>> two days ago. >> rupert murdoch's two sons back on his coattails. >> everyone is happy, everything is good. >> it's family and we're doing great together. >> but things had sort of gone sideways. >> profit without purpose is a recipe for disaster. >> liz is differentiating herself from the murdoch family. >> james is basically ambushed. >> lachlan says that james will be working for him. >> willpower is everything. >> james has no question that lachlan will burn out. >> yes, you have met some of my family before. >> rupert murdoch, get out! >> it's the phone hacking scandal that has the uk in an uproar -- >> thousands of victims.

>> this phone hacking crisis is escalating and getting closer and closer to the center of power. >> this is the most humble day of my life. >> facing widespread public anger, news corp withdrew its 12 million dollar bid to take over bskyb. >> james had been a step away from being the official heir. >> but he had made all the wrong decisions and he's essentially kind of run out of town. >> it is like a stick of dynamite that has exploded inside the family. >> ladies and gentlemen, my father, donald j. trump. >> most people think that the start of the trump political rise happens famously on the golden escalator at trump tower, when he announces he's running. but, in our reporting, we

learned that it truly started months earlier. in early 2015 rupert murdoch's office gets a call. it's ivanka trump. the ties between the trumps and the murdochs are deep. jared, when he bought a weekly newspaper in new york, the new york observer, he'd reached out to murdoch for advice in the newspaper business to become basically, his protege, and a relationship developed between rupert, wendi, and jared and ivanka. they even vacationed together, went to the caribbean on a yacht, naturally. early 2015, so ivanka proposes a lunch. and at this lunch, it's ivanka, jared, donald trump, and rupert murdoch. there really couldn't be a more

glaring contrast at this intimate lunch. trump, this larger than life glutton, a cheeseburger and fries kind of guy. at this stage, rupert's a health nut. grilled chicken and vegetables and a little soup. the only thing these two men have in common is diet coke. rupert has no idea what this lunch is about, and then trump breaks the news; i'm going to run for president. the subtext being; he's going to want rupert's support. without looking up from his soup, rupert says; you better be prepared to get wrapped up badly. which is australian for getting beaten up. ♪

>> so, it's 2014, and i'm sitting with rupert murdoch, in his office on 6th avenue, and frankly, i was a little surprised that he was willing to talk with me because he had not done any kind of real lengthy public interview in 5 years. and i'm sitting there and saying, could i set up my tape recorder? and he said, fine. you've had a very eventful last few years. >> oh, it's been stressful. >> so do you feel that any stresses in the family have been repaired now? >> i hope so. >> okay. >> rupert murdoch's son, james, has stepped down from another

corporate position amid ongoing fallout from the uk phone hacking scandal. >> 2011, it's a bruising period for the murdoch family. james has basically flamed out with hacking. lachlan is still estranged in australia. >> well, there's been a lot of talk about your son, james, perhaps being your heir apparent until -- >> well that was there because he was the only one in the company. and now, my daughter, elisabeth's in the company. >> if there is one moment when elisabeth has a real shot at finally winning the succession battle, this is it. she's proven herself, she's done it on her own. she hasn't been part of this mess. >> in 2011, she sells her very successful tv production company, shine, to her father. suggesting that maybe this is the beginning of her return and rise, but things had sort of gone sideways. elisabeth doesn't ultimately

replace james, she doesn't get his job. >> every indication is, the relationship between liz and her father breaks down. >> at that point, murdoch had intended to segue elisabeth onto the board of news corp. >> she declined to go on the board, right? yeah, why did she decline? >> i don't know. i'd rather not go into that. >> okay. >> the pain in his voice is clear and surprising to me. >> and then, in the summer of 2012, liz is invited to give what's known as the mactaggart lecture, the most important annual speech in media circles in the uk. >> writing a mactaggart has been quite a welcome distraction from

some of the other nightmares much closer to home. yes, you have met some of my family before. the uh -- >> with this lecture, liz is very clearly differentiating herself from the murdoch family. >> and elisabeth decides to use this particular speech to go after her brother, guns blazing. >> speaking of independence, my brother james spoke about it in his mactaggart, three years ago. >> the only reliable, durable, and perpetual guarantor of independence is profit. >> the reason his statement sat so uncomfortably is that profit without purpose is a recipe for disaster.

