The eighth floor at 1211 Avenue of the Americas in Manhattan is where 21st Century Fox Inc.’s top executives sit, which is why it’s all the more significant that Rupert Murdoch is spending so much time six floors below.
The 86-year-old media mogul moved to the second floor and into the office vacated when Fox News chief Roger Ailes was ousted last July. Last week, Murdoch gathered staff to reveal plans for adding reporters and physically making over the newsroom, spending millions to install an open floor plan with giant data screens and a TV studio. In a statement, Murdoch described the investment in personal terms, calling it “a sign of my unwavering confidence” in Fox News.
His dedication to the project is a reminder that Murdoch is still leaving his mark on Fox even while his sons are upstairs managing his media empire. Murdoch promoted Lachlan and James two years ago to top roles, and they have worked in concert with their father on key personnel changes -- evidence that some transfer of power is happening, slowly but surely, at 21st Century Fox.
The next few months will determine whether that change in control is happening quickly enough at Fox, the $50 billion media giant Murdoch built from a single newspaper in Australia. U.S. federal investigators are examining Fox’s legal settlements of sexual-harassment allegations. Executives are trying to reverse declines in ad sales, non-sports TV ratings and box office revenue. And U.K. regulators are evaluating the Murdochs’ fitness as media owners as part of a review of Fox’s $15 billion takeover of Sky Plc -- putting the elder Murdoch’s management of Fox News front and center.
Having Murdoch run Fox News “seems counterproductive and probably not helpful in sending messages about changes in culture,” Claire Enders, founder of media research firm Enders Analysis, said in an interview.
So far, the Murdochs’ power-sharing structure has helped Fox weather a tumultuous period, though its stock hasn’t kept up with rivals’ gains. Since July 6, when a lawsuit filed by former anchor Gretchen Carlson set the harassment scandal in motion, 21st Century Fox shares have gained 1.4 percent, compared with a 13 percent increase for the S&P 500 Media Index.
But it would be better for Murdoch to gracefully step back to a role like Microsoft Corp. co-founder Bill Gates did, becoming a board member and adviser, said Jeffrey Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management. Murdoch is “way too brilliant” to lose, “but he needs to give some clear sailing to the next generation to be the standard bearers now of the enterprise,” he said.
Otherwise, he said, Murdoch risks joining the long list of corporate monarchs who held onto the throne too long and made mistakes that hurt their empires, from William Randolph Hearst to Sumner Redstone. The scandal at Fox News is the second major management crisis Murdoch has faced over the last decade, following the phone-hacking scandal that in 2011 derailed his first attempt to buy Sky.
Fox declined to make the Murdochs available for comment on succession and long-term strategy. Bloomberg LP, the parent company of Bloomberg News, competes with Fox News in providing news and information.
Public companies like Fox or Facebook Inc., whose founders have voting control, are more tolerant of risk, which can be an advantage, Martin Sorrell, chief executive officer of WPP Plc, said in a statement with the advertising giant’s most recent annual report.