FAMILY media dynasties are a dying breed. Fairfax is long gone (although John B. Fairfax is attempting a comeback), the Packers and O'Reillys are getting out. That leaves the Stokes and, the biggest of them all, the Murdochs.
When the extended Murdoch clan gathers in Melbourne next month for the centenary of their matriarch, Dame Elisabeth, one ugly, unanswered question will hang in the air: who will succeed Rupert to run News Corp? Dame Elisabeth can hardly turn 100 without the spotlight shifting to her son, who turns 78 in March.
After slicing and dicing the Bancroft family to win control of The Wall Street Journal (he paid a premium $US60 a share, only to see the price then fall disastrously) Rupert Murdoch will be acutely aware of the iron law of family businesses: extended families are easy prey.
Murdoch wants one of his children to succeed him in running News Corp. The favoured one at the moment is James from his second marriage, after James' siblings, Lachlan and Elisabeth, left News Corp to start their own media businesses.
But that is no done deal. Murdoch may be the greatest media wheeler-dealer the world has known, with a global empire stretching across print, film, television and the internet, but his succession planning is hazy.
He has wisely taken the first step of buying out his own sisters' families' shareholdings in Cruden Investments, which holds the family stake in News.
It cost him $US650 million but it narrowed future family ownership (now 38 per cent of the voting stock) down to his six children from three marriages.
Now he must take the even more painful step of anointing his successor and backing his choice by buying out other children. The family will only remain in control if its shareholding is consolidated around a dominant family member.
If Murdoch simply lets events play out, it could prove catastrophic for family control. Murdoch dying in office without an anointed family heir would leave the News Corp board with no option but to get on with the task of appointing a new chief executive itself.
And that might not be James or any of his siblings. With 38 per cent, the family cannot dictate to the board. Rupert can, because he's Rupert, and nobody disagrees that it is "his" company.
A managerially run News Corp (chief operating executive Peter Chernin is the obvious choice) would see other changes.
News would be forced to tackle Murdoch's loss-makers such as the New York Post and his indulgences like The Australian. Indeed, the entire print component of an increasingly visual News Corp would come under the microscope.
The board could not afford to wait for the Murdoch children's family trust — the vehicle in which the children will share their inheritance — to either nominate a successor to Rupert or decide on his print indulgences.
That could be messy. A new book on Murdoch, The Man Who Owns the News, by Michael Wolff, was written after extensive interviews with Murdoch and his family, and it reveals that the trust is already dysfunctional.
At the insistence of his third wife, Wendi Deng, Murdoch has persuaded his four other children to admit his two new offspring, Grace and Chloe, to the trust. But the four older children restricted these half-siblings to an economic interest without voting rights.
And when it comes to voting, the children are evenly split, according to the Wolff book. James sides with Prue (from Murdoch's first marriage), while Lachlan and Elisabeth (the resignees) are aligned. There is no mechanism to break an impasse. Apparently Murdoch mistakenly believes his new children will have a vote.
Lachlan might be bought out by flogging him the Australian newspapers — there would be no domestic competition issues with that strategy.
Apart from family trust tensions, there are also strains between management and family. The Wolff book reveals that it was Chernin and another senior executive who pushed Lachlan out of the company.
The main News Corp game now, however, is whether Murdoch is prepared to back a successor, a move he must make if he wants to secure family control. News Corp likes to see itself as an agent of change. Now the only certainty is the change coming to News itself — with or without a Murdoch in charge.
Allan Fels is the former chairman of the Australian Competition and Consumer Commission. Fred Brenchley is a former editor of The Australian Financial Review.
