The Man Who Owns the News: Inside the Secret World of Rupert Murdoch

by Michael Wolff

  LACHLAN

  Lachlan’s turf, in addition to Bronte, is Surry Hills in Sydney. Surry Hills is where News Ltd. has its headquarters and where, in its new gentrified incarnation, Lachlan has opened offices for the mostly as-yet-to-be-determined activities of his new company. The office he’s set up in a converted warehouse building resembles all self-consciously uncorporate offices in recently gentrified areas of cities around the world.

  Once famously handsome and fit—the striking good looks of both Murdoch sons help account for the gay rumors attached to both of these complacently married men—Lachlan, when I visit him in Sydney shortly after the Dow Jones deal is completed, is a contented thirty pounds overweight. At thirty-eight, he now has the same boyish chubbiness that his father had at that age. (Rupert, says Prue, desperately tried to lose weight when they lived in London by trying all manner of faddish diets, grapefruit diet included.)

  People mostly comment on the differences between father and son, but the similarities are as pronounced. They both, in one sense, have an odd lack of presence. They’re both standoffish or even shy—making eye contact isn’t their first move—and unexpectedly inarticulate. They both need someone to finish their sentences. (So much for Murdoch’s view of Prue as the inarticulate one and Lachlan as confident and surefooted.)

  In our interview, Lachlan is skittish and put-upon. He is talking only on his father’s request. Would rather not be. Except to the extent that he, like Prue, seems clearly to regard this as a dialogue with his old man. The point he wants to make is about being infantilized.

  He makes the point without obvious recrimination but with a sense of great burden. Weariness almost. Lachlan, whose career has, in a sense, yet to start, has already experienced a great roller-coaster ride in his professional life. He has been tutored, then been elevated, then been anointed, then been thwarted by his father’s courtiers, then been overtaken by his brother—and then he turned his back on it all.

  It’s important to understand how much the Murdochs’ business is suffused with emotion—how deeply involved the children have been with the affairs of the father:

  “We walked back to the apartment, I remember—that was when we did the deal [the merger of Sky with British Satellite Broadcasting, which kept News Corp. afloat in 1991]—with the company being at that stage, you know, near, um, dissolvement, I think really, that, um, you know, shook him more than I’ve ever seen. He was—I remember, like, almost like putting him to bed. I mean, I was only whatever—what, sixteen or fifteen or something—but I remember really being worried about him.”

  It was a life immersion too:

  “You have to understand, my dad never said to us or my mother—my mother didn’t even want us to be—work in the company or be in media, like it was never a—it was never a suggestion that we should be or what we should do, but I think it was, you know, I think obviously as kids growing up, you, you expect that that’s what they want, right, um, but, from the—I think that what people maybe who aren’t in these situations don’t believe—realize—that, and I think also my dad’s being um, being um, uh—and my mother were so involved in the business from like every minute of every day, so growing up around that, right, it wasn’t a business—it wasn’t like Dad goes to work and he works in the media and he comes home, and you know, he’s just Dad. Every breakfast was about media. My dad was, you know, we went through the newspapers every breakfast, through things, we, we would, we—when we got home, Dad would come home usually with, um, businesspeople—every night would be, um, um, be either someone come over for a drink or dinner, usually dinner, then there’d be people in business or in politics around all the time, so he had a constant, you know—even on weekends, right.”

  Now, in its way, all this living over the store added up to a stellar upbringing. From an early age each of the professional Murdoch kids was good at what he or she did, certainly far advanced beyond their age and beyond their peers. Rupert Murdoch, focused by his then-wife Anna, set his mind to combining his business interests with proper family life, and raised a coven of media managers.

  Which is bound to be a problem: You empower, but then don’t want to cede power. You train, but then don’t let go. It didn’t even cross your mind to, say, let any of the kids get an outside job. Gain a little experience on his or her own. Work for someone else. Nail down a few professional credentials, which might have given a bit of cred beyond the last name. You didn’t encourage that or allow that mostly because it didn’t occur to you that anybody could give your kids a better idea than you could give them. And, too, of course, because you’re nature’s most consummate control freak.

