Vol.103: Murdoch’s family squabble

Why gifted tycoons make dreadful dads

“Happy families are all alike,” Tolstoy famously declared in the first line of Anna Karenina. “Every unhappy family is unhappy in its own way.” But if Tolstoy is right, why do the endless travails of Rupert Murdoch’s family sound so familiar?

Murdoch, the domineering chief of Fox Corp. and News Corp. (which own Fox News, the Wall Street Journal, the London Times, and HarperCollins publishers, among many other properties), has often expressed the hope that one of his children would succeed him, just as he succeeded his newspaper-publisher father in Australia back in 1952. As recently as the turn of this century, when Murdoch was 68, three of his adult children were employed in the family’s media conglomerate. But now Murdoch is 93 and his family has grown even more complicated than his business empire.

Over the past 73 years, you see, Murdoch has accumulated not only dozens of companies but also five wives and six children, some of whom are themselves old enough to be parents to their siblings. Murdoch’s adult children, like most children in large families, possess diverse abilities and temperaments; and, not unreasonably, they’re reluctant to share control of this kingdom with two siblings who are now barely in their 20s. Murdoch’s various ex-wives, also not unreasonably, have lobbied for equal treatment for their respective offspring when it comes to dividing the family loot.

Oh, did I mention that the Murdoch family doesn’t technically own Fox Corp. or News Corp.? The Murdochs own barely 40% of the stock of either company, but that’s sufficient to exercise control, thanks to an irrevocable family trust that votes those shares in unison. This clever arrangement guarantees Rupert control of his companies as long as he lives. But when he dies, the trust (as a condition of Rupert’s divorce from his second wife) will be left with four votes— one for each of his adult children. (Rupert’s two younger children will share equally in the inheritance but won’t have any vote in the trust.)

‘I love my children, but…’

In most family businesses, the boss owns the company and passes that ownership on to his chosen successor, often (but not always) the eldest son. Murdoch would like to pass his empire on to his eldest son, Lachlan Murdoch, who (Rupert now believes) possesses both the managerial acumen and the right-wing editorial philosophy that would extend Rupert’s influence beyond the grave. But Rupert can’t turn the companies over to Lachlan because, remember, those four remaining votes in the family trust will be equally divided among his four children.

What’s a media titan to do with recalcitrant kids? How can he make them punch his ticket to posterity the way he’d like them to? Should he try friendly persuasion? Maybe let them work things out among themselves, thereby demonstrating confidence in their judgment?

These options don’t appear to have occurred to this world-beating corporate titan. Instead, in late 2023, Rupert attempted to add new voting trustees to the trust so as to consolidate Lachlan’s control in perpetuity. That is, Rupert tried to revoke an irrevocable trust.

“I love each of my children,” Rupert said in a pathetic statement he read aloud at a family meeting when he introduced this gambit, “and my support of Lachlan is not intended to suggest otherwise. But these companies need a designated leader, and Lachlan is that leader.”

Last month, Rupert’s plan was rejected by a Nevada commissioner whose scathing opinion accused Rupert of acting “in bad faith” and pursuing “a carefully crafted charade” to deprive Lachlan’s siblings of their rightful inheritance.

Hefner’s forgotten marriage

I ask you: Do you envy Rupert Murdoch and his offspring? More to my point, have we heard this dismal story before?

Oh my, yes— many times, in fact. I offer here a few very similar examples— gleaned from my past incarnations as a financial journalist and editor of Family Business Magazine.

—Maurice “Hank” Greenberg ran American International Group, a global financial powerhouse, with an iron hand from 1967 to 2005. Like Murdoch, Greenberg groomed his two capable sons to succeed him. Like Murdoch, Greenberg operated as a one-man band and kept his subordinates (including his sons) in the dark. Like Murdoch, Greenberg often harangued his sons in front of their colleagues. Like Murdoch, Greenberg long refused to contemplate retirement. And ultimately, Greenberg lost both his sons, who left American International to run other insurance companies.

—The Pritzker brothers of Chicago, Bob and Jay, built Hyatt Hotels and the Marmon Group into a family empire valued at some $15 billion. But they proved better at building hotels than building families. Like Murdoch, Bob Pritzker and his second wife produced two children who are a generation younger than their siblings and first cousins who actively ran their family’s firms. But that didn’t deter Bob’s second litter of offspring (as well as their mother, subsequently Bob’s bitter ex-wife) from demanding an equal share of the family’s pie and power.

—Playboy Magazine’s founder, Hugh Hefner, married Playboy playmate Kimberley Conrad in 1989, when he was 63. Kimberley bore him two kids before leaving him nine years later. Nevertheless, Hefner left his entire 71% voting stake in Playboy Enterprises to Kimberley’s children. Hefner’s two much older children from his first marriage— including Christie, who became Playboy’s chief executive—didn’t inherit any of their father’s stock.

