Murdoch Transition Puts Media-Sector Succession in Spotlight

Analysis: The media industry is already grappling with seismic change. Should the companies pay more attention to leadership as well?

Rupert Murdoch: Media Sector Succession In

The media industry is making a jump from one generation to the next.

Rupert Murdoch is the latest mogul in the media sector to set in motion a plan for succession as media companies face an era filled with disruption caused by the rise of new digital technologies.

The mogul, who oversees both 21st Century Fox and News Corp., is expected to propose to the board of directors of 21st Century Fox that his son James be made chief executive of the company and his other son, Lachlan be made executive chairman alongside his father. Chase Carey would step down as chief operating officer, but would remain with the company through May 2016 in a role that would be defined later.

The transition caps long speculation about the fate of 21st Century Fox, a global media conglomerate that stands behind everything from “The Simpsons” to “Empire” to Fox News Channel and “Modern Family.” But it also shows a bevy of media companies attempting to navigate their way forward under what have been some of the toughest circumstances imaginable. Old methods of viewing content have become less popular — and less easy to monetize — as new mobile venues and easy availability of streaming video give consumers the chance to watch video at times of their own choosing, making the flow of ad dollars less of a certain thing.

Media companies have to juggle many pressures at this time of year. Many of them are trying to work their way through what has become a sluggish upfront process, when they try to sell the bulk of their ad inventory for the year. They are also trying to navigate through piracy concerns, and develop expertise in new kinds with new kinds of entertainment that involve social media and other kinds of interactive formats. With all that going on, it’s hard to focus on creating a direct line of succession too.

Investors have recently fixed their gaze on Viacom and CBS Corp. in recent weeks, owing to questions raised by press reports over the health of Sumner Redstone. Through the company National Amusements Inc., he and his family control large voting blocks in each media company. Through an attorney, Redstone recently articulated a plan that would have the fate of NAI guided by a trust that will include both his daughter, Shari Redstone, and his grandson, Tyler Korff.

Other media companies seem to have made things more clear. Walt Disney in February named Tom Staggs as its chief operating officer, a move that appeared to position him as heir apparent to current Disney chief Robert Iger, who is scheduled to step down as CEO in mid-2018. Jay Rasulo, Disney’s chief financial officer, said earlier this month that he would step down from Disney at the end of June, a decision that would appear to make Staggs ascent all but certain.

And then there are companies where investors seem to have some sense of where things might be going, but are not really certain. At Time Warner, CEO Jeff Bewkes has assembled a team of three leading executives: John Martin succeeded Phil Kent as leader of Turner Broadcasting in 2014, while Kevin Tsujihara runs Warner Brothers and Richard Plepler oversees HBO. Investors have long wondered if Martin, who was formerly Time Warner’s chief financial officer, was being given a chance to gain some operating chops before being considered for the top job at the entertainment company.

The pressure may also be building at some of the sector’s smaller and medium-sized companies, which need to fret more about scale at a time when distributors like AT&T and DirecTV and Charter Communications and Time Warner Cable are poised to combine. A recent agreement unveiled by Verizon Communications and AOL don’t make matters easier, and many in the sector are likely to consider what is said to be an effort to combine T-Mobile and Dish as well.

In that light, companies like Scripps Networks, AMC Networks and Discovery Communications must also consider not only the strength of their operations, but who is best suited to guide them going forward.

Things may seem easier at Fox, where Murdoch and his family have control and have maintained strong involvement in the company even as they sought the help of professional managers like Carey or Peter Chernin. The elder Murdoch is now in his mid-80s and has made no secret of his desire to hand the reins of his empire to his children. At Fox, the culture has long called for senior executives to take their cues from Murdoch, and that may help him in his current effort to place his children at the helm of his ship.

Can others emulate that process? Look to the hands placed upon their corporate steering wheels in the months ahead.

And even when someone makes succession look relatively easy, that doesn’t mean the company’s new leaders won’t face some of the same headwinds that pushed upon the old. In a research note published Thursday, independent analyst Michael Nathanson urged 21st Century Fox management to work diligently to “create a more efficient corporate structure” and “finish the transformation” of Fox “from media conglomerate to pure-play video content company.”

Whether the bosses are old or new, the same challenges remain.