- Registration time
- Last login
- Online time
- 10 Hour
- Reading permission
Murdoch's breaking news
James Murdoch - the chief executive of BSkyB - has been catapulted into pole position in the contest to inherit the reins of power at Rupert Murdoch's global media conglomerate by the decision of his brother Lachlan to quit his executive role at News Corporation. Guy Dennis looks at the siblings who love their dad but don't want to work near him
Lachlan Murdoch did not seem to want to talk on Friday. The first time I rang, he was on a conference call. Then he was on another line. And third time unlucky, he had gone home (even though it was only 2.33pm there).
Media moguls: Rupert, Lachlan and James Murdoch
With wonderful understatement, his secretary explained his early bath in the friendly tone that only American PAs muster for unwanted callers. "He's gone for the day, and is, quite possibly, not in next week, so it may be a while before he returns the call."
Quite so. Earlier that day News Corp, which owns the Sun and the Times newspapers, had announced that Lachlan, 33 - its deputy chief operating officer - was leaving the company. "It is," said one former News Corp executive, "amazing".
Many Murdoch-watchers said the same because they never saw it coming. Lachlan was seen as Rupert's most likely heir. Speaking in 1997 Rupert, now 74, described Lachlan as "first among equals" in terms of succession planning.
Now it seems that the man once destined to inherit the moniker of "world's most powerful media mogul" is throwing the inheritance away. And there is growing speculation that another of Rupert's sons, James, 32, who is chief executive of British Sky Broadcasting, the satellite television company, will take Lachlan's role as heir-apparent at News Corp, which has a market value of $55bn (£31.3bn).
What makes News Corp's announcement even more striking is its wording. It contains quotes from both Lachlan and his father that are about the family. Lachlan says: "I look forward to returning home to Australia with my wife, Sarah, and son, Kalan."
It is a strangely personal comment for a corporate press release but it would have sounded even stranger if Lachlan had actually voiced it. He was brought up mostly in the US and speaks with an American accent, not an Australian one - though he worked in Australia for six years at News Corp.
His wife, however, the former model Sarah O'Hare, is Australian, though she was born in the UK, and people close to the Murdoch family said that they wanted their son to grow up an Australian, too.
Meanwhile, Rupert said: "I am particularly saddened by my son's decision." He went on to thank Lachlan "for his terrific contribution to the company, and also his agreement to stay on the board and advise us in a number of areas".
In the corporate world, executives and financiers wondered what the announcement meant for News Corp, what it meant for Lachlan, and what it meant for his younger brother at BSkyB. Would James soon be departing for the US to replace his brother?
Meanwhile, the news probably means that it is less likely that Peter Chernin, News Corp's president and chief operating officer, will leave the company any time soon. Analysts expect him to succeed Murdoch at News Corp one day - if the magnate proves not to be immortal.
But Chernin is seen as a regent, pending the arrival of a Murdoch scion. "Most investors will take the news somewhat positively," said Michael Nathanson, an analyst at Sanford C. Bernstein. "There were some worries that Peter Chernin, who is highly respected, will be pushed aside to make way for the two sons."
So what is it all about? Well, News Corp's own newspapers stick to the company line. But there has been speculation of a recent cooling in relations between father and son. Lachlan has told colleagues that he has been thinking about quitting for some months.
It's not the first time a Murdoch child has insisted on distance from the businesses. Elisabeth, 36, the eldest of the three, joined BSkyB in 1996 as a general manager before being made head of programmes later that year. But she left in 2000 to set up Shine, her own independent production company.
Furthermore, Murdoch's eldest daughter, Prudence, 46, from his first marriage in 1956 to Patricia Booker, has never sought a career in the media and has largely stayed out of the public gaze.
As for Lachlan, he went straight from a philosophy degree at Princeton to work for News Corp's newspaper business in Australia where he enjoyed a series of increasingly senior management positions before returning to the US, and acquired the moniker "the Prince of Print".
