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Murdoch empire has become the house of the rising sons
Brothers making bigger mark on 21st Century Fox
James Murdoch, 44, (left) and his brother Lachlan, 45, are determined to rid the company of their 86-year-old father, Rupert, of its roguish, old-guard internal culture. (Robert Carter/New York Times)
By Brooks Barnes and Sydney Ember
New York Times

NEW YORK — The sun was setting in New York as James Murdoch, looking confident in cream pants and a dark blazer, stepped before 350 guests in a glass-walled concert hall and waxed poetic about his pet TV channel and its dedication to “scientific literacy.’’

The event Wednesday night was an advertising showcase for National Geographic, which Murdoch, 44, has doted on since becoming CEO of its parent company, 21st Century Fox. As a person who cares deeply about “issues related to the environment, conservation, exploration and education,’’ he told the crowd, “I’m personally grateful for the important work National Geographic does.’’

Across town at that same moment, his 86-year-old father, Rupert — who once called climate change “alarmist nonsense’’ — was still dealing with fallout at his most cherished channel, Fox News. Bill O’Reilly, the pugnacious and top-rated talk show host, had been ousted that day after allegations of sexual harassment involving multiple women.

It was James Murdoch — the one looking so unperturbed at the NatGeo presentation, posing for photos as waiters milled about in yellow suspenders and guests ate skirt steak and shrimp cocktail — who had most aggressively moved against O’Reilly. The same had happened in July, when Roger Ailes, who founded Fox News with Rupert Murdoch, was forced to resign amid his own sexual harassment scandal.

This is what generational change at one of the globe’s most powerful media conglomerates looks like.

With James and his elder brother, Lachlan, 45, who is the executive chairman of 21st Century Fox, firmly entrenched as their father’s successors, they are forcibly exerting themselves. Their father remains very involved, but his sons seem determined to rid the company of its roguish, old-guard internal culture and tilt operations toward the digital future. They are working to make the family empire their own, not the one the elder Murdoch created to suit his sensibilities.

“They are both young enough to see and understand that the company has to change,’’ said Doug Creutz, a media analyst at Cowen and Co. “At some media companies, there is a feeling that people are being dragged kicking and screaming into the digital future. I don’t get that sense with the brothers at all.’’

Fox executives either did not return calls or declined to comment for this article. But a picture of a new Murdoch era emerged in interviews with over a dozen people who work at the company or are friendly with James and Lachlan, most of whom spoke anonymously for fear of reprisals.

Over his storied career, Rupert Murdoch repeatedly showed that he was willing to trade workplace culture for profits — ride people hard, overlook putrid behavior as long as the results are there, reward infighting. But when his sons took over two years ago, they immediately set about creating a warmer and fuzzier workplace, at least in parts of the company, and moving away from an anti-politically-correct environment that, at least in the case of Fox News, seemed to enable the kind of behavior of which Ailes and O’Reilly have been accused. Both men deny the allegations.

Employees at the Fox broadcast network said they were pleasantly surprised, for instance, to be summoned to a town-hall meeting — something that had rarely if ever been done under the archly conservative Rupert Murdoch — where the brothers espoused transparency, workplace diversity, and greater cooperation between divisions. In the fall, James and Lachlan introduced additional benefits, including more paid vacation, vastly enhanced reproductive coverage for women, and “expanded coverage for our transgender colleagues.’’

James and Lachlan overhauled their international networks business, a collection of some 350 channels; changed leadership at their film studio, home to the “X-Men’’ movies; and poured money into National Geographic. They culled the company’s entertainment ranks of 400 employees, something James described at the time as a “ventilation.’’ (While some people in Hollywood saw the move as ageist, grumbling was minimal; Fox offered relatively lavish buyout packages.)

The brothers have even shaken up 21st Century Fox’s profile in Washington, replacing their father’s Republican lobbying chief with a Democratic one. One Hollywood friend equated their mindset to moving into an outdated house and looking for wood rot.

Still, some of the most dramatic changes at 21st Century Fox over the last two years, including the ouster of O’Reilly, have been forced on them.

As James and Lachlan move to modernize their company, several questions have emerged. The biggest: Can you truly change the culture without losing what made it so successful? It was Rupert’s band-of-pirates mentality that willed the Fox broadcast network into existence, and turned Fox News into a source of astounding profit and political muscle.

Rupert Murdoch spent decades plotting and re-plotting which of his children would take over his empire. In 1997, Lachlan became the crown prince. When he quit in 2005 after sparring with Ailes, James ascended. But James was seen as badly mishandling the phone-hacking scandal at family-owned tabloids in Britain. For a time there was speculation that Rupert’s daughter Elisabeth, who founded the Shine reality TV juggernaut, had a shot, but the brothers eventually rose back to the top.

The conglomerate, like its competitors, is facing an extremely uncertain future. Consumers are canceling or forgoing cable hookups and instead subscribing to streaming services like Netflix and Hulu, which 21st Century Fox co-owns. The movie business continues to grapple with piracy, rising costs, and flat domestic attendance. Fox also has special problems: With competitors getting bigger — AT&T’s $85.4 billion purchase of Time Warner being Exhibit A — where does that leave the Murdochs?

“That’s a question I think they asked themselves and moved them to try to buy the rest of Sky,’’ said Michael Nathanson, an analyst at MoffettNathanson, referring to a pending $14.3 billion deal for 21st Century Fox to take full control of the British satellite TV giant.

At the moment, 21st Century Fox’s portfolio is relatively healthy. Fox News has continued to dominate in the ratings. The FX cable channel has found a steady stream of hits, including “Atlanta’’ and “The People v. O.J. Simpson.’’ The Fox broadcast network has struggled to find new must-see shows, but the company’s overseas channels and sports networks are thriving. In its most recent quarter, 21st Century Fox reported income of $856 million, a 27 percent increase from the same period a year earlier.

Speaking of those results during a call with analysts in February, Lachlan noted moves the company had made to strengthen its business.

“We’ve been saying this for a while,’’ he said, “but actions and outcomes speak louder than words.’’