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Lessons on family business succession from Rupert Murdoch

The Murdoch family likely had a considerable amount of discussion and debate about the succession of brothers James and Lachlan Murdoch to the helm of 21st Century Fox, a US family business expert says, and did well to keep those discussions contained.

Earlier this month it was revealed that Rupert Murdoch was standing back as chief executive of the movie and entertainment studio, appointing his sons to top positions within the company, with James becoming chief executive.

On Tuesday, the brothers’ appointments were confirmed at a board meeting. The elder Murdoch will remain at the helm, but will become co-chairman alongside his other son, Lachlan. The positions are effective from 1 July.

James, who suffered a fall from grace at the family’s other media empire, News Corp, after the UK’s phone-hacking scandal, has been confirmed as CEO.

In 2013, Rupert divided News Corp's publishing and broadcasting assets into two separate companies – 21st Century Fox and News Corp – to protect his profitable film and television assets from his struggling newspaper titles.

Murdoch has two other adult children from his first and second marriages, and two young daughters from his marriage to third-wife Wendi Deng, who he divorced in 2013.

Amy Renkert-Thomas, a family business expert and joint managing director at Withers Consulting Group, says it is testament to the family’s internal governance that the outside world hasn’t been privy to the amount of discussion Rupert Murdoch must have had with his family in the lead up to the announcement.

“If there were any disagreements around it, and this is a big enough decision that I can’t imagine it was perfectly smooth, the family was able to contain it.”

Renkert-Thomas, who did a 12-year stint heading her fifth-generation family business Ironrock, added: “They’ve demonstrated a well-orchestrated announcement, that communicates to the wider world that they are organised and they do have a plan. Outside advisers and directors might have concerns about what type of input non-family members will have in this empire, but certainly it is clear the Murdochs have a plan and are executing on that plan.”

Octogenarian Murdoch has often been criticised for his lack of transparency about succession planning at the media dynasty, with shareholders in his companies often pushing for him to name a future replacement. But this week’s move makes it very clear he wants control to remain in the family.

Speaking on the appointment of two next-generation family members to top spots, Renkert-Thomas said this was fairly common in family businesses, unlike corporate governance norms in public companies that would typically favour one executive at the helm. She said because the brothers had been given very separate roles, rather than acting, for example, as co-CEOs, they would have more chance to take full control in those positions.

Speaking on Rupert Murdoch’s age, Renkert-Thomas said she sympathised with the forces that have kept him in place this long. “Founders are driven, entrepreneurial, immensely talented people, and the businesses they create are very much their creations, and for many of them the reason why they continue forward with vigour.”

She said it was too early to tell whether Murdoch’s sons would run the company in the same empire-building way their father had.

“The sons are in a challenging position. Founders are hard acts to follow, and I think the biggest challenge they’ll face is feeling comfortable with their own vision and carrying it forward and not taking their father’s success as a baseline for their own success.”


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