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| The mythical $1.7bn of Rupert Murdoch's second divorce | The mythical $1.7bn of Rupert Murdoch's second divorce |
| (4 months later) | |
| Numerous publications and news outlets around the world, including the New York Times, noted a glaring and puzzling fact the other day in its coverage of the latest Murdoch divorce. As though with one voice and sure agreement, the worldwide media said that Rupert Murdoch had paid his second wife, Anna, whom he divorced in 1999, $1.7bn – making it one of the, if not the, largest divorce settlement of all time. | Numerous publications and news outlets around the world, including the New York Times, noted a glaring and puzzling fact the other day in its coverage of the latest Murdoch divorce. As though with one voice and sure agreement, the worldwide media said that Rupert Murdoch had paid his second wife, Anna, whom he divorced in 1999, $1.7bn – making it one of the, if not the, largest divorce settlement of all time. |
| My story now is less about Murdoch and his divorces, about which I will surely have much more to say, than about the how the media reports and how it counts. This example, and its mindless repetition, suggests that much of what you read, especially when it involves numbers, could be a crock. | My story now is less about Murdoch and his divorces, about which I will surely have much more to say, than about the how the media reports and how it counts. This example, and its mindless repetition, suggests that much of what you read, especially when it involves numbers, could be a crock. |
| One-and-three-quarters billion dollars is an extreme and preposterous amount that, with any attention to the Murdoch story – actually, with any attention to any story – ought to have cried out for further scrutiny. It is certainly a failure to understand what most billionaires are made of – much less cash than you might think. And in Murdoch's case, it's an absurd distortion of a story with a fine dramatic balance. | One-and-three-quarters billion dollars is an extreme and preposterous amount that, with any attention to the Murdoch story – actually, with any attention to any story – ought to have cried out for further scrutiny. It is certainly a failure to understand what most billionaires are made of – much less cash than you might think. And in Murdoch's case, it's an absurd distortion of a story with a fine dramatic balance. |
| Rupert Murdoch is not a man who would pay most of his fortune even for love (that is to exit one love and enter another), and Anna, his steely and principled second wife, is not a woman who would extort such sums even to soothe her own great pain. | Rupert Murdoch is not a man who would pay most of his fortune even for love (that is to exit one love and enter another), and Anna, his steely and principled second wife, is not a woman who would extort such sums even to soothe her own great pain. |
| This misapplication on the part of much of the world's media of more than $1.5bn seems to have only really bothered two people in the world: Neil Chenoweth, the world's most comprehensive follower of Murdoch's finances, and me, the most obsessive chronicler of Murdoch's motivations. | This misapplication on the part of much of the world's media of more than $1.5bn seems to have only really bothered two people in the world: Neil Chenoweth, the world's most comprehensive follower of Murdoch's finances, and me, the most obsessive chronicler of Murdoch's motivations. |
| Chenoweth and I do not know each other, and have the mutual arms-length wariness of biographers of the same subject. We do, however, have Twitter in common, and hence registered each other's nearly simultaneous "Huh?" | Chenoweth and I do not know each other, and have the mutual arms-length wariness of biographers of the same subject. We do, however, have Twitter in common, and hence registered each other's nearly simultaneous "Huh?" |
| If Anna secretly holds $1.7bn of Rupert's NewsCorp stock then all that stuff bout the 6 kids getting equal shares is hooey. Makes no sense | If Anna secretly holds $1.7bn of Rupert's NewsCorp stock then all that stuff bout the 6 kids getting equal shares is hooey. Makes no sense |
| — Neil Chenoweth (@NeilChenoweth) June 14, 2013 | — Neil Chenoweth (@NeilChenoweth) June 14, 2013 |
| I saw the number in the Times; Chenoweth, in Australia, registered the sudden weird repetition of the number everywhere else. | I saw the number in the Times; Chenoweth, in Australia, registered the sudden weird repetition of the number everywhere else. |
| Chenoweth, I feel safe in saying, knows more about what's in Rupert's pocket than Rupert knows. He has meticulously followed not just the company's ever-expanding fortunes and often complicated transactions, but Murdoch's own trades in his company's stock, transfers to his children, and tight-fisted management of his own dough. | Chenoweth, I feel safe in saying, knows more about what's in Rupert's pocket than Rupert knows. He has meticulously followed not just the company's ever-expanding fortunes and often complicated transactions, but Murdoch's own trades in his company's stock, transfers to his children, and tight-fisted management of his own dough. |
| Still, this story does not take an expert. Any reasonably numerate person should know that $1.7bn doesn't grow on trees. You can't hide $1.7bn. In order to have drummed up $1.7bn in cash in 1999, nearly a quarter of his family's holdings at the time, Murdoch would have had to have sold enough of his News Corp holding to shake the value of the company and to lose the single most important thing in his life: control of News Corp. Or he would have transferred enough stock in the company to make Anna one of the biggest holders, which would be public information, and which would also have guaranteed her a place on the board – though, in fact, he forced her off it. (With $1.7bn in voting stock, she could have forced him off.) Or he would have had to put himself in epic-scale and dangerous hock. | Still, this story does not take an expert. Any reasonably numerate person should know that $1.7bn doesn't grow on trees. You can't hide $1.7bn. In order to have drummed up $1.7bn in cash in 1999, nearly a quarter of his family's holdings at the time, Murdoch would have had to have sold enough of his News Corp holding to shake the value of the company and to lose the single most important thing in his life: control of News Corp. Or he would have transferred enough stock in the company to make Anna one of the biggest holders, which would be public information, and which would also have guaranteed her a place on the board – though, in fact, he forced her off it. (With $1.7bn in voting stock, she could have forced him off.) Or he would have had to put himself in epic-scale and dangerous hock. |
