Keith Rupert Murdoch turns 80 on March 11. While he regularly makes fun of other old people—particularly Sumner Redstone, the 84-year-old chairman of Viacom and CBS—Murdoch’s own age is something he almost never discusses. Part of his business strategy is to project an almost frightening sense of his own permanence and invulnerability.
His mother, the grandest woman in Australia, is 103, after all. (Pay no attention to the fact that his father died at 67, that Murdoch was a heavy smoker into his 40s, and that he’s had prostate cancer.)
And yet he’s obsessed with succession, too. He’s as atavistic as a Kennedy in seeing his children’s destiny as his own: they will take over the family business. But part of the method and guile with which he approaches his succession—integrating his children into the fabric of the company in such a way as to give his shareholders little or no say in the matter—is also how he keeps them from succeeding him before he wants them to.
Lachlan, 39, was once the heir, but was then deposed in favor of his brother James, 38. Still, both brothers sit on the News Corporation board, where they regularly and publicly snarl at each other. Now, their sister Elisabeth, 43, who was a likely heir before she left the company in a huff in 1998, is back in the fold. Her father is buying the company she owns, Shine, an independent television production company. (He did this once before, buying from her the television stations she and her former husband bought as first-time entrepreneurs after college.)
It’s a canny move. Murdoch not only brings his blood around him in mafia fashion, he also further muddies the waters about who will actually succeed him and when. James runs a considerable portion of the company overseeing European and Asian operations. But with the $750 million purchase of Shine, Elisabeth is now the richest Murdoch sibling, and, with her eye on television programming, likely to run the most profitable part of News Corp.
There is, too, complicating matters further, the siblings’ half sister Prudence, 52: the four adult children comprise the Murdoch family trust, which will vote the controlling shares—with no tie-breaking mechanism (the younger Murdoch children, Grace, 9, and Chloe, 7, are economic participants in the trust, but will have no vote).
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.