  In Lachlan’s case, the father tried to re-create his own history by sending his son to retrace his steps. Lachlan at twenty-two (Rupert’s age when he took over the Adelaide News) was sent like a viceroy to Australia—not so much the boy publisher as the boy governor-general. And he was received, in the land Murdoch departed a quarter century before, like a piece of the cloth. He was fathered by everybody at News Ltd. Everybody took pride in his least accomplishments. Not only was he raised to be a media manager at a very young age, he actually became one. And he became the prince of Australia—learned, in fact, how to be an Aussie!—and married a girl who is just like (or at least looks just like) the girl who married dear old dad. He learned the newspaper business and pretty much did everything he was supposed to do that Dad did, and then he was brought back from the provinces to take his rightful and inevitable place at HQ.

  What must the old man have been thinking? He must have been thinking in novelistic rather than business or managerial terms. It was some fine fantasy: The beloved son at his side. The beloved son taking over his beloved New York Post. The prince being schooled by the regent, Peter Chernin. And, most of all, the son patiently, admiringly, dutifully, loyally, lovingly watching the father as the years ran out, in this way being passed all the secrets of the Murdoch line.

  There is no misunderstanding this story line among his father’s retainers. As a name throughout News Corp., Lachlan is almost as redolent as Rupert. Still, if there is within the company an absolute belief in a forthcoming succession and in the Murdochs as royalty, a people apart, there is, too, an obvious and constant comparison between once and future.

  If in Australia Lachlan was regarded as a clever and sophisticated guy—a tastemaker—and a good manager who built a strong rapport both in the Australian newsrooms and with his executives, in the United States he was a weak, even pitiable, version of his dad. He was too sensitive; he was petulant; he lacked charm; he was not sharp.

  The father in small but constant ways humiliated the son, which made him a joke to everybody else. In every meeting the father was the impatient, domineering, fussing presence. He couldn’t stop calling attention to himself and away from the son. At the same time, the son, stamping his foot, was trying to call attention to himself. He started marketing campaigns for the Post—tried to bring a little class to a notoriously unclassy operation by throwing functions and parties in the tabloid’s name. Over on the West Coast, he hung out with movie stars and insisted his dad make smarter and hipper movies (Fight Club, which Murdoch detested, was a Lachlan-supported project).

  There it is. As devoted a father as Rupert was, as determined as he was to foster a great dynasty, as proud as he might be of his son (and it was a huge pride), as absolutely delighted (inner-peace-type delight) as he was to have Lachlan close, it was still a story about him. He’s not going to give up—is not capable of giving up—an iota of real control. And what control he does give up, he’ll take back as soon as he needs it.

  It’s a bloody mess.

  Lachlan: “Family businesses are great businesses, but they’re, they’re also fraught with difficulties, so um, so the, uh, you know, so they’re more complex than meets the eye, and in some ways they’re great and simple but…they get complicated, and again, because, um, I think because you go back to that fundamental character trait which has served Dad so
well, which is forward thinking out here and always driving forward, I think he, um, misunderstood—doesn’t understand or doesn’t appreciate sometimes, or he does, but doesn’t think about how complicated they are, um—I’m not really answering the question, but, uh, don’t you know my dad’s never going to die?”

  The curious thing, the unexpected thing, the thing that doesn’t happen in such a story, was that the son upped and resigned. Other than the fact that his sister Elisabeth had also a few years before been given a similar back of the hand, this really seldom happens in dynastic settings. In dynasties, you get heirs who are squashed or denuded, but you don’t much get resignations. What’s more, Lachlan, like Elisabeth, gave this up without having any money. Until recently, the old man had carefully held that card.

  And yet here, in the old man’s defense, is the other elemental point: If he tried to hold them and dominate them, he also apparently raised them to be able to say Fuck you.

