Murdoch's Son and Expected Successor Quits News Corp.

By VIKAS BAJAJ and RICHARD SIKLOS
Published: July 29, 2005

One of the business world's most-watched family dynasty dramas took a sudden twist today when Lachlan Murdoch, the son of Rupert Murdoch, the chairman and chief executive of the News Corporation, resigned from his executive posts at the global media company.

His departure raises fresh questions about executive succession at the News Corporation. Though Rupert Murdoch, 74, has not formally declared his successor , it was widely believed that he favored Lachlan, his oldest son, to replace him eventually

The company said Lachlan Murdoch, 33, would remain on the News Corporation's board but would relinquish his executive posts, which include deputy chief operating officer, at the end of August. He is also the publisher of The New York Post.

With Lachlan's departure, the front runners to succeed Rupert Murdoch appear to be James R. Murdoch, his 32-year-old son who is chief executive of British Sky Broadcasting, the satellite television service in which the News Corporation owns a 34 percent stake, and Peter Chernin, the News Corporation's president and chief operating officer.

Lachlan Murdoch, 33, had worked at the global media company for 11 years.

"I look forward to returning home to Australia with my wife, Sarah, and son, Kalan, in the very near future," Lachlan Murdoch said in a statement. "I would like especially to thank my father for all he has taught me in business and in life. It is now time for me to apply those lessons to the next phase of my career."

Rupert Murdoch said: "I am particularly saddened by my son's decision and thanked him for his terrific contribution to the company, and also his agreement to stay on the board and advise us in a number of areas."

Neither Murdoch gave details on the events that presaged Lachlan's departure.
Among the six Murdoch siblings who range in age from 46 to 3 from three marriages, only James Murdoch remains directly involved with the company's operations.

Gary Ginsberg, a spokesman for the News Corporation, said Lachlan Murdoch's resignation does not necessarily mean his brother James would be Rupert Murdoch's ultimate successor.
"It does not change the succession plan at all," Mr. Ginsberg said. "Rupert has said he plans on staying as chairman as long as he mentally and physically fit to do so."

Rupert Murdoch has said that Mr. Chernin is likely to be his immediate successor as chief executive, but that his ambition is for a member of his family to one day take charge of the company.

"The investment community has an interest in figuring this out as well because you would probably come down on the side, in the near term, of Peter Chernin vs. his sons," said Michael Nathanson, an analyst at Sanford C. Bernstein & Company. "We are in kind of an ambiguous place right now."

Though Mr. Murdoch has long wanted one of his sons to succeed him, investors and analysts prefer Mr. Chernin, 51, with his greater experience and lack of family ties.

"From an investors' standpoint there was an ongoing fear of nepotism that is lifted, or at least partially lifted, by his departure," Richard Greenfield, an analyst with Fulcrum Global Partners, said referring to Lachlan Murdoch.

Other media companies like Walt Disney have eyed Mr. Chernin as a candidate for a top job, a factor that could play into the thinking of News Corporation's board, which would not want to see such a senior executive leave to join a competitor.

Mr. Greenfield said he did not expect Lachlan Murdoch's decision to have any significant impact on the News Corporation's operations, because Rupert Murdoch and Mr. Chernin remain in control. "It further cements the fact that if anything happens to Mr. Murdoch in the next year or two that Peter Chernin, the No. 2, will take his place."

As part of his grooming, Lachlan Murdoch's duties had included oversight of the News Corporation's print operations in the United States and Australia, which included the HarperCollins book publisher, as well as The New York Post.>>>continued

http://www.nytimes.com/2005/07/29/business/29cnd-news.html