Rupert Murdoch Announces Split of Company, Marriage
Eighty-two-year-old billionaire and media mogul Rupert Murdoch is set to divide his media company, News Corp., in two, with one company managing all the publishing assets (which include Harper Collins, the Wall Street Journal, and the New York Post), and the other focusing on TV and film.
But that impending separation was overshadowed last Thursday by the announcement of a more personal one: Murdoch filed in a New York Court for divorce from his wife, Wendi, as a result of irretrievable marriage breakdown.
Wendi Deng Murdoch is Rupert's third wife, and 38 years his junior. A Yale MBA graduate originally from a factory town in China, Deng was working for Murdoch's company Star Television in Hong Kong when the pair first met.
Insiders have recently suspected difficulties in the couple's 14-year marriage, but the divorce is still big news in the financial community, where any indication of marriage settlements eating into the family business empire is bound to set investors on edge.
Murdoch's previous divorce, from his second wife, Anna, is notorious for its rumored settlement of $1.7 billion, which included about $110 million in cash, plus properties and other assets. Despite the astronomical sum (said to be the second-highest divorce settlement in history), things could have gone far worse for Murdoch. The couple lived in California, a state with a shared-property regime, and they did not have a pre-nup. Anna could have claimed half his fortune, then valued at $7.8 billion.
Murdoch was more cautious this time around. When he married Deng in 1999 aboard his private yacht (just 17 days after his previous divorce was finalized), she had already signed a pre-nup, and she later signed two additional agreements, one following the birth of each of the couple's daughters. It is almost certain Murdoch would have protected News Corp. and its new offshoot, 21st Century Fox, in the agreement. Both companies are currently to be controlled by the Murdoch family trust, in which all six of his children hold shares (though Grace and Chloe, his children with Wendi Deng, hold only non-voting shares).
How enforceable is a pre-nup? The answer depends on the jurisdiction. New York is a state known to be "pre-nup friendly," and the agreement will likely be upheld, unless it is unconscionable. But the enforceability of pre-nups or other domestic contracts, such as separation agreements, can be a tricky issue.
If the couple were divorcing in Canada (where pre-nups are referred to as "marriage contracts"), the fate of their contract would be less certain. Canadian law regarding marriage contracts is currently in a state of flux, and it is common for one spouse to apply to the court to have their agreement set aside. If there were procedural problems at the time the agreement was signed (for example, one person was pressured to sign, didn't have independent legal advice, or did not know what they were giving up), the agreement might be set aside. The same is true if the agreement is grossly unfair to one spouse at the time of signing, or if it has unexpectedly become so by the time that one spouse applies to have it set aside.
A large power imbalance between parties can lead to issues with the contract. Deng, significantly younger than Murdoch and a junior employee at his company at the time of marriage, could certainly meet those criteria. (And Murdoch admits he had to persuade her to accept his proposal.) However, Murdoch covered his bases here: Deng was represented at the time by Pamela Sloan, an experienced attorney who is now representing her in the divorce. That makes it much harder for Deng to argue she didn't know what she was getting into. The subsequent signing of two additional agreements, to take into account the birth of two daughters, also makes it less likely that holes will be found in the pre-nup.
Wendi Deng probably won't walk away empty-handed from her marriage to a man Bloomberg lists as worth over $12 billion, but let's hope she and her lawyer were sharp negotiators back in 1999. She may not get much more than whatever is in that pre-nup, plus her share of any property the two own jointly-which includes a Beverley Hills home and a Manhattan condo purchased in 2005 (for a whopping $44 million).