  The exit couldn’t have been more painful for both father and son. Not only was the father embarrassed, but it showed his relative corporate vulnerability—Chernin and Ailes made life difficult for Lachlan and openly took credit for pushing him out. What’s more, the father lost his closest confidant as well as his perfect dynastic dream.

  But never mind. The Murdochs are sentimental only up to a point.

  Before his chair was cold, Lachlan was eclipsed in his father’s, and certainly in the company’s, estimation by his brother James, who had been hounding his back since childhood. In the blink of an eye, Lachlan went from the chosen one to the fallen one. Harsh.

  And then there was the issue of having no money. Oh, Lachlan had cash flow—his payout from News Corp. was certainly generous. He didn’t want for relocation expenses to Australia and an appropriate gilded exile lifestyle. But he didn’t have enough money to be somebody else. To make himself into something other than Murdoch’s son. It has become one of Lachlan’s own parenting mantras: When his kids turn eighteen, he’s giving them personal control of their dough.

  It is for him, then, a significant development that the sensitive trust issue with his half siblings was settled with $150 million pay-outs. Because at the same time his father is considering whether the Wall Street Journal might not be a strategic way to bring him back into the fold, Lachlan is finally in a position to make other plans.

  And he’s not telling his father—or at least he’s sharing as little as possible. And driving his father crazy in the process.

  When Lachlan finally phones his father in early January 2008 to tell him he is looking to do a deal, Murdoch says he is left with the understanding that Lachlan is buying the Bulletin, a serious and unprofitable newsmagazine in Australia that was propped up by the goodwill of Kerry Packer until his death in 2005. “A great magazine,” Murdoch tells me after speaking to Lachlan. “It’s not something he will get rich on, but he’s hoping it will give him a bit of a presence there.”

  In fact, Lachlan’s larger plan is to go into business with Jamie Packer, whom he seems to admire for being truly Australian and actually having control of his family and fortune, and with SPO Partners in San Francisco, which has made a name financing deals for the children of moguls. The idea is to get himself his own media empire in Australia by gaining control, in a leveraged $3.3 billion deal, of a company that has stakes in broadcast, satellite, and publishing companies.

  As Murdoch starts to get inklings of what his son is planning, he dispatches James to find out what the hell is going on. James reports that the deal involves huge debt and would only give Lachlan minority stakes in media assets (many of which turn out to be businesses that News Corp., with its minority investments, technically has first dibs on).

  There are tense phone calls between the father and first son.

  “It’s just a deal and he’s not a deal person,” the father fumes. “He’s a very, very good executive. He works hard. He makes good judgments of people; people who work for him love him. I’ve been urging him, ‘Get something to run.’”

  Then Lachlan announces the deal to the public with a front-page story in the Australian on January 22, 2008, just weeks after U.S. bank stocks have tanked as the carnage of subprime mortgages spreads to general credit. SPO abruptly pulls its financing in March. Murdoch is sure that’s the end of it, but Lachlan finds a savior in an old friend of the family, Michelle Guthrie, who used to help run Star in Asia and now has a finance gig with Providence Equity Partners.

  People from Providence arrive in Sydney on April Fool’s Day, ready to do the deal, Lachlan believes, at the price he and Packer agreed on. But Providence ups the cost, and his best mate, Packer, pulls out, humiliating Lachlan.

  “I don’t understand it, his brother doesn’t understand it,” Murdoch tells me. “Lachlan, from the age of four, was a stubborn bastard. He always was.”

  ELISABETH

  Lachlan and his sister Elisabeth form a special Murdoch club, the resignees—and indeed, Lachlan’s exit from News Corp. in 2005 and the substantial press surrounding it were managed by Elisabeth’s husband, Matthew Freud.

  Like Lachlan, she is also bound to their mother. For both Lachlan and Elisabeth, there’s a fierce defensiveness when it comes to Anna, and, indeed, defense: She didn’t louse up the marriage, their father did. And like Lachlan, Elisabeth has set up on her own, not just in business but in identity—even brand. She’s a powerhouse. She’s a macher. She’s hot media stuff. Both Lachlan and Elisabeth, in Australia and London, have allowed themselves to become personalities (something their father really never was). Indeed, this is the context in which Elisabeth falls in love with Matthew Freud: He’s her image consultant. This in itself is something of a rebellion against her father. It’s a kind of insiderness that their father finds gauche (although it’s the same insiderness, in fact, that their stepmother is courting). His son and daughter are the kind of people his tabloids would naturally ridicule.

