How Rupert Murdoch’s Son James Pulled Off Comeback After NewsCorp’s Hacking Scandal
21st Century Fox’s orderly succession plans wins fans on Wall Street, unlike the protracted confusion at Viacom, CBS
Jill Goldsmith | June 11, 2015 @ 12:18 PM
Last Updated: June 11, 2015 @ 1:00 PM
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Three years ago, James Murdoch slunk back to New York City from London, his impressive run at BSkyB tarnished by a nasty phone-hacking scandal involving NewsCorp.’s U.K. tabloid newspapers that upended the Murdoch empire and put at risk the inheritance his father badly wanted to leave him: custody of the family media empire.
But the shoe never fell. James, 42, prospered and all is well in the House of Murdoch as chairman-CEO Rupert prepares to step down as chief executive and hand off the title to his younger son.
Fox’s board is scheduled to meet next week to formalize the handoff, which not only installs James atop the company but brings his older brother, Lachlan, 43, back into the fold as non-executive chairman alongside his father.
Lachlan Murdoch, who had been groomed as a successor early on, abandoned the chance when he jumped ship in 2005, moving from New York to Australia to take over the company’s newspaper business there. He is expected to move to Los Angeles in his new role with the company.
Chief Operating Officer Chase Carey, whose contract ends this year, will also step down, leaving the company without a senior manager outside the family for the first time.
That’s a situation that would have spooked Wall Street tremendously as recently as two or three years ago. But James Murdoch has shored up his reputation since then and investors greeted today’s news with enthusiasm and praise for James — although no one contests the fact that he likely would not be in the job if his last name wasn’t Murdoch.
“James was tested at BSkyB and passed with flying colors. He wasn’t very popular when he went on board there and it wasn’t preordained that it would do as well as it did. He made News Corp. shareholders a lot of money,” Larry Haverty of Gabelli Funds told TheWrap.
Since James Murdoch’s return to New York, Haverty added, “People have been impressed with how much he knew about the business and how much he liked it.”
NewsCorp. split in half two years ago, moving all of its entertainment assets into a new company 21st Century Fox and keeping the global newspaper business under the old NewsCorp banner.
Haverty and others on Wall Street are most impressed by how Murdoch has engineered an orderly transition. Family-run businesses often face daunting challenges when it comes to succession, as the the complex situation at Viacom has demonstrated in recent months. Viacom’s chairman, 92-year-old Sumner Redstone, has declined to name a successor — resulting in significant investor anxiety about the futures of both Viacom and CBS.
“I can’t tell you that watching Viacom had anything to do with Rupert’s decision, but I can tell you that over the years they’ve watched each other closely,” said one fund manager who declined to be identified.
“Rupert wanted to ease out with his faculties intact,” another added.
Redstone’s faculties are said to be fine but he’s ill, has difficulty speaking and rarely appears in public.
Executives who’ve worked with Rupert Murdoch expect that he will continue to play a significant role at the company — a point underscored by Fox News boss Roger Ailes’ statement that he would continue to report to the senior Murdoch after the transition.
“Rupert will be around a very long time and not a lot will change,” Chris DeWolfe, former CEO of MySpace told TheWrap on Thursday at the PromaxBDA conference in Los Angeles. “I can’t see him staying away from the company for long.”
In one of his uncharacteristically poor deals, Murdoch famously bought the social-networking site for $580 million in 2005, then sold off for just $35 million six years later.
Fox’s new leader, Wall Streeters said, is a less imperious version of his father and seen as a less vicious competitor. “Rupert was in the newspaper wars,” Haverty said. “That’s what they called them, wars.”
James Murdoch may not be an empire builder like his father, who built one of the world’s biggest multimedia conglomerates from his own father’s two-newspaper company in southern Australia.
But as the split of Fox and NewsCorp demonstrated, acquisitions may be less crucial to the operations of a modern media company. “That’s not as important as it was. The empire’s been built,” noted one investor. “James has a good grasp on what makes the company tick: the power of sports, news, and globalizing your content around the world.”
And fund managers noted that both Fox has a deep bench of experienced executives across its divisions.
Twenty-First Century Fox Film CEO Jim Gianopulos, speaking to investors Thursday at the Gabelli & Company Movie & Entertainment Conference in New York, literally shrugged off questions about whether James’ ascension would result in changes for him. “For me?” he asked. “It’s good. I’ve worked with these guys for 25 years.”
News of the coronation made no mention of Rupert Murdoch’s eldest daughter Elisabeth, a talented television executive who sold her company, Shine, to News Corp. but ultimately left the fold and exited the board of directors.
Elisabeth, James and Lachlan will inherit Rupert’s voting interest in the Murdoch Family Trust, which controls 39.4 percent of both companies. Murdoch’s two teenage daughters by his ex-wife Wendi Deng hold an economic interest in the trust but not a vote.
