The long-running Murdoch family feud over the future direction of News Corp and Fox Corporation has been settled.
Patriarch Rupert Murdoch agreeing to sell billions of shares to three of his children in exchange for his son and preferred successor Lachlan remaining in control of the businesses.
Rupert and Lachlan had attempted to change the terms of the irrevocable family trust to give Lachlan control. It had given four of his kids—Elisabeth, James, Prudence and, of course, Lachlan—equal voting rights when he died.
Lachlan is executive chairman of Fox Corporation, which owns Fox News, and chairman of News Corp.
Rupert and Lachlan had feared that when Rupert, 94 died, Lachlan’s siblings would vote to kick him out of the trust, throwing his leadership of Fox and News into jeopardy. Statements from both Fox and News Corp said a new trust with Lachlan, Grace Murdoch and Chloe Murdoch (the two youngest siblings) as the beneficiaries will be created to settle the dispute.
The creation of this new trust will see Prudence MacLeod, Elisabeth Murdoch and James Murdoch—the “departing beneficiaries”—each given their own trust filled with the proceeds of roughly 14.2 million News Corp Class B shares and 16.9 million Fox Corporation Class B shares. Class B shares confer voting rights on the holders.
The New York Times, quoting a person with knowledge of the settlement, reckoned the deal could be worth in the order of US$3.3 billion (AU$5 billion)—meaning Prudence, Elisabeth and James will each receive $US1.1 billion, or about 80 per cent of their marked value at the close of trading last Friday.
They have also agreed to sell any shares in Fox or News Corp that they own over the next six months and not buy any more.
All taken together, it means the new trust with Lachlan, Grace and Chloe, will own all the remaining shares of News Corp and Fox Corp held by the previous Murdoch Family Trust. Statements from the companies said tis is expected to consist of about 33.1 per cent of News Corp’s Class B and about 36.2 per cent of Fox Corporation’s Class B common stock.
A term of 2050 will be established for the remaining beneficiary trusts (i.e. Lachlan, Grace, Chloe). After all the transactions have been completed, Lachlan will have sole control of the trust’s shares through his appointed MD. Rupert will carry on has chairman emeritus.
Rupert had chosen Lachlan to be the ongoing boss of the companies because of his more conservative politics. The New York Times said the deal gives Rupert the chance to preserve Fox and News Corp’s status as what he has called the “protector of the conservative voice in the English-speaking world”.
Prudence, Liz and James, all to the left of Lachlan, were keen to break from the media empire, due to disagreements with their personal politics. And, of course, to add even more money to the billions they have inherited from Rupert, who renounced his Australian citizenship in 1985.
The agreement brings a long-running battle to an end that started when Rupert divorced his second wife, Anna Mann. At the time, he agreed to bequeath equal control of his empire after his death to his four oldest children, Prue, Liz, Lachlan and James. This meant, in effect, he would give up control of his succession.
Rupert and Lachlan concocted “Project Family Harmony” last year to force Prudence, Liz and James to sell their shares in 2030, regardless of when Rupert passed away.
Prudence, Liz and James sued to block the change to the trust, igniting a legal struggle that culminated in a six-day trial in a courtroom in Reno, where the family trust was incorporated.
It seems, in effect, that everyone has received something like the outcome they always wanted.
