The Stakes of the Murdoch Family’s Peace Deal

DealBook|The Stakes of the Murdoch Family’s Peace Deal

Andrew here. Lots of news this morning, including the end of the fight for control over the Murdoch family’s media empire. There’s something else worth keeping an eye on: a report by The Wall Street Journal that OpenAI would consider leaving California over concerns the state might block its plan to become a for-profit business.

OpenAI, which said it had no plans to leave the state, is in a complicated place. It’s trying to persuade state officials to approve its plan. But the potential threat could backfire, since regulators could not only block the plan but also go to court to halt any effort to reincorporate elsewhere. That would thrust OpenAI and its investors, including Microsoft, into a lengthy legal battle.

Lachlan in control

It’s over. The Murdoch family has finally settled a yearslong civil war for control of its empire — one that, yes, inspired an award-winning TV show — in perhaps the only way possible: a multibillion-dollar deal that followed a protracted legal fight.

But the stakes of the dispute, in which Rupert Murdoch’s elder son and ideological heir, Lachlan, go beyond Shakespearean drama. The agreement settles the leadership of what may be the most powerful media conglomerate in the world, with Fox News as its crown jewel, at the height of its influence.

The numbers:

• Lachlan’s three eldest siblings — Prue, Liz and James — will get $1.1 billion each for their shares in the Murdoch empire in return for ending their fight against Rupert and Lachlan, according to The Times. That’s worth about 80 percent of the value of their stock as of Friday’s market close.

• The deal creates a new trust controlled by Lachlan that will have a 36 percent voting stake in Fox and a 33 percent voting stake in News Corp. His younger sisters, Grace and Chloe, will be a part of that entity, which will expire in 2050.

• Fox and News Corp will sell about $1.4 billion worth of shares on behalf of Prue, Liz and James. (The Financial Times reports that buyers will include big institutions and sovereign wealth funds.) The new trust will buy additional shares from those siblings, financed in part with a $1 billion loan.

The path to a deal was paved with conflict. The eldest Murdoch siblings have frequently criticized the editorial slant of their family’s media business, putting them in conflict with their father and Lachlan. Rupert and Lachlan escalated matters when they sought to change key terms of what was meant to be an irrevocable family trust that held the Murdoch siblings’ shares.

The Times exposed the battle, which took place in a Nevada probate court and included a scathing opinion from a judge and accusations that James had disclosed confidential information about the case to The Atlantic.