The family business, that is. Father Rupert -- and, for that matter, grandfather Keith -- was a newspaper man. Harvard dropout James was never passionate about newspapers, preferring television and digital media. So, while Rupert, now in his 80s, is back running the U.K. publishing business, News International, launching a new Sunday newspaper (or, at least, turning a six-day-a-week publication into a seven-day operation), the younger Murdoch is returning to the parent company, News Corp.
"Now that he has moved to New York," Murdoch père said in a Feb. 29 statement, "James will continue to assume a variety of essential corporate leadership mandates, with particular focus on important pay-TV businesses and broader international operations."
So Sun's up for Rupert while James rides off into the sunset, although it is hard to argue he rides out as the hero. Given the scandals that engulfed the News International tabloids under his leadership, the phone hacking that destroyed the News of the World and the allegations of corrupt relationships with the police and public officials that now threaten to undermine the revival of The Sun, it looks rather as though James might have been thrown and trampled by his horse. Not, of course the retired police horse, Raisa, who gave us such an entertaining ride in the days following his resignation ... (For more on that story, keep reading.)
Interestingly, News International now has no member of the Murdoch family on its board of directors. The patriarch may be a dead-tree man to his 80-ringed trunk, News International, but he knows better than to sit on a branch that might already be too rotten to save. Hence the headlines that preceded the announcement about James: News Corp.'s chief operating officer, Chase Carey, had reportedly revealed he had held talks with the company's executives about selling or separating the publishing unit from the rest of the group. He'd told a Deutsche Bank AG media conference in Palm Beach, Fla., of an "awareness" that News Corp. would trade at higher multiples if it did not own newspapers.
Maybe the U.K. newspapers are not on the block just yet. Presumably, the U.S. publishing empire -- including The Wall Street Journal -- is still safe while there's life in the old man's timbers. But News Corp., with or without James at the helm (he still chairs British Sky Broadcasting Group plc), is increasingly an electronic-media business. In Britain the biggest question -- apart from the uncertainty over The Sun's police connections and the future regulation of the country's print media -- is, who would buy the U.K. papers?
With luck -- and the memory of burned fingers -- private equity will have the good sense to stay away from any highly leveraged buyouts based on any property sale and leaseback model or some wildly overoptimistic forecast of Internet income. But there are alternative possibilities. A Russian oligarch perhaps, such as Alexander Lebedev, who acquired the London Evening Standard for a nominal sum in 2009 and turned it into an advertising-led freesheet and bought the quality daily The Independent for a token £1 ($1.59) the following year. Or Roman Abramovich, the owner, among other trophy assets, of Chelsea Football Club plc. If he changed editors as often as he changes soccer club managers, Abramovich would be doing no more than earlier newspaper proprietors once did whenever their breakfast reading offended them. But he might still be sufficiently excited to own The (up-market-ish) Times or The (down-scale) Sun to invest in their journalism and -- who knows? -- even restore their fortunes and reputations after their slow decline in later Murdoch years.
Perhaps a supermarket chain like Tesco plc might like to diversify further into nonfood, or a Finnish paper manufacturer might want to develop a vertical, forestry-to-newsstand silo for its newsprint output? Maybe an oil-rich sheikhdom or the Chinese Communist Party might want to invest their amply stocked sovereign wealth funds in controlling British news flow? Two years ago, such ideas might not even have seemed farfetched. But after the Murdochs' failure to take full control of BSkyB in the wake of the phone-hacking scandal, even the ideologically free-trading British government might think that allowing foreign-state control of the media was a step too far.
However, the last word should go to Raisa, ever the neighsayer. She's dead, poor thing. But that wouldn't have stopped The Sun (in its heyday) sending out a reporter to offer her sugar lumps for a juicy quote about the prime minister, David Cameron, who was forced to admit -- after some prevarication -- that he once rode the nag. He'd done so as a guest, friend and neighbor (in his Oxfordshire, England, constituency) of former News International chief executive, former News of the World editor and former Sun editor Rebekah Brooks. To the embarrassment of all concerned, it turns out Brooks had been "loaned" the aging Raisa by London's Metropolitan Police, to feed and keep in her paddock. Maybe it had all been innocent, but coming just as the police bribery allegations hit the headlines, the revelation had the whiff of the stables about it.
So what would Raisa, now portrayed in the cartoonists' shorthand with the flame-red mane of her last mistress, have told The Sun?
"Cameron? Man of straw! James Murdoch? Useless hacker! Rebekah? Nice girl, but always on the phone. Now, pass the nosebag."
Paul Friedman, who joined Morrison & Foerster LLP in 1982 and has been a partner and practice group leader since 1986, was named managing partner for Europe. For other updates launch today's Movers & shakers slideshow.
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