happy trafficking in that kind of conspiracy. There are websites, there are podcasts. The Fox News audience has never had more places to go to on its right. So there is a real competitive issue there. So what did James and his sisters say to that?

Well, again, we don't know the particulars because this whole case is sealed. So there's so much that's happening here in secret and our access is fairly limited. But we do know what James has said in the past. And what James's argument was back when he was running the company with his brother was, sure, you're going to get the short-term rating gains, no doubt. I don't think he ever argued with that. But at what cost? And let's remember what happened after the 2020 election. Yes, Fox regained its ratings footing, flanked out its right-wing competitors.

But boy, did it come at a cost. As you might remember, there was a voting company called Dominion Voting Systems that was in the center of some of those voting conspiracies. Those voting conspiracies popped out onto Fox's air. They were about this supposed voting machine company switching Trump votes to Biden's votes. The company files a defamation suit. And in the end, Rupert Murdoch is forced to shell out the biggest defamation settlement in known history of almost $800 million. They're facing another lawsuit. Yeah, it's a lot of money.

I mean, it was a huge financial hit for the company and kind of showed how going too far out there in the conspiracy world could cost real world money, right? Yeah. And by the way, it didn't end with Dominion. There's another suit still pending by another voting company, part of the same conspiracy called Smartmatic. It's suing Fox for almost $2.6 billion. These are gigantic sums for any corporation in America, let's face it. But I want to say one thing. From the court papers we've obtained, James and his sisters are making a more narrow argument that boils down to, Dad, you can't do this. This is favoring one over the other. And the trust as written very clearly said they all had to be treated equally.

And this is certainly not equal. Okay, so now all of this is in the hands of a court in Nevada. Yeah, basically, as we understand it, in September, all the drama will play out behind these closed doors, and it will fall to this probate commissioner in Washoe County, Nevada, to decide where this all ends up. So Jim, just taking a step back for a second, you know, we've been talking to you literally for years about this family, and it just seems like it goes around and around, the succession battle. It's settled, then it's not. It comes back again. Alliances shift.

But this time, you know, in that court, it really does feel like maybe this is it. We're going to get the answer, the series finale. Well, in the real-life version of the story, there are never season finales. It's possible. This judge could say, hey, Rupert gets his say here.

It's Lachlan. And then Fox News stays Fox News. The empire stays intact. Everything goes in its way. Or he says, Rupert can't do this. And then you'd think you have an answer. Okay, now you have a solid block of the other three. They will wrest this away from Lachlan.

They will change Fox News, change the empire. But that just might not be the case. Because all these children, over the course of all these decades I've been covering this family, their alliances are constantly shifting. James and Elizabeth aren't talking. James and Lachlan aren't talking.

James and Rupert aren't talking. So we don't even know that after Rupert dies, these three are going to stay in a block. So think about it this way. The fate of the most influential conservative media empire in the entire English-speaking world, and by extension, the politics of the English-speaking world and beyond, all rest on these few siblings finding a way to finally get along. And good luck with that. God bless. Jim, thank you.

Thank you so much. We'll be right back. Here's what else you should know today. Well, good afternoon. And this is a very good afternoon. On Thursday morning, President Biden announced that an elaborate prisoner swap involving seven different countries had freed three Americans and one American green card holder who'd been held in Russia. Among those released were Evan Gershkovich, a Wall Street Journal reporter, Alsu Kurmacheva, a reporter at Radio Free Europe, Vladimir Karamurza, a columnist at The Washington Post, and Paul Whelan, a corporate security executive and former Marine. All four have been imprisoned unjustly in Russia. Paul for nearly six years, Vladimir since 2022, Evans since March of 2023, and months of delicate negotiations between the U.S.,

Germany, Poland, Slovenia, Norway, Turkey, and Russia. And now their brutal ordeal is over and they're free. For Russia, the swap meant the release of a prized figure, Vadim Krasikov, a Russian hitman convicted of murdering a Chechen fighter in Germany on orders from the Kremlin. On Thursday night, Gershkovich, Rieland, and Kurmacheva landed at Andrews Air Force Base in Maryland,

where they were met by their families, President Biden and Vice President Kamala Harris. And on Thursday night, the United States weighed into Venezuela's disputed presidential election, with Secretary of State Antony Blinken recognizing the opposition candidate Edmundo Gonzalez as the winner. Blinken said in a statement that the evidence was, Edmundo Gonzalez, as the winner. Blinken said in a statement that the evidence was, quote, overwhelming, setting up a clash with the country's authoritarian president, Nicolas Maduro, who himself had claimed victory in this weekend's election.

A quick reminder to catch a new episode of The Interview right here tomorrow. This week, David Marchese speaks with actor Vince Vaughn about R-rated comedies, timidity in Hollywood, and just how much fatherhood changed him. I don't know that I've changed as far as like, oh, I was cold and callous, and now I've learned to love, I think it's just made me more empathetic, more patient, just because of the nature of the job. Today's episode was produced by Eric Krupke, Aastha Chaturvedi, and Olivia Natt. It was edited by Mark George, with help from Rachel Quester.

Contains original music by Dan Powell, Diane Wong, and Marion Lozano. And was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsberg of Wonderly. That's it for The Daily. I'm Sabrina Tavernisi. See you on Monday.