What: According to news reports, the multi-billionaire founder of News Corp (ASX: NWS) and the Nasdaq-listed Twenty-First Century Fox, Rupert Murdoch, is planning to relinquish his role as Chief Executive Officer (CEO) at Fox.
The reshuffle will see the media mogul retain his position as Executive Chairman but share it with his son Lachlan as Co-Chair, while elevating his younger son James to the position of CEO.
So What: It has long been known by investors that Rupert held a preference for seeing his sons James and Lachlan continue his legacy; reports that James has now been tapped on the shoulder are hardly surprising.
Is it a reason for shareholders to be concerned? Yes, absolutely!
There are two major concerns arising from today's news. Firstly, while Rupert has proven to be a shrewd operator of media assets and has built a vast media empire, his sons have few achievements to point towards to provide comfort that they possess the same level of business acumen as their father. Secondly, the appointment of a close associate rightly brings into question whether the best person for the job has been chosen – as a public company this is a concerning scenario for shareholders.
Now What: The details of Rupert's plan suggest succession activity is centred on the Fox business. It appears unlikely that there will be any immediate changes at the ASX-listed News Corp which is home to many of the old empire's newspaper assets as well as a 50% stake in pay-television operator Foxtel (Telstra Corporation Ltd (ASX: TLS) holds the remaining 50%). News Corp also has a significant investment in online real estate classifieds business REA Group Limited (ASX: REA).
Holders of News Corp shares appear to have less "key man risk" than shareholders at Fox with the Murdoch family probably more focussed on being involved in the day-to-day activities of Fox. For News Corp shareholders there would appear to be less to worry about in terms of succession planning.
