In the last few weeks, there can be few better and more engrossing portrayals of the trials and tribulations of a family business than that of the Murdoch-controlled media group News Corporation. Nor is there likely to be for years to come.
The phone-hacking scandal involving News International, the UK division of News Corp, has gone global – few people with access to a TV or any other devise that disseminates news wouldn’t know about the scandal and who Rupert Murdoch is by now such is the blanket coverage of the event.
And as the world tuned in to what Rupert and his son James had to say about the tawdry hacking affair to a committee of British politicians when most of Europe was preparing to go on holiday, the saga reached electrifying intensity.
Unwittingly or not, the hundreds of million of viewers of the event were treated to an extraordinary insight into the dynamics of the running of a family business – albeit one that has arguably gone awry in recent months.
Rupert, the family patriarch of the media empire, came across to the casual observer as old and dithering – not, as might have been expected even if he is 80, as the razor-sharp mogul behind one of the biggest and most feared media organisations of all time. James, in contrast, was quick witted, and well briefed in the legal and management speak of a senior 21st century global manager. Some say too well briefed.
Then, of course, there was Rupert’s wife, Wendi Deng. No one thought she would turn up to the Westminster committee – and certainly no one could have guessed what a pivotal role she was going to play in the proceedings when she aggressively defended her husband being assaulted from a foam-throwing intruder. She was sitting behind Rupert during the proceedings and after her actions has been portrayed by some as another example of the Tiger mother phenomenon – and even, King Lear-like, as the real protector of the Murdoch legacy.
Whatever the wider implications for the Murdoch empire will be from the phone hacking affair, there are certainly many sobering lessens family businesses can learn from the whole affair. By far the most obvious is succession – and how not to handle it.
Few would dispute that Rupert has waited too long to deal with succession at News Corp. Whether his dithering persona was real or partly an intentional act to fool the gathered members of parliament and the wider world, shareholders must be concerned that he hasn’t dealt well with the issue.
Indeed, if he had appointed a successor much earlier his company might not be feeling the heat it is today. Those following the News Corp stock price have been talking for sometime about the “Murdoch discount” – referring to the expected downward pressure on the stock price exerted by Rupert’s unwillingness to deal with the issue.
But despite everything, Rupert himself shows no signs of letting go anytime soon given his remark at the hearing that he was the best person to sort out the hacking scandal. He obviously doesn’t trust his son to do it, or he wouldn’t have said this. Also, let us not forget that he still controls 40% of the voting rights at News Corp – and, longevity appears to be on Murdoch’s side. Dame Elisabeth Murdoch, Rupert’s mother, is still alive at 101.
But in reality, the saga probably represents the beginning of the end of the octogenarian’s tenure at the top.
Shareholders and non-family board members are bound to ask additional questions of Rupert’s leadership in the months ahead – even if they don’t do publically. They must be aware that failure to do so could store up further problems in the years ahead.
The Murdoch saga will rumble on. But for family businesses there have been few better illustrations of the consequences of ignoring succession than News Corp since Shakespeare wrote King Lear – all of them need to take note.