The Succession-like true-life battle for control over the Murdoch media empire has reached a settlement. Lachlan Murdoch will take control after buying out his siblings.
The legal battle stemmed from Rupert Murdoch’s attempt to amend an irrevocable trust to shift control to Lachlan. Three of his other children, Prudence MacLeod, Elisabeth Murdoch and James Murdoch, opposed this move and favored maintaining equal voting rights. The dispute escalated into litigation, with the family divided over the future of the empire’s political and editorial stance, which was playing out behind closed doors in a Nevada courtroom.
The Terms
The settlement, which terminates all outstanding litigation related to control over the family shares in the empire, solidifies the 94-year-old family patriarch’s wish to preserve the conservative slant at the empire’s various news outlets, including Fox News, The New York Post and The Wall Street Journal.
The existing family trust will be dissolved, and a new trust will be created that will include Lachlan and two younger siblings, Grace and Chloe. The new trust will hold the controlling stake in Fox Corp. and News Corp. and leave Lachlan in control of voting shares. The new trust is set to expire in 2050.
Meanwhile, Prudence, Elisabeth and James will become beneficiaries of new trusts funded in part by the sale of millions of News Corp Class B common stock shares and Fox Corporation Class B common stock, a deal reportedly worth billions. According to Variety, the three siblings must sell any personal holdings in either Fox Corp. or News Corp and be barred under an ironclad long-term agreement from buying shares in either corporation.
The Deal
The deal appears to have been facilitated following a probate court victory for Prudence, Elisabeth and James. Facing down a lengthy appeal process, the New York Times reports that representatives for the two parties returned to buyout talks after oral arguments in the case in late May signaled that the presiding Judge might be “inclined to grant Rupert considerable latitude to do what he wished with the empire that he had built,” asking, who better than Rupert knows the strengths and weaknesses of his own children?
Buyout talks in the past had led nowhere, with Lachlan refusing to pay anywhere near full value, despite fears that his siblings might try to oust him following their father’s death or, worse yet, sell their shares to an outsider when the trust expired in 2030.
Lessons Learned
While the settlement was mutually agreed on, “this saga has been going on for years, likely creating built-up friction and alienation amongst the siblings at the hands of their father that will be hard to move past, with Lachlan’s every move likely to be scrutinized going forward,” said Jonathan S. Forster, Managing Director at Weinstock Manion. “In family businesses, the greatest sources of consternation are related to management and control, as well as compensation. We would not be surprised if Lachlan’s siblings harbored resentment over those issues,” he added.
Forster noted that the Murdoch settlement “highlights the need for transparency and clear plans to avoid deferring conflict and creating tensions that could not only dismantle family relationships but also threaten the business itself.”
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