The Man Who Owns the News (50 page)

It is hard, to say the least, for Murdoch to fathom why his son, who has Australia’s most powerful media enterprise at his disposal, would want a lesser one of his own. This has long been the
duh
conclusion of the entire Murdoch family: Lachlan, the New York–raised Murdoch who discovered a great love for Australia, who from 1997 to 2001 ran the company’s Australian business with distinction, and who has continued to cast about for opportunities and challenges since he left News Corp. two years ago, should run Australia. This is evident to everybody, including, most obviously, father and son. But emotional negotiation is not the chief skill of the father. So, everyone agrees, it will be a while before the son comes around.

The Murdochs are in many ways an awkward dynasty. Not just because the empire builder is so sui generis as to be irreplaceable, and not just because he is so evidently determined not to be replaced, but because, relatively speaking, the members of the dynasty are so capable—even, given the circumstances, normal. Dynasties are dependent on dependence. It complicates dynastic tradition and succession if the succeeding generation has compelling options outside of the dynasty.

The further twist of the knife is that Murdoch, a naturally cheap patriarch, finds himself financing his children’s independence.

It really was not supposed to be like this. After his awkward start with Prue—the early separation from Prue’s mother, Prue and Anna’s difficult relationship, his disinclination to see a girl as having professional potential—he got with the dynastic program. Elisabeth, Lachlan, and James were raised in a family-business hothouse. The Murdochs were not about to produce doctors or lawyers or investment bankers. Everybody was instilled with a grand media vision as well as a profound yen to please the old man. Everybody was put to work in the business at the earliest opportunity. And any effort to break away—Elisabeth getting into Stanford business school, James starting a record label—was quickly nipped in the bud. He wants them in
his
business.

But at the same time, he raised his kids in Manhattan, which is a hothouse of a different order. They were serious yuppie kids. It was the world of super-ambition. It provided a leveling effect, even. Everybody was super-rich. You were surrounded by expectations of extraordinary achievement and status. It might even have seemed, in the new age of financial derring-do, a bit bush league, a bit played out, this dynasty business.

And their particular dynasty further encumbered them. In the world of great fortunes in which they lived, the Murdoch kids always had a singular problem: They personally didn’t have a lot of dough. Since they were on their own, they all worked for their upkeep. And if they did quite well—especially the boys on the News Corp. payroll—they still essentially lived paycheck to paycheck. They really weren’t able to compete in the international heirs-and-heiresses set or with the heavy-hitter entrepreneurs.

The prospect of cash—liquidity—suddenly, though, became a softening agent in the intractable issue of Murdoch getting his older children to admit his young children to the family trust. It became Murdoch’s reluctant—very reluctant—leverage. He really didn’t want to give his children money. He didn’t want to sell News Corp. stock and, too, he didn’t want to give his children this kind of independence. But it was really a rather bad situation. Elisabeth and Lachlan, especially, were intent on defending their mother’s settlement agreement. Prue was inclined to side with her father. James, trying to be the family diplomat, went back and forth. It was Elisabeth’s husband, Matthew Freud, an inveterate middleman, and a practiced mollifier, who helped ease the group toward a solution. The older children were adamant about not giving up control over the trust but were willing to allow their new siblings equal economic participation in the family fortune (the subtext here was that giving them voting participation would effectively give Wendi, the guardian of two votes, more weight than the others). At the same time—although this was not explicitly stated as a quid pro quo—Murdoch stumped up $150 million in cash and stock for each of his kids (including Grace and Chloe, to mollify Wendi); and the Murdoch family trust started distributing annual income for the first time ever.

It is this $150 million (paid in two separate disbursements—$100 million in stock in January 2007, and $50 million in cash in October) that is giving everybody the wherewithal to be significantly less bound to him. It’s letting Lachlan pursue his own search for a business and letting Elisabeth expand hers.

