Rupert Murdoch should be as lucky as Avedis Zildjian.
A 17th-century Armenian alchemist, Zildjian invented an alloy of copper, tin and silver while trying to make gold, and used it to create an exceptionally resonant cymbal for court musicians. Nearly 400 years later, his descendants still own and operate Zildjian, a private company in Norwell, Mass., making cymbals for the best drummers in the world.
Few business dynasties last anywhere near that long, of course. And as Murdoch prepares to hand the chief executive role of 21st Century Fox to his son James, he is embarking on what is often a hazardous task - trying to transfer control of a company to the next generation, while positioning it for future success.
Letting go is hard, and Murdoch, 84, is expected to stay closely involved with 21st Century Fox as executive chairman, a title he also holds at News Corporation, a collection of media properties he spun off in 2013.
But while his skill may be welcome in the boardroom - he built the companies into a $75 billion empire - his lingering presence could pose challenges for his son.
"Murdoch didn't say he was going off to the senior citizen golf tournament," said Jeffrey Sonnenfeld, a professor at the Yale School of Management. "His phone is going to be busy, and he's going to be making decisions, and those decisions aren't going to be subordinate to James's."
Many family transitions strain under the patriarch's reluctance to let go. Sumner Redstone, who remains chairman of Viacom and CBS, tried to involve his children, Shari and Brent, in the business. But relations with both have been contentious over the years. At one point Brent sued his father for $1 billion to gain a stake in a company and is no longer in the picture. Redstone, who is 92, has reportedly mended ties with Shari, making her his likely successor.
Family dynamics do not have to be explosive, but they require a delicate balancing act. Hal and Hank Steinbrenner steered the Yankees to continued success after their father, George Steinbrenner, handed over the reins. But they did so under his watchful eye.
"When George Steinbrenner said he would step away from leadership of the New York Yankees, there was no doubt about who was in control," Sonnenfeld said.
Like Redstone and Steinbrenner, Murdoch is a powerful force.
"James is going to be under a microscope, and everyone will be comparing him to a legend," said Ted Clark, executive director of the Center for Family Business at Northeastern University. "It's going to be really hard to measure up."
At 42, James Murdoch has already been tested. His reputation was badly tarnished by the phone hacking scandal at News Corporation, and he fled London to a less hostile New York. Since arriving in 2012 and taking the role of co-chief operating officer of 21st Century Fox, he has rebounded and even thrived.
He is fluent in new media, an important trait as 21st Century Fox grapples with challenges from companies like Netflix, Facebook and Apple. The entertainment empire he will be running includes cable and broadcast television networks, film studios and satellite companies, and he is already pushing the company deeper into digital advertising.
"Every generation needs to reinvent the business," Clark said. "Businesses that remain dynasties really go with the times. If you try to keep this the same company, you will fail."
One family that recently navigated such a transition is the Grahams of Washington. Best known for its long stewardship of The Washington Post, the Graham family also developed Kaplan, a successful test preparation enterprise. But in 2013, the family sold The Post to Jeff Bezos, the founder of Amazon, severing ties with its flagship asset.
"They needed to move on," Clark said.
For Murdoch, simply arriving at this point is something of a victory. After the phone hacking scandal and well-publicized family disputes, it was conceivable just two years ago that none of his children would assume his place at the head of the company.
Only about 30 per cent of family businesses pass control to a second generation, just 12 per cent make it to a third generation, and only about 3 percent to a fourth, according to the Family Business Institute. In one painful and litigious public spectacle, Herbert Haft, who built a successful discount retail empire, fired his son and cut his children out of his will. Anheuser-Busch, the company behind Budweiser, was family-controlled for five generations, until intergenerational sparring led to the brewer's sale to InBev in 2008.
The elder Murdoch inherited the foundation of what would become 21st Century Fox and News Corporation from his own father, Keith, and built it into one of the most influential media companies in the world. By passing control to James, the Murdochs will join that 12 per cent who maintain control across three generations.
"It's a real achievement," said John A Davis, a professor at Harvard Business School.
While it may be a dynastic achievement, it is not clear whether family businesses are good for business. Some research contends that family businesses are more successful than those without dynastic backing, while other research concludes the opposite. A study by the Boston Consulting Group found that in boom times, family businesses did not keep up with the market. But during downturns, family-run companies outperformed their peers. Further complicating the analysis is the fact that some family companies are also publicly traded and have unconventional corporate governance. The Murdochs maintain their hold on 21st Century Fox and News Corporation because of dual-class stock structures that give them more power than ordinary shareholders.
The Murdoch family trust owns about 40 per cent of the voting shares in 21st Century Fox and News Corporation, and Murdoch has more rights than any of his children. His allies also control substantial blocks of the voting shares, giving him effective control of the companies. (The Sulzberger family controls The New York Times Company with a dual-class stock structure.)
Since the financial crisis, 21st Century Fox's stock price has beaten the Dow Jones industrial average and the Standard & Poor's 500-stock index, but has been outperformed by rivals like Disney and Time Warner. The stock has been flat since it spun off News Corporation two years ago, while the S.&P. 500 is up 27 per cent.
In his new role as the face of the company, James Murdoch will have to please not only his father, but big institutional shareholders as well.
To that end, his father seems to have vetted each of his children before handing James the reins. James's brother, Lachlan, distanced himself from the company in 2005, spending years pursuing his own interests in Australia. He is now expected to become co-executive chairman, beside his father. Their sister Elisabeth, once briefly considered a successor, built up her own company, Shine Group, then sold it to her father for $673 million in 2011.
James has stayed closest to his father's side, working in a variety of roles across the family's music, television and newspaper businesses.
In the years to come, the siblings will have to rally behind James for the company to succeed. Fractious relations among siblings have undone many a family dynasty, including the Bancrofts, who sold Dow Jones & Company to Mr. Murdoch in 2007 during a period of internal rancor.
"What's less clear is how well the heirs work together," Mr. Clark said of the Murdochs. "If the siblings back James, this handoff will be very effective."
Even the most enduring dynasties hit bumps. After centuries of success making cymbals, two of the Zildjian brothers squabbled in the 1970s. One of them, Robert, quit and founded Sabian. That company is now Zildjian's main rival.
© 2015 The New York Times News Service
