Hi everyone!
Since we’ve been following the Murdoch family saga/drama over the last few months, I thought I would post an update to the situation as the NY Times just came out with an article about it. As a quick recap, Rupert Murdoch, the founder of Fox Corporation (and Fox News — which is known for its right-wing political commentary), made a change to the family trust that would give his eldest son Lachlan full control over Fox News. The trust was originally created for the benefit of Rupert’s four oldest children (Lachlan, James, Elisabeth and Prudence) and would divide control over Fox News equally among them. However, to preserve the strong conservative views of Fox News, Rupert wants to give full control of the company to Lachlan as the other three siblings possess more politically moderate views. This is to ensure the commercial value of the company (since Fox News would likely lose value/viewership if it became more moderate). Therefore, Rupert argues that the change to the trust is in the financial interest of his four children. As was mentioned in class, this is a family law dispute that is being heard in Nevada, so much of the details of the case are not available to the public.
For the update: the Nevada probate commissioner ruled that Rupert Murdoch acted in bad faith in making the change to the family trust. According to the NYT article, the commissioner claims that Rupert’s plan was “a ‘carefully crafted charade’ to ‘permanently cement Lachlan Murdoch’s executive roles’ inside the empire ‘regardless of the impacts such control would have over the companies or the beneficiaries’ of the family trust.”
Looking at the situation from a Canadian corporate law perspective, I wonder if the case would have been decided differently. Of course, it is difficult to analyze the matter without knowing much of the factual background. It seems that Rupert’s plan to give full control to Lachlan is a business decision intended to maintain the commercial value of Fox News, which would consequently benefit the children financially. Therefore, I think that the courts (in Canada) would defer to Rupert’s “business judgment” to act in the best interest of the company. However, because this is a family trust matter and the courts are ultimately looking at whether Rupert was acting for the benefit of the children (i.e. the beneficiaries) in varying the trust, perhaps the business judgment rule (or its equivalent in US law) was taken into account in the commissioner’s decision, but did not override other evidence that Rupert wasn’t acting in the best interest of the children, leading to the commissioner’s conclusion of “bad faith”.
Of course, as the NY Times points out, this decision will likely be appealed, so the saga is not over yet!
Sources:
https://www.nytimes.com/2024/12/09/business/media/rupert-lachlan-murdoch-family-trust.html
https://www.nytimes.com/2024/07/24/business/media/rupert-murdoch-succession-fox.html