>> this is something that people have been talking about with the murdochs for decades. that they only care about the business, that they don't think about their moral and ethical responsibility, and here is one of the murdochs making that very claim. >> profit must be our servant, not our master. >> this is a really brilliant moment for elisabeth. she shows that she's her own executive and establishes herself as someone who would have never allowed the family to get in this kind of trouble. >> that did cause a rift for a while though, didn't it, between liz and james. >> i think she was hurt when i said i didn't really love it. when i didn't say it was a wonderful speech. >> did it take a while for you to watch it? >> i didn't watch it, i read it. >> i really harbor absolutely no

ambition for that top job that you refer to, so -- >> is it likely that she will somehow get involved in the business again? >> i'd love them all in. >> yeah, and you've expressed this to her? >> oh yeah, she knows. >> yeah. >> this is a family empire, first and foremost. and i think he desperately wants to keep it that way. >> elisabeth? >> but in 2014, elisabeth murdoch steps away from the family business. >> thank you very much, and goodnight. >> she resigns as chairwoman of shine, the company that she built, and her father bought. in doing this, liz is basically closing the book on one major chapter in this saga. >> so why did liz leave?

i mean it's difficult to say and to get inside her head, but maybe she had nothing left to prove. >> i think she just decided to stop playing the game. >> it was so shocking in that moment, but looking back on it, one can sort of infer that it's a matter of self-preservation maybe. elisabeth has recognized that this isn't going to happen for her. so why shouldn't she just look out for herself and try to build her own name and her own reputation? (vo) with their verizon private 5g network, associated british ports can now

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and now to a high profile split that has a lot of people talking, rupert murdoch filing for divorce from his wife. everyone is now wondering what went wrong. now as you can imagine -- >> the news broke that the murdoch marriage was on the rocks. i called a source and i'm like, please kill me, but i have to ask about what happened to the murdoch's marriage? and this person was like, just look at your computer. and all of a sudden, this image starts coming up on my screen in this email, that's wendi sitting in between rupert and tony blair. >> tony blair, who's godfather to one of her children. >> thank you very much everyone. >> and the prime minister murdoch supported three times for election -- >> what are you trying to tell me here? are you saying what we think you're saying?

we didn't say it was an affair, but it was a euphemism like close relationship. and that was followed by a "vanity fair" story. wendi had written about her affairs in her diary. >> according to an alleged secret love note that's been linked to wendi -- >> in the writing, like wendi and tony with hearts. >> describing how she sort of loses herself in tony blair's eyes. how he has the cutest bottom, or whatever. >> of course, mr. blair in particular has denied it, but more important than his denial is the fact that whether it is true or not, mr. murdoch believes it. >> over the years, wendi dang has declined to comment. >> murdoch files for divorce and the split is swift and the split is complete. >> one of the things about murdoch is he's very loyal to you until he's not. at a certain point, he just cut

off the tie. >> let me just ask you about james, what kind of a leader is he? >> oh, james is, well, he did a great job when he went to hong kong, and he got india right. >> you know, james now is basically beginning the process of rehabilitating himself in the wake of the phone hacking scandal. >> if you become paralyzed by your failures, then you won't grow and you won't have big visions for the future and i think what you have to is try to learn as best you can. >> okay, lachlan -- >> lachlan is a wonderful human being. >> lachlan was back in australia, he had very viscerally distanced himself from the family when he felt that his father wasn't supporting him against roger ailes a decade earlier. >> i hope, and i've said from day he went back there, that

he's going to come know here. >> and do you see that possibly happening in the next couple of years? >> yes. >> and then almost 10 years after he has left the family business, lachlan murdoch returns from australia. >> and what does that mean? i mean does that mean that maybe lachlan is going to supplant james? does it mean that lachlan is in fact going to be the heir again? >> so many years ago, lachlan was declared first among equals, and to have him back, it's a real shake up in terms of the succession race. >> rupert murdoch is now 83 years old. his two sons are now firmly back on his coat tails. >> everybody's trying to read the tea leaves. who does rupert like more?

