By Dawn Chmielewski
RENO, Nevada (Reuters) - A closed-door court battle over control of Rupert Murdoch’s media empire begins Sept. 16, and could determine the future of Fox News and the Wall Street Journal.
Murdoch, 93, is attempting to change the terms of the family’s irrevocable trust to ensure his newspapers and television networks remain under control of his eldest son and chosen heir, Lachlan Murdoch, according to the New York Times, which obtained a sealed court document detailing the succession drama.
Reuters and other news organizations are attempting to gain access to sealed court records, and to open the court hearings in Reno, Nevada, before probate commissioner Edmund J. Gorman Jr.
The trust lays out a scenario on how a potential takeover could occur, according to a source who has seen the documents. The trust is the vehicle through which the elder Murdoch controls News Corp (NASDAQ:NWSA) and Fox, with roughly a 40% stake in voting shares of each company. Murdoch also holds a small amount of shares of the companies outside the trust.
Upon Rupert Murdoch’s death, News Corp and Fox voting shares will be transferred to his four oldest children – Prudence, Elisabeth, Lachlan and James. Potentially, three of the heirs could out-vote a fourth, setting up a battle over the future of the companies, even as Lachlan Murdoch runs Fox and is sole chair of News Corp.
Rupert Murdoch’s proposed amendment to the trust would block any interference by three of Lachlan’s siblings, who are more politically moderate, the Times reported, citing a sealed court document.
Lachlan Murdoch is viewed as ideologically aligned with his conservative father. James Murdoch, who has donated to progressive political groups, resigned in 2020 from the News Corp board, citing disagreements over editorial content. James also has criticized the U.S. media for amplifying disinformation about the 2020 election results ahead of the Jan. 6 attack on the Capitol. He hosted a fundraiser for U.S. President Joe Biden in 2021, before the Democrat ended his re-election campaign.
A hearing to determine whether Rupert Murdoch's proposed changes to the trust would benefit his heirs will take place in a Reno courtroom, well outside the media hubs from which the conglomerate operates in New York, Los Angeles, London and Sydney.
“He's going to have to prove that these changes are being made in good faith,” said Shane Jasmine Young, a Nevada attorney who specializes in estate planning. That means demonstrating any changes would not “sacrifice the rights, or discriminate against, any of the parties that this trust was intended to protect.”
A group of news organizations, including the New York Times, CNN, The Associated Press, National Public Radio, The Washington Post and Reuters, have asked to intervene in the matter, arguing that the court should unseal the records and provide access to the proceedings.
“Though some litigants may desire secrecy and some courts indulge this desire, this level of sealing does not pass constitutional muster,” attorneys for the Access Coalition of news organizations wrote in a memo to the court, arguing the First Amendment calls for civil judicial proceedings and records to be open to the public.
The news organizations say the public has immense interest in which of Murdoch’s children will succeed him at the helm of the influential media empire, an outcome that will affect thousands of jobs, millions of worldwide media consumers and the political landscape.
Spokespeople for Lachlan, James and Elisabeth Murdoch declined comment. A spokesman for Rupert Murdoch referred inquiries to his attorney, who did not respond to a request for comment. An attorney representing James, Elisabeth and Prudence also could not be reached for comment.
“The reason this is interesting is the outsized role that Fox (News) has played in the political landscape, in the U.S. and around the world,” said Paul Hardart, director of the Entertainment, Media and Technology Program at New York University’s Stern School of Business. “I think this is a reflection of the future of not only the business, but also how conservative media is handled going forward."