Is there any family owners of a business that makes the news more than the Murdochs? If so, WealthSpike would like to know – because the family that control one of the biggest media businesses in the world is rarely out of the news for more than a couple of weeks. That’s partly because the media love talking about themselves, especially when a large part of it is controlled by a big personality like Rupert Murdoch. But also because the Murdochs are one of the few powerful families recognized across much of the world.
And the great thing about the Murdochs being the focus of so much media attention is the plethora of examples other family businesses can draw on when running their own companies. OK, most family businesses don’t operate in the media sector, or are as big as the media conglomerate the Murdochs run, but there are lessons that can be learnt from the Murdochs for all sizes of businesses.
Just this week a big story broke about how the Murdochs are easing out one of their most powerful non-family managers at 21st Century Fox, Roger Ailes – the mastermind behind the incredibly successful Fox News and TV. There must be some lessons here for other family businesses – like no matter how successful and good a non-family manager is sometimes the best way forward is to get rid of them before they become a liability. Just to be clear, the Murdochs aren’t saying Ailes is a liability, but there’s clearly some issues with his continuing involvement with the Murdoch empire.
Another example can be drawn up around the empire’s governance and its long-term objectives. Some observers of the Murdoch empire have said in the past that Rupert Murdoch might not have followed best practices when it comes to corporate governance. They’ve argue that Rupert, 85, should have implemented a much more coherent succession plan years ago. Indeed, although he’s given his two eldest sons, Lachlan and James, more power, it’s still not entirely clear who will take over the overall running of the media business when he eventually steps down, or dies.
And then there is the matter of the two class of shares controlling the empire, with the Murdochs owning the biggest number of voting shares that enables them to control the business. Some analysts say this creates a “Murdoch Discount” to the price of the non-voting shares – some say the discount is as much as 50%.
WealthSpike reckons the Murdochs aren’t particularly concerned about this discount, or other perceived shortcomings in their governance standards. And here lies perhaps the greatest lesson other family businesses can learn from them – the emphasis on the long-term, rather than all the noise surrounding the short-term, like the Murdoch Discount. Most family businesses aren’t listed, but all of them have to deal with their own short-term issues just as much as a listed family business has to deal with quarterly reporting pressures.
Another lesson might be how the Murdochs work with non-family senior managers. Again, some exponents of good corporate governance might not place the Murdoch companies in their top ten when it comes to best practices in this area. The Murdochs are very much in control. But Rupert Murdoch has also had his share of loyal senior managers like Chase Carey, vice chairman of 21st Century Fox, and Robert Thomson, chief executive of News Corp. Incidentally, both individuals are some of the best examples of non-family senior managers in a family business there is.
But perhaps the most impressive aspect of the Murdoch family business empire is their ability to retain the entrepreneurial spirit of a business founded by Rupert’s father way back in the 1920s. Much of this entrepreneurial nous is driven by Rupert – one of the most extraordinary businessmen of the last 50-plus years. Indeed, his exploits have been written about in two biographies, and many, many articles. Again, lots of publicly available information to draw from – much more so than for most other business leaders.
Of course, family businesses might look at the Murdoch empire and think the values it represents and its governance culture isn’t something they’d like to follow. They could feel there are too many compromises in pursuing good family business governance, or the family is too powerful to the detriment of other stakeholders, etc…
But from whatever perspective a family businesses choses to learn or not from the Murdochs there’s rarely been a better publicised family business saga to do so from – and one that’s going to provide many more examples in the future as the next generation eventually take over.