The changing faces of Fox's leadership

(From left) The Murdoch men at the helm – James, Lachlan and Rupert.
(From left) The Murdoch men at the helm – James, Lachlan and Rupert. ILLUSTRATION: NYTIMES

Media mogul Rupert Murdoch's sons Lachlan and James are ridding the company of its roguish internal culture and moving towards the digital future

NEW YORK • The sun was setting in New York as Mr James Murdoch, looking confident in cream pants and a dark blazer, stepped before 350 guests in a glass-walled concert hall and waxed poetic about his pet television channel and its dedication to "scientific literacy".

The event last Wednesday night was an advertising showcase for National Geographic, which Mr Murdoch, 44, has doted on since becoming chief executive of its parent company, 21st Century Fox, on July 1, 2015.

As a person who cares deeply about "issues related to the environment, conservation, exploration and education", he told the crowd, "I'm personally grateful for the important work National Geographic does."

Across town at that same moment, his 86-year-old father, Rupert - who once called climate change "alarmist nonsense" - was still dealing with the fallout at his most cherished channel, Fox News.

They are both young enough to see and understand that the company has to change. At some media companies, there is a feeling that people are being dragged kicking and screaming into the digital future. I don’t get that sense with the brothers at all.

MEDIA ANALYST DOUG CREUTZ on Mr Rupert Murdoch’s sons, Lachlan and James

Bill O'Reilly, the pugnacious and top-rated talk-show host, had been ousted that day after allegations of sexual harassment involving multiple women.

It was Mr James Murdoch who had most aggressively moved against O'Reilly. The same had happened in July, when Mr Roger Ailes, who founded Fox News with Mr Rupert Murdoch, was forced to resign amid his own sexual harassment scandal.

This is what generational change at one of the globe's most powerful media conglomerates looks like.

With James and his elder brother Lachlan, 45, who is the executive chairman of 21st Century Fox, firmly entrenched as their father's successors, they are now forcibly exerting themselves. Their father remains very involved, but his sons seem determined to rid the company of its roguish, old-guard internal culture and tilt operations towards the digital future.

"They are both young enough to see and understand that the company has to change," said Mr Doug Creutz, a media analyst at Cowen and Co.

"At some media companies, there is a feeling that people are being dragged kicking and screaming into the digital future. I don't get that sense with the brothers at all."

Over his storied career, Mr Rupert Murdoch repeatedly showed that he was willing to trade workplace culture for profits - ride people hard, overlook putrid behaviour as long as the results were there, reward infighting.

When his sons took over two years ago, however, they immediately set about creating a warmer and fuzzier workplace, at least in parts of the company, and moving away from an anti-politically correct environment that seemed to enable the kind of behaviour of which Mr Ailes and O'Reilly have been accused.

Both men deny the allegations.

Employees at the Fox broadcast network said they were pleasantly surprised, for instance, to be summoned to a town-hall meeting where the brothers espoused transparency, workplace diversity and greater cooperation between divisions.

In autumn, James and Lachlan introduced additional benefits, including more paid vacation, vastly enhanced reproductive coverage for women and "expanded coverage for our transgender colleagues".

James and Lachlan overhauled their international networks business, a collection of some 350 channels; changed leadership at their film studio, home to the X-Men movies; and poured money into National Geographic.

The brothers have even shaken up 21st Century Fox's profile in Washington, replacing their father's Republican lobbying chief with a Democratic one.

Still, some of the most dramatic changes at 21st Century Fox over the last two years, including the ouster of O'Reilly, have been forced on them.

When they first took over, they stepped gingerly around Fox News.

James and his progressive- minded wife, Kathryn, have long been embarrassed by certain elements of Fox News, associates said, while Lachlan's views of the network have been more in line with his father's.

Both sons were willing to tolerate the freewheeling Fox News culture because of the enormous profit the channel generates. Analysts estimate that the division generated 25 per cent of 21st Century Fox's operating income last year, which was US$6.6 billion (S$9.2 billion).

Only last summer, when former Fox News anchor Gretchen Carlson filed a sexual harassment suit against Mr Ailes, did James and Lachlan, and eventually Rupert, force change. And even then, the company continued to support O'Reilly in the face of repeated allegations of sexual harassment.

It was not until The New York Times disclosed financial settlements, which involved multiple women who alleged that O'Reilly had behaved inappropriately, and advertisers began leaving his show in droves, that the company forced him out.

As James and Lachlan move to modernise their company, several questions have emerged. The biggest: Can you truly change the culture without losing what made it so successful?

Mr Rupert Murdoch spent decades plotting and re-plotting which of his children would take over his empire. In 1997, Lachlan became the crown prince. When Lachlan quit in 2005 after sparring with Mr Ailes, James ascended. But James was seen as badly mishandling the phone-hacking scandal at family-owned tabloids in Britain.

For a time, there was speculation that Rupert's daughter Elisabeth, who founded the Shine reality TV juggernaut, had a shot. The brothers eventually rose back to the top. Yet they have not entirely convinced Wall Street analysts that their pairing is workable in the long term.

"James has a lot of experience in senior management and he is capable of running a business," said Mr Creutz. "Lachlan? I don't know. People don't know him as well. He is looked at a bit more sceptically by investors."

Mr Anthony DiClemente, an analyst at Nomura Instinet, challenged that notion.

"As a manager, Lachlan has grown and developed quite a bit," he said. "I think the brothers get along well and that Lachlan's views are falling into line with James'."

The brothers are radically different in style.

James is a speed-talking, tightly wound technophile who socialises with young technology kingpins such as Elon Musk. Lachlan, with his tattooed forearm, avoids the spotlight and comes across as a more grounded guy's guy. On his first day as executive chairman, he rolled onto the Fox lot in Los Angeles in a truck.

Friends say the brothers do not spar with each other, or at least keep any disagreements hidden, but do not seem to have much of an affinity for each other either.

Lachlan lives in the fashionable Mandeville Canyon area of Los Angeles with his wife, Sarah, a former model, and their three children. James' family uses New York as home base.

Working together will be crucial if 21st Century Fox is going to navigate the shoals ahead. The conglomerate, like its competitors, is facing an extremely uncertain future. With competitors getting bigger - AT&T's US$85.4-billion purchase of Time Warner being Exhibit A - where does that leave the Murdochs?

"That's a question I think they asked themselves and moved them to try to buy the rest of Sky," said Mr Michael Nathanson, an analyst at MoffettNathanson, referring to a pending US$14.3-billion deal for 21st Century Fox to take full control of the British satellite TV giant.

At the moment, 21st Century Fox's portfolio is relatively healthy. In its most recent quarter, it reported income of US$856 million, a 27 per cent increase from the same period a year earlier.

Speaking of those results during a call with analysts in February, Lachlan noted moves the company had made to strengthen its business.

"We've been saying this for a while," he said, "but actions and outcomes speak louder than words."

NYTIMES

A version of this article appeared in the print edition of The Straits Times on April 24, 2017, with the headline 'The changing faces of Fox's leadership'. Print Edition | Subscribe