Paul McIntyre: Mutterings amid the Murdochs

The sun king's son has gone. Lachlan Murdoch's exit from News Corp and his return to Australia - probably this weekend - has been the subject du jour in Australian media circles.

Australian Prime Minister John Howard took a call from the one-time media heir at 6.30pm last Friday (4.30am Saturday in New York). Lachlan told him of his return to Australia without executive responsibilities at News Corp.

His surprise exit has triggered intense speculation about a falling-out between father and son. It's rather crude, but some suggest a true indication of how the relationship is tracking is whether Lachlan, wife Sarah and son Kalan return to Australia on a News Corp jet or have to slum it in first class on Qantas.

What we know so far is that Lachlan and his family will move into a A$7 million ($7.8 million) beachside house they have just bought at Bronte, two enclaves down from iconic Bondi - the couple sold their Sydney Harbour mansion last year for A$18 million to become part of the beach set.

We also know that although Lachlan will retain a News Corp board seat, he will relinquish the chairmanship of News Ltd in Australia and is bound to a two-year non-compete clause.

There are potentially huge ramifications for News Corp's Australian arm, News Ltd, in Lachlan's move. Murdoch junior was a champion in New York of Australian interests, much to the bemusement of other head office heavies.

Many believe any future corporate moves Australian management want to make will now be assessed in New York more bluntly and without the emotional links that Lachlan held for the operation. His career started with News Ltd in Australia in 1994.

The power vacuum some argue the Australians will now operate in comes at a critical time because it potentially limits News Ltd's involvement in a shakeout of the Australian media sector as the Federal Government looks to relax media ownership regulations.

Australia delivers just 10 per cent of News Corp's global earnings, and it is not considered a growth market for Rupert's empire. Without Lachlan's voice, persuading New York to shell out a billion dollars or more to acquire mature media assets in Australia may indeed be difficult. And it has been widely observed that Rupert defers to Lachlan on details about the Australian market, an indication that his focus is on much bigger things.

News Ltd chief executive John Hartigan may have a grind ahead.

Just what Lachlan will do when he returns to Australia is the subject of much conjecture. He has close friends on the creative side of the entertainment and media business here, but with a net worth of $60 million, he doesn't need to rush.

Certainly Lachlan's dropout from his father's media empire is being compared with Kerry Packer's eldest and late brother Clive, who cashed in his chips very early and left Australia for the US, leaving Kerry to become the media mogul.

Clive Packer lived a somewhat bohemian lifestyle on the West Coast fed by a small but successful independent media operation.

Some commentators have called Lachlan the new poster boy for the downshifting movement, flicking fancy career and big bucks for a less hectic, quality lifestyle.

Relatively speaking, it's exactly what Lachlan has done, although some of his departing comments suggest he has plans: "I will remain on the board and I am excited about my continued involvement with the company in a different role.

"I look forward to returning home to Australia with my wife, Sarah, and son, Kalan, in the very near future. I would like especially to thank my father for all he has taught me in business and in life. It is now time for me to apply those lessons to the next phase of my career."

His past management tenure in Australia was a mixed bag of success. He made big profits selling stakes in AAPT and Vodafone, and took A$580 million for Ansett before it collapsed a year later.

But he was also involved in the A$550 million Super League breakaway competition, which proved a disaster and lost more than A$500 million. Whatever he plans, Lachlan is not going to be a global media tycoon. His mother, Anna Murdoch, predicted as much in the Packer-owned Australian Women's Weekly in 2001, three years after her split with Rupert.