Reference no: EM132206941

MIXING BUSINESS AND FAMILY CAUSES CONFLICT

Two of the most powerful global media empires in the world are controlled by family patriarchs. Sumner Redstone, who is over 80, controls Viacom, which owns Paramount, MTV, and CBS Inc. Rupert Murdoch, in his mid-70s, controls News Corp., which owns the Fox Network and studios among an array of other global media assets.84 Both of these men brought their many children into their businesses and over time groomed them to take up senior management positions and eventually succeed them. However, in both of these companies, the fight between siblings to succeed their fathers has caused escalating conflict and bad feelings both between siblings, and siblings and fathers, which has pulled their families apart. In the Redstone family, the conflict came to a head when Brent Redstone was kicked off the board of directors of National Amusements, the family-owned company that owns about threequarters of both Viacom and CBS. He claimed he had not been consulted in key decisions concerning the company—despite the fact that he owns one-sixth of the company—worth over $1 billion. 85 Apparently, Sumner Redstone, who intends to remain chairman until “the last breath in my body,” asked son Brent and sister Shari, who he had been grooming to take control when he dies, to give him the voting rights to their stock. Brent refused, while Shari agreed. So, Sumner Redstone appointed her vice chairman of the company and his heir apparent. Claiming wrongdoing by his father, Brent began a lawsuit to force the breakup of his father’s empire and gain access to his $1 billion stake. If he sold his stake, this might put the Redstone’s control of their company at risk. Sumner Redstone’s plan to shift control of his media empire to Shari Redstone after he dies would thus be in jeopardy. In the Murdoch family, a conflict between siblings is also hurting family relations. Apparently, Rupert Murdoch had been grooming his eldest son, Lachlan Murdoch, to take over the family empire. Lachlan rose through the ranks to become the deputy chief operating officer of News Corp. and publisher of the New York Post. However, in a move that was a great surprise to many, Lachlan, Murdoch’s heir apparent, suddenly resigned his executive posts at the media company in July 2005.86 This left Lachlan’s brother, James Murdoch, who had been acting as CEO of the British satellite television service Sky Broadcasting, in line to succeed his father. Once again, money and power seem to be at the heart of the conflict. Apparently, Murdoch wants the young children of his new wife to eventually share in the control of his media empire. However, Lachlan was reluctant to give them voting rights that would reduce his own rights and thus power in the company. This may have precipitated his father’s anger and led to his removal from his management positions.87 Since Murdoch’s youngest children are infants, if James cannot fill his father’s shoes when he assumes control, it is likely that nonfamily top executives at News Corp. will also battle to gain control of the company. So, once again politics is the order of the day as ambitious people—both family and nonfamily members—fight for the power to control the media resources of the company.

1. What sources of conflict are operating in these media companies and why are they operating?

2. Do you think the people who own a company are the right ones to manage it, especially when the companies become large and family issues are involved? Why or why not?

3. Search the Internet for stories about which family members or outsiders are managing these companies now. How are they and the companies performing?