11 Sep Fox News Future Depends on Murdoch’s Ability to Make “Right” Pick The Real Life “Game of Thrones”
Billionaire media mogul, Rupert Murdoch, is in a family feud with 3 of his children over control (after his death) of his mega media business which includes Fox News, The Wall Street Journal, The New York Post and many other newspapers and television stations.
Murdoch has gone to court to change the terms of his irrevocable family trust so that his son, Lachlan, would be in charge of the Murdoch empire after the self-made billionaire dies so that the conservative views of the television stations, newspapers, etc. that Murdoch presently controls would continue. He calls his efforts “Project Harmony”.
Generally, irrevocable trusts can be changed by a court order pursuant to the laws of the state which has proper jurisdiction (in this case, it is Nevada due to its favorable laws on trusts). The succession planning through the existing irrevocable trust gives equal ownership and voting rights to 4 of Murdoch’s children – Lachlan, Prudence, Elisabeth and James. Needless to say, James, Prudence and Elisabeth are opposed to any change in the irrevocable trust which gave them equal control and say in running the media syndicate after Murdoch’s passing. Murdoch also has 2 other children (Chloe and Grace) who also have equal ownership interest, but they have no voting rights after Murdoch’s death. The court battle is over voting rights. Murdoch wants Lachlan to have 100% control over voting rights. Murdoch’s efforts to revise his irrevocable trust have left him estranged from Elisabeth, James and Prudence, as evidenced by their failure to attend his most recent wedding (his 5th marriage) last year.
The origins of Murdoch’s irrevocable trust sprouted from the divorce of his second wife, Anna Murdoch Mann – the mother of James, Elisabeth and Lachlan. Ms. Mann required that the 4 children (Prudence was a child of Murdoch’s first marriage) get equal control over the media conglomerate. As a result, there was equal governance provision in the irrevocable trust through the use of voting rights.
However, the irrevocable trust contains the ability to make changes if done in good faith and with the sole purpose of benefitting all of its beneficiaries. As a result, a Nevada court has held that Murdoch can modify his trust if he can show he is acting in good faith and for the benefit of the trust beneficiaries. A trial is scheduled for this month (September) before a Nevada probate commissioner. Murdoch has argued that a “lack of consensus” among his children would impact the strategic direction of his companies including a “political reorientation of editorial policy and content”. As a result, Murdoch has requested to “consolidate decision-making in Lachlan’s hands and give him permanent, exclusive control over the businesses so that the media conglomerate will remain a “conservative force” and protect its “commercial value”.
Similar to many families, the political views of a parent and child are divergent. In this case, Mr. Murdoch and Lachlan (whom he desires to anoint as king of the media empire) are conservative while Prudence, James and Elisabeth are more moderate in their political beliefs. As Donald Trump became more politically popular, Murdoch and Lachlan guided its flagship company, Fox News, to be more conservative to the chagrin of James, Prudence and Elisabeth.
Murdoch hired William P. Barr (who was Attorney General under Presidents George H.W. Bush and Trump) as his personal representative to rewrite the trust so that Lachlan could be in charge of the successful strategy of catering to the conservative view. Mr. Murdoch and Lachlan argue the success of Fox News and other outlets with the conservative slant resulted in a formula for profitability. James, who previously worked in a leadership role over operations with Lachlan, left the company in 2019 after his father put Lachlan in charge and disagreement over the treatment of Trump. James believes that Fox News support of Trump may give short-term gains, but it would not be beneficial for future success as evidenced by Fox paying hundreds of millions in settlement to voting machine companies in connection with Fox reports of voting machine inaccuracy. If Murdoch loses this control battle, it is likely that James, Elisabeth and Prudence could remove Lachlan after Murdoch’s death. The hearing has been deemed confidential and all hearings in the case are closed.
Under Texas law, the one who establishes an irrevocable trust cannot bring suit to modify the terms of the trust – only the trustee or a beneficiary could do so. Under Texas law, an irrevocable trust can be modified by court order if (1) the purposes have been fulfilled or have become illegal or impossible to fulfill; (2) because of circumstances not known or anticipated by the settlor, the court order for modification will further the purposes of the trust; (3) modification of the administrative, non-dispositive term of the trust is necessary or appropriate to prevent waste or avoid impairment; (4) the court order is necessary or appropriate to achieve settlor’s tax objectives and is not contrary to the settlor’s intentions; or (5) continuance of the trust is not necessary to achieve any material purpose of the trust, or the order is not inconsistent with a material purpose of the trust.
Murdoch’s companies (Fox News and News Corp.) have a vast sphere of political influence throughout the world. The determination of future political influence will likely be decided by the Nevada Probate Commissioner. The real-life battle of the Murdoch family may be more entertaining than the television shows “Game of Thrones” and “Succession”.
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