Business leaders retiring from executive roles at the age of 92 don’t typically come as much of a surprise — unless the person stepping aside is a media mogul called Rupert Murdoch.
After Fox Corp. and News Corp. said on Thursday that Murdoch would step aside as chairman of both his companies, effective as of the annual meetings for both firms in November, Wall Street analysts started dissecting the move, its timing and its impact. Son Lachlan Murdoch will keep leading both companies, which only fuels Succession-esque speculation about how the transition will truly play out.
“While Rupert Murdoch is a one-of-a-kind global visionary, Lachlan Murdoch has been running the company for the last five to 10 years,” Bank of America analyst Jessica Reif Ehrlich tells The Hollywood Reporter about the impact on Fox. “The company is uniquely positioned with a great balance sheet and very interesting set of assets. It is unlikely to change strategic direction in the foreseeable future.”
The BofA analyst adds: “Longer term, there are many options as Fox has such a strong balance sheet — so it can get bigger,” but it also has “bite-size assets easily to be sold.” Could Fox and News Corp merge again? Reif Ehrlich doesn’t see a real rationale, saying: “I don’t think it makes sense to combine the companies.”
Given the media titan’s age and his son’s experience at Fox and News Corp, not everyone was shocked by the news. It’s “no major surprise,” offers Siye Desta, analyst at CFRA Research. “However, as we approach the 2024 elections, we’ll be watching closely to see if this leadership transition affects the value of News Corp shares. Furthermore, we believe that a merger between News Corp and Fox Corp. is now more likely, which could explain why Fox Corp shares are currently trading higher than those of News Corp.”
Analysts beyond big Wall Street banks also took stock of the impact the move has on Murdoch’s empire. “Rupert Murdoch appeared to be pretty hands-off for the past few years,” argued Scott Robson, senior research analyst at S&P Global Market Intelligence. “Before stepping away, Rupert strategically positioned the company to navigate a challenging media landscape by selling off its entertainment cable networks to Disney and focusing on news and sports. This also included exiting the regional sports network business at its peak.”
The expert also noted that since March 2019, when he became chairman and CEO of Fox, Lachlan Murdoch has grown the company “from $10.98 billion in revenue in 2018 to $14.29 billion in 2022. A lot of that growth during a challenging period can be attributed to the moves Rupert made before stepping down in 2019.”
Meanwhile, Third Bridge analyst Jamie Lumley added Rupert Murdoch’s exit “could further decrease the likelihood of an eventual reunion of Fox with News Corp,” and he suggested: “We’ve heard from experts that the synergies of such a merger are no longer as apparent as they were in previous years, and without Rupert advocating for it, it’s hard to see a renewed push anytime soon.”
Lumley also addressed the timing of Murdoch’s transition to a new role. “This leadership transition comes at a challenging time for Fox. Following the Dominion Voting Systems settlement earlier this year, the potential liability from the Smartmatic lawsuit still hangs over the company,” the analyst wrote. “Questions also remain about how Fox will approach its programming and coverage of the 2024 election cycle, a year which will be flush with political ad dollars.”
Rupert Murdoch’s move “seems a bit out of the blue as he has not shown a willingness to throw in the towel,” PP Foresight analyst Paolo Pescatore said in a first reaction, while also highlighting: “Undoubtedly, he will still be involved and not want to remove himself entirely given the media empire he has created.”
What does the change mean for his son taking over the reins of the Murdoch empire? “Lachlan’s first job will be to manage this transition as smoothly and seamlessly as possible to ensure no instability,” the expert said. “Regardless, [Murdoch’s are] big boots to fill, and it is never easy given the empire created. However, [it is] still paramount to have Rupert in your corner.”
Could the mogul’s transition to the chairman emeritus role lead to key changes at Fox? “It is too early to say what the future holds and unclear what direction the company will take under Lachlan’s stewardship,” Pescatore argued. “In the short term, there should not be any drastic changes given he has been heavily involved for some time. However, he will want to cement his own position and create his own legacy.”