>> this idea that he'd hand the reins over to his son, james, has been -- >> who's standing next to him in the picture? who is he taking here? or who's he taking there? and all of a sudden, now there's a contest. now there's a bake off. who's going to run this thing? >> the race for the white house has suddenly gotten very hot and possibly very crowded, as the gop attempts to win back the oval office. >> and to the republic, for which it stands. >> it was a huge republican field, i think there were 19 candidates ultimately. >> everyone in republican party politics knows, you have to seek out the murdoch seal of approval. >> because the road to the republican nomination ran

through fox news. >> which is why ivanka proposed lunch with rupert in january, 2015. she wanted him to give her father his blessing. >> rupert murdoch has a good relationship with donald trump, but he does not take him seriously as a person. and he certainly doesn't take him seriously as a presidential candidate. rupert denies this, but we were told he refers to him as, an effing idiot, privately. of course, never publicly. try dove dry spray. our weightless formula with 1/4 moisturizers is effective and kind to skin. leaving you feeling instantly dry and confident.

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it's so nice to say i'm running as opposed to, "if i run, if i run," i'm running. >> the fact is, no one invented donald trump other than donald trump. but it wouldn't have been possible without rupert murdoch and "he new york post." >> we need trump now! >> you're right. >> over the course of four decades, donald trump appeared of "the new york post." >> donald trump was tabloid gold. i don't think that murdoch and trump were friends, but murdoch certainly saw the advantage in

using trump. he could see that trump would sell papers. and trump used "the post" the same way. >> donald trump used to call "page six" almost every day. all of those trump stories that we were writing is how he could go to the bank and continue to get loans the next morning. i'm serious. >> most americans knew donald trump through his popular reality television show, "the apprentice." >> maria, you're fired. you're fired. you're all fired. all four are fired. >> and in fact, some people would say that nbc launching the show in 2004 is what enabled trump to become a national star. >> donald trump is ceo of the trump organization and he joins us now, bright and early on a monday morning, on the phone. >> you know, i want to let people know, i'm a smart guy. because what they do to the birthers and it's, i don't even like the term -- >> it's murdoch's fox and

friends that really helps transform donald trump from an entertainment figure into a political one. >> why can't he produce a birth certificate? there is something very strange going on. >> he would go on and talk about what's really going on with barack obama's birth certificate. the message is, here's an other, here's a black person who may not be what they seem. >> it was a natural synergy between what trump was espousing and what fox had already been telling its viewers for years. >> and then they get president b. hussein obama in there. >> he kicked his american flag pin to the curb. >> obama refuses to salute the flag -- >> deep seeded hatred for white people. >> this is the beginning of a grand scheme -- >> the idea was that if you could speak to their fears, if you could make them afraid, well then they'll keep watching. >> that first time that we put him on, the ratings for those 15 minutes spiked. and the way it worked was, if any quarter spikes, you repeat that. you give the viewers what they want.

>> joining us now, donald trump. >> brash and never bashful, the donald now makes his voice loud and clear -- >> after spending four or five years on "fox and friends," donald trump really did have his finger on the pulse of the fox news audience. >> so when he comes down that golden escalator and he gives the speech -- >> when mexico sends its people, they're not sending their best -- >> that seemed way over the line. >> they're bringing drugs, they're bringing crime, they're rapists, and some i assume are good people. >> what donald trump knew is that what he was saying was what a lot of conservatives, especially fox news viewers, really wanted to hear. >> --the illegal immigration -- >> major crisis at our border -- >> why are they helping illegal aliens -- >> illegal -- >> for years fox has been stoking fears about immigrants and trump, brilliantly, pulls a page from that directly. he says what fox is doing is what i'm going to do, only i'm going to take it over the top in

a way that not even fox could do. >> i will build a great, great wall on our southern border and i will have mexico pay for that wall. mark my words. >> so after that, rupert murdoch tweets out that he's actually in support of immigration. murdoch was worried because he saw trump as somebody who was going to ruin republicans' chance at winning the white house, and all of that power that he had built up within the republican party would go away. >> and then rupert murdoch tweeted out, he is embarrassing all of us. donald trump changed the republican race immediately. and rupert murdoch did not like it one bit. >> good morning, mr. murdoch. you're going to retire soon, finally, and have a good life? >> no way.

