Murdoch Family Values; Why Did Lachlan Resign? Inside the Tortured History of a Real-Life Dynasty That Mixes Family with Business

Newsweek, August 8, 2005 | Go to article overview
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Murdoch Family Values; Why Did Lachlan Resign? Inside the Tortured History of a Real-Life Dynasty That Mixes Family with Business


Byline: Johnnie L. Roberts (With Melissa Roberts in Sydney)

By all public appearances, Lachlan Murdoch's eventual ascension to the throne of New York-based News Corp., the global media empire founded by his father, Keith Rupert Murdoch, was growing more certain by the month. On Dec. 9, the young Murdoch was center stage in black-tie splendor at the gilded Waldorf-Astoria. The audience was packed with New York's real-estate, business and political elite, including Mayor Michael Bloomberg and Gov. George Pataki.

On behalf of the 204-year-old New York Post, perhaps Rupert's most beloved media property, the 33-year-old scion had come to accept the annual Gold Medal Award for "outstanding contributions to the City of New York." Through the decades the honor had gone to, among others, three Rockefellers, Rudy Giuliani and Carnegie Hall. In April, Lachlan snared another honor. He was named "Media Person of the Year" by the Cannes Film Festival for his role in developing News Corp., where his younger brother, James, runs the company's London-based satellite broadcaster, BSkyB. In May came word of further recognition of Lachlan's stature. The News Corp. board, which his father chairs, had boosted his 2004 salary and bonus to $3.8 million from $2.6 million the year before. And he was beaming in June as he accepted his award in Cannes.

He may no longer qualify. Last week Lachlan abruptly quit his post as News Corp.'s deputy chief operating officer. In a written statement, he said he was returning home to Australia, the family's ancestral land, with his wife, an Aussie supermodel, and their 9-month-old son, Kalen. The statement offered mutual and maudlin sentiments by father and son. (Lachlan thanked his father "for all he has taught me in business and life." Rupert said he was "particularly saddened" by his son's decision and thanked him for agreeing to remain on News Corp.'s board.) But in the end the words left a void, quickly filled by speculation about what really happened. Did father and son clash over strategy? Did Lachlan demand to succeed his father now ? Was James involved? Is there a scandal unfolding around Lachlan that has yet to come out? The development also raised anew the longstanding issue of who will succeed the 74-year-old Rupert. He has six children, ages 2 to 46, from three marriages, including two toddlers with his current wife, Wendi. By default, it now looks like the nod goes to James, 32, the only Murdoch child currently employed by News Corp.

The independent-minded younger son has rapidly hit his stride. He joined News Corp. in 1996, but not before dropping out of Harvard the year before to launch a rap-music label. He landed in the start-up Internet division at the height of the technology bubble, and his largely dismal results were typical of the overheated era. But James, colleagues said, was demonstrably the brightest Murdoch offspring. He turned around Murdoch's Star TV in Asia, parlaying his performance into the top job at BSkyB in 2003. The results so far: higher profits and more subscribers. Still, a non-Murdoch also figures prominently in the succession question: Peter Chernin, Murdoch's seasoned second in command.

If anyone in or near the family's inner circle has a clue about Lachlan's ultimate motives, they aren't daring to share it. A corporate spokesman demurred, saying Lachlan had been contemplating the move for months. But that explanation doesn't seem to square with the young Murdoch's recent high-profile hobnobbing as News Corp.'s rising star. In the past, Rupert and his son had seemed like-minded on business issues and close personally. Politically, both were conservative, unlike James.

It all seems to add up to one of the greatest mysteries to delight the fishbowl world of international media moguldom in a long time, at least since the 1991 death of Rupert's onetime rival Robert Maxwell. (The British press lord vanished from his luxury yacht, the Lady Ghislane, off the Canary Islands.

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