Rupert Murdoch steps down as chairman of FOX Corp and News Corp

Media mogul Rupert Murdoch announced on Thursday that he's stepping down as chairman of FOX and News Corp.

Murdoch, 92, informed his employees in a letter Thursday of his decision to transition to new role of Chairman Emeritus of FOX Corp and News Corp. He will officially make the transition in November, and his son Lachlan will become the sole chairman of both companies.

"I am writing to let you all know that I have decided to transition to the role of Chairman Emeritus at Fox and News," Murdoch wrote. 

"For my entire professional life, I have been engaged daily with news and ideas, and that will not change. But the time is right for me to take on different roles, knowing that we have truly talented teams and a passionate, principled leader in Lachlan who will become sole Chairman of both companies. Neither excessive pride nor false humility are admirable qualities. But I am truly proud of what we have achieved collectively through the decades, and I owe much to my colleagues, whose contributions to our success have sometimes been unseen outside the company but are deeply appreciated by me.

"Whether the truck drivers distributing our papers, the cleaners who toil when we have left the office, the assistants who support us or the skilled operators behind the cameras or the computer code, we would be less successful and have less positive impact on society without your day-after-day dedication. Our companies are in robust health, as am I. Our opportunities far exceed our commercial challenges. We have every reason to be optimistic about the coming years - I certainly am, and plan to be here to participate in them," he wrote. 

The executive transition coincides with the annual meeting of shareholders for Fox and News Corp in mid-November.

It also comes just months after Murdoch, 92, scrapped a plan that would have reunited his media empire by merging Fox and News Corp, after several top shareholders rejected the proposal on the grounds that it would fail to realize the full value of the company.

Murdoch, who has near-controlling stakes in both companies, will be appointed chairman emeritus of both the companies.

Lachlan takes over the Murdoch empire as the media industry is battered by challenges ranging from the decline in traditional television viewership, to news organizations battling tech companies over alleged copyright theft in the age of artificial intelligence.

Fox News continues to be the number one U.S. cable news network, playing an influential role in U.S. politics.

Earlier this year, Fox settled a defamation lawsuit with Dominion Voting Systems for $787.5 million, averting a trial in which Murdoch, his son Lachlan and Fox executives and hosts were expected to testify.

The trial would have put Fox in the crosshairs over its amplification of false vote-rigging claims in the 2020 U.S. presidential election. Legal experts said the settlement was the largest ever struck by an American media company.

Fox still faces a lawsuit from voting technology firm Smartmatic, which in 2021 sued Fox for $2.7 billion over similar claims, as well as shareholder lawsuits accusing Fox Corp officers and directors of breaching their duties by allowing the company to become mired in defamation claims.

SUCCESSION

Murdoch, who has six children, has long desired his children to eventually take the reins of the empire. His son James had been CEO of Twenty-First Century Fox before the company's decision to sell its film and television assets to Walt Disney Co DIS.N for $71.3 billion, a deal that closed in 2019.

James then channeled proceeds from the deal into a private investment firm, Lupa Systems. Lachlan was appointed CEO of the new Fox Corp.

Upon Murdoch's death, his other children could challenge Lachlan's power. Murdoch controls News Corp and Fox Corp through a Reno, Nevada-based family trust that holds a roughly a 40% stake in voting shares of each company. He also holds a small number of shares of the companies outside the trust.

Each of Murdoch's four adult children has a stake in the trust. However, his youngest daughters Chloe and Grace, from his third wife Wendi Deng, do not have voting rights in the trust.

The transfer of News Corp and Fox Corp voting shares from Murdoch to his four adult children could create a scenario in which three of the children could out-vote a fourth, potentially setting up a battle over the future of the companies, even as Lachlan Murdoch now oversees Fox Corp. and News Corp.

Fox and News Corp have a dual-share system, with non-voting Class A shares and voting Class B shares. The shares in Fox and News Corp owned by Murdoch’s children through the trust are a combination of both classes of shares.

Concerns about Murdoch's health have dogged him in recent years. In 2018, he suffered a serious back injury after he fell on his son Lachlan's yacht, according to several employees.

Over the past year, Murdoch has started appearing back at Fox and News Corp's offices in London and New York, employees say.

Shares of Fox rose 2% after the news of Murdoch stepping down. News Corp shares gained 0.6%.

"It’s the end of the founder-mogul era," said former News Corp executive Jonathan Miller, who worked alongside the elder Murdoch.

A generation of media titans, including Sumner Redstone, Ted Turner and John Malone, shaped the modern industry, Miller said. Now, the mantle has been passed from founders to executives who have risen through the ranks.

With inputs from Reuters