>> by now, lachlan had been back in the united states for about a year. and there was still an open question; which of the sons is going to get the top job? >> then, in the summer of 2015, something surprising happens. we learned in our reporting, there had been a lunch, it's lachlan, chase carey, who's the head of news corp, and james. and lachlan has a little news to deliver. >> lachlan tells james that he's going to be the co-executive chairman of the company with rupert, and that james will be working for him. james hears this and he is furious. not only is his brother jumping over him, taking his job, but their father, rupert, didn't even deliver the news himself. james feels like his father has basically just stabbed him in the back. james storms out of the

restraint, threatens to quit, gets on an airplane and flies to indonesia. >> it was a very tenuous moment. so his father and brother came up with a compromise to try to lure him back. lachlan and james would be seen as co-equals, running different parts of the company. >> have a bit of breaking business news now in our parent company, james murdoch will work with his brother, lachlan who will become executive chairman. this is a -- >> rupert and lachlan go out of their way to present this story to the outside world. >> these were the brothers, they're best friends, it's family. we've got joint custody of this thing, we are co-parenting, and we're doing great together. >> so why would james agree to this? >> as much as james might feel betrayed by his father, feel like he's not treated fairly by his father, he continues to try

to prove himself to his father. >> it's been a great start so far and the company has good velocity -- >> james had devoted his entire life to the company. so it's clear he doesn't want to walk away without trying one last time to make it work. >> and there's another thing we learned, james has no question in his mind that lachlan will burn out. >> lachlan will get bored, restless, he'll want to return to australia. >> so if james is ceo, he can run the company as he sees fit. lachlan will stay out of his way and eventually james will take over. of our clients come to us with complicated situations that occur in their lives. for them it's the biggest milestone, the biggest accomplishment, the sale of a business, or an important event for their family. for them, it's the first and only time.

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♪ there this signal moment in august 2015, it is the first republican primary debate. it is hosted, of course, by fox news. >> former florida government, jeb bush. businessman, donald trump. >> murdoch had already put donald trump on notice that, you know, get ready to get naked around. >> you've called women you don't like, fat pigs, dogs, slobs, and disgusting animals. your twitter account -- >> only rosie o'donnell. >> trump becomes immediately defensive and then goes right on

the attack. >> honestly megan, if you don't like it, i'm sorry. i've been very nice to you, although i could probably maybe not be, based on the way you have treated me, but i wouldn't do that. but you know what -- >> it was, i thought that trump got the better of it. the megan kelly dustup was an early test of whether trump could kind brazen those kind of attacks out, which he did. >> and i think this creates this really interesting situation for rupert murdoch. because, when your first debate of the primary cycle gets 24 million viewers, blowing the roof off any record in cable news history, there's something going on here. >> the questions to me i think were much tougher than the questions to anybody else. >> why do you think that was? >> i don't know. >> unlike other republican politicians who have always felt that they answer to fox news and

they cannot do anything to offend rupert murdoch, donald trump instead decides to go to war with fox. >> i was asked some really nasty questions by people that are not nice people. she's not very tough and she's not very sharp, so you know, i blame fox to a certain extent. >> rupert went on twitter and said; donald, you need to calm down. and then fox held the follow-up debate in january 2016. >> before we get to the issues, let's address the elephant not in the room tonight. donald trump has chosen not to attend this evening -- >> trump boycotted the debate, refused to show up. he held a competing event down the street. >> i kind of miss donald trump, he was a little teddy bear to me. >> the ratings plummet, like half as many people tune in. >> no longer does trump need fox news. they need him. and it's the moment the balance of power shifts.

>> trump is the republican party's presumptive nominee for president. >> rupert always has his eye on where power is moving. >> see you at the 14th. >> sometimes he gives it a nudge. >> it's clear to rupert in this moment, that people want to see donald trump. and if fox wants to keep its audience, it's going to have to get on board. >> around this time, rupert, who is around 85, marries again, to former super model and mick jagger ex, jerry hall. >> while rupert and his new wife, jerry hall, are off enjoying their honeymoon, his two sons are attending one of the most important media conferences in the world. >> but the summer of 2016, it's

a little bit different for james and lachlan murdoch because they attend sun valley without their father. and it's the first year that they've done that as business leaders out from under the wing of their dad. that morning in july, lachlan has a conversation with julie henderson, who is the top communications officer at the company. and she asks him, have you see the suit. >> a sexual harassment scandal is rocking the world of cable news. >> sexual harassment charge leveled at fox news chief, roger ailes. >> fox news host, gretchen carlson alleges she was fired by roger ailes because she rebuffed his sexual advances. >> we've reached out to fox news for comment on the sexual harassment suit, no word back yet and no comment from -- >> this lawsuit is really the first big test for james and lachlan in their positions at

