Wendi Deng: Heiress Apparent?

BY LEE HAN SHIH
May 17, 2009
*Special to asia!

How Rupert Murdoch's young wife could end up running the world’s most aggressive media empire.

Murdoch has made no secret he wants to run the biggest media company in the world. This means he must be a major player in two emerging markets – the Internet and China. In both markets he has worked closely with his current wife, Deng, but only indirectly. Deng would have had legitimate ground to be elected to the News Corp board if Murdoch had managed to amend the family trust in 2004. Because that failed, Murdoch has adopted a different approach: he is creating a new media empire, one that is adjunct to News Corp, but not bound by its rules, to be run by Deng. In a nutshell, he has set in the process of splitting his family empire into two, passing one of them into the hands of Deng.

 

wendi deng by chris peterson

Photo credit: Christopher Peterson

 

Chinese-born Deng, 38, met Murdoch, 76, in 1997 when she, as a middle manager of his Star TV, gate-crashed his party in Hong Kong and introduced herself when he walked through the door. They started dating the following year and were married in 1999, 19 days after Murdoch’s divorce from Torv.

Obscured by news of Murdoch’s bid for Dow Jones, many missed the announcement that Deng had been appointed a director of MySpace China. This is her first appointment in News Corp.

MySpace China has an unusual corporate structure – it is 51% held by News Corp, but managed by the Chinese, including, it is said, Deng’s younger brother. Neither News Corp nor MySpace has direct control over MySpace China. The one wields the power at the company is none other than Deng herself.

 

Breaking into China

Where MySpace goes, other News Corp assets are likely to follow. In coming months, expect similar joint ventures in China. Each will have News Corp as a major investor but it will be run by a team that ultimately reports to Deng. Even the Journal is likely to go the same route.

This is no mere sleight of hand by Murdoch to pass control to Deng, though it must be one of his intentions. With half a billion people learning English, China will become the biggest English-speaking country in 20 years. It is a market no global media company can afford to ignore. Under current rules, the joint venture is the best way to enter the Chinese market. For instance, Yahoo paid US$1 billion to buy the mainland e-commerce firm, Alibaba, to spearhead its growth in China.

The Journal has an Asian edition, which has a circulation of less than 100,000 after two decades of operations, barely scratching the surface of potential demand among Asia’s booming economies. China alone could yield millions of readers, if the Journal is willing to go into a joint venture in the mainland.

Under the Bancrofts, any talk of such a joint venture would have been a non-starter. It now falls on Murdoch to persuade the independent panel that such a venture will benefit the Journal, without sacrificing the paper’s journalistic integrity. To avoid talk of conflict of interest, Deng is unlikely to take a direct role in such a venture, but it’s difficult to see how she could be kept out of the picture, given that she speaks and understands Chinese and had spearheaded the setting up of MySpace in China.

For the critics of the holier-than-thou Journal, there is a delicious irony that Deng – who seven years ago was severely criticised by the Journal – is now in line to end up running the paper. The irony takes on another dimension when one remembers that Deng’s original name is not “Wen Di” (she combined the two words in English) but “Wen Ge”, which means “Cultural Revolution” in Chinese. Barron would turn in his grave if he knew that a woman named after the darkest episode in China’s modern history could end up running the publication he had built up to be the most capitalistic paper in the world.

But Barron is the past and Deng, the future. At his age, Murdoch has at most a decade of active years, after which he has to pass the running of News Corp to someone. None of his adult children works closely with him, if at all. It takes little to see whom he favours as his successor. Creating a series of joint ventures under Deng is the only way he can achieve his objective. Given time, Deng’s influence in News Corp will grow, to the extent that after Murdoch goes, his children will have little choice but to accept her into the top management of News Corp. No doubt this is an outcome that would be welcomed by the Chinese government.

lee han shihLee Han Shih is the founder, publisher and editor of asia! Magazine.

 

Contact Han Shih