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In the Matter of the Doe 1 Trust
CourtNevada Second Judicial District Court
CitationPR23-00813
Court membership
Judge sittingEdmund Gorman Jr. (probate commissioner)

The succession of Rupert Murdoch describes a court case relating to which of American media magnate Rupert Murdoch's children will gain power and influence over his business interests, in particular News Corp and Fox Corporation. Since Murdoch's retirement and as of September 2024, these have been headed by his eldest son Lachlan Murdoch. The case is known as In the Matter of the Doe 1 Trust.

The issue of succession began in December 2023, when Rupert Murdoch applied to change the terms of his "irrevocable" family trust (established in 1999, as the Murdoch Family Trust, or MFT) to ensure that Lachlan would have full control over News Corp, a mass media and publishing company that manages hundreds of assets, rather than his three siblings Prudence MacLeod, Elisabeth Murdoch, and James Murdoch, have equal voting rights. The court case is held at the Washoe County Courthouse in Reno, Nevada, U.S.

Background

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Rupert Murdoch

News Corp

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Main article: News Corp

In 1952, Rupert Murdoch inherited The News, a tabloid newspaper based in Adelaide, South Australia, after the death of his father Keith. In the years following, he acquired several newspapers in the United Kingdom and the United States, including News of the World, The Sun, the New York Post, and founded Sky News and Fox News. News Corporation, Murdoch's company, later acquired HarperCollins and Dow Jones & Company, the publisher of The Wall Street Journal. In 2013, amid several scandals—including the News International phone hacking scandal, News Corporation divested its entertainments assets into 21st Century Fox and its publishing assets into News Corp. The Walt Disney Company acquired 21st Century Fox in March 2019. Murdoch's eldest son Lachlan was appointed the chief executive of Fox Corporation following the acquisition and appointed the chairman of Fox Corporation and News Corp in September 2023. Murdoch's assets are primarily derived from Fox Corporation, which retained nearly thirty affiliate television stations after Disney's acquisition and operates several Fox News affiliates.[1]

Murdoch family

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Further information: Murdoch family
Elisabeth, Lachlan, and James Murdoch

Rupert Murdoch has six children, including four with Patricia Booker and Anna Maria Torv (now Anna dePeyster). Prudence, who is the only child from Murdoch's first marriage, was described by Michael Wolff in Vanity Fair as uninterested in Murdoch's business operations, though she was employed as a journalist at News of the World. Elisabeth, Murdoch's eldest child with Torv, was the chairwoman of television production firm Shine Group until it was acquired by 21st Century Fox in 2015.[2] Lachlan, Murdoch's elder son, is the chairman of Fox Corporation and News Corp and the chief executive of Fox Corporation.[1] James was a board member of News Corp until he resigned in 2020 over "disagreements over certain editorial content," including coverage by the company's assets of the 2019–20 Australian bushfire season. James's political views concerned his father, who believed he would enlist Elisabeth and Prudence to ensure editorial neutrality.[3] According to The Wall Street Journal, Murdoch postulated that James could sell Fox News, and former host Tucker Carlson expressed concerns. In October 2022, Murdoch proposed combining News Corp and Fox Corporation, a merger that would have solidified Lachlan's position. Murdoch's efforts were privately criticized by Elisabeth and Prudence; at a dinner for Elisabeth's husband Keith Tyson, Robert De Niro encouraged her to go against her father, though she later appeared with Rupert at Super Bowl LVII.[4]

The Murdoch Family Trust (MFT),[5] written after Murdoch's divorce from Torv in 1999, defers management of News Corp to Murdoch's children upon his death and is largely irrevocable, but contains a provision that allows good faith and beneficial changes. The trust gives Chloe and Grace, Murdoch's two youngest children with Wendi Deng Murdoch, equal share of the equity without voting rights.[3] The Murdoch trust controls the largest share—but not a majority—of voting rights in News Corp despite low equity.[6] The MFT owns only 14 per cent of News Corp in economic terms, but the family is able to have control over it because it owns 41 per cent of the voting shares. This is because News Corp shares have two tiers: voting shares and non-voting shares.[5]

In December 2023, Murdoch altered the terms of the irrevocable trust in an effort to appoint Lachlan as the sole proprietor, arguing that the conservative bias of News Corp's media assets could be retained, ensuring its commercial value. Murdoch met with Elisabeth and Prudence after filing his petition, who disapproved of his efforts.[3] Murdoch moved the trust to Nevada, a decision that would favor Lachlan for the state's probate law.[7] Nevada has strict confidentiality protections, and few income and inheritance taxes, so it is a popular state for the management of family trusts.[8] Representatives for Murdoch's children attempted to adjourn a meeting in Reno approving the changes, but failed.[3] Rupert's argument is that interference by the other siblings would cause a financial loss to Fox, and therefore "in their own best interests if they have their votes taken away from them".[9]

