After what most investors would agree is too many years at the helm, billionaire octogenarian Rupert Murdoch is stepping down as CEO of Twenty-First Century Fox (FOXA).
On the other hand, just because the man doesn’t officially have the title doesn’t mean he’s not effectively still in charge of the organization. Indeed, once current or would-be FOXA shareholders take a closer look at the details of the new arrangement, it’s very likely they’ll be wondering if the recent announcement is a step forward or a step back.
Goodbye Rupert Murdoch… Sort Of
The announcement came on Thursday of this week, though only tentatively. The Board of Directors still needs to approve the proposed plan that Rupert Murdoch be replaced specifically by his son James Murdoch. Given the fact that the Murdoch family has such an extensive grip on FOXA though — enough of a controlling interest to hand-pick Murdoch’s successor — there’s little doubt the Board will approve the pick.
Rupert Murdoch isn’t going away, however. That same level of family-ownership that pushed James Murdoch to the top of the corporate ladder at 21st Century Fox will also allow Rupert Murdoch to remain the executive chairman of the board, where he’ll almost certainly be pulling at least some of James’ strings.
In fact, one could arguably say the Murdoch family will have even greater control of 21st Century Fox once the plan gets the Board’s blessing. Chase Carey, the current President of FOXA as well as its Co-COO with Rupert, will be leaving both posts once his contract is up in the middle of 2016. After that, it will be a 100% family-led affair.
All the same, overwhelming nepotism aside, the absences of the oft out-of-touch 84-year-old Rupert Murdoch will be a breath of fresh air for those who’ve been patiently waiting for 21st Century Fox to become better known for what it does than the errors in judgment its CEO seems to continually make.
Gaffes Galore
To be fair, none of the questionable things Rupert Murdoch has said or done over the years are company-killers. On the other hand, it’s difficult to win new customers and cultivate new business partners when your CEO is even more habitually offensive than former Abercrombie & Fitch (ANF) CEO Mike Jeffries (who had a real knack for being a jerk).
Case in point: In January, following the Muslim-led attack Paris-based company Charlie Hebdo, Murdoch tweeted:
“Maybe most Moslems [he meant Muslims] peaceful, but until they recognize and destroy their growing jihadist cancer they must be held responsible.”
He later tweeted something of a retraction of the message’s sweeping premise, but the damage had already been done.
It’s not just errors in social judgment Rupert Murdoch makes, however. Murdoch also blew a prime opportunity to make MySpace the dominant name in social media, rather than letting Facebook (FB) take on that role.
The year was 2005, well before Facebook became the monster of a company we know and love today. Already with a big head-start and a lot of potential, Murdoch led News Corp. (NWSA) (this was before News Corp. has spun off 21st Century Fox) to acquire MySpace for a cool $580 million. Never quite sure how to monetize or grow the web property, News Corp. finally sold MySpace in 2011… for a mere $35 million.
Nobody expects every business venture to pan out. But, most would also expect a $580 million investment to be followed by the hiring of people who truly understood what this new “product” was. Clearly success was possible in this new arena, as Mark Zuckerberg grew FB from only one million users in late-2004 to an estimated 1.4 billion regular users today.
Bottom Line for FOXA
It remains to be seen if 21st Century Fox will be in better hands with James Murdoch at the helm. He’s no stranger to questionable decisions either; James was the Murdoch implicated in a phone-hacking scandal in the UK back in 2011.
Still, some of those who know James well will concede he’s grown up a great deal since he was removed from his leadership post at the UK News Corp. division after the scandal came to light. Since the debacle, it’s become clear James Murdoch is a skilled and insightful business person.
Perhaps the new leadership arrangement could be best described like this for the time being: Though it’s not yet clear if it’s really a step forward, it at least doesn’t appear to be a step back.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
