Wendi Murdoch Hires a New Lawyer, Suggesting a Divorce Is Getting Messy

Mrs. Murdoch has hired William D. Zabel, a well-known New York trusts and estates lawyer who has represented several women in their divorces from wealthy businessmen, including Jane Beasley Welch during her contentious split from John F. Welch, the former chief executive of General Electric.

A spokesman for Mrs. Murdoch, Christopher Giglio, confirmed the hiring of Mr. Zabel, but otherwise declined to comment.

Mrs. Murdoch had been represented by Pamela M. Sloan, who advised Mrs. Murdoch on her prenuptial agreement with Mr. Murdoch in 1999, when the couple married in front of 82 guests on board his 155-foot sailing yacht, the Morning Glory.

But since then, Ms. Sloan had become friendly with the Murdochs, and Mrs. Murdoch decided that she wanted more independent counsel, said a person with direct knowledge of the case who like many people declined to be identified discussing personal matters.

Ms. Sloan did not return a request for comment.

Although the Murdochs signed a prenuptial agreement and two postnuptial agreements delineating the separation of assets in the event of a divorce, there are a number of areas that remain up for negotiation, said people with knowledge of the case who spoke only on the condition of anonymity.

For one, there are the custody arrangements and child support for their daughters, Grace, 11, and Chloe, 9, these people said. Because they are not binding on the court, custody arrangements and child support are rarely part of prenuptial agreements, and are often used by the less-moneyed spouse as leverage in negotiations.

Other issues that could be contended include the division of certain assets, like their Fifth Avenue penthouse and the yacht, on which Mrs. Murdoch, 44, and her daughters are currently vacationing in the Caribbean.

There is also the contentious issue surrounding the Murdoch family trust. Mr. Murdoch surprised his wife in 2006 when he announced during a television interview with Charlie Rose that Grace and Chloe would have the same economic interest in the family’s trust but not the same voting rights as his four children from his previous two marriages.

The slip almost created a separation, and prompted Mrs. Murdoch to negotiate more favorable terms for her daughters, according to people close to the couple.

Mr. Zabel, an expert in trust law, is expected to examine the soundness of the trust structure.

“Even with the most sophisticated couple, unless you have perfect 20/20 foresight often some issues can arise that weren’t taken into consideration and are prime for negotiation,” said Paul M. Talbert, a divorce lawyer at Donohoe Talbert in New York, who is not involved in the Murdoch case.

Representing Mr. Murdoch, 82, in the divorce proceeding is Ira E. Garr of the law firm Garr Silpe. But Mr. Murdoch is also relying heavily on the advice of Gerson A. Zweifach, the general counsel of both News Corporation and 21st Century Fox, as the newly separated companies are now known. Mr. Murdoch’s 1998 divorce from his second wife, Anna, cost more than $110 million in cash.

A company spokeswoman has said the divorce will have no effect on either company.

Shortly after a visit to the couple’s Northern California home in June, Mrs. Murdoch returned to New York to learn that Mr. Murdoch had served her with divorce papers, a decision he did not take lightly, according to several people close to the couple who would not discuss their private matters for attribution.

Mrs. Murdoch, after interviewing about eight different lawyers, including leading members of the matrimonial bar like Robert Stephan Cohen and Peter E. Bronstein, chose Mr. Zabel. Initially, Mrs. Murdoch did not have time to screen potential divorce lawyers and turned to Ms. Sloane, a trusted confidante, by default.

The core of Mr. Zabel’s practice at the law firm Schulte Roth & Zabel is advising wealthy clients like George Soros and the Lehman family, drafting their wills and trusts and advising on estate planning. But he also handles messier matters for his clients; in 2010, for instance, he represented the estate of his longtime client, the Palm Beach philanthropist and investor Jeffry M. Picower, in a $7.2 billion settlement with the federal government over claims related to money that he received from Bernard L. Madoff’s Ponzi scheme.

There is also the occasional divorce assignment. Much of the time, Mr. Zabel will play the role of mediator, and has peaceably settled the divorces of the late author Michael Crichton, the radio host Howard Stern and the New York Jets owner Robert Wood Johnson IV.

But at times, he has been involved in nasty marital spats, like that of Ms. Welch, whose marriage collapsed after she discovered her husband’s dalliance with the journalist Suzy Wetlaufer. The divorce was fiercely litigated and settled on the courthouse steps in 2002 only after Mr. Welch agreed to pay Ms. Welch several hundred million dollars.

More recently, he represented Christina Lurie, the former wife of the Philadelphia Eagles owner Jeