06 Oct CELEBRITY UPDATE: MURDOCH’S FLAWED SUCCESSION PLAN COST BILLIONS
It is official! Lachlan Murdoch will be king over the media empire created by his iconic father, Rupert Murdoch, as a result of a multi-billion-dollar settlement agreement with his other children.
Rupert, now 94, wanted to give Lachlan the keys to the kingdom since Lachlan shared Rupert’s conservative views. However, as a result of a divorce settlement with his second wife, Rupert created an irrevocable trust, whereby (after Rupert’s death) his 4 eldest children (Prudence, Lachlan, Elisabeth and James) would have equal control of the irrevocable trust created by Rupert. The trust was funded with Fox News and News Corp, including voting rights. Prudence, Elisabeth and James did not share Lachlan’s conservative views that Rupert wanted continued after his passing.
As a result, Rupert wanted the Nevada court to change the terms of the irrevocable trust saying the desired change was made in “good faith” since the requirement of 4 having equal rights would result in a “lack of consensus” which could change the “political orientation of editorial policy and content.”
The Nevada commissioner in December 2024 determined the attempt to amend the irrevocable trust was in “bad faith” as it was a “carefully crafted charade” to “permanently cement Lachlan Murdoch’s executive roles” regardless of the impact on the companies or the beneficiaries Rupert appointed. Two years after Rupert brought suit, the case settled whereby Lachlan will be in full control of a new trust.
Rupert’s 2 youngest children, Grace and Chloe, will have equal shares with Lachlan, but Lachlan will have all voting rights of the trust (which will hold controlling interest of Fox Corp and News Corp) until 2050 when the new trust terminates.
The old trust was dissolved as part of the settlement. Prudence, Elisabeth and James each received $1.1 billion from the sale of stock in News Corp and Fox Corp. The settlement also required them to not buy stock in either corporation.
Although Rupert’s shrewd business dealings are beyond repute, creation of a trust with 4 equal owners almost never works as there is usually a fight on who is in control and how much they are paid. Furthermore, joint owners often result in strained relationships between the parties. The litigation between Lachlan and his siblings has come to an end – but so has his relationship with Prudence, James and Elisabeth. Some say “blood is thicker than water.” However in the Murdoch family, money, control and management are thicker than blood.
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