Rupert Murdoch is getting sued for nepotism in a lawsuit that really raises questions about the future of News Corporation. What happens after Murdoch, who turned 80 last week, finally snaps this mortal coil?
As reported here, the lawsuit challenges News Corp.'s planned $675-million purchase of Rupert Murdoch's daughter's television company. As part of the deal, Elizabeth Murdoch gets a spot on the board.
The lawsuit from New York based Amalgamated Bank says: ''Murdoch's admitted purpose in entering into the transaction is to bring Elisabeth back to the family business. Once the prodigal daughter is back into the News Corp fold, she will vie with her brothers, board members James and Lachlan, for the position of successor to Rupert Murdoch's global media dynasty. In short, Murdoch is causing News Corp to pay $US675 million for nepotism.''
The case really comes down to whether the plaintiff can show that the directors on the News Corp board lacked objectivity. But just as importantly, it raises questions about who will take over News when Rupert finally snuffs it. The problem, as commentator Steve Bartholomeusz says, there is no one in the group with any direct hands on experience of newspapers, or for that matter across every part of the business. And that means the empire will be broken up when News Corp loses its head.
Bartholomeusz writes"After Rupert, whomever succeeds him, there is likely to be a significant restructuring of the group to focus on its global and integrated film and TV businesses, with loss-making print media businesses sold or closed, and a far greater and more conventional emphasis placed on shareholder returns rather than on the growth of the empire for growth's sake. Rupert has been the visionary, the dictator and the glue that has held the vast collection of News Corp's media assets together – especially when times were tough – and kept the egos and ambitions of a hoard of aggressive executives under control while disregarding any shareholder discontent. When the era ends there is potential for a destructive power struggle and a surge in shareholder activism."
The play for Elizabeth Murdoch's television company is just an attempt to try and keep everything in the family. Now Murdoch would argue that Shine is a good business that fits perfectly into News Corp's entertainment portfolio. With its high-profile TV content Shine produces, including the likes of Spooks, Masterchef, and One Born every Minute, it's undoubtedly an attractive asset.
Still, the lawsuit does highlight investor unrest about Murdoch's dynastic ambitions. And that is likely to continue.
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