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business newsDysfunctional Family Businesses: Fox
By
Justin Rohrlich
Jun 30, 2009 7:40 am
When it comes to being a Murdoch, it's easier to be on the outside than in.
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Katherine Griffiths, in the London Independent, wrote: “In trying to create a family dynasty, in which one of his children would replace him, Mr. Murdoch…created a hothouse, giving senior roles to his adult offspring and then expecting them to prove themselves and to compete with each other.”
And so goes the all-too-familiar story of the dysfunctional family business.
In the US, 80% of all businesses are family-controlled. Over 60% of employed Americans work for a family business. Edward Hess -- author of The Successful Family Business: A Proactive Plan for Managing the Family and the Business -- writes that family businesses “embody our country’s entrepreneurial spirit and represent the hopes and dreams of many for independence, community, self-sufficiency, and wealth.”
He adds, however, that:
“The added complexity of family dynamics causes most family businesses to operate, to adopt strategies, and to make decisions differently from non-family businesses. Families factor family needs, hopes, and fears into their decisions regarding the business, and only family businesses have sibling or cousin rivalries, jealousies, and competition for parental love, approval, and financial favor."
Unfortunately, the “beauty” Hess refers to isn’t always pretty. Joseph Astrachan, Ph.D., editor of the Family Business Review, says statistics show that less than a third of family businesses make it successfully to a second generation; 12% make it to a third generation. And fourth-generation family-run businesses? Only about 3% make it that far.
Let’s take a look at how the family dynamic created a perfect storm of turbulence within media titan Rupert Murdoch’s family, and by extension, News Corp. (NWS), parent company of Fox.
“It’s easier to be a Murdoch outside of News Corp. than inside,” Murdoch’s first-born child, Elisabeth has said - something son Lachlan experienced first-hand when he was given the position of News Corp.’s deputy chief operating officer and presumed successor to his father's throne.
Money, power and politics factor heavily into any global business empire. Now toss 4 adult children (Prudence, James, Lachlan and Elisabeth), plus 2 younger ones, ages 6 and 7 (Chloe and Grace) into the mix, and things suddenly enter a sort of fourth dimension.
In 2005, having joined the News Corp. board in 1996 and its Office of the Chairman in 1999, Lachlan abruptly resigned, thereby giving up responsibility for overseeing HarperCollins, News America Marketing (News Corp’s freestanding inserts business), News Limited (parent company of News Corp’s Australian operations), the company's United States television station group and the New York Post.
According to published reports, the final straw came when Fox News CEO Roger Ailes pitched an idea for a television police series directly to the elder Murdoch, going over Lachlan’s head. Lachlan wanted to hold off for a while, arguing that the show would be too expensive to produce at the moment. And that’s when the proverbial waste hit the ventilator.
No positions in stocks mentioned.
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