Succession comes second to success at News Corp.
Rupert Murdoch turned 79 on March 11, and even as he made the rounds of a few elite Oscar parties and flashed an occasional (very rare) smile, his friends acknowledged that, while he looks his age, he doesn’t act it. Indeed, the media king seems to grow feistier and more combative with each birthday, quashing rumors about succession over an empire that is as much a cauldron as it is a corporation.
Consider the various Murdoch combat zones: He declared war on Google, charging that the search giant “steals” content and poses a mortal threat to print media. He launched a frontal assault on the New York Times by embarking on an expensive New York edition. Amid all this, he seems to have quashed a family rebellion over the toxic propagandizing of Fox News, an organization that pursues “a horrendous and sustained disregard of journalistic standards” in the words of Murdoch’s son-in-law, Matthew Freud.
The Murdoch paradox was in full evidence last week. Though he has always distrusted movies, he is gratified by the “Avatar” revenue stream, the endless bliss emanating from “American Idol” and the overall prosperity and stability of his Hollywood properties. But he is, at heart, a print man, and his critics continue to fault him for his lavish spending on newspapers. The New York Post loses an estimated $70 million a year. A year ago News Corp. took a $3 billion writedown on its newspapers, reflecting the impact of the much-criticized $5 billion acquisition of the Wall Street Journal.
In initiating his assault on the Times, his nemesis of the moment, Murdoch is amping up his newspaper wars at a time when his bankers would like to see him make a peaceful exodus.
Peace is not a Murdoch policy, as his longtime associates can testify. Freud, who is married to Elisabeth Murdoch, arguably the most independently successful of the four offspring, may argue that the family is “ashamed and sickened” by Roger Ailes’ journalistic practices, but the hard reality is that Ailes’ division spits off some $700 million in profits each year — revenue that is fundamental to sustain the Murdoch media machine.
Of course, Murdoch, through Ailes, a former Nixon aide, has effectively polarized the political dialogue in this country, and Ailes knows the firestorms he systematically sets off. He has become so paranoid about his personal safety that his daily trek to work from Westchester County is fortified by a security force sizable enough for an Arab potentate (Murdoch, by contrast, often walks to work by himself).
Murdoch himself famously avoids political confrontation, espousing a garbled sort of traditional economic liberalism. Yet all of his U.S. newspapers, from the Post to the Journal, have grown ever more shrill in their fervid disdain of anything to the left of Limbaugh.
There are hints that Murdoch’s four children abjure the Ailes view of the universe, as do most of his top executives. Peter Chernin, who recently departed as Murdoch’s No. 2, was not only a political dissenter but also played a key role in initiating corporate policy. Chase Carey, his successor, is regarded more as a problem solver (and has maintained political neutrality).
Carey, like Chernin, realizes that Murdoch’s successor will be another Murdoch, while Rupert himself enjoys giving off mixed signals. James, age 37, seems to have handled family politics with the greatest finesse. He deftly managed his
tenure as CEO of BSkyB and recently maneuvered his own communications chief into the job once skillfully handled by Gary Ginsberg. Lachlan, 38, has proven himself more temperamental and more personable. Elisabeth, 41, has gained industry respect by building a successful TV empire on her own.
Murdoch can play the rules of succession any way he wants, but he still has to sustain an aura of fiscal respectability to placate his bankers. The accounting results of the company have proven startlingly volatile. Last year’s second-quarter loss of $6.4 billion magically turned into a $254 million profit for the same period this year. The Murdoch family trust owns 38% of voting shares, so the family influence is pervasive but not all-encompassing.
Exactly 20 years ago Murdoch found himself in trouble with his bankers to such a degree that his control of his empire seemed in jeopardy. I called him at the time and asked him bluntly whether he could pull things out of the fire.
“I’ve gotten myself in trouble,” Murdoch told me on the phone. “It’s so damned complicated. Why don’t you come over to my office and I’ll take you through it.”
An hour later I was seated across from Murdoch, a dizzying array of data confronting us. He detailed his strategy for his financial recovery. He seemed taut but determined. And indeed he was downright friendly about explaining it.
Rupert’s world has become vastly more complex since that time and his mood less hospitable. I don’t think I’d call him today for another sitdown. For one thing, we would get into a Roger Ailes argument and neither of us would like that.
In his final years, William Randolph Hearst, the last big baron, became as hard-right politically as Murdoch. He never succeeded in Hollywood, however, and he never had his own Roger Ailes.
Hearst met financial ruin in the end. Murdoch is too wily for that.