Rupert Murdoch cannot hand control of his media empire to son Lachlan, commissioner rules

Rupert Murdoch has been dealt a setback in his bid to steer control of his empire to his son Lachlan after the media mogul dies.

Murdoch, 93, had sought to change the terms of his irrevocable family trust to ensure his older son, Lachlan, would have sole control over his media companies News Corp. and Fox Corp. News Corp. owns influential publications such as the Wall Street Journal, the New York Post, Investor’s Business Daily and Dow Jones. Fox Corp. is the parent company of Fox News and the Fox broadcast network.

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But a Nevada probate commissioner rejected the request to amend the trust that had been opposed by three other Murdoch children named in the trust — Prudence, James and Elisabeth. In the current version of the trust, the four eldest siblings, including Lachlan, were set to jointly inherit control of the businesses.

That commissioner, Edmund J. Gorman Jr., said in a ruling over the weekend that the elder Murdoch and Lachlan Murdoch had acted in “bad faith” in their attempt to rewrite the trust, according to a sealed court filing obtained by the New York Times.

“The effort was an attempt to stack the deck in Lachlan Murdoch’s favor after Rupert Murdoch’s passing so that his succession would be immutable,” Gorman wrote in the filing. “The play might have worked; but an evidentiary hearing, like a showdown in a game of poker, is where gamesmanship collides with the facts and at its conclusion, all the bluffs are called and the cards lie face up.”

Although the Nevada proceedings were behind closed doors, the outcome had enormous implications because Murdoch controls the world’s most influential conservative-leaning media empire.

The trust was established after Murdoch’s divorce from his second wife, Anna Torv Murdoch Mann, the mother of Elisabeth, Lachlan and James. As part of that 1998 divorce settlement, Murdoch agreed to set up the trust that would give control of his empire to his then-four adult children after the mogul’s passing.

The trust gave Anna’s children and Murdoch’s eldest daughter from his first marriage, Prudence, equal voting shares in a bid to establish a power-sharing arrangement to oversee his corporate empire. Murdoch’s two daughters from his subsequent marriage to Wendi Deng were given economic stakes in the trust, but not voting shares.

News Corp. and Fox Corp. declined to comment. Rupert Murdoch’s lawyer, Adam Streisand, said in a statement: “We are disappointed in the Commissioner’s ruling and, of course, plan to appeal.”

Prudence, James and Elisabeth Murdoch said in a separate statement that “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.”

Murdoch’s proposed trust change revealed a deep rift is the family.

The elder Murdoch had claimed changing the trust was necessary to preserve the conservative bent of his media properties, which would maintain shareholder value for all the heirs. Lachlan is known for sharing his father’s political views, and since last year has served as sole chairman of News Corp. and executive chairman of Fox. The three other siblings are more politically moderate.