Rupert Murdoch’s real succession drama − why the future of his media empire could hinge on a legal effort in Nevada

The trust document sets out what will happen to ownership of the media assets upon Murdoch’s death: His voting share will be transferred to the four oldest children. That could lead to a scenario in which the children are fighting over the future of the media assets. Fear of that outcome seems to have motivated Rupert Murdoch to seek this change to the trust.

Although Lachlan is now the chair of News Corp. and executive chair and CEO of Fox Corporation, the children have already aired some of their disagreements over the political direction of the media companies. For example, James and his wife have criticized Fox’s move to the right. Murdoch may well see this as a threat to the company’s business model, which caters to a conservative audience.

Even though Murdoch’s trust is irrevocable, it reportedly “contains a narrow provision allowing for changes done in good faith and with the sole purpose of benefiting all of its members.” Rupert Murdoch’s argument is that by taking away governance rights from James, Elisabeth and Prudence, Lachlan will be able to manage the family business more profitably, thereby increasing the value of trust assets for all beneficiaries.

Because some of Murdoch’s children object to his proposed governance changes, Murdoch appears to be relying on the power he retained as settlor to modify the trust in good faith for the beneficiaries’ benefit.

A court will decide later this year whether the changes really are in good faith; If so, then Murdoch will be able to change the trust as he would like so that Lachlan can continue to control the family business.

The saga shows the ways that trusts can protect a family business. But when the next generation lacks a shared vision for the future of that business, even irrevocable trusts can’t ensure family harmony.

The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.