He seemed the "serious" brother: James dropped out of Harvard, had his eyebrow pierced and started a hip-hop record label, Rawkus, which was bought by News Corp in 1996. Media commentators repeatedly dubbed him the "black sheep" of the family.
But James went on to lead News Corp's Star TV operation covering Asia that is based in Hong Kong. Then, controversially, he was made chief executive of BSkyB in late 2003. This made James the youngest ever chief executive of a FTSE100 company, and caused consternation, because although BSkyB is chaired by Rupert Murdoch, News Corp only owned a third of the shares.
Murdoch also has two young daughters from his most recent marriage to Wendi Deng, a former Star TV executive. Since the eldest is three, they are unlikely to succeed him at News Corp, at least without an interregnum.
But although the timing of Lachlan's departure has surprised many commentators, several media executives say that they never expected Lachlan to succeed his father. "I don't think he's the most decisive person," said one executive. Another said: "He's anxious around his father, but close to him."
Perhaps most telling, however, was a further comment. "When you see the three kids [Elisabeth, Lachlan and James] together it's clear that James is most like his father: the smartest, the most intuitive, the most aggressive."
In the UK, James has earned grudging respect from fellow media executives. When he was made chief executive of BSkyB, many muttered that he got the job because of who his father is. This may be true, but rather than oversee the incumbent bright minds at BSkyB, as some expected, he has developed a reputation for focusing on the business in detail himself.
And while his strategy of investing in the company and seeking to grow the number of subscribers to its pay-television packages at the expense of short-term profits has hit the company's share price, executives at rival television companies privately concede that his strategy looks like being the best for BSkyB in the long-term. "He's a very bright guy, like his father," says one.
"He's one of the smartest media executives in the UK," says Sir Martin Sorrell, the chief executive of WPP, the UK-listed advertising giant.
If Lachlan's departure marks out James as Rupert's successor, a whole series of questions present themselves. Rupert has said that his plans for retirement are on hold "forever" and that he will have to be "carried out" of the company. Even so, a successor is likely to be needed within the next 10 years simply because of his age.
One issue is how long James is likely to stay at BSkyB. As things stand, James has no experience of running any of News Corp's US television businesses or any of the company's print operations, which he would probably need to do as a credible successor to Rupert.
"There's so much more that he's got to get across, he's got to get across DirecTV [News Corp's US satellite television business] and the other businesses there," said one media executive, who added that he now definitely expected James to leave BSkyB within 18 months, after about three years at the helm.
"Spending any more than three years on any one business is a luxury that I'm not sure he's got." Another executive also said they expected James to leave within this time-frame.
BSkyB says that James has no intention of quitting in the near future but the speculation will certainly persist.
Curiously, one executive suggested that with Lachlan out of News Corp, it would be harder, rather than easier, for James to succeed his father. Executives from outside the family might feel encouraged to make a run at the top job, he said.
Besides, the Murdoch dynasty may decide that leading the company in its current form is simply not something any of them want to do.
Recently, there has been unwonted uncertainty about its future following the acquisition of an 18 per cent stake in News Corp by John Malone, a legendary US media financier. It makes Malone a powerful influence, since the Murdoch family controls just under 30 per cent of the votes - and the Murdoch stake is worth around $6bn (£3.4bn).
Malone's investment has fuelled talk of a break-up or takeover, which will not vanish with the appearance of a diminished commitment to News Corp by the Murdoch scions.
"I would have thought that this news would send News Corp. shares up," said one former News Corp employee. "It suggests that the company may be broken up when Rupert dies. I think the family will say 'forget this, let's break the company up and take the cash and maybe some of the assets'." However the shares fell 1.3 per cent on Friday.
For Lachlan a future beckons in Australia. In his statement he says: "I would like especially to thank my father for all he has taught me in business and in life." He may be back at the centre of the family business one day - but that farewell has a certain finality about it.