Why can’t Rupert Murdoch pass on his business to who he wants?

The world’s most famous media baron, Rupert Murdoch, was told this week that he can’t pass the running of his family business to his eldest son, Lachlan. The decision—by a US court—is unfair and not good for the company’s future.

Under the strict secrecy of a Nevada court hearing, Rupert Murdoch was told, according to people familiar with the case, that he acted in “bad faith” by trying to change a family trust to leave Lachlan in control rather than his siblings.

Although 93, there is nothing to suggest that Rupert isn’t of sound mind and is entirely cognitive in his decision-making 

The trust was set up after Murdoch divorced his second wife, Anna Torv, and gave her three children—Lachlan, James, and Elisabeth—and Patience, the only child from Murchoh’s first marriage, equal voting rights after their father’s death. Grace and Chloe, his children with Rupert’s third wife, Wendi Deng, have an economic interest but no voting control.

OK, the trust was set up in good faith, and the judge in Nevada has a point. But if the person responsible for the vast media empire and the wealth of all his siblings wants to change his mind, why can’t he? 

Although 93, there is nothing to suggest that Rupert isn’t of sound mind and is entirely cognitive in his decision-making. So, from a mental health perspective, there is nothing to stop Rupert from making that control decision. 

Most of the media reckon Rupert’s decision to pass control on to Lachlan is because his eldest son’s politics align more with his father’s views. That may be the case. James, in particular, has been much less in favour of the opinions of the right-wing Fox News, which New Corp owns. Elisabeth and Patience, more nuanced in their politics, nevertheless sided with James in the dispute with their father. 

But political disagreements within the family are probably just a sideshow. Perhaps more on Rupert’s mind is the future of the business, believing that its success is more guaranteed under the control of one family member rather than many. 

Rupert probably feels the family business will likely come under considerable pressure to break up when all four family members control it after his death. Inevitably, a committee will rule under such a scenario, and decision-making will become more bureaucratic and slow. Deal-making – one of Rupert’s great strengths – will wither away. 

Ultimately, there will be considerable pressure to break the company up as the family shareholders disagree on the way ahead. External pressures from other shareholders and vested interests will also come into play much more than in the past. 

So, one of the greatest family media empires of the last 100 years will likely fall foul of the classic curse of the third-generation family business – from short-sleeves to short-sleeves in three generations. 

Of course, third-generation Murdochs do not have to worry about money, and their families’ wealth will continue for many generations. 

But that’s beside the point as far as Murdoch is concerned. What matters is the business’s success after he dies, and he views that success as more guaranteed under Lachlan singular control. He won’t be alive to see the outcome, but he’s likely to be vindicated.