Rupert Murdoch loses bid to change family trust

By Brian Stelter and Hadas Gold, CNN

(CNN) — Rupert Murdoch cannot amend his family trust to put the power of his media companies in the hands of his chosen successor, a Nevada commissioner has ruled.

The probate commissioner, who heard several days of secret testimony by Murdoch family members earlier this year, issued a ruling over the weekend, and the 96-page opinion eviscerated Rupert Murdoch and his chosen son, Lachlan Murdoch, according to a person with direct knowledge of the ruling.

The commissioner, Edmund J. Gorman Jr., wrote that Rupert, Lachlan and their representatives had operated in “bad faith,” the source said. Gorman’s assessment may be a factor in any eventual appeals.

Rupert Murdoch had wanted to amend his irrevocable family trust, which gives his four eldest children equal voting shares upon his death. Under the proposed change, Lachlan – who more closely aligns with his father’s conservative views – would consolidate all the power. The other three eldest children, Prudence, Elisabeth and James, objected to the change and contested it in Nevada court.

The court opinion is sealed, and CNN has not reviewed it. The New York Times, which was first to report the ruling, said it obtained a copy.

According to the Times, Gorman wrote that Rupert and Lachlan Murdoch tried to “stack the deck in Lachlan Murdoch’s favor after Rupert Murdoch’s passing so that his succession would be immutable.”

Inspired by TV drama

If this sounds like an episode of “Succession,” that’s because it is. According to the Times, an episode of “Succession” about the death of the fictional family patriarch Logan Roy caused Murdoch’s children to hold discussions about how to avoid a TV-drama-worthy outcome within their own family. The commissioner even cited the HBO series in his opinion.

Alas, drama was unavoidable with assets like Fox News on the line. Disputes over the family trust have been tearing the family apart, sources previously told CNN.

The family trust that Rupert designed a quarter-century ago has been viewed in recent years as a pathway toward potential political change. James, in particular, has privately expressed revulsion about Fox’s divisive right-wing programming, and he has also donated to Democrats and supported progressive groups.

Some of James’ associates have talked about a scenario where he could work with Prue and Elisabeth to dethrone Lachlan in the event of their father’s death. Sources have insisted that there is no plan to do so. But Rupert Murdoch believed James was “scheming,” in the words of one source, to make changes that could possibly undo what he has built over decades.

So Rupert Murdoch took steps to ensure that Lachlan would remain in control. Last year, for example, Murdoch became chairman emeritus of both Fox Corp and News Corp, a move that was meant to signal that Lachlan would be firmly in charge of both companies.

Rupert Murdoch also decided to petition the Nevada probate trust to amend the trust. His representatives – including former attorney general Bill Barr – argued that because Lachlan would not change the conservative bent of the company’s outlets, the amendment was in the financial interest of all the beneficiaries, even those who opposed it.

A family’s legal fight

In effect, Rupert made a “father knows best” argument – and James, Elisabeth and Prue were incensed.

The dispute reached its climax in a Reno, Nevada, courtroom in September. The feuding family members were face to face for several days as Gorman heard arguments from both sides.

The proceedings were sealed and meant to be kept secret, but the Times learned about the dispute ahead of time and photographers saw Murdoch family members coming and going from court. A group of news organizations have taken legal action to unseal the records in the case.

The ruling from Gorman was unequivocal, stating that the attempt to blow up the trust was a “carefully crafted charade.”

A spokesperson for James, Elisabeth and Prue Murdoch told CNN that they hope to “move beyond this litigation to focus on strengthening and rebuilding relationships among all family members.”

An attorney for Rupert Murdoch did not respond to CNN’s request for comment. The attorney told the Times they planned to appeal.

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