  Elisabeth is, arguably, his most successful child—and his angriest. When I see her in London in the inauspicious offices of her company, Shine, which is now one of the largest independent producers of television in the world, she is as wary as Lachlan about speaking to me, and as concise in her message to her father: He’s created vast emotional turmoil and ought to thank his lucky stars he’s also produced children strong enough to survive it.

  Which is, quite precisely, her own character note.

  On one hand, she is the emotionally fragile woman with the difficult personal life whose relationship with Matthew Freud is likely the product of a major daddy complex. On the other hand, she’s the super businesswoman, the dealmaker, and, as well, the person who can probably best articulate her family’s dysfunction.

  “It hasn’t been an easy couple of years,” Elisabeth tells me. “He still falls into stupid old habits. I mean, he’s impossible to figure. He’s weirdly awkward about things sometimes, but his heart is in the right place. He’s very old-fashioned sometimes. He finds it hard to talk about emotions. He finds it hard to say…. If somebody doesn’t know it he finds it hard to say…. He will say sorry if you call him on it, but he walks straight into it.”

  It is a curious new reality: the dynastic patriarch subject to the modern language of behavior and relationships.

  Part of the wherewithal to critique their father comes not just from the psychological predicament the Murdoch children have shared—in this Elisabeth sounds a lot like any well-analyzed forty-year-old woman—but also from the fact that they share his professional world. Talking about their father is shop talk—which they’ve learned from him.

  Indeed, they’ve often conspired together in the workplace—they know his moves. When Elisabeth first came to London and was given a job at BSkyB under Sam Chisholm, Murdoch would have had Chisholm believe she was an underling, but then he was on the phone with her constantly and she became his back channel. He promoted his inexperienced offspring, in his stealthy ways, into his formidable tool. His children know better than anybody e
lse how he works.

  This is one of the odder aspects of the Murdoch dynasty—its relatively clear awareness of itself, and its analytic regard for the patriarch. There’s a sense that the children are intent on not being played the way he’s playing everyone else—desperate not to be his fools. Trying to figure out every step he takes.

  The addition of Matthew Freud added a further ironic twist to this analysis.

  After the birth of Matthew and Elisabeth’s first child, Charlotte, it was Anna Murdoch who marveled in the interview she gave in 2001 in Australia: “I thought what on earth is this baby going to be like with the blood of Rupert Murdoch and Sigmund Freud running about its veins.”

  Freud added another level not just of modern personal astuteness but of media consciousness. At times, Matthew Freud almost makes Murdoch seem like an innocent when it comes to using the media. Into the world of Rupert Murdoch came a man of unspeakable craftiness, lounge-lizard smoothness, deep connectedness, superb analytic abilities, and possibly dynastic ambitions of his own. Indeed, Murdoch initially was rather horrified by him. (News Corp. executives were so suspicious of Freud that for a time they called him “Matthew Fraud” behind his back.)

  Freud too has been a factor in this book—with a calculated helpfulness and a talent for insinuation. He’s contributed his own message—directed in part to his father-in-law—which is that News Corp., as it exists now, bullying and irascible, is old-fashioned, in its way a dying animal, and will inevitably have to transition to a different, cleverer, defter MO.

  Variations on that are what Freud has been whispering into his father-in-law’s ear—and Murdoch has begun to listen. In fact, Murdoch has come to quite like his dodgy son-in-law, something that the dodgy son-in-law seems to take enormous pride in. In the summer of 2007 when the family is sailing around Sicily, just after the Dow Jones deal is done, a photo is taken of Murdoch and Freud arm in arm, hanging off the top of the boat. Freud gets a framed copy as a keepsake.