Good morning, and happy Sunday.
But first, a word from our sponsor, Percent.
Earlier this month, a settlement in the lawsuit over the Murdoch family trust removed the biggest risk hanging over the multibillion-dollar media giants Fox Corp. and News Corp.
The deal guaranteed properties including right-leaning Fox News, The Wall Street Journal and The New York Post would maintain their editorial lines well after the death of 94-year-old patriarch Rupert.
Rupert will turn the family empire over to his eldest son, Lachlan, 54, a self-described “introvert” who once summed up his politics as “economically conservative but libertarian on people’s individual rights.”
Three of Lachlan’s siblings — Prudence, Elisabeth and James — challenged their father’s bid to amend the family trust and give him sole control of the companies. That exacerbated fears among some investors that the more liberal-leaning three might push to radically alter the company’s strategy, or even sell Fox News.
The trust resolution eliminates those risks. It also means New York’s other papers will no longer be filled with enough Murdoch family gossip every week to inspire an entire season of Succession.
Investors will now look to the anointed son, the most ideologically aligned with the media empire, for signs of how he will shape the business going forward. That’s the focus of today’s deep dive, but first a word from our sponsor.
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What’s Next for the Murdoch Empire?
Rupert Murdoch started out with a chain of Australian newspapers inherited from his father in 1952, and turned that down-under print publisher into a $43 billion global force spanning two companies (Fox Corp.’s market cap was $25.4 billion on Friday and News Corp.’s $17.7 billion; the two were formed from a 2013 split).
The Fox Broadcasting Company is the most successful challenger in US television history to the Big Three networks, ABC, CBS and NBC. Fox News and Fox Sports are powerhouses in the broadcasting areas where consumer demand for live access remains strong.
News Corp. owns Dow Jones & Company, publisher of The Wall Street Journal, Barron’s and several financial trades; a news media division that publishes the New York Post, UK broadsheet The Times and UK tabloid The Sun; a subsidiary for its Australian media properties and the book publisher HarperCollins.
Eldest son Lachlan had already taken over much of the running of the businesses after his father semi-retired in 2023, but a permanent grip on power was uncertain. The family trust said voting shares would be equally divided between Rupert’s four eldest children, while all six of his children would get equal equity stakes.
When Rupert and Lachlan tried to amend the trust in 2023, in an effort to concentrate power in the patriarch’s preferred heir, the move was challenged in Nevada probate court by Lachlan’s siblings Prudence, Elisabeth and James. In December 2024, the court ruled in their favor, finding that Rupert had acted in bad faith.
Rupert was in the process of appealing, but on September 8, Fox Corp. and News Corp. announced both sides had agreed to a resolution.
Prudence, Elisabeth and James agreed to walk away and dissolve the family trust in exchange for a $1.1 billion payout each.
Of that $3.3 billion total, about a third is being financed by the sale of Fox Corp. and News Corp. Class B shares. The rest is seemingly coming from Lachlan’s side of the deal.
Indeed, a new holding company established by Lachlan and two siblings on his side in the ordeal, Grace and Chloe Murdoch, borrowed $1 billion from JPMorgan Chase to put toward the buyout of their siblings. (They chose the incredibly on-the-nose LGC HoldCo as the name of the entity.)
Those funds are secured by Fox Corp. and News Corp. shares, which means Lachlan is taking on enormous exposure to the companies his father built and that he will run.
That’s one way to tell investors you’re all in. All told, Lachlan’s side of the transaction will control roughly a third of both Fox Corp. and News Corp. voting shares, as well as smaller stakes in non-voting shares.
Dealmaker Jr.
Lachlan could run his family’s firms for another quarter-century, or more if his father’s industrious devotion into his 90s is any indication. Rupert made clear in announcing his 2023 retirement that Lachlan would be an ideological heir: “My father firmly believed in freedom, and Lachlan is absolutely committed to the cause.”
Thanks to his increasingly senior involvement in the family firms, including leading them since 2023, there’s also a track record to show what kind of business heir he might be.
Among his most fruitful bets, made while he was a News Corp. executive in 2000, was taking a $10 million, 44% stake, paid in cash and advertising, in REA, then a struggling Australian real estate listings business. The company has since emerged as an online real estate advertising giant, and News Corp. upped its stake, now worth over $18 billion, to a majority 61% in 2014.