Screaming at the dinner table

—At Reliance Group, India’s largest private company, the patriarch, Dhirubhai Ambani, died without a will in 2002, leaving his two sons to fight for control so bitterly that they didn’t speak to each other for more than a year. Their feud threatened to destroy the whole conglomerate until their mother brokered a seemingly Solomonic settlement that effectively divided the empire between the two brothers. At first glance, this sounded like a happy ending— after all, every family is entitled to its internal feuds and sibling rivalries. But the Ambani family owned only 46% of Reliance, and most of its control was exercised through hundreds of companies with thousands of other shareholders. Like Murdoch, the Ambani brothers seemed blithely unconcerned with the repercussions their blood feuds could cause beyond their immediate family.

—Saul Steinberg, a brilliant but unstable entrepreneur, gained control of Reliance Insurance Company (not to be confused with India’s Reliance Group) at age 29 and used its assets to launch hostile takeover raids on Chemical Bank, Penn Central, Walt Disney, and other established companies through the 1970s and ’80s. He hired his brother as president of Reliance and put his father and brother-in-law on the payroll. Yet my conversations in 1984 with his former employees and household servants suggested that Steinberg was an equal opportunity abuser to relatives and rivals alike.

Visitors to Steinberg’s Park Avenue duplex— including his mother and brother— were sometimes kept waiting for hours while he languished upstairs. He once summoned his brother there for a late-night business conference, then asked his cook to fix him a corned beef sandwich and wolfed it down without inquiring whether his brother would like something to eat, too. Saul once threw a screaming fit at dinner because his favorite chicken parts— the legs— had been served to his children rather than to him. Another time, he refused to take a phone call from his college-age daughter, who was vacationing in Egypt, saying, “Tell her I’m not in.” In 1987, as Steinberg scrambled to cover his mounting debts, he borrowed $4.7 million from his widowed 80-year-old mother. Three years later, she sued him for the money, explaining that Saul had defaulted on his payments— her sole source of income— and had resisted her informal attempts to collect.

—Albert M. Greenfield (1887-1967) was a Russian Jewish immigrant who built a business empire encompassing real estate, department stores, hotels, banks, and newspapers stretching from New York to New Orleans. Yet within his own home he demonstrated little of the charm that he utilized so successfully to close business deals and transform enemies into friends. “In our family, to say you ‘loved’ someone was considered unduly sentimental,” his youngest son later recalled. All five of Greenfield’s children bridled under the burden of his overwhelming shadow, not to mention his biting sarcasm and arbitrary mannerisms, which for some of them led in adulthood to alcoholism, emotional problems, and broken marriages.

As for Elon Musk…

“There is a law of compensation in nature,” the late billionaire oilman J. Paul Getty mused after his fifth divorce. “Every plus is somewhere, somehow offset by a minus. I have long been able to exercise a very considerable degree of control over my display of emotions. This has been an asset to me in business. In the more personal spheres of my life, it has often been a distinct liability— nowhere more so than in my relationships with my first four sons.”

I would put it slightly differently. Executives who operate instinctively can make and execute brilliant decisions faster than their business rivals. But instinctive leaders are unlikely to analyze and learn from the mistakes of others, and consequently they’re often doomed to repeat those mistakes. Or as I suggested in The Outsider, my 2013 biography of Albert Greenfield: “The more effective the corporate leader, the less effective the family leader.”

Are there no exceptions? Well, yes, I can think of one that I observed up close.

In 1986, when I was editor of the Philadelphia alternative weekly, the Welcomat, my publisher persuaded her quarrelsome sisters to sell the paper to Ralph Roberts, the shrewd founder of Comcast Corporation, then a giant regional cable television company well on its way to becoming America’s largest cable TV system. In my relief over the Welcomat’s rescue from my publisher’s wacky sisters, I barely paused to wonder why a major national TV operator like Ralph Roberts would be interested in two small weekly newspapers and a composition shop in South Philadelphia. The answer surfaced soon enough: Roberts needed a graceful way to pass control of Comcast to his son Brian without offending Ralph’s son-in-law, Anthony Clifton, who also worked at Comcast. By installing Anthony as president of the Welcomat’s parent entity, Ralph avoided the possibility of rivalry or jealousy between Brian and Anthony. But that congenial outcome is the exception that proves my rule about family business leaders.

Today Elon Musk is the world’s richest man, with a net worth of $425 billion, according to Forbes. On the other hand, Musk has 12 children from three wives. And he’s only 53. Won’t it be interesting to see how that family saga plays out?

All of which leaves just one unanswered question: When it comes to sweeping generalizations about families, whom should you believe— Tolstoy, or me?

Enjoy Dan Rottenberg’s newest book, The Price We Paid: An Oral History of Penn’s Struggle to Join the Ivy League, 1950-55. You can also visit his website at www.danrottenberg.com