the top of the company. >> gretchen carlson today -- >> ailes, one of the most powerful men in media -- >> the way sexual harassment cases have been handled is that a woman comes forward -- >> what corroborating evidence does she have? >> -- she's promptly put into this secret chamber to have the case handled. and she might get some sort of paltry payout. you never hear from her ever again. and she never works again, usually. the predator gets to stay on the job, and the cycle continues. and, she has to sign a nondisclosure agreement. so there's been a movie and a mini-series made about my story, and i can't even tell you whether or not it's accurate. >> fox and friends. >> well good morning folks, it is already wednesday, thanks for joining us. >> in the beginning it was the perfect job for me that i had always dreamed of. the only remnant is the freezing temperatures here this morning. >> right. >> gretchen carlson was very

much in the mold of a fox news female anchor; blond, former beauty queen. >> you're just a just sexist. >> yes. i jest -- >> okay. >> but she didn't dance to roger the way he would have liked. so there was always a little bit of a conflict going on, from the beginning. >> headline time, women are everywhere, we're letting them play golf and tennis now, it's out of control. >> you know what? you know what? >> she's out. >> you read the headlines since men are so great. go ahead, take-- i would call them my mini protests. but listen, i had to be really careful. >> there was a lot of fear inside the halls of fox. that's how he believed in keeping people in line. >> you know my lawyers, the number one thing they warned me about is that they're going to

try and take you down. >> roger ailes denies ever having harassed anybody. >> roger ailes had deep, deep ties to powerful people. we knew he did black ops. murdoch could plant articles about you. he had political power. he had financial power. and he had media power. it's a machine that can crush you. ♪ ♪ a bunch of dead guys made up work, way back when. ♪ ♪ it's our turn now we'll make it up again. ♪

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♪ back in sun valley, james and lachlan get on the phone with their attorney about what they're going to do. the way that the company has always dealt with these kinds of complaints is to just let ailes railroad everyone and this time james and lachlan decide to do something very different. >> with roger ailes what we were able to do is go in, we hired an outside law firm to go in and investigate. >> have to have independent investigation, right? you have to actually get to the bottom of it. >> they actually announced that they were going to start an investigation. we were all pretty dumbfounded.

because that was not something that we had predicted would happen. >> with this internal investigation, james and lachlan really see an opportunity. >> because both of them have real, long-standing problems with roger ailes. >> here we are with something worth 10 or 12 billion dollars, which is the work of roger ailes who's done it absolutely brilliantly. >> ailes hates both of them, they both hate ailes. >> lachlan murdoch abruptly resigns in the -- >> he is the reason that lachlan left in 2005. >> rupert said don't worry about the boy. >> don't worry about the boy. >> roger ailes is a genius. >> and james is far more liberal. he sees fox news as holding the company's reputation back. and so the way that they do this

investigation is targeted, like a drone strike, on their enemy, roger ailes. their dad lets them know, i hope you know what you're doing. over the course of several days, the lawyers question women about their experience with roger ailes. many of them, with shocking similarities in their stories. >> the time that was most upsetting for me was when i was young, i was hoping for more opportunity. and he nodded and assured be that i could be probably very good on the anchor desk, but that would require that he work with me a little bit more closely. and i also wouldn't be able to tell anybody about this because people would be jealous.

so, some of these meetings might have to happen at a hotel. >> i spoke to more than 30 of his victims. roger ailes was a serial sexual predator. >> it took us 13 days from the time we learned of the first allegation against roger ailes until the time that he was walked out of the building. >> there was a problem with our chief executive over the years, but isolated incidents, but that that was largely political because we're conservative. >> rupert, in honor of his relationship, in honor of the many billions of dollars that roger had earned for him, let him off quite easy. >> they paid for him to leave the company to buy him out, to go away. >> james didn't want to pay roger that money and wanted to

