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A volatile combination of money, power and dysfunction has made dynasties a focus of fiction from Shakespeare, through Tolstoy and Balzac, to the writers of Succession itself.
Rupert Murdoch is scripting a new episode in the Nevada courts where he is trying to secure son Lachlan’s grip on his media properties. Control of the trust that holds the family interest in Fox and News Corp was to be split between Lachlan, his siblings James and Elisabeth, and his half-sister Prudence after Murdoch’s death. Now the patriarch wants to amend the trust to give his elder son full voting and decision-making power.
Some wealthy founders, such as Bill Gates at Microsoft and Larry Page at Google, never expected to crown their offspring in their place. The success of those companies ought to make ageing founders think twice before granting executive powers to Junior. Research also shows that picking a family chief executive rather than an external manager to take control after the founder’s death can damage performance. There is a reason why almost every language has a proverb equivalent to the English “from shirtsleeves to shirtsleeves in three generations”.
Still, having decided to transfer control through his bloodline, Murdoch has a reasonable rationale for amending the trust. The right-wing political leanings of Fox and News Corp media outlets have helped the companies prosper. James, Elisabeth and Prudence are politically more moderate and could combine to oppose Lachlan. Guaranteeing strong leadership and a consistent conservative strategy would be better for the business, so their father believes, and therefore for the family as a whole.
In any case, the old orthodoxy that family-owned businesses should transfer management entirely to professionals is no longer as widespread. Family members’ long-term commitment to the business and intimate knowledge of its culture are valuable, particularly when they work alongside seasoned outside executives. The trick of dynastic succession is even easier to pull off when the family company has survived for many generations and can pick the best managers from a wider pool of blood relations.
Problems arise when founders try, in the words of one academic, to “rule from the grave”. Successfully involving the children in the business requires a rigorous assessment of their abilities and strong self-discipline from the ageing founder. Bernard Arnault of LVMH has given his five children roles in the luxury group as he assesses their leadership potential. Mukesh Ambani, who went through one of the messiest succession sagas in corporate history when his father died intestate, pitting him against his brother Anil, is trying to avoid repeating that mistake at Reliance Industries by mentoring his three children to lead the conglomerate.
The question of how family businesses are run, and by whom, matters because, by some estimates, two-thirds of all companies are family controlled. Founders who made their mark in the second half of the 20th century are fading, making succession critical, particularly in Asia, which has an even higher proportion of family businesses. Minority investors’ interests are ill-served by feuds between descendants. At News Corp and Fox, the ripples could extend well beyond the boardroom and the shareholder register to the type and tone of news the world consumes.
Political rifts between Murdoch’s offspring do not bode well. In theory, Lachlan’s leadership should be sufficiently strong and his long-term strategy promising and profitable enough to satisfy his siblings, who could then invest their billions in their own progressive ventures. His father would not have to fiddle with the trust. Everyone would live happily ever after. But as novelists, playwrights and scriptwriters through the ages have recognised, when it comes to family drama, that outcome is never guaranteed.
