WSJ: At News Corp., a Bitter Battle Over Inheritance Splits Family

...The bitter battle has all the hallmarks of a classic family drama. It pits the toddler children of Mr. Murdoch and Ms. Deng, a Chinese-born woman in her mid-30s, against Mr. Murdoch's children from his first two marriages. One of the key debates: Who should inherit the family's $6 billion fortune and Mr. Murdoch's control of News Corp....

But despite his job title, one of the few businesses Lachlan had a free hand in managing was one of News Corp.'s smallest, the New York Post, a tabloid paper that was one of his father's first acquisitions after he moved to the U.S. in the 1970s. As a perpetual loss-maker, it didn't attract attention from other executives in the company.

The younger Murdoch quickly found himself being undermined in his attempts to deal with the station group, one of the biggest sources of conflict between Lachlan and his father. News Corp.'s 35 TV stations are one of the company's most important profit generators. Lachlan soon found himself out of the loop, in part because of the close relationship between the station group's CEO, Jack Abernethy, and Fox News chief, Roger Ailes, a close confidant of the elder Mr. Murdoch....

Lachlan has a more laid-back style than Mr. Murdoch, who is known for a hands-on and imperious management style.

Lachlan saw his sister Elisabeth quit a job with BSkyB in 2000 to start her own TV production company.... Only their younger brother James, 32, is still with the company, as CEO of BSkyB. He is now seen as the most likely successor to his father. James, who dropped out of Harvard University... was initially considered by shareholders as too inexperienced to run a large public corporation like BSkyB, which is 35.4%-owned by News Corp., but has since won accolades....

Peter Chernin, left, president of the News Corp., is currently designated to succeed Rupert Murdoch, right.

Mr. Chernin, meanwhile, has emerged as the most senior non-family executive. Callers to Mr. Chernin's office on Friday were told he was not taking media inquiries. Investers and analysts praised Mr. Chernin as an astute politician who has always understood that he is working for a family business and, while sometimes disagreeing with Mr. Murdoch, has earned his professional regard. For example, although Mr. Murdoch holds strong conservative political views that are often expressed in such media outlets as the New York Post and the London Times newspapers as well as Fox News Channel, Mr. Chernin is an active supporter of Democratic causes.

Mr. Chernin, who joined the News Corporation in 1989 and assumed his current post in 1996, has also put himself forward as an outspoken Hollywood advocate against piracy and urged collaboration between entertainment companies and gadgetmakers that make swapping and stealing programming easy.

Amid rumors that he was being courted as a potential chief executive of the Walt Disney Company - although it is not clear he was directly approached - Mr. Chernin signed a five-year employment contract with the News Corporation last fall. Mr. Chernin is paid a base salary of $3.8 million a year, $4.3 million in annual pension contributions, and bonuses tied to the company's earnings per share performance. If he is terminated "without cause" or resigns "for good reason," he also receives a $40 million payment and is assured a six-year television and film production deal with the News Corporation under which the company would purchase at least two films from him per year, according to company filings.

Although he now holds the title of chief operating officer, however, it is a slight misnomer. While he has had visited many of the company's far-flung outposts, only Mr. Murdoch, company intimates say, has a true grasp on the inner workings of the company's diverse interests.

Similarly, although Lachlan's title since October 2000 was deputy chief operating officer, he was anything but Mr. Chernin's deputy. After the two initially clashed when Lachlan went to Los Angeles to learn the News Corporation's television business several years ago, their contact was limited and chilly, according to people close to both Lachlan and his father. In addition to overseeing the TV station group, Lachlan was in charge of the company's print businesses in Australia and the United States and was publisher of the tabloid New York Post.

-- New York Times, August 1, 2005

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