(Speaking of Australian real estate, London-born and New York-raised Lachlan lives in Sydney, while making frequent trips to the company’s US offices, and says he sees himself as Australian).
In 2019, on the other side of the Pacific, Lachlan led Fox Corp.’s acquisition of a majority stake in fintech Credible, a US online marketplace for student loans, personal loans and mortgages. It does not separately report results, though the (non-News Corp.-owned) Australian Financial Review reported in 2023 that loan volume at the company had by then increased three times.
Lachlan’s other big move at Fox came in 2020, when he led the acquisition of the free, ad-supported streaming service Tubi for $440 million, excitedly proclaiming it would be a billion-dollar business. This summer, the service passed 100 million monthly users and, according to Nielsen, accounted for 2.2% of all US TV viewership.
There have been misses, too. News Corp. paid a $13 million settlement to the creditors of One.Tel, a telecommunications company that collapsed in 2001 after News Corp. under Lachlan and other investors canceled a capital infusion. In 2017, CBS bested an attempt by a Lachlan-led consortium to take over Australian broadcaster Ten Network Holdings.
And, in 2023, News Corp. sold a stake in gambling startup Betr after its investment in the new entrant to the space didn’t take off.
A Bit More Digital Than Dad
The moves are clearly those of someone who came of age during an era of rapidly advancing digitization.
Last month, Fox Corp. reported a 7% jump in advertising revenue to $1.1 billion in its most recent quarter, setting it apart from much of its media industry competition, where ad revenues have been flat at best amid increasing upheaval and economic challenges. Its overall revenue in the quarter was $3.3 billion, and net income doubled year-over-year to $720 million.
Fox attributed the growth to Tubi and to its crown jewel, Fox News. Trey Gargano, an executive at the top-rated cable news network, told Axios in May that the network was projecting $500 million in non-cable TV revenue in 2025. Even as it has remained more resilient than competitors in traditional TV, Fox News has aggressively diversified to blunt the impact of cord-cutting.
Also last month, Fox Corp. launched a new streaming service, Fox One, which houses Fox News and Fox Sports programming under one banner. Revenue at the segment that includes Fox Nation, a streaming service companion to Fox News launched in 2018, rose 39% in the latest quarter.
News Corp., which also reported last month, came in ahead of analysts’ expectations with $2.1 billion in revenue. That was thanks to surging digital subscriptions at Dow Jones, which saw a 6.7% increase in quarterly revenue, with total average subscriptions to its consumer products rising 7% from a year earlier to nearly 6.3 million, while digital-only subscriptions to Dow Jones’ consumer products rose 9% to over 5.7 million. At The Wall Street Journal, total subscriptions grew 7% year-over-year to an average 4.5 million, while digital-only subscriptions grew 9% to over 4.1 million.
The digital real estate unit, which includes REA Group, saw revenue rise 4% year-over-year.
Lachlan likely won’t create as much value from these properties as his father did, but he’s starting with a mature media empire, not a handful of Aussie papers.
At Rupert’s suggestion in 2022, News Corp. announced it was exploring the idea of merging with Fox Corp., reuniting the two more than a decade after their split. The idea is that with Fox Corp.’s $71.3 billion sale of 21st Century Fox to Disney in 2017, the two companies shared a focus on broadcasting and news.
By 2023, the proposed merger was determined to be “not optimal for shareholders of News Corp. and Fox at this time.”
Major News Corp. investors, including T. Rowe Price, the UK’s Independent Franchise Partners, and Australia’s Airlie Funds Management, opposed the reunion, arguing News Corp. trades at a significant discount to its assets. “We think the business owns a collection of high-quality assets that are deeply undervalued by the market — so we don’t want our ownership in News Corp. to be diluted by a merger at the current market price,” Airlie’s Will Granger told the Australian Financial Review at the time.
That assessment persists today. News Corp. CFO Lavanya Chandrasekar said on the company’s latest earnings call that its “current share price is at a significant discount to net asset value.”
JPMorgan and Citigroup rate the stock a buy, with both holding a $40 target price. News Corp. shares traded at $33 on Friday. Rupert unlocked the world, starting with a chain of Aussie papers. Lachlan may simply need to unlock value from a global empire.