When Lachlan Murdoch abruptly resigned his News Corp. posts Friday without explanation, many were left scratching their heads.
Why would the son once deemed heir apparent to CEO Rupert Murdoch chuck it all, move back to Australia and leave the keys to the kingdom to President Peter Chernin and, possibly down the road, his younger brother James?
Sources close to the 33-year-old scion say it wasn’t a big surprise and may have been spurred by a combination of business and personal factors, including the birth of a child six months ago.
His job as News Corp.'s deputy chief operating officer, chairman of Fox's TV station group and chairman of The New York Post, combined withthe long flights he had to endure commuting between New York and Australia, were also taking their toll. The dashing son of a billionaire who married a former lingerie model was gaining weight.
Insiders assert the younger Murdoch never embraced running the TV station group the way he did the newspaper, which some inside the company see as an increasingly obsolete business.
When he took over the group five years ago, the stations showed steady growth under former Fox O&O President Mitch Stern, who left Lachlan alone when he moved to News Corp.’s Direct TV in December 2003 as president-CEO.
Stern exited the company this past March and is now rumored to be a serious contender to run the Viacom station group.
The timing couldn’t have been worse for Lachlan. After Stern had posted more than a decade of straight growth, making the TV stations Fox’s most profitable division, the junior Murdoch was faced with the advent of Nielsen’s Local People Meter system, which hurt ratings and profits for the group.
Insiders say that is why Fox put on a full-court press to stop the LPM roll-out, including helping create the Don’t Count Us Out coalition, fronted by minority groups.
On top of the losses from the LPMs, the Fox Television Stations group also took severe financial hits on several ill-fated first-run syndicated shows it produced, including an estimated $30 million on Twentieth TV’s On-Air with Ryan Seacrest. That show was canceled in mid-2004 after less than eight months on the air.
In January, Fox brought in Jack Abernathy, the executive VP and CFO of Fox News Channel, to run the station group under Murdoch.
Abernathy immediately started cutting costs and streamlining the business, and while he has not started repurposing FNC programming on the Fox stations, insiders say the company has weighed that possibility. The goal would be to further slash costs related to acquiring and producing programming for the low-rated, low-margin daytime hours.
Lachlan Murdoch has set his official exit day as Aug. 31, though he will remain on the board of the company.
"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," he said in a statement.
His father added: "I am particularly saddened by my son's decision and thank him for his terrific contribution to the company." Murdoch then listed those achievements: "Driving all of his reporting divisions to record profits and the New York Post to it’s highest-ever circulation."
Wall Street analysts note that Rupert Murdoch, 74, has increasingly favored President Peter Chernin, coaxing him to turn down approaches to run Walt Disney Co. "We continue to expect Mr. Chernin will take the helms of the company when Rupert Murdoch retires," says Merrill Lynch media analyst Jessica Reif Cohen.