Rupert Murdoch plans to pass on his business to his sons; history shows this to be a risky proposition, says Rodney E. Lever.
SOME WOULD SAY Rupert Murdoch has led a charmed life, making an enormous fortune and creating one of the world’s biggest media companies and now this is topped by his recent decision to slide his two sons into the top positions of his major companies, News Corporation and 21st Century Fox.
There are other people in the business world, however, who are prepared to say that Rupert has made a serious mistake.
In what is surely the last decade of his business career, he has elevated his relatively young sons over the heads of a highly successful and professional management team. Very few business magnates try to relive their own lives again by appointing their own flesh and blood to take over the family business.
In Australia, one major company did take the same course Rupert has decided on — the once gigantic and wealthy merchandise house of David Jones. Their first store opened in Sydney in 1838, just half a century after Australia was first colonised. The owner was a Welsh immigrant, whose name still remains as one of the most well known purveyors of everything from ladies panties, scanties and bloomers to refrigerators, television sets, washing machines and everything in between.
When the owner David Jones retired, the store fell on hard times, but his son Edward Lloyd Jones returned from an overseas study of retailing in Europe and England and introduced the concept of a “department” store. He began to remake his father’s old shop into a modernised version, buying extra land and extending the building into several stories, with Australia’s first hydraulic lift as a unique feature.
In this case, the family succession began a generational success and the store thrived for three quarters of a century, still functioning within the family.
Edward handed over to Charles Lloyd Jones Sr and then a succession of Jones' ran the business until it was taken over by Adelaide Steamship in 1980 and, after 140 years, the company finally left Jones family hands.
David Jones is a rare example in Australia of success in continued family ownership.
The Australian eyewear group OPSM is an offshoot of a massive Italian company known in Europe as Luxottica, owned by the multi-billionaire Leonardo del Veccio. He built the family business himself and has six children — just like Rupert Murdoch.
But Veccio determined not to hand over his company to any of his children, giving no reason. He built a team of professional management outsiders to succeed him.
On the other hand, Mayer Amschel Rothschild, who started a bank in 1760 in Frankfurt and went on to build a chain of banks around Europe and overseas, had five sons who succeeded him and who were also succeeded by their own children and grandchildren. The Rothschilds became one of true world’s most wealthy families, with a fortune that could never be properly assessed.
Rupert’s ambitions for the future will rest with his sons Lachlan and James — if he continues on with the plan announced.
Only future generations will know whether he made the right decision.
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