But there are two other elements of the trust that make for an eventual, and inevitable, tale. Quite unusual for a trust arrangement that holds sway over a large business and that must accommodate a decision-making framework, in this one there is no way to break a tie.

A two-to-two vote means absolute deadlock in the affairs of one of the world’s largest companies. Already, Prue and James, inclined toward their father’s view, form one bloc, and Lachlan and Elisabeth, continuing their mother’s grudge (as well as their own), another.

The next potential complication of no small significance is that Murdoch himself does not accept the exclusion of his two most recent children from participation in the trust voting.

When I ask him about the mechanism to break a tie, Murdoch responds: “There are four votes now, but when my little kids grow up, they will get votes when they are twenty-five or thirty or something. All right?”

Except that this is absolutely untrue. His eldest children as well as his longtime lawyer, Arthur Siskind, are clear on the point: Grace and Chloe will be treated as financial equals—but will never get a vote.

Murdoch may have signed off on the agreement. But denial, or willfulness, or a lifelong belief that no negotiation is ever truly over, is bound to complicate things.

Meanwhile, Murdoch remains very much the main character in the story. His children, as much as anyone, are always waiting to see how he’ll react. It’s
his
drama. They may be angry, hurt, or confused, but the greater story is how
he
will deal with their anger, hurt, or confusion. That’s what most captivates them. He even manages to turn his difficulties in dealing with personal issues into an advantage: He’s so awkward about it that he earns, rather in spite of himself, an amount of sympathy.

His family, like the rest of the News Corp. universe, is under the spell of his immortality. His children can’t think beyond him—don’t want to think beyond him. It requires not just emotional fortitude but an exceptional imagination to envision a post-Rupert world.

And yet…

They will ultimately take over this company and family fortune and, as it stands now, have to agree or risk paralysis. What’s more, they have yet to anticipate what moves and mischief he might make before he can no longer make moves and mischief. And they have to figure that there’s a good possibility that at least one of them will want to try to take his mantle and force out the others (as he forced out his siblings and mother).

My interviews with the Murdoch children for this book are curious affairs. They are each reluctant or deeply wary—perhaps more about why their father is having them talk to me than about the interview itself. They are wary too about his wisdom in offering
them
up to scrutiny (“Why is he doing this?” is a question each of them asks me—as well as one of the questions I ask them). And then, having acceded to his instruction to cooperate, each lays out a separate agenda for what they want from this book. Their message, however, is not so much for readers as, seemingly, for their father.

It would be incorrect to imply that they are a divided group. They’re much too controlled or impacted for that. But certainly, given the stakes, it’s not any wonder the fault lines can’t be missed.

And while on one hand his regard for them, and even sensitivity (in his fashion), holds them in thrall if not harmony—the flotilla of Murdoch boats often gathers for a family holiday—he also can’t seem to keep himself from applying a Murdochian view to their futures.

In a rare rumination about life at News Corp. after he departs, Murdoch speculates that Elisabeth “would like to build a big company and sell it on her own, spend all the money and buy News Corp. shares and give James trouble.” When Gary Ginsberg jumps in with “He’s kidding,” Murdoch responds: “I’m not altogether kidding in the sense that she would then be in the position to buy out one of her siblings.” Ginsberg adds, “Right, but for the book you’re kidding.”

PRUDENCE

While fixing it with his eldest daughter to meet with me in Australia, Murdoch explains that Prue, the housewife who has had relatively little exposure to the press, will be extremely nervous about being interviewed and will probably not be too helpful. Lachlan, on the other hand, whom I will also be seeing in Sydney, is of course a pro, he says, and will be able to offer valuable insights into News Corp.

Prue has a sprawling, comfortable house overlooking Sydney Harbor in Vaucluse, one of the most expensive neighborhoods in Australia. It’s a house filled with teenage children and their friends—lots of tracking in and out of the kitchen. (On the day I see Prue, her husband, Alasdair MacLeod, one of the seniormost guys at News Ltd. in Australia, is upstairs, home sick in bed.)