be much harsher and he didn't have that kind of influence in the end. >> ultimately, roger ailes left with 40 million dollars. >> -- ailes has resigned, the resignation, roger ailes is out. stepping down amid allegations of sexual -- >> the news breaks just as trump is about to accept the republican nomination for president. >> donald trump, the id of the fox news viewer, was taking the stage to accept the republican nomination for president. at the same time that the person who built up the network and the ecosystem for that to take place and for that to be made possible, was departing. and watching it, and thinking

about it, in the moment, it was breathtaking. >> -- he helped found the news division 20 years ago, rupert murdoch made the announcement to staff personally. in a statement he praised ailes, saying roger ailes had made a remarkable contribution. >> roger ailes is gone, and that creates a huge power vacuum in the center of the company. >> james sees that there's a real opportunity in this moment for fox to chart a new path, to cater to younger audiences, to be a little less right winning. >> but lachlan's view and rupert's view was why would we change this? we've never had bigger ratings. we've never had more profit. it was a fork in the road and james lost out.

>> rupert murdoch is going to assume the role of chairman. >> at age 85 rupert murdoch himself is going to take over fox news. >> murdoch was fully in his element. it's what rupert loves, running the news. >> by this point a lot of news outlets including cnn have realized donald trump is ratings gold. >> we are waiting for donald trump to speak. >> now to are extended interview with donald trump. >> mr. trump, thanks for your time. >> the crowd is fired up. >> why were people waiting in line for hours to see you? >> but with fox it's qualitatively different. for rupert fox news is also a tool of influence. >> donald trump speaking to supporters in florida yesterday and betting on a big victory in the sunshine state.

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donald j. trump. >> he's at his best when he's slightly tongue in cheek. i think he's a very funny guy. >> fox news plays an enormous

role in legitimizing trump's candidacy. >> donald trump has spurred a political movement in our country. >> i've never seen enthusiasm like this any campaign i've ever been in. >> the 45th president of the united states. >> unbelievable. >> when trump was elected, it was a victory for rupert murdoch as well. rupert had always fantasized about having a close relationship with an american president. first weeks of the presidency murdoch had visits to the white house. murdoch was on the phone constantly with trump. trump would get on the phone as we're told and say, rupert, rupert, you love this. >> i think it's natural for him to see murdoch as probably the most significant influencer in the country. >> it's my distinct honor to

introduce the commander in chief, the president of the united states, my friend, donald j. trump. >> rupert murdoch has achieved what he wants. he has a direct line to the oval office which he never had before. >> thank you to my very good friend, rupert murdoch. there's only one rupert that we know. >> he had the ultimate influence proximity to power and during this period fox takes yet another shift. >> there was a real reorganization of the network to more closely reflect donald trump's politics. >> the place that voted for trump. >> full lineup of trump cheerleaders. >> it's fox and friends this morning. >> donald trump loves to watch tv. he loves the whole fox lineup and it became this whole feedback loop of he'd watch fox. he'd hear things. >> now let's talk about immigration. yesterday we told you about --

>> and then he would tweet them. >> the president just tweeted. can we look at this tweet he just put it out? >> donald trump will watch that, say, "we need to get our borders under control," and then fox news will shift coverage talking about how the president says there's a crisis on the border and we need to get things under control. it was difficult at times to tell was donald trump setting the country's agenda or was fox news setting the country's agenda? >> president trump did exactly the right thing. >> donald trump has been doing a great job. >> it's something you've never seen in american history. a news network is practically an arm of the white house. >> whatever his instinct is, that's right. >> he left it all on the field. >> talk about fox news. is fox news fair and balanced? >> james murdoch is watching

this all in dismay. >> look, i mean i think the leadership at fox news makes decisions around how they hire and what they do. i try not to get too much. >> he is getting increasingly uncomfortable with the direction that the network is heading in under really the leadership of his own father. >> it really forces a conversation inside the murdoch family about what is it that they've created. >> james was really alone in feeling that fox news was going off the rails and the first kind of cracks are starting to appear. >> maybe we won't do it anymore. >> come on, help me out here.

>> the public face of the company is this is a wonderful partnership, but behind the scenes it's impossible. >> they think i'm the raging liberal environmentalist tree hugger. >> but rupert suggests something stunning, something that will forever change the faces of his empire. >> and lachlan is furious and he says if you take another phone call on this deal, you no longer have a son. >> this will decide what they've all been vying for, succession for the company. what's it like being the first second gentleman? doug emhoff