Murdoch Family Values

By all public appearances, Lachlan Murdoch's eventual ascension to the throne of New York-based News Corp., the global media empire founded by his father, Keith Rupert Murdoch, was growing more certain by the month. On Dec. 9, the young Murdoch was center stage in black-tie splendor at the gilded Waldorf-Astoria. The audience was packed with New York's real-estate, business and political elite, including Mayor Michael Bloomberg and Gov. George Pataki.

On behalf of the 204-year-old New York Post, perhaps Rupert's most beloved media property, the 33-year-old scion had come to accept the annual Gold Medal Award for "outstanding contributions to the City of New York." Through the decades the honor had gone to, among others, three Rockefellers, Rudy Giuliani and Carnegie Hall. In April, Lachlan snared another honor. He was named "Media Person of the Year" by the Cannes Film Festival for his role in developing News Corp., where his younger brother, James, runs the company's London-based satellite broadcaster, BSkyB. In May came word of further recognition of Lachlan's stature. The News Corp. board, which his father chairs, had boosted his 2004 salary and bonus to $3.8 million from $2.6 million the year before. And he was beaming in June as he accepted his award in Cannes.

He may no longer qualify. Last week Lachlan abruptly quit his post as News Corp.'s deputy chief operating officer. In a written statement, he said he was returning home to Australia, the family's ancestral land, with his wife, an Aussie supermodel, and their 9-month-old son, Kalen. The statement offered mutual and maudlin sentiments by father and son. (Lachlan thanked his father "for all he has taught me in business and life." Rupert said he was "particularly saddened" by his son's decision and thanked him for agreeing to remain on News Corp.'s board.) But in the end the words left a void, quickly filled by speculation about what really happened. Did father and son clash over strategy? Did Lachlan demand to succeed his father now? Was James involved? Is there a scandal unfolding around Lachlan that has yet to come out? The development also raised anew the longstanding issue of who will succeed the 74-year-old Rupert. He has six children, ages 2 to 46, from three marriages, including two toddlers with his current wife, Wendi. By default, it now looks like the nod goes to James, 32, the only Murdoch child currently employed by News Corp.

The independent-minded younger son has rapidly hit his stride. He joined News Corp. in 1996, but not before dropping out of Harvard the year before to launch a rap-music label. He landed in the start-up Internet division at the height of the technology bubble, and his largely dismal results were typical of the overheated era. But James, colleagues said, was demonstrably the brightest Murdoch offspring. He turned around Murdoch's Star TV in Asia, parlaying his performance into the top job at BSkyB in 2003. The results so far: higher profits and more subscribers. Still, a non-Murdoch also figures prominently in the succession question: Peter Chernin, Murdoch's seasoned second in command.

If anyone in or near the family's inner circle has a clue about Lachlan's ultimate motives, they aren't daring to share it. A corporate spokesman demurred, saying Lachlan had been contemplating the move for months. But that explanation doesn't seem to square with the young Murdoch's recent high-profile hobnobbing as News Corp.'s rising star. In the past, Rupert and his son had seemed like-minded on business issues and close personally. Politically, both were conservative, unlike James.

It all seems to add up to one of the greatest mysteries to delight the fishbowl world of international media moguldom in a long time, at least since the 1991 death of Rupert's onetime rival Robert Maxwell. (The British press lord vanished from his luxury yacht, the Lady Ghislane, off the Canary Islands. His body later turned up bobbing in the waves.) The meandering Murdoch saga has long been a mix of extraordinary wealth, multiple nuptials, betrayal, corporate backstabbing, global ambitions, strident ideology and sibling rivalries real and imagined. Now Lachlan's bewildering exit from the family business is just one more element for spinning as many plot lines as Murdoch's Fox studios or his HarperCollins publishing unit. "It speaks to the fact that News Corp. is a jungle," says one former top Murdoch executive. "It is the survival of the fittest."

Rarely has anyone doubted Rupert Murdoch's survival skills. Beginning with a single newspaper, he built arguably the world's most powerful media empire, with newspapers, television, film and publishing assets dotting the globe. His satellite broadcasting operations reach every continent, making News Corp. the only true global media company. Ruthless and shrewd, the patriarch has pursued his strategy for global conquest with little restraint. In the 1980s, for instance, he became a U.S. citizen to circumvent regulations that barred foreigners from owning American broadcasters. Last year he reincorporated News Corp. in the United States, ripping his corporate roots from Australia. And even as the issues surrounding Lachlan apparently were growing more urgent in recent weeks, Murdoch continued his rapacious ways. Last month he formed a digital-media division and then immediately acquired a major Web site for $580 million. None of that has been bad for News Corp.'s corporate image. On the contrary, it generally performs in stellar fashion financially, and Wall Street deems it the best-run media concern around.

It may be a public company, but News Corp. has always been the Murdoch family business, from the moment Rupert inherited the Adelaide News from his father, Sir Keith Murdoch. And all along, Rupert has intended for one of his children to take over after he departs--although he has pledged to stay put until he dies. His explicit dynastic ambitions set him apart from contemporary media moguls like Viacom's Sumner Redstone and CNN founder Ted Turner. Until recently, Redstone, 82, had rarely put the spotlight on either of his two children as heir apparent. And Turner, who has sold off his Turner Broadcasting empire, once famously fired his son.

As Lachlan's experience shows, the mix of family and business has been a struggle. Among other things, Wall Street has focused on familial issues intently, concerned about how succession would play out and whether Rupert's children were up to taking the helm. Lachlan, James and Elisabeth--the children of Rupert's second wife, novelist Anna Murdoch-Mann--have been the focal points of the succession drama. Murdoch-Mann has made no secret of her concern that the children might be harmed in a sharp-elbowed battle to win their father's blessing. In her 1988 novel, "Family Business," she wove a tale of a media dynasty torn apart in a battle of control by four siblings after their father dies without naming a successor.

Life is unlikely to imitate art. Rupert, loath to contemplate his mortality, won't have to spend any of his remaining time on earth dwelling on succession. Elisabeth left the company in 2000. By abandoning his dad, Lachlan, the son who rushed into the family business, has made his decision for him. News Corp.'s reins will be handed off to James, the Murdoch who at first balked at a corporate role. And now, heading back to Australia, the onetime heir apparent can stake his own claim in the land where the storied Murdoch empire began.