Maybe Rupert Murdoch should take a leaf out of King Fahd’s book,” mused the Daily Telegraph’s City comment column on Tuesday. “The old king has died, yet it is business as usual in Saudi Arabia … But over in that other secretive kingdom, News Corporation, things are nothing like as cosy. The Murdoch heirs are all jostling for position. Will one of them launch a coup against their autocratic father?”
The cause of the upheaval was the unexpected resignation last week of Lachlan Murdoch, the 33-year-old eldest son of Rupert, as deputy chief operating officer of News Corp, to which he was also heir apparent.
Media and business pundits have spent much of the intervening time speculating about Lachlan’s reasons. According to Richard Siklos in the New York Times, “the chief issue was Lachlan’s feeling, which he expressed to several people close to him, that his father interfered with his business dealings and undermined him … Another minor factor in Lachlan’s departure … was the shifting family dynamics and the question of how the elder Mr Murdoch’s two children with his third wife, Wendi Deng, would be treated under family trusts that control the company.”
Father and son moved quickly to deny rumours of a family rift. A US spokesman for News Corp told the New York Times and the Wall Street Journal that Murdoch Sr had said: “There is no dispute. All my children will be treated equally and I look forward to the day when Lachlan wants to return to News Corporation.”
Others thought the success of Lachlan’s younger brother, James, as CEO of BSkyB in the UK had tipped the balance. “He may have got wind that James was overtaking him,” nodded Terry Murden in Scotland on Sunday. “Murdoch watchers have reckoned for months that, if Lachlan and James were pitted against each other for the succession, then James - making a good fist of driving BSkyB - would be a more cerebral, savvy chip off the old block,” agreed Peter Preston in the Observer.
In the same paper, however, Frank Kane cautioned against assuming it was a shoo-in for James. “The general view is that he is too young, so Peter Chernin, the president, will take over as regent to James,” Kane said.
The affair highlighted the problems of personal conflicts in dynastic businesses, said the Financial Times. “In a privately held business, the resulting tensions are of interest only to the family and the people who work for it,” the paper said. “But News Corp and several of its businesses are publicly quoted companies, with large stakes held by outside investors, who have been left in the dark about the management of the group when Mr Murdoch eventually hands over … But investors are entitled to know how the group’s managers see its future, and their plans for an orderly succession.”
“Unsurprisingly, a ‘Murdoch discount’ now applies to Sky’s stock,” said the Telegraph. “The market no longer trusts the old man and is ignoring the company’s excellent performance … Investors think Sky has the corporate governance of a corner shop.”
Lachlan’s departure held implications for the shape of News Corp, as well as the succession, suggested some observers. As Jane Schulze wrote in the Australian: “News’s Australian businesses will be the first to feel the effect of his resignation, as the country’s largest newspaper group (which includes the Australian) … has lost its main sponsor in the US-based company.”
And the New York Daily News, rival to the Murdoch-owned tabloid New York Post, could not resist giving the knife a sharp twist. It gleefully reported that “the slumping tabloid is haemorrhaging as much as $70m [£40m] a year, according to revelations that have emerged amid the sudden resignation of Post publisher Lachlan Murdoch … The paper remains a big black hole.”
Who, then, is to be the long-term heir? In the Independent on Sunday, Tim Luckhurst offered the mischievous suggestion of the Murdoch-Deng toddlers. “In 20 years’ time they should be ready to take control, under the careful supervision of their mother,” he said. “Rupert Murdoch will be only 94.”
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