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21st Century Fox

Murdoch family may not be unified about breaking up Fox

James Murdoch may be the odd man out if his father decides to break up Fox after some five decades in the media and entertainment business

PUBLISHED : Tuesday, 21 November, 2017, 12:05pm
UPDATED : Tuesday, 21 November, 2017, 12:14pm

By Leon Lazaroff

Whether or not the Murdoch family actually would break up Twenty-First Century Fox Inc.

has become a media industry parlour game with few rivals.

After some five decades in the media and entertainment business, Rupert Murdoch may sell his movie and TV studios as well as Fox’s international distribution networks in Europe, Asia, Latin America and Australia. Fox executives have been talking with their counterparts at Comcast Corp., owner of NBCUniversal, about selling those assets. In recent weeks, Fox officials also were talking with Walt Disney Co. about unloading everything except the Fox broadcast network, its sports programming and local TV station group and the Fox News Channel.

That the Murdochs didn’t initiate conversations with Comcast and Disney may no longer be important. What is important is that talks have proceeded, taking on a life of their own.

Neil Chenoweth, a senior writer with The Australian Financial Review and the author of a series of books on Rupert Murdoch, takes a more nuanced view on what may happen to Fox in the coming weeks. The Murdoch family — meaning Rupert and his sons, Lachlan and James — may not be particularly unified about Fox’s future, he told TheStreet.

That the Murdochs agreed to engage with Comcast and Disney reflects a “massive power shift within the family,” Chenoweth said via email. While Rupert remains the company’s sole power broker, he’s 86 and isn’t nearly as engaged in the company as he once was. Over the past 15 month, the elder Murdoch has spent more time at Fox News attending to sexual harassment scandals, but the company’s day-to-day operations are handled by his sons and a few key division heads.

On paper, Fox’s sprawling global operations are managed by James and his brother, Lachlan. Peter Rice, often called a third Murdoch son, runs Fox’s domestic television operations as well its international channels group, while Stacey Snider oversees the film studios, reporting to James and Lachlan. But James, 44, is the classic harder-working younger son, whose intensity of purpose catapulted him over Lachlan, 46, for the key post of CEO. Lachlan holds the title of co-executive chairman with his father.

As Rupert gets older, James has been pushing for greater control. The three Murdochs were said to have taken slightly different views on the future of former Fox News CEO Roger Ailes after sexual harassment charges surfaced in July 2016. While James and Lachlan advocated for Ailes’ immediate departure, Rupert was said to have preferred a slower approach. James also pushed for an outside investigation into the scandal. Ultimately, public opinion strengthened James’ position, and Ailes was ousted on July 21, 2016. He died on May 18.

Chenoweth makes the point that were Fox to sell its international businesses — a 39 per cent stake in European satellite TV operator Sky plc, the StarIndia networks and distribution businesses throughout Europe, Asia and Latin America — it would amount to a “massive rebuff” of James’ work. James was CEO of Fox’s international group before being elevated to co-COO in March 2014 and then CEO in July 2015. In addition to building Sky and StarIndia, he also had a large hand in the company’s decisions to exit China and Russia.

Viewed in another light, selling the international assets would affirm that James did a very good job building that part of the company. If anything, the recent surge in media coverage around Fox has highlighted the value of businesses that investors, especially U.S. investors, may have undervalued given the attention in recent years on the profitability of Fox News.

Clearly, James’ future is tightly wrapped in whatever decision his father makes in the coming weeks. Chenoweth, who has long piqued the ire of the Murdochs and Fox, sees a generational power struggle at play.

“On the one hand, James is the major league loser,” said the author of 2001’s “Rupert Murdoch: The Untold Story of the World’s Greatest Media Wizard.” “It’s like Rupert saying, ‘You think you’re taking control from me, but I’ll bring the temple down first.’”

On the other hand, Chenoweth said, is Lachlan.

“The longer this goes on, the harder James will work, the more actual control he has, the more irrelevant Lachlan becomes,” he said. “So I’m thinking the sale talk is not just father against the sons, it’s Lachlan and Rupert against James.”

A Fox spokesman declined to comment for this story.

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