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Elisabeth of the Murdochs

With her husband and privy counselor, Matthew Freud, the Murdochs’ prodigal daughter is trying to finally get her due.

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Elisabeth Murdoch has always had to fight for her father’s attention, never easy in a family that was focused on the sons. Though she was the eldest of the three children from Rupert’s second marriage, Rupert had never taken her seriously as a possible contender to run the company some day. In 1997, he’d announced that in the competition, Lachlan was “first among equals,” and then, when Lachlan ran into troubles, he seemed to give James, now the deputy COO, the inside track. “Liz is the most overtly ambitious of the three kids,” a former News Corp. executive told me. “She was driven to prove to her dad that she could more than hold her own with the boys.”

So, over a decade ago, Elisabeth walked away from the family business to venture out on her own, starting Shine, a television-­production company that she built into one of the most successful in Britain. In 2008, she acquired Ben Silverman’s production company Reveille in a $125 million deal, which made her a significant player in Hollywood. She’d loved her independence, the more because it proved her worth to her father.

When the elder Murdoch tried to bring her back into the fold, Liz, 43, played a bit hard to get, savoring the moment. Finally, this past February, she agreed to sell her company to News Corp. for roughly $670 million. Liz made more than $200 million off the deal and was promised a seat on the board alongside her brothers. “The validation was absolute,” a London media executive told me.

It wasn’t long, however, before the prize started to disintegrate in front of her. On July 4, the Guardian broke the explosive story that detailed how reporters for News of the World had hacked the phone of Milly Dowler, spinning News Corp. into turmoil. The company announced it was shuttering News of the World, the 168-year-old tabloid that had been Rupert’s first acquisition in Britain. Now the $12 billion bid for the shares of BSkyB they didn’t own, which was supposed to cement James’s centrality as heir apparent, was in doubt.

And in the space of a week, the story of the prodigal daughter, the one who’d made good on her own before returning to the fold, had been forgotten. Suddenly, she was just another Murdoch, entitled and corrupt. In the United States, shareholders had filed a lawsuit claiming Rupert had overpaid for her company and treated News Corp. like a “candy store.”

To Liz, the scandal reinforced her view of the problems with the family business and the people who ran it. She loved James as a younger brother, but she saw his ascension as undeserved. She was the talented one. And her father was of a different culture. “Rupert has had lots of tensions with Liz,” former Sunday Times of London editor Andrew Neil tells me. “She’s never liked the tabloids. She’s like her mother, Anna, who never liked the Sun’s ‘Page Three’ girls. Anna wanted to get rid of the ‘Page Three’ girls, but Rupert wouldn’t do it because he thought there was too much money in it.”

When the scandal mushroomed in the wake of the Milly Dowler report, Rupert flew to London from the annual Allen & Company media retreat in Sun Valley—and seemed to make matters worse. He told reporters his top priority was Rebekah Brooks, the flame-haired former News of the World editor who had run the paper at the time of the Dowler hacking before being promoted to News International CEO. Brooks and Rupert Murdoch were close—closer, in many ways, than Murdoch was with his own daughters (he has one daughter from his first marriage and two from his marriage with his current wife, Wendi). In photographs, he’d look at Brooks with an air of fatherly concern and love. Elisabeth found the whole situation galling. “She was concerned that was an odd message to be putting out at that time,” a friend says.

Partly, Rupert’s botched response was fueled by exhaustion. “He had just closed the newspaper that brought him into Britain,” an associate recalls. The experience seemed to age Rupert overnight. “He walked with a stoop.”

James, too, had been putting his marks on the management of the crisis—not that they were any more successful. He had never had much taste for the Fleet Street side of the business. “He was invisible,” a senior News of the World staffer said. “He was never seen in the newsroom.” As head of News Corp.’s European and Asian operations, James oversaw the company’s British tabloids, but he believed News Corp. needed to become a modern, digital media company, respected like other global powerhouses. When he lobbied to shut News of the World, he was, in a sense, trying to kill two birds with one stone.


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