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RUBY:

From Schwartz Media, I’m Ruby Jones, this is 7am.

Rupert Murdoch’s media empire is one of the most powerful corporate influences right around the world.

But in recent years it’s been through radical changes, and now it looks like Rupert is starting to hand power over to his son Lachlan, as part of a succession plan.

Journalist Paddy Manning is currently writing a biography of Lachlan Murdoch, titled Sly Fox, and he wrote about the company’s future in this week’s issue of The Saturday Paper.

Today, Paddy Manning on Lachlan Murdoch’s ambitious plans for the family’s business empire, and how they compare to those of his father.

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RUBY:

Paddy, Fox News has traditionally been one of the loudest and most influential voices in the media industry, but for the last couple of years, there have been some pretty significant changes there. So can you tell me about what's been happening?

PADDY:

Yeah, Fox Corporation is minority owned and controlled by the Murdoch family. Used to be part of their media empire, News Corporation. But after a restructure, it was spun out as an independent entity, Fox Corporation.

Archival tape -- New Reporter 1:

“Fab breaking news. The blockbuster Disney deal. The parent company of ABC buying many of the assets of 21st Century Fox, creating an entertainment, entertainment giant.”

PADDY:

The film studios was sold a few years back to Disney, and now it concentrates on news and live sports, in particular, Fox News.

Archival tape -- Tucker Carlson:

“We spend a lot of time in this show night after night trying to explain what’s happening to our country. And it’s depressing a lot of the time because the answer is always the same: America is not rotten, it’s a great place. The people who run it are rotten.”

PADDY:

Which is sort of notorious for its right wing punditry.

Archival tape -- Tucker Carlson:

“As the debate over immigration has risen to the top of the news in recent weeks, a number of figures on the left have denounced this show as racist. It's notable that not a single one of them has offered any evidence to support that slur or even bother…”

PADDY:

Fox News as a business generates three quarters of the earnings of Fox Corporation. It is an absolutely prize asset and of course, it has outsized political influence as the top rated cable TV station that attracts endless controversy. But it is also extremely powerful and influential in US politics.

Archival tape -- New Reporter 2:

“To all your patriots who supported president Trump, stand tall and be proud of your efforts and his. It was all worth it. We all helped reshape the national conversation, on China, on immigration…”

PADDY:

So, the chairman and CEO of Fox Corporation is Lachlan Murdoch. He sort of won the family succession battle, if you like, between the three kids of Rupert and Anna Murdoch. Rupert remains executive chairman. But, you know, he's turned 90 just in March.

And Lachlan just moved back to Australia. And that has really got people talking.

RUBY:

Right. So Lachlan Murdoch, the CEO of FOX, has come back to Australia. What does that say about the future of FOX? What does it tell us about what plans might be in the works?

PADDY:

Well, at first there was a lot of kind of head scratching because how do you run a business that is overwhelmingly based in the US from Australia, which is in a completely different time zone? And, you know, there was even speculation that Lachlan had already ceded control to the company's very highly paid corporate in-house counsel, Viet Dinh.

So at first it seemed like, you know, the sort of sands of the Murdoch succession were shifting again. But through his spokesman, Lachlan has assured investors and commentators that he does remain in control of the company. Apparently, he's working through the night, he’s turned nocturnal.

And, you know, there was even speculation that there was going to be an attempt to, you know, launch a Fox News here, and that kind of doesn't really make sense because Fox News is already available to Foxtel subscribers. It's one of the international news channels you can get here. Sky News is already, of course, you know, up and running and very, you know, got a very high profile in that kind of right wing commentary space.

So it doesn't sort of make sense that they would be launching Fox News here. There are other deals that are sort of afoot, which I think are a little bit more interesting.

RUBY:

OK, so what you’re hearing then Paddy, is that Lachlan Murdoch’s return to Australia should not be taken as a sign that there’s some sort of Australian version of Fox News in the works. Can you tell me more about what deals that are afoot then?

