Succession
A battle for Rupert Murdoch’s media empire is playing out behind closed doors. The consequences of this succession conflict will go far beyond unsettling the nepo babies involved.
Life has a funny way of imitating art. On 16 September, a probate court in Reno, Nevada saw the start of a trial that closely resembles the plot of the hit HBO drama Succession. This high-stakes showdown should determine the fate of one of the most powerful media houses in the U.S.
Rupert Murdoch, the media tycoon behind Fox Corporation ($FOXA) and News Corp ($NWSA), is trying to amend a trust that splits voting rights equally between his four children in the event of his death. The 93-year-old wants to give his eldest son Lachlan Murdoch full control of his empire – something that his other children James, Prudence and Elisabeth are contesting.
Succession creators have admitted the show was inspired by the Murdoch family. But unlike the show, where the fictional Logan Roy (spoiler alert!) doesn’t follow through on a succession plan, the real-world Murdoch has already stepped down last year and named Lachlan a worthy successor.
According to Rupert, Lachlan taking the reins is in the ‘best interest of all the beneficiaries, including his other children.’ While those other children disagree, Lachlan’s right-leaning political views may indeed be in the best interest of the business (and its shareholders).
That’s because Fox News’ editorial stance – love it or hate it – has driven much of its profits over the years. It ended 2023 being the most watched cable network for the eighth year straight. Even after the unceremonious departure of TV personality Tucker Carlson, the network managed to recover its ratings with a revamped prime-time lineup.
Fox Corp generated between US$12b and US$14.9b in revenue over the last five years. In FY24, Fox reported US$2.28b in operating income, along with a strong cash position of US$4.3b. FOXA shares are up 39% YTD.
And while it ticks all the boxes from a valuation standpoint, its ability to maintain an edge in the competitive landscape that is broadcast media will depend on this succession outcome. Let’s not forget it's an election year, and alienating its conservative audience would likely dig into Fox’s consistent profits.
News Corp’s strategic direction could also be an area of concern. It has some good things going for it though: The Wall Street Journal (WSJ) is a division of Dow Jones & Company – an entity controlled by Murdoch’s News Corp. Hedge fund Irenic Capital Management values the WSJ publisher at US$10b, but argues that News Corp’s underperforming assets drag down its current market value to US$12b. The company also owns 61% of Australia’s REA Group ($REA), which was a significant driver to News Corp’s US$10.09b in FY24 revenue.
Murdoch’s family has 39% voting power in each company despite having a 17% ownership stake, because of the dual-class share structure that gives them disproportionate control. Some investors – like Starboard Value – have argued this undermines effective governance and shareholder rights. Minority investors will be as eager as the Murdoch siblings to see how the final verdict unfolds.