According to the Wall Street Journal in September 2024, James had made a prior attempt at settlement, in a proposal that included the possible sale of his and his sisters' interests in the trust. However, this would lead to a loosening of the hold of Lachlan and Rupert on the companies, as they would be under financial strain.[10] Paddy Manning, who published an unauthorised biography of Lachlan Murdoch in 2022,[11] says that Lachlan had the option to buy out his family members a few years ago, but, after papers had been drawn up, decided that the price was too high, and none of the siblings appeared to pose a threat to his control of the business. To buy out his three siblings now would cost at least $US3 billion (A$4.4 billion), and as his wealth was estimated at $US2.4 billion (A$3.5 billion) in early 2024, it is unclear whether he could manage to fund it.[12]

An annual meeting of News Corp shareholders to be held by webcast on 20 November,[13] will determine whether the "dual-class" share structure (voting and non-voting) will be abolished, after Starboard Value, which has bought up a large share of News Corp over the previous year, has proposed a one-share-one-vote system. News Corp has stated that if the proposal is accepted, the new system of shares could only be introduced if agreement between voting and non-voting shareholders is reached.[5]

Murdoch's health

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According to Vanity Fair in April 2023, Murdoch had previously suffered several medical emergencies that were largely unreported, including "a broken back, seizures, two bouts of pneumonia, atrial fibrillation, and a torn Achilles tendon." In July 2022, Murdoch collapsed in Oxfordshire from COVID-19-related complications. He was treated at Cromwell Hospital and required the assistance of Lachlan to move.[14]

Nevada trust law

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It is not stated where the family trust was set up, but a key reason for challenging the terms in Nevada is that it allows changing the terms of a trust, using a method known as "decanting". This allows assets of one trust to be moved (or "poured") into a new trust with altered provisions. Nevada does not tax trusts at a state level nor mandate the reporting of trusts.[15]

Nevada has strong privacy protections, used to disallow publication of any details; this would not be allowed under Australian law and in most other places.[15]

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The legality of Murdoch's changes to his family's trust will be decided at the Washoe County Courthouse.

Pre-trial motions

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In June 2024, Nevada Second Judicial District Court probate commissioner Edmund Gorman Jr. ruled that Murdoch could amend the trust if he could argue that "he is acting in good faith and for the sole benefit of his heirs," according to The New York Times,[3] which also reported that Rupert Murdoch Snr wants his companies to remain politically conservative, and sees his other children as too politically liberal.[16][17]

Alex Falconi, a software engineer who founded the organization Our Nevada Judges, petitioned Gorman to televise the trial.[18] Six news organizations—the Associated Press, CNN, NPR, The New York Times, Reuters, and The Washington Post—filed a petition to unseal court proceedings and documents.[19][20] The petitions were rejected on September 12,[21] with the judge ruling that the case is "essentially a private legal arrangement".[20]

Trial

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The court described the case as "The Matter of the Doe 1 Trust, PR23-00813",[20] and provided a public schedule of the case in a general docket on September 7, 2024.[22]

James, Elisabeth, and Prudence are represented by Gary A. Bornstein of Cravath, Swaine & Moore; Rupert is represented by private wealth litigator Adam Streisand of Sheppard, Mullin, Richter & Hampton;[3] and Lachlan is represented by Alexander LeVeque of Solomon Dwiggins Freer & Steadman, Ltd.[23] The trial began on September 16, 2024.[24]

Conclusion

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On September 24, 2024, it was reported that the trial had concluded the previous day, but the probate commissioner had not yet given his verdict.[8][25] After the judge has made his recommendation (as a ruling in probate court is known), either side can appeal within 14 days. The decision may then be either upheld or reversed by a district judge. Beyond that, an appeal to the Supreme Court of Nevada can be filed by either party, and the final decision could take years.[8]

Impact

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The significance of the trial is linked to the influence of Fox News on the upcoming U.S. elections. The outlet has in the past publicly not only endorsed Donald Trump's presidency but also some of his more questionable assertions and conspiracy theories, including his big lie about the 2020 election being "stolen". It could be argued by the three siblings that Fox taking a more moderate line than before would benefit the business, but it is as yet unknown how Lachlan wants Fox to portray the elections.[12] He has in the past not been as vocal as James about how climate change or other political issues have been treated on the network.[26]

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The television series Succession concerns the succession of a fictional media empire known as Waystar Royco. Aspects of Succession were adapted from the Murdoch family.[27] Screenwriter Jesse Armstrong intended to write a documentary on Murdoch, but abandoned the project in 2011.[28]

