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Lachlan Murdoch must fix Fox News problems to impress his siblings, insiders say

Murdoch will be judged on his ability to see off a $2.7bn lawsuit and manage Trump's relationship with Fox News

He’s won the family succession battle but is Lachlan Murdoch inheriting a poisoned chalice?

Rupert Murdoch‘s eldest son will be confirmed as the new sole chairman and CEO of his father’s media empire at News Corp’s annual board meeting on Wednesday.

However, the 52 year-old’s reign over a $12bn (£9.8bn) business, which stretches from newspapers and real estate to the controversial Fox News, could be brief.

Lachlan is “auditioning” to impress his three siblings. Upon Rupert’s death, News Corp and Fox Corp voting shares will be transferred to the four oldest Murdoch children, creating a scenario in which three of them could outvote Lachlan, setting up a battle over the future of the companies.

The siblings will judge the new family patriarch on his success in seeing off a $2.7bn (£2.2bn) lawsuit facing Fox News and his ability to manage the news network’s tempestuous relationship with Donald Trump, a leading insider said.

“The rest of the family will be deciding the future on the basis of his performance over Smartmatic. It’s a big test for Lachlan,” media consultant Claire Enders, who has advised News UK on business deals, told i.

Voting technology company Smartmatic is seeking defamation damages over claims made on Fox News about its software after the 2020 presidential election that the firm says directly led to the 6 January Capitol riots.

Fox has already agreed to pay $787.5m (£642m) to another voting company, Dominion, over false claims that its machines were involved in a plot to “steal the election” for Joe Biden.

Under Lachlan’s leadership, Fox has pledged to contest the Smartmatic case. The outcome will be watched closely by his siblings Prudence, Elisabeth and James.

“They could put Lachlan on the witness stand and it was his call not to offer to settle. $2.7bn is a lot of money for the business,” Enders said.

“If Lachlan gets through the Smartmatic case successfully he will be thought of as a hero by the siblings.”

Fox News, still hugely influential over conservative US voters, is both News Corp’s biggest cash cow but, reputationally, its greatest headache. And Trump’s return to the presidential fray is another big challenge for Lachlan.

“Trump has transformed the income generated for Fox. He brings a lot of viewership but he is a hard brand for a company to manage commercially,” Enders said.

“The Dominion lawsuit means Fox has to keep its nose clean at the next presidential election. With Trump being the leading Republican candidate, avoiding troubles will be hard.”

‘Like father, like son’

Although diminished since the $71bn (£57.9m) sale of its Fox film and TV entertainment assets to Disney in 2019, the business built by Rupert’s buccaneering acquisitions still contains valuable jewels.

The inheritance includes a growing streaming platform acquired by Lachlan as Fox CEO in 2020, called Tubi, boasting 74 million active users, the Wall Street Journal, HarperCollins books and UK newspapers including The Times and The Sun, whose endorsement remains sought by political leaders.

Whilst the 92-year-old Rupert is taking an emeritus role, handing over control of News Corp and Fox to Lachlan, he “is very much involved and will be for years to come”, his chosen heir told Wall Street analysts.

Enders, founder of the Enders Analysis media research company, says there will be little change at the UK titles – giving the struggling TalkTV more time to build an audience – with Lachlan largely splitting his time between the US and Australia.

However, Lachlan has already shown he will take a close interest in the UK operation.

“Lachlan visited News UK HQ last week, he was very hands on,” an insider said. “He met with editors and visited the newsrooms.

“He chatted to staff and had lots of ideas – Rupert used to visit regularly and interrogate editors so like father, like son.”

Lachlan’s visit was hosted by CEO Rebekah Brooks and he met figures at News UK’s radio stations and the struggling TalkTV, i understands.

Rupert’s influence and personal relationship with star presenter Piers Morgan is a factor in persisting with TalkTV.

“Talk exists to help support the costs of the Piers Morgan contract (a global deal with The Sun and News Corp) which is huge,” Enders said.

News Corp future

The first test of Lachlan’s ambitions could be a mooted News UK bid for The Spectator magazine, currently being auctioned along with the Telegraph papers by Lloyds Banking Group.

This would give Rupert a “vanity project” to occupy him, if successful, Enders said.

Elsewhere, he has told editors that AI will play a big role in the future of News Corp’s revenues, with the company set to licence its content to AI engines, a source said.

Lachlan could deploy News Corp’s funds to emulate Rupert’s deal-making by snapping up tech start-ups in a bid to build his own digital-focused media empire.

Hedge fund Starboard Value, which has been building a stake in News Corp, said the company should unlock $7bn (£5.7bn) in value by selling off its online real estate business.

Michael Wolff, Murdoch’s biographer, believes that News Corp “will cease to exist in its present form” after Rupert departs the scene.

“I think it will go into a radical transition in which, either James Murdoch will take over and change it into something else, or they will sell it,” he told Vanity Fair.

In contrast to the backstabbing family feuding of the TV drama Succession, the next few years could see an anti-aggression pact between the Murdoch siblings who hold the company’s future in their hands.

“Right now there is calm,” Enders said. “Lachlan gets on well with Rupert which helps the others pursue their interests. It’s not as if Elisabeth (who built up her own TV production business) has ever said ‘I want that top job.’”

“Who would want the job of rebranding Fox News – which they know is always going to be a right-wing network – and taking the witness stand in the Smartmatic case?

“The siblings are very unlikely to want to push Lachlan off that very elevated pedestal. It’s unlikely they would want to take that on.”

The calm may not last though if Lachlan falters.

Ms Enders suggested there could be a “break clause” to revisit the family trust arrangements when Rupert turns 95. “That would be the occasion for a tussle over the future management of the company.”

The heir’s ascendancy is good news for Brooks and his father’s most loyal senior executives. “There is a seasoned group within the company and Lachlan is known for delegating and letting those people get on with the job,” Enders said.

Robert Thomson, News Corp chief executive, heaped praise on the new boss recently, lauding Lachlan’s “passion for principled journalism” as well as his “multidisciplinary expertise and philosophical integrity”.

News UK was approached to comment.

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