Are the Murdochs at war over the future of their media empire?

Rupert Murdoch’s relationship with his younger son James is being called into question in the aftermath of the revelation that his company 21st Century Fox was considering selling its film studio and stake in Sky to rival Disney.

The potential sale of Fox has already been interpreted by financial analysts as a recognition by the Murdochs that the company is not large enough to compete in entertainment with global technology giants in an era of streaming media.



However, it also raises the prospect that Rupert has become disillusioned with James’s strategy at Fox and the Sky deal. According to Hollywood Reporter, Rupert has been telling people that the Sky deal risks distracting Fox and is “James’s baby”, as well as the fact that he is concerned his younger son is too fired up, with Lachlan the steadier hand.

Alice Enders, director of research at Enders Analysis, said that if the Sky deal collapsed, in the face of a lengthy regulatory process and political opposition, then it would be seen as a failure for James. “We think that a lot of things could be on the table if the deal does not go through,” she said. “If it doesn’t go through it would compromise the position and the strategy James has taken, it would be a failure.”

Up until this week, it had been presumed that James and Lachlan had a equal role in running the media mogul’s empire. James is chief executive of 21st Century Fox, chairman of Sky but a non-executive director at News Corp, the Murdochs’ news and publishing business and owner of the Times, Sun and Wall Street Journal; Lachlan is co-chairman of Fox and News Corp.

This set-up positioned James as the entertainment head and Lachlan as the news chief, which made sense given that Lachlan began his career in Australian newspapers while James was a successful chief executive of Sky.

However, the sale of large swaths of Fox, including the movie studios and the stake in Sky, would dramatically disrupt this equilibrium, taking away the parts of the business that James seems to enjoy most.

The deal with Disney would have left the Murdochs with an empire that centred on Fox News, the Fox TV network and News Corp. Fox News is the single biggest profit driver for Fox so the company would still be valuable even after the sale of the film studio. The Murdochs could then have tried to reunite the remnants of Fox with News Corp, helping Rupert’s beloved newspapers to be part of a larger and potentially more robust company.



That would leave Lachlan best-placed to lead a news and sports-focused empire.

Odds on whether Lachlan, James, or sister Elisabeth and half-sister Prudence will succeed their father have fluctuated wildly in the past. Vanity Fair wrote in 2011 that the siblings even had counselling with a psychologist in attempt to deal with issue of succession. Initially the heir presumptive was eldest son Lachlan, until he suddenly quit as an executive in News Corp in 2005, then it was James until he became caught up in the phone hacking scandal after moving from Sky to become executive chairman of News International in the UK.

There has been speculation that the Murdochs are trying to rekindle their $80bn bid to buy Time Warner, with the Trump administration expressing its opposition to AT&T’s takeover of the firm. The talks with Disney could be a way of sending a message to Time Warner shareholders that Fox is open to a deal.

However, the Murdochs tried to present a united front when Fox published solid results for the last financial quarter on Wednesday.

During a conference call with investors and analysts, Lachlan and James declined to comment about talks with Disney but both expressed their confidence in the Sky deal and said that Fox is big enough to compete with rivals.

“We’ve got a great set of brands and a great set of assets that we really like,” James said. “These are big brands that really matter for their customers and we like where we are.”

“James, that’s 100% correct,” Lachlan added. “Look, I think historically, the truth is, we’ve always been asset builders, whether it’s Sky or Star or Fox News or the Fox network, we operate these businesses to build them and to grow and we will continue to do so.”