PADDY:

Well, the interesting move that was reported by the Sydney Morning Herald's media writer, Zoe Samios, was that Fox Corporation has taken out the trademark, Fox Bet in Australia.

In Australia, of course, online live sports betting is a mature industry, and you can barely watch a game here without being inundated with ads from the likes of Sportsbet, which is the market leader. But it's been traditionally banned in the US.

And it's only since a Supreme Court ruling in 2018 that it's that that market has started to open up state by state.

Archival tape -- Judy Woodruff:

“The supreme court has ruled that states have the power to legalise sports betting.”

Archival tape -- News Reporter 3:

“The ruling now paves the way for states to allow sports betting…”

PADDY:

At the moment, there are projections that the percent of the population, US households that will be able to bet online as states deregulate, is about to double in the next two years.

So it's going to go from 31 per cent to more than 70 per cent in the next two years, especially as the big states like New York and California and Texas open up to live sports betting.

So you have what one analyst described to me as an absolute greenfields opportunity to invest in live sports betting in America. Of course, that betting has happened before, but it's always been illegal.

Now, analysts say Fox Corp is the best positioned media company in America to take advantage of this huge new market that is estimated to be worth 30 or 40 billion dollars a year.

PADDY:

So if he can pull off something like that, it will be transformative for Fox, there's no question.

RUBY:

We’ll be back in a moment.

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RUBY:

Paddy, Fox has been through some big changes in recent years, both in terms of how it’s structured and also who runs the company… with Rupert Murdoch’s son Lachlan now at the helm. You’re saying that it might be about to make another big shift, this time by entering the lucrative betting market. What is driving that change, are there signs that the company’s traditional media business is in trouble?

PADDY:

Well, it's structurally challenged. Just as you know, the newspapers were challenged by, you know, the Internet.

Archival tape -- News Reporter 4:

“Imagine if you will, sitting down to your morning coffee, turning on your home computer to read the day’s newspaper, well it’s not as far fetched as it may seem...”

PADDY:

Cable TV has the same kind of headwinds.

Archival tape -- News Reporter 5:

“Netflix really changed the game. I mean it was an alacarte on demand service, it wasn’t like a regular tv station that had at eight o’clock…”

PADDY:

So basically what has happened is the rise of it's sometimes called the streaming apocalypse. So, over the top streamers, like Netflix or Amazon have taken or have challenged and disrupted linear TV.

Archival tape -- Unknown Person:

“My students have not had a television set in their residences for a long time, so yes I think this will continue to be the way more and more people get their television...”

PADDY:

So, yeah, Fox has got kind of commercial challenges it also has, you know, sort of there is volatility in US politics. In the immediate wake of the US election, the you know, there was so much upset with Fox's decision to call Arizona you know, on the night for Biden.

Archival tape -- News Reporter 6:

“Reports are circulating out there that FNC is hiring a crisis management team to deal with a mass tune out from conservatives, Trump supporters and those who have come to trust that channel.”

PADDY:

There was a lot of talk about, you know, a new network, perhaps a new Trump network,

Archival tape -- News Reporter 7:

“Trump associates raising $200M to buy NewsMax as a Fox News alternative and it would be like Trump tv…”

PADDY:

Although that speculation has subsided. But also, the rise of new networks on the right to challenge FOX.

Archival tape -- Interviewer:

“Where do you get your news from?”
“OAN baby”
“OAN?”
“They’re a lot more honest than you. Even Fox News is crooked.”

PADDY:

Fox is also facing multibillion dollar lawsuits from the operators of electronic voting machines, Dominion and Smartmatic, which both say that they were defamed during Fox News coverage of the 2020 US election, where they amplified, you know Donald Trump's baseless claims that there was a conspiracy to rig the result.

So now Fox dismisses both those claims as meritless. But there's no doubt that FOX is kind of, you know, it's entered a kind of choppy waters politically and commercially. And they are, you know, online sports betting seems to be a market that could prop up the business and provide a real kind of input, as one analyst described it to me, put a growth halo over the company.

