The walk-away price paid to the three dissenting Murdoch heirs is a cool $US1.1 billion ($1.7 billion) a head.
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The personal cost to the family will likely be greater still. After the brutal means Rupert had employed over the past decade to consolidate Lachlan’s position as the sole ruler of the empire, it is difficult to imagine a convivial extended family Christmas.
Though at 94, Rupert has statistically outlived the average male life expectancy by 16 years, so for him the damage from this succession wrecking ball will be limited.
The seeds of the sibling fight for control were sown in the aftermath of Rupert’s divorce from Anna Torv, the mother of Lachlan, James and Elisabeth, in 1999. A family trust was created to hold the family’s shares in the media companies, with the three children and Prudence, the daughter from his first marriage, becoming equal beneficiaries and with equal voting rights to the trust.
The trust had a sunset clause, under which it would expire in 2030.
If Rupert had died with the original trust in place, James, Prudence and Elisabeth would likely have dethroned Lachlan – an outcome that the nonagenarian mogul believed would have run counter to the financial interests of his media empire.
For Murdoch, succession came down to money, not family cohesion.
He believed that in the hands of the three less conservative and more liberal-leaning children, his media assets would lose their near-monopoly conservative audience stranglehold.
For Murdoch, succession came down to money, not family cohesion.
Lachlan and his father made numerous unsuccessful attempts to buy the three other siblings out of the trust in recent years – but at prices that were demonstrably below fair value.
The family tension reached a critical point last year, when Rupert and Lachlan manoeuvred to consolidate Lachlan’s leadership by changing the trust with a plan they bizarrely called “Project Family Harmony”. The trust was written to be inviolable until its expiration in 2030.
In secret and closed proceedings at a Nevada probate court, at which all parties gave evidence, team Rupert and Lachlan scored a comprehensive loss.
The family drama as good as any Succession script: (From left) Prudence Murdoch, Elisabeth Murdoch and husband Keith Tyson, and James Murdoch at court in Reno, Nevada in September last year.Credit: Bloomberg
And while appeals have been on foot since, time was not on Murdoch senior’s side.
It was this urgency leverage that clearly enabled Rupert’s disenfranchised children a better negotiating position to ultimately secure a financial settlement.
While the empire will sell this outcome as a win/win, injuries have been inflicted on both sides.
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Financing the payout to the siblings troika involves selling voting shares in Fox and News Corp. After the deal, the Murdochs will control 33.1 per cent of News Corp (the owner of The Wall Street Journal and The Australian newspapers) and 36.2 per cent of Fox – down from the family’s voting stakes of 41 per cent and 43 per cent, respectively.
This loosening of the family’s ownership grip may open a narrow window for disaffected minority shareholders that have railed against numerous corporate decisions, including the leadership of Lachlan.
The three Murdochs that will now permanently sever ties with News Corp and Fox will walk away as billionaires with richer bank accounts – but undoubtedly poorer for the bruising experience of the succession battle that unravelled the fabric of their family.
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