Maybe the most uncertain story in all of media right now is the future of Fox Corporation and News Corp, the two media conglomerates owned by the 93-year-old media mogul Rupert Murdoch.
Fox Corporation houses all of Murdoch’s television assets in the United States: Fox News Media, Fox Sports, Fox Television Stations, Fox Entertainment, and the free ad-supported television platform Tubi. News Corp is a much more sprawling global conglomerate that holds print publications including the New York Post and Wall Street Journal in the United States, and a hodgepodge of other print and video assets primarily in Australia and the United Kingdom.
The future of Murdoch’s enterprise has come back into the spotlight amid recent reports over a legal battle surrounding a decades-old irrevocable family trust designed to pass his media empire down to his four eldest children after his death. As written, the family trust divides control over Murdoch’s businesses equally to the four children — Lachlan, James, Elisabeth, and Prudence — following his death.
However, last year, Murdoch began a legal effort to amend the irrevocable trust and ensure Lachlan, the current chairman and CEO of Fox Corporation, would retain control of the company after his passing.
To understand why Murdoch seeks such a change is to know the patriarch’s grander motives and the dynamics that govern the Murdoch children.
Murdoch’s primary motivation for amending the family trust is to ensure that Fox News Channel, his most prized asset, maintains its current right-wing slant after he’s gone. That’s a vision his eldest son Lachlan has shared since taking over as chairman and CEO in 2019. Conversely, Murdoch’s three other children — James, Elisabeth, and Prudence — hold more moderate political views, with James especially seen as a threat to spearhead an effort that would alter Fox News’ editorial skew after his father’s death.
So instead of leaving things up to chance, Murdoch and his chosen successor Lachlan devised a plan called “Project Family Harmony” to strip voting power from the other three children. The catch? It’s difficult to amend an irrevocable trust.
Murdoch and Lachlan argued in court that the amendment, which would consolidate Lachlan’s control over the family business, was in the financial interest of all of the trust’s beneficiaries. The four children would all keep an equal financial stake in the trust, but complete voting power would be granted to Lachlan. The crux of Murdoch’s argument in court was that by ensuring Lachlan’s position atop Fox Corporation, the right-wing bend of Fox News would be locked in, thereby ensuring the venture remains a commercial success.
Last week, a Nevada judge ruled against Murdoch and his son Lachlan, calling the effort a “carefully crafted charade.” The father-son duo plan to appeal.
Now, this is just the latest effort by Murdoch to ensure his sprawling media empire falls to his chosen successor. Earlier attempts have revolved around Lachlan buying out his siblings’ shares of the family trust. And given these efforts date back many years, one thing in this succession battle is clear: Rupert Murdoch does not want to be buried before there’s certainty over the future of his prized media companies.
To Rich Greenfield, Brandon Ross, and Mark Kelley of the media research firm LightShed Partners, that leaves just two options on the table, assuming an appeal is unsuccessful. Both of which could have far-reaching impacts on the future of Fox Sports.
One option is that Lachlan resumes buyout talks with his siblings. That’s perhaps easier said than done. Lachlan would need to raise significant capital in order to fund the buyouts, and his siblings would likely drive the price up knowing that control of the family business is at stake.
That’s not to mention the interpersonal dynamics at play. For years, Lachlan has tried to secure his place as his father’s successor, angering his siblings in the process. Reports indicate that Lachlan and James are “hardly on speaking terms,” which would present obvious challenges to a potential buyout.
That said, money can fix a lot of things. And if Lachlan is able to secure a buyout of his siblings’ shares in the trust, LightShed anticipates Fox will become a buyer in a media landscape likely to be full of sellers. “In this scenario,” the firm wrote, “we would expect Fox to continue on its current course and might even look to be a bit more acquisitive.”
Perhaps that means Fox could be a bit more aggressive in acquiring sports rights, a smaller streamer, or even declining cable assets that reach the market.
Scenario two is much more interesting and could upend the status quo of Fox Sports. LightShed believes that if Lachlan is unable to secure control over the family trust, Fox will begin to auction off its assets. From the analysis:
“We believe there is a near zero percent chance that Rupert wants to leave planet earth with the future of the assets he spent his life building left in limbo. If Lachlan is unable to cement control through a buyout, we suspect Rupert would look to sell Fox’s assets.
“Could Elon Musk buy Fox News for north of $20 billion (not such a crazy idea)? Could Warner Bros. Discovery buy the Fox Network, TV stations and FS1 (game changer for [WBD CEO David] Zaslav and team, adding broadcast TV and the power/leverage of the NFL)? Or maybe Comcast’s SpinCo looks to take advantage of a newly public currency and a pile of cash? Not clear either has enough cash and we doubt Rupert wants shares in either entity. However, given that the majority of value rests with Fox News, maybe a hybrid cash/stock transaction for Fox Network and stations is conceivable.”
On the sports side of things, there are two sensible buyers. One is Warner Bros. Discovery, who at the moment is having a bit of a resurgence having just secured a major carriage agreement with Comcast that retained most of the value of its cable assets despite losing the NBA. WBD’s balance sheet may actually look healthier sans NBA, meaning it could be a good time for them to buy.
Fox’s assets would make sense for the company as well. WBD does not own a broadcast channel, making the regulatory hurdles of acquiring one a non-issue. And the company doesn’t have a piece of the NFL, the single most important piece of content any American media company can own. So a WBD-Fox deal in this scenario doesn’t seem so far-fetched. The question would be whether or not WBD could find the capital to make such a deal work.
The other buyer that LightShed mentioned is Comcast’s upcoming SpinCo — the spin-off entity comprised of a majority of NBCUniversal’s cable assets (MSNBC, CNBC, USA, E!, etc). SpinCo was created with acquisitions in mind, and if Fox put a for sale sign on its assets it’d be hard to ignore. Given its detachment from the parent company, it doesn’t seem like acquiring a broadcast channel would be a huge regulatory hurdle. Acquiring NFL rights would turn SpinCo from a nursing home filled with declining assets to something with legitimate growth prospects.
While these scenarios might seem like a Succession fan-fic, they’re firmly on the spectrum of possibility. Rupert Murdoch is 93 years old. He presumably won’t be around for much longer. Sooner or later (but likely sooner), the family patriarch will need to make a tough decision on the future of his media empire.
Risk the uncertainty of a heated sibling rivalry upon his death, or cash in now and take chance out of the equation? The answer might come quicker than people think.