| Such a sum would make the former Anna Murdoch, now Anna Mann, one of the richest women in the world – as rich or richer than Murdoch himself. | Such a sum would make the former Anna Murdoch, now Anna Mann, one of the richest women in the world – as rich or richer than Murdoch himself. |
| The divorce was in California, a community property state, which gave Anna enormous leverage in dealing with her husband. She could have insisted on that $1.7bn, or even more, maybe causing the company to be sold in the process. But having regarded the company as her life's work as well as her husband's, she used her unique leverage to protect the company for her children. | The divorce was in California, a community property state, which gave Anna enormous leverage in dealing with her husband. She could have insisted on that $1.7bn, or even more, maybe causing the company to be sold in the process. But having regarded the company as her life's work as well as her husband's, she used her unique leverage to protect the company for her children. |
| Her deal, spelled out in quite specific terms to me by News Corp's long-time lawyer, Arthur Siskind, was straightforward, and elegant. She would receive $100m, give or take, and Rupert would be bound not to change the terms of the family trust. That is, Anna's three children – Elisabeth, Lachlan, and James, along with Prudence, Rupert's child by his first wife, whom Anna raised – would inherit the company. In order for her not to make a full California division of property claim, Rupert – neither in Anna's eyes, nor in the world's estimation the most trustworthy soul – would have to set this in stone. Thus Anna made sure the next generation of ownership was locked down tight. | Her deal, spelled out in quite specific terms to me by News Corp's long-time lawyer, Arthur Siskind, was straightforward, and elegant. She would receive $100m, give or take, and Rupert would be bound not to change the terms of the family trust. That is, Anna's three children – Elisabeth, Lachlan, and James, along with Prudence, Rupert's child by his first wife, whom Anna raised – would inherit the company. In order for her not to make a full California division of property claim, Rupert – neither in Anna's eyes, nor in the world's estimation the most trustworthy soul – would have to set this in stone. Thus Anna made sure the next generation of ownership was locked down tight. |
| As Chenoweth tweeted: | As Chenoweth tweeted: |
| In the week the divorce to Anna was finalized in June 99 RupertMurdoch raised $A214m selling stock. And she got a couple of houses | In the week the divorce to Anna was finalized in June 99 RupertMurdoch raised $A214m selling stock. And she got a couple of houses |
| — Neil Chenoweth (@NeilChenoweth) June 14, 2013 | — Neil Chenoweth (@NeilChenoweth) June 14, 2013 |
| Now, as it happened, Rupert would breach this agreement. When he had two more children with Wendi, he begged his adult children to agree to a change in the trust. Rupert, the ironfisted tightwad, who believed his and his children's money should only be held in the company's stock, had kept his jetset offspring pretty poor compared to other billionaires' children. | Now, as it happened, Rupert would breach this agreement. When he had two more children with Wendi, he begged his adult children to agree to a change in the trust. Rupert, the ironfisted tightwad, who believed his and his children's money should only be held in the company's stock, had kept his jetset offspring pretty poor compared to other billionaires' children. |
| So, he bought them off, each with $150m – begrudgingly having to sell equity to raise this money (he sold his non-voting shares). For this, they agreed to divide the trust into six parts, instead of four. But they were unmovable – Anna's fury would not let them move – on the voting issue. Their young sisters, to Wendi's chagrin, would never have a vote. | So, he bought them off, each with $150m – begrudgingly having to sell equity to raise this money (he sold his non-voting shares). For this, they agreed to divide the trust into six parts, instead of four. But they were unmovable – Anna's fury would not let them move – on the voting issue. Their young sisters, to Wendi's chagrin, would never have a vote. |
| According to Chenoweth's analysis, the $1.7bn number appears first in Australia and then travels to the UK – and, even here, as a number incorrectly rendered. It first appeared as speculation, in an article in an Australian women's magazine (pdf), as $A1bn ($US660m). | According to Chenoweth's analysis, the $1.7bn number appears first in Australia and then travels to the UK – and, even here, as a number incorrectly rendered. It first appeared as speculation, in an article in an Australian women's magazine (pdf), as $A1bn ($US660m). |
| It then crossed to the UK, first in the Independent – which has since removed the number – as £1bn, then was repeated by the Telegraph in 2010 as $1.7bn, where it now resides on Wikipedia as the second-most expensive divorce in history. (In other words, along with other outlets, the New York Times is charging its readers for junk information from Wikipedia. It ought at least to offer a refund, not to mention a correction, which it has yet to issue.) | It then crossed to the UK, first in the Independent – which has since removed the number – as £1bn, then was repeated by the Telegraph in 2010 as $1.7bn, where it now resides on Wikipedia as the second-most expensive divorce in history. (In other words, along with other outlets, the New York Times is charging its readers for junk information from Wikipedia. It ought at least to offer a refund, not to mention a correction, which it has yet to issue.) |
| Meanwhile, the much more salient fact of Murdoch's second divorce was overlooked. Other than hardly perceptible nods on a few unavoidable family occasions, he has not spoken to the mother of three of his children since he left their home, 15 years ago. | Meanwhile, the much more salient fact of Murdoch's second divorce was overlooked. Other than hardly perceptible nods on a few unavoidable family occasions, he has not spoken to the mother of three of his children since he left their home, 15 years ago. |
| The cold man is about to get even colder. | The cold man is about to get even colder. |
| • Editor's note: Neil Chenoweth's name was misspelled in the original; the article was amended at 1pm ET on 17 June | • Editor's note: Neil Chenoweth's name was misspelled in the original; the article was amended at 1pm ET on 17 June |
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