In some sense, planning for succession, if not acting on it, has become the main business of the company. Indeed, the background to succession is a series of business moves whose clumsiness either demonstrates exactly why Murdoch should be succeeded, and quickly, or just how much of his shareholders’ money he is willing to spend in order for his dreams of succession to come true.
In 2003, Murdoch completed the largest and, according to him, most important deal of his career—one that he’d spent almost four years putting together: taking a controlling interest in DirecTV, the nation’s largest television satellite distribution system. But then, in 2004, his arch rival, John Malone, exploiting a technicality in Australia, made a fortuitous midnight run (on election night in the U.S., when Murdoch and Roger Ailes were drunkenly celebrating the re-election of George Bush) on News Corp. voting stock, scooping up 19 percent.
Malone’s new clout in the company meant he might well be a roadblock to the Murdoch children’s futures. In 2007, Murdoch bought Malone out. In a sudden reversal of the key business strategy of News Corp., DirecTV, instead of being elemental, was deemed incidental and passé—Malone could have it in exchange for his News Corp. shares.
So far so good—except that since then, News Corp. shares have stayed flat, and DirecTV’s have doubled, a loss to News Corp. shareholders of about $18 billion.
In 2008, following his acquisition of The Wall Street Journal, Murdoch decided his son, James, would be better positioned inside News Corp. if he stepped down as CEO of the British satellite broadcasting company, BSkyB, in which News Corp. owned a minority interest, and instead ran the company’s other interests in Europe and Asia, arguably a smaller job than heading BSkyB. So the deal became: if James took this new job, his father would buy the rest of BSkyB and put it back under James’ control.
The acquisition of BSkyB currently under way is now the company’s biggest deal, and will require almost all the cash it has on hand. But the transaction now hangs in the balance, a hostage to the ongoing investigation in the U.K. of the phone-hacking scandal involving a Murdoch tabloid. In essence, News Corp.’s cash is spoken for—so it must indefinitely forgo all other opportunities—and yet the deal may never be done.
Still, James is where his father wants him, and now Elisabeth is coming home (her deal will be done with stock, not cash—she’s family, after all), and plans continue to have Lachlan run the Australian newspapers.
The old man, still in the catbird’s seat, has it all.
FOR A COMPREHENSIVE MURDOCH TIME LINE, CLICK HERE
Elisabeth Murdoch's Next Frontier
Hacking Away at News Corp.