The Secret Battle for the Future of the Murdoch Empire

J Rutenberg, J Mahler

Rupert Murdoch is locked in a secret legal battle against three of his children over the future of the family’s media empire, as he moves to preserve it as a conservative political force after his death, according to a sealed court document obtained by The New York Times. Murdoch, 93, set the drama in motion late last year, when he made a surprise move to change the terms of the Murdochs’ irrevocable family trust to ensure that his eldest son and chosen successor, Lachlan, would remain in charge of his vast collection of television networks and newspapers.

The trust currently hands control of the family business to the four oldest children when Murdoch dies. But he is arguing in court that only by empowering Lachlan to run the company without interference from his more politically moderate siblings can he preserve its conservative editorial bent, and thus protect its commercial value for all his heirs. Those three siblings — James, Elisabeth and Prudence — were caught completely off-guard by their father’s effort to rewrite what was supposed to be an inviolable trust and have united to stop him. Lachlan has joined on Murdoch’s side. Remarkably, the ensuing battle has been playing out entirely out of public view.

Last month, the Nevada probate commissioner found that Murdoch could amend the trust if he is able to show he is acting in good faith and for the sole benefit of his heirs, according to a copy of his 48-page decision. A trial to determine whether Murdoch is in fact acting in good faith is expected to start in September. Hanging in the balance will be the future of one of the most politically influential media companies in the English-speaking world.

Representatives for the two sides declined to comment. Both have hired high-powered litigators. The three Murdoch siblings are represented by Gary A. Bornstein, the co-head of litigation at Cravath, Swaine & Moore. Murdoch is represented by Adam Streisand, a trial lawyer at Sheppard Mullin who has been involved in estate disputes concerning Michael Jackson and Britney Spears.

Few media stories have been watched as closely as the succession battle over the Murdoch empire, both because of the irresistibly Shakespearean nature of the drama, and because of the empire’s outsize political influence. Murdoch’s decision in 2018 to formally designate Lachlan as his heir put to rest years of speculation over his wishes for the company.

What it did not do, though, was ensure that Murdoch’s wishes would survive him: The existing trust gives all four of his oldest children an equal voice in the company’s future.

The Murdoch family has been divided before. James and Elisabeth at one point competed with each other and Lachlan to eventually take over the company, and at various times they have clashed with one another and their father. James, who once helped run the company with Lachlan, left it in 2019 and now oversees an investment fund. Elisabeth runs a successful movie studio, Sister, and has for years sought to position herself as the “Switzerland” of the family, maintaining good relations with all. Prudence, Murdoch’s oldest child and the only one from his first marriage, has been the least involved in the family business and has remained the most private of the children.

But given Murdoch’s advanced age, this battle has all of the makings of a final fight for control of his sprawling media conglomerates, which own Fox News, The Wall Street Journal, The New York Post and major newspapers and television outlets in Australia and Britain. It has already driven a new wedge into the famously fractured family.

Politics, and power, are at the root of the struggle. Since Murdoch designed the trust nearly 25 years ago, the family’s political views have diverged sharply. During Donald J. Trump’s rise, Murdoch and Lachlan became more closely aligned, pushing the company’s most influential outlet, Fox News, further to the right, making the other three children increasingly uncomfortable.

Murdoch has called his effort to change the trust Project Harmony because he hoped that it might head off a looming family struggle when he dies, according to a person with knowledge of the family. But it has had the opposite effect.

After filing his petition to amend the trust, Murdoch met separately with Elisabeth and Prudence in London, hoping to win their support, this person said. Instead, they were furious. Elisabeth responded to the possibility with a string of expletives.

Days later, on Dec. 6, Murdoch’s representatives went ahead with the motion to make the changes at a hastily called special meeting of the trust in Reno, Nev. The representatives for the three children sought to adjourn the meeting and block the proposed changes but failed, according to the court decision. The fight has left Murdoch estranged from three of his children in his twilight years. None of them attended his wedding to Elena Zhukova, his fifth wife, in California last month. (Lachlan did.)

Though the trust is irrevocable, it contains a narrow provision allowing for changes done in good faith and with the sole purpose of benefiting all of its members. Murdoch’s lawyers have argued that he is trying to protect James, Elisabeth and Prudence by ensuring that they won’t be able to moderate Fox’s politics or disrupt its operations with constant fights over leadership.

According to the court’s decision, Murdoch was concerned that the “lack of consensus” among his children “would impact the strategic direction at both companies including a potential reorientation of editorial policy and content.” It states that his intention was to “consolidate decision-making power in Lachlan’s hands and give him permanent, exclusive control” over the company.

The document makes it clear that Murdoch’s actions have pushed Elisabeth, Prudence and James into a joint posture against him. The siblings share legal counsel and are fighting to retain their voice in the company’s future, arguing that their father is trying to disenfranchise them. They say Murdoch’s move violates the spirit of the initial trust, enshrined in its “equal governance provision,” and that it was not done in good faith.

This will be one of the main issues in the trial. As the Nevada probate commissioner, Edmund Gorman Jr., wrote in his decision: “A rational fact finder could find that the determination that the Amendment was in the best interests of the beneficiaries was made with ‘[d]ishonesty of belief, purpose, or motive,’ i.e., in bad faith.”

The action is taking place in a Reno probate court, which is devoted to dealing with family trusts and estates. Nevada is a popular state for dynastic family trusts because of its favorable probate laws and privacy protections. The decision obtained by The Times contains a review of the facts by a probate commissioner whose role is to adjudicate cases.

The trust holds the family’s shares in Murdoch’s empire, which is now mainly divided between two companies: Fox, which includes Fox News and the Fox broadcast network, and News Corp, which holds his major newspapers.