References

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  1. ^ a b Edward Moreno, J. (September 21, 2023). "How Rupert Murdoch Built His Media Empire". The New York Times. Retrieved September 12, 2024.
  2. ^ Wolff, Michael (October 31, 2008). "The Secrets of His Succession". Vanity Fair. Retrieved September 12, 2024.
  3. ^ a b c d e f Rutenberg, Jim; Mahler, Jonathan (July 24, 2024). "The Secret Battle for the Future of the Murdoch Empire". The New York Times. Retrieved September 12, 2024.
  4. ^ Toonkel, Jessica; Sharma, Amol; Frangos, Alex; Sayre, Katherine; Hagey, Keach (September 11, 2024). "The Family Rift Driving Rupert Murdoch to Redo His 'Irrevocable' Trust". The Wall Street Journal. Retrieved September 12, 2024.
  5. ^ a b c Manning, Paddy (October 26, 2024). "This high-stakes meeting could pressure the Murdoch family to relinquish News Corp control". ABC News. Retrieved October 30, 2024.
  6. ^ Miller, Joe; Nicolaou, Anna (September 13, 2024). "The Murdoch succession saga reaches its 'end game'". Financial Times. Retrieved September 13, 2024.
  7. ^ Rutenberg, Jim (September 13, 2024). "Future of Murdoch Empire Comes Down to a Court in Nevada". The New York Times. Retrieved September 13, 2024.
  8. ^ a b c Miller, Hannah (September 24, 2024). "Murdoch trust trial concludes with judge's ruling still to come". Bloomberg News. Retrieved September 24, 2024 – via Las Vegas Sun.
  9. ^ Whittaker, Mark (September 8, 2024). "Lachlan Murdoch: Holding the keys to the empire and, maybe, the future of democracy". Forbes Australia. Retrieved September 18, 2024.
  10. ^ Verrender, Ian (September 21, 2024). "Inside 'Project Harmony', Rupert Murdoch's desperate plan to keep control from beyond the grave". ABC News. Retrieved September 20, 2024.
  11. ^ Manning, P. (2022). The Successor: The High-Stakes Life of Lachlan Murdoch. Black Inc. ISBN 978-1-74382-271-5. Retrieved September 25, 2024.
  12. ^ a b Manning, Paddy (September 22, 2024). "What the fight for the Murdoch family media empire is really about". ABC News (Australia). Retrieved September 25, 2024.
  13. ^ "Schedule 14A". Starboard Value. Retrieved October 30, 2024.
  14. ^ Sherman, Gabriel (April 12, 2023). "Inside Rupert Murdoch's Succession Drama". Vanity Fair. Retrieved September 12, 2024.
  15. ^ a b Saeed, Daanyal (September 18, 2024). "Why are the Murdochs fighting in Nevada of all places?". Crikey. Retrieved September 25, 2024.
  16. ^ Clarke, Carrington; Ryan, Brad (September 17, 2024). "Rupert Murdoch's family feud over future of News Corp and Fox plays out in Nevada court". ABC News. Retrieved September 17, 2024.
  17. ^ Rutenberg, Jim; Mahler, Jonathan (July 24, 2024). "The Murdoch Family Is Battling Over the Future of the Fox Empire". The New York Times. Retrieved September 19, 2024.
  18. ^ Warrington, James (September 6, 2024). "Murdoch family fights attempt to have Succession-style legal battle televised". The Daily Telegraph. Retrieved September 12, 2024.
  19. ^ Arkin, Daniel (September 7, 2024). "The fight for the future of the Murdoch media empire is about to begin". NBC News. Retrieved September 12, 2024.
  20. ^ a b c Gold, Hadas (September 12, 2024). "Why the Murdoch family is secretly battling over succession in an obscure Nevada court". CNN. Retrieved September 12, 2024.
  21. ^ Arkin, Daniel (September 13, 2024). "Murdoch family succession battle will remain confidential, judge rules". NBC News. Retrieved September 13, 2024.
  22. ^ "Notable Cases". Second Judicial District Court of Washoe County. January 26, 2024. Archived from the original on September 7, 2024. Retrieved September 24, 2024.
  23. ^ "Notable Cases". Second Judicial District Court of Washoe County. Retrieved October 19, 2024.
  24. ^ Chmielewski, Dawn (September 12, 2024). "Murdoch succession battle to play out in Nevada courtroom". Reuters. Retrieved September 12, 2024.
  25. ^ Chmielewski, Dawn (September 23, 2024). "Judge concludes hearing to determine fate of Murdoch media empire". Reuters. Retrieved September 24, 2024.
  26. ^ Helen Coster, Dawn Chmielewski (September 22, 2023). "Murdoch Family Trust: The real battle over succession has yet to begin". Reuters. Retrieved September 25, 2024.
  27. ^ Hartmann, Margaret (September 21, 2023). "How the Rupert Murdoch Family Drama Inspired Succession". New York. Retrieved September 12, 2024.
  28. ^ Armstrong, Jesse (May 27, 2023). "Jesse Armstrong on the roots of Succession: 'Would it have landed the same way without the mad bum-rush of Trump's presidency?'". The Guardian. Retrieved September 15, 2024.

Further reading

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