“Dad said say whatever you like,” says Prue—the daughter Murdoch portrays as nearly reclusive. With a glint in her eye, she begins to dish.

Her message to her father is that, as the odd duck out—the half sister and the one who’s not a media professional—she possesses a unique and perhaps powerful perspective. She exists as, if not a threat, then a potential spoiler or leveler—a loose cannon. A truth teller, albeit an entirely good-natured one. Indeed, while her siblings display a certain forced and watchful attention, she is easy, unconcerned, eager to throw caution to the wind. (Her father’s perception of her is, in fact, an odd inversion. He must see her openness as nervousness and her siblings’ control as being relaxed.) Her further message is that she’s owed something more for being excluded from the family’s ring of accomplishment. There’s no bitterness here. In fact, it’s sort of that she’s owed something for
not
being bitter. And what she’s owed has nothing much to do with anything material—although she is mother-hennish when it comes to her husband’s and her children’s futures in regard to News Corp.—but rather some further relationship with her father, some deeper level of rapport and understanding.

In this, she has also established herself—or sees herself—as her father’s most reliable ally among his adult children. This is the Prue narrative, which she tells with relish, and which seems clearly to be a guiding theme of her position in the family and, ultimately, her vote: She’s her father’s daughter, and hence different from Anna’s children.

She gives the story a neatly Dickensian spin: “I had a stepmother and they had a mother.”

Prue says this about Anna: “She’s very strong, she’s highly intelligent and very manicured and perfect, and I was just always this sort of ragamuffin and always wanted to ride my horse and never brush my hair.”

Her siblings she sees as continuing to represent the intelligent and the manicured—both of her brothers with their former model wives and her chic sister.

While her siblings have become more and more self-conscious about being Murdochs and increasingly see themselves as living inside a bubble—and it’s lonely in there—Prue has cultivated her outsiderness with self-denigration and reverse mythologizing. As the Murdochs prepare to spend Christmas together in 2008, Prue is adamant that she won’t be buying a yacht to join the family flotilla wherever it will dock. No, she plans to
rent
one. She will come to this conclusion after taking her son James during the last Australian summer to vacation with her family as they sail around the Aeolian Islands.

“They have massive boats, all of them. My son James completely had his head turned. He was like, ‘We’re not like this, are we?’ I said, ‘Don’t be like that, that’s my family. Yes we are, yes we are, we just don’t have a boat.’ I was quite hurt that he didn’t think his mother was sophisticated enough to be on this big boat. I never feel sophisticated enough to be on this big boat. They are all taller than me, that’s the worst thing, so they all look chicer wherever they are, but especially on a boat, where everyone is in shorts or a swimsuit and I’m the short fat one.”

As the outsider, she’s given herself a pass to say and think what she wants.

She reports telling her father, “‘Dad, I understand about dyeing the hair and the age thing. Just go somewhere proper. What you need is very light highlights.’ But he insists on doing it over the sink because he doesn’t want anybody to know. Well, hello! Look in the mirror. Look at the pictures in the paper. It’s such a hatchet job.”

She further reports his response: “Well”—sputter sputter—“you need a face-lift.”

Also, her father’s divorce from Anna and marriage to Wendi have given her a kind of leveling confidence when it comes to her siblings: Nobody understands better than Prue.

On the birth of Grace and Chloe: “Elisabeth and I discussed it at one point in the very beginning when everyone was hurt. It was interesting to me because I was just sitting there thinking, ‘Well, hello, I’ve done this’—and when I said that they said, ‘Yes, but it wasn’t like this for you.’ I said, ‘It was kind of
worse
because I had to live with you!’”

And yet the bond here is real and obviously fierce. When Liz married Matthew Freud—“dodgy” Matthew Freud, whom everybody was deeply wary of—Prue took it on herself to deliver the family ultimatum: “If you hurt her, I’ll kill you.” (Freud pointed out that James had just told him the same thing.)