James takes the helm of a company that has been streamlined and nipped and tucked into shape, largely by Carey, who will likely remain for a transition period through 2016. The well-respected financial manager simplified News Corp.’s structure, selling off or rolling up minority interests around the world.
The split of entertainment and newspapers made each company easier to understand and invest in. “The company is definitely more manageable,” Christopher Marangi, of Gameco Investors, told TheWrap.
James’ biggest challenge may be the Fox broadcast network which has struggled despite the emergence of this year’s breakout hit “Empire.” “The network is a mess,” Havery said. “But like any network, it’s only two shows away from moving to the top of the pack. In ‘Empire,’ it’s already 50 percent of the way there.”
42 Summer Movies on Our Radar: From 'Avengers,' 'Jurassic World' to 'Magic Mike XXL' (Photos)
"Avengers: Age of Ultron" - May 1 The elite superhero team -- including Scarlett Johansson, Robert Downey Jr., Chris Hemsworth and Chris Evans -- assembles again in this follow up to the 2012 blockbuster.
Marvel/Disney
"Welcome to Me" - May 1 Kristen Wiig stars in this indie drama about a woman with borderline personality disorder who buys herself a cable access talk show after winning the lottery. Will Ferrell and Adam McKay produced.
Alchemy
"The D-Train" - May 8 Jack Black plays the head of his high school reunion committee who must convince the most popular guy in his class (James Marsden) to attend the reunion in this Sundance pic.
IFC
"Maggie" - May 8 Arnold Schwarzenegger stars in this indie as a father who stays with his daughter (Abigail Breslin) as she transforms into a zombie.
Roadside Attractions
"Hot Pursuit" - May 8 Reese Witherspoon and Sofia Vergara star in this buddy comedy about a straight-laced cop (Witherspoon) tasked with escorting a witness (Vergara) to her trial
Warner Bros
"The Connection" - May 15 Oscar-winner Jean Dujardin stars in this French crime thriller as a real-life policeman who dedicates his career to taking down a drug lord (Gilles Lellouche)
Relativity
"Mad Max: Fury Road" - May 15 Tom Hardy takes over the role that made Mel Gibson an international star in this reboot from the madcap mind of George Miller
Warner Bros.
"Pitch Perfect 2" - May 15 Anna Kendrick returns for the song-filled sequel to the 2012 musical smash hit.
Universal
"Poltergeist" - May 22 Sam Rockwell leads a remake of the 1982 horror classic that was originally written by Steven Spielberg.
Twentieth Century Fox
"Tomorrowland" - May 22 George Clooney and Britt Robertson star in a sci-fi fantasy about a man and woman who must discover the secrets of a strange land lost in time and space.
Disney
"Aloha" - May 29 Cameron Crowe directs Bradley Cooper and Emma Stone in a romantic comedy about a military contractor overseeing a satellite launch in Hawaii.
Columbia Pictures/Twentieth Century Fox
"San Andreas" - May 29
Dwayne Johnson stars in a disaster movie about a chopper pilot who must rescue his daughter (Alexandra Daddario) after a massive earthquake strikes California.
Warner Bros.
"Entourage" - June 5 Vince (Adrian Grenier) drives Ari (Jeremy Piven) up the wall when he decides to direct and star in his own movie in the big screen version of the HBO show.
HBO/Warner Bros.
"Spy" - June 5 Melissa McCarthy co-wrote and stars in a comedy about a CIA analyst who gets her chance to work in the field when an arms dealer (Rose Byrne) threatens to destabilize the world.
Twentieth Century Fox
"Insidious Chapter 3" - June 5 In this horror prequel, psychic Elise Rainier (Lin Shaye) agrees to help teenager (Stefanie Scott) who is being targeted by a supernatural force.
Blumhouse
"Jurassic World" - June 12 Chris Pratt and Bryce Dallas-Howard lead the latest installment in the Michael Crichton-inspired series. This time around, the park is terrorized by a genetically-engineered dinosaur that escapes its enclosure.
Legendary Pictures
"Me and Earl and The Dying Girl" - June 12 This 2015 Sundance Grand Jury winner follows an anti-social teen (Thomas Mann) who falls in love with a classmate (Olivia Cooke) who has leukemia.
Fox Searchlight
"Dope" - June 19 This Sundance breakout centers on a teen (Shameik Moore) trying to make his Ivy League dreams come true in his tough LA neighborhood.
Open Road Films
"Inside Out" - June 19 Pixar takes us inside the mind of a little girl as her emotions vie for control. Amy Poehler, Mindy Kaling and Bill Hader all lend their voices.
Disney/Pixar
"Ted 2" - June 26 Seth MacFarlane's foul-mouthed teddy bear returns in the sequel that finds Ted (voiced by MacFarlane) and John (Mark Wahlberg) fighting in court to prove that Ted is human.
