Murdoch's daughter snubs dad
Sources say Rupert's TV producer daughter declined spot on News Corp.'s board
LOS ANGELES -- In the weeks that Rupert Murdoch was locked in unsuccessful negotiations to keep his longtime No. 2 at News Corp., the media baron also had to accept his daughter Elisabeth's decision to turn down a spot on the company's board, sources told Fortune.
Murdoch's interest in having Elisabeth rejoin the family business adds to the palace intrigue surrounding president Peter Chernin's pending departure and the question of who will eventually run the globe-spanning media conglomerate Murdoch assembled and controls through a 37% voting interest. Indeed, Elisabeth was in New York today as an "observer" at the company's first board meeting since announcing Chernin's departure yesterday, two people said. She could not be reached for comment.
The sources said that Elisabeth, known as Liz, was torn about joining the News Corp. (NWS, Fortune 500) board. On the one hand she has a sense of duty and is one of four grown Murdoch children who will one day inherit the family's controlling votes. But she also has a conflict of interest with Shine, the big U.K. production company she has built up over nearly seven years. Under U.K. broadcast regulations, Liz Murdoch's presence on the News Corp. board would have rendered Shine ineligible for the 25% of programming budgets that big British broadcasters like the BBC and Channel 4 are required to spend on independent production houses that have no links to broadcasters. Two people close to Murdoch said that this pool of funding represents a large proportion of Shine's business, and that there are other advantages to being an independent producer that allow Shine to more easily retain the rights to formats it creates. Being on the News Corp. board would be a conflict for Shine because News controls British Sky Broadcasting, the big U.K. satellite TV business, as well as numerous Sky and Fox TV channels that air there. Liz Murdoch owns 63% of Shine and another big backer is Sony Pictures Entertainment, which has 20%.
If she had wanted to rejoin the News board, Liz would have had to sever her ties with Shine, which presumably would have involved selling it, perhaps to News Corp. Liz had worked closely with her father for several years at News -- in a senior role at BSkyB -- but eventually quit in frustration in 2000, yearning to be entrepreneurial and independent. "For Lachlan and I, we had to do our own things," she told me in a 2007 interview, referring to her brother, now 37, who quit the company two years earlier to move to Australia but remains on the News Corp. board. That left James, 36, Elisabeth and Lachlan's younger brother via Rupert Murdoch's second wife, as the only executive active at News Corp. (Rupert also has an older daughter from his first wife who is not involved in the business and two young girls with his wife Wendi.) While all the siblings are close, James has not lived in the U.S. where News Corp. is based for some time and now runs the company's European and Asian businesses out of London. (A word of disclosure: some of my columns have run in News Corp.'s Times of London.)
Whether she is on the board or not, Liz is clearly beginning to play a larger role at News Corp. But that does not, insiders say, diminish the odds that James is the most likely Murdoch to one day succeed Rupert as CEO. News of Chernin's departure created some speculation that it could accelerate James moving to a new role in the U.S., or lead to Liz being groomed to oversee the Hollywood film and television businesses that Chernin has run with considerable autonomy. Some view that scenario as unlikely in the near term, both because of Liz's decision to stick with Shine and also because she and her husband, prominent U.K. public relations executive Matthew Freud, have six children and are very settled in London (and Freud is said to dislike Los Angeles). That said, Liz has been spending increasing amount of time in Hollywood, particularly after Shine last year acquired Reveille, the TV producer built by NBC Entertainment co-chairman Ben Silverman, and which is responsible for such shows as the US versions of "The Office" and "Ugly Betty." Murdoch herself is credited, among other things, with calling up her father and insisting he buy the rights to what became American Idol, the runaway TV hit of the past decade. "She would be the one who is best suited to do it," one senior figure in Hollywood who knows the Murdochs well said of her one day overseeing those businesses.