RUBY:

Right - ok so there are some political and commercial challenges at Fox that they’re trying to address. And so this potential push into online sports betting - is that about trying to prop up and underpin the underperforming but influential interests of the Murdochs - specifically in the media?

PADDY:

Well, the best way to think about it is, is exactly the way REA Group is under, underpinned, the newspaper operations.

So the REA group is a majority owned News Corporation business, which is which owns and operates the website Real Estate dot com au, which is the market leading property website in Australia for people looking to buy or sell or rent a home. And it now accounts for roughly two thirds of the earnings of News Corporation.

So you know online sports betting seems to be a market that could be a growth business which provides an endless kind of cross subsidy, if you like, to loss making, but influential, you know, cable TV operations like Fox News.

So you know, this is something that Rupert Murdoch it's entirely consistent, if you like, with the tradition inside News Corporation. I mean, The New York Post, Rupert Murdoch persevered with that masthead, for decades, although it made losses because it was his one newspaper asset in America and it was, you know, in his hometown of New York. So he enjoyed the influence that it gave him, whether on, you know, mayoral elections, like backing Rudy Giuliani or whether it was backing Trump.

You know, throughout the history of News Corporation, actually, Rupert has shown an appetite for, you know, loss making assets. You could say the same thing about the Australian in in in this country or even, you know, the Times in London. Because the Murdoch game is to a large degree about influence as much as it is about making money.

RUBY:

And so Rupert Murdoch, he's now 90 years old. And the appointment of Lachlan as Fox CEO was seen as an indication that, that Lachlan will ultimately be the successor to the Murdoch media empire. So what do we know about how different Lachlan will be to his father in terms of how the company operates and the influence that it exerts?

PADDY:

Yeah, well, it is still an open question, Ruby to be honest. And I think, you know, there is, there is plenty of commentary. I mean, most recently, Malcolm Turnbull was making this point in an interview with on CNN.

Archival tape -- Malcolm Turnbull:

“Well look I’ve known Lachlan Murdoch for many years, and I’ve spoken to him and his father…”

PADDY:

Where he, he said that and it's been often observed that Lachlan is seen to be further right wing than Rupert, than his father.

Archival tape -- Malcolm Turnbull:

“More extreme, and I think the bottom line is they enjoy the power…”

PADDY:

But I think it's kind of speculating about whether Lachlan is right or left of Rupert is kind of a one dimensional analysis.
I think that the more interesting thing is whether he has the ability to exercise that same kind of genius which Rupert and his grandfather, even Keith, exercise, which is to govern by media.

And I think that, you know, if you look back at the track record of Lachlan's investments, they have not always been in businesses which generate that sort of outsize influence that the, you know, print or cable TV, you know, assets that Rupert has invested in have always generated.

That's a kind of theme of the book I'm working on is whether, is whether Lachlan has that same Murdoch genius, in fact. And it's interesting to sort of reflect one of Rupert's biographers, Michael Wolff, wrote that Roger Ailes had called Lachlan un-Murdoch like.

And that's quite a kind of that's quite a kind of stinging accusation to you know level against, the eldest son and designated successor.

And it points to a kind of degree of scepticism, I guess, in the US as to whether or not Lachlan has got the same combination of huge appetite for risk, a ruthlessness and interest in politics that Rupert has had.

RUBY:

Paddy, thank you so much for your time today.

PADDY:

Thank you Ruby.

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RUBY:

Also in the news today -

NSW authorities have confirmed another Indigenous person has died in custody.

The 37 year old man was found dead in his cell at Cessnock Correctional Centre on Tuesday morning.

Six Aboriginal people have died in custody across Australia in the past two months.

Labor spokeswoman for Indigenous Australians, Linda Burney said the deaths were a "national emergency".

And the Prime Minister Scott Morrison has announced his government will spend $747 million dollars upgrading military training bases in the Northern Territory.

The funding will support more "war gaming" exercises between the ADF and its allies.

I’m Ruby Jones, this is 7am, see you tomorrow.

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