Universal Pictures
"Batkid Begins" June 26 This feel-good documentary tells the story of a five-year-old leukemia patient who inspired people from all over the world to help him live out his dream of being Batman for a day.
Warner Bros
"Max" - June 26 A Marine-trained German shepherd is sent to live with the family of his former handler (Robbie Amell), who was killed in Afghanistan
Warner Bros
"Big Game" - June 26 A teenage-boy (Onni Tommila) rescues the President of the United States (Samuel L. Jackson) when Air Force One crash lands near his campsite.
EuropaCorp
"Magic Mike XXL" - July 1 Channing Tatum gyrates his way into this sequel as stripper "Magic" Mike who decides to attend an annual stripper conference in Myrtle Beach.
Warner Bros.
"Terminator: Genisys" - July 1 Arnold Schwarzenegger is back as the unstoppable android as he fights to protect Sarah Connor (Emilia Clarke) with the help of Kyle Reese (Jai Courtney).
Paramount
"Minions" - July 2 The Minions are back in this "Despicable Me" spinoff. This time, they are recruited by a super-villainess (Sandra Bullock) in her plot to take over the world.
Universal Pictures
"The Bronze" - July 10 "Big Bang Theory" star Melissa Rauch co-wrote and stars in this comedy about a former Olympic athlete clinging to her last shreds of fame.
Relativity
"Self/Less" - July 10 Ryan Reynolds stars in this thriller about a wealthy, dying man who pays to have his consciousness transferred into a younger body. When he begins to investigate where the body came from, he discovers a terrifying mystery
Focus Features
"Ant-Man" - July 17 Paul Rudd leads this Marvel comic adaptation about a con man who is given a device that can shrink him in scale by Dr. Hank Pym (Michael Douglas).
Marvel/Disney
"Trainwreck" - July 17 Amy Schumer and Bill Hader star in a Judd Apatow comedy about a magazine writer (Schumer) who refuses to commit, until her relationship with a doctor (Hader) challenges her notions of monogamy.
Universal Pictures
"Stanford Prison Experiment" - July 17 Based on the infamous 1971 psychological experiment, 24 male students volunteer to play prisoners or guards in a mock-prison, only for things to spiral completely out of control.
IFC
"Paper Towns" - July 24 Based on the novel by John Green, Nat Wolff plays a boy who convinces his friends to embark on a road trip to find the missing girl next door (Cara Delevingne).
Twentieth Century Fox
"Pixels" - July 24 Adam Sandler leads a team of gamers (Kevin James, Josh Gad, Peter Dinklage) who must fight aliens that invade Earth in the form of classic video games.
Columbia Pictures
"Southpaw" - July 24 Jake Gyllenhaal packed on the muscle for this drama about a troubled boxer fighting to regain custody of his daughter. Antoine Fuqua directed based on a script by Kurt Sutter.
The Weinstein Company
"Irrational Man" - July 24 Joaquin Phoenix and Emma Stone star in a Woody Allen film about a college philosophy professor (Phoenix) who enters into a relationship with his student (Stone).
Sony Classics
"Mission: Impossible - Rogue Nation" - July 31 Tom Cruise once again does the impossible as he leads his team against an international syndicate intent on destroying the Impossible Mission Force.
Paramount
"End of the Tour" - July 31 Jesse Eisenberg stars as Rolling Stone journalist David Lipsky as he conducts a series of interviews with author David Foster Wallace (Jason Segel). The film is based on Lipsky's book, "Although of Course You End Up Becoming Yourself."
A24
"Fantastic Four" - August 7 Miles Teller (Mr. Fantastic), Michael B. Jordan (Human Torch), Kate Mara (Invisible Girl), and Jamie Bell (The Thing) lead this comic adaptation about the superhero team that gained powers after an accident in space.
Twentieth Century Fox
"Masterminds" - August 7 Kristen Wiig, Jason Sudekis and Zach Galifianakis star in this heist comedy about a real 1997 armored car robbery in North Carolina
Relativity
"The Man From U.N.C.L.E." - August 14 Henry Cavill and Armie Hammer play an American and Russian agent forced to team up to stop an evil organization trying to steal nuclear weapons. The film is based on the 1964 TV series of the same name.
Warner Bros
"Straight Outta Compton" - August 14 O'Shea Jackson Jr., the son of Ice Cube, plays his father in this look at the impact of the revolutionary gangster rap group NWA.
Universal
"Hitman: Agent 47" - August 28 Rupert Friend stars in this video game adaptation about a genetically engineered assassin who teams up with a mysterious young woman to bring down an evil corporation.
Twentieth Century Fox
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TheWrap Summer Movie Preview 2015: “Mission: Impossible 5,” “Entourage,” “Mad Max: Fury Road” also among season’s big releases