By Dawn Chmielewski
(Reuters) -Rupert Murdoch has lost a bid to change his family trust to consolidate control of his media empire in the hands of his son Lachlan, the New York Times (NYSE:NYT) reported on Monday, citing a sealed court document.
Nevada commissioner Edmund Gorman concluded in a decision filed on Saturday that Rupert Murdoch and his eldest son, Lachlan, who is the head of Fox News parent Fox Corp (NASDAQ:FOXA) and News Corp, had acted in "bad faith" in their effort to amend the irrevocable trust, the Times reported.
The court docket indicates Gorman issued a recommendation or order Saturday, but the document is not publicly available.
The trust currently would divide control of the company equally among Rupert Murdoch’s four oldest children - Lachlan, James, Elisabeth and Prudence - after his death.
Rupert Murdoch proposed amending the family trust to solidify Lachlan's leadership of the family's media empire after the his death, and block any interference by three of Lachlan’s siblings, who are politically moderate, the Times reported.
Under one scenario, three of the heirs could technically out-vote a fourth, setting up a battle over the future of the powerful media outlets, even as Lachlan Murdoch runs Fox and is sole chair of News Corp. (NASDAQ:NWSA)
In his opinion, Gorman said the plan to change the trust was a "carefully crafted charade" to "permanently cement Lachlan Murdoch’s executive roles" inside the empire "regardless of the impacts such control would have over the companies or the beneficiaries" of the family trust, the Times said.
A lawyer for Rupert Murdoch, Adam Streisand, said they were disappointed with the ruling and intended to appeal, the Times reported. The commissioner's ruling is subject to approval by a district judge, whose decision could be challenged in court.
The trust was set up in Nevada, which is prized for its strict confidentiality rules.
A spokesman for Rupert Murdoch, 93, could not immediately be reached for comment. Lachlan Murdoch did not respond to an email seeking comment.
Lachlan's siblings James, Elisabeth and Prudence issued a joint statement expressing hope that the family would focus on mending relationships.
"We welcome Commissioner Gorman’s decision and hope that we can move beyond this litigation to focus on strengthening and rebuilding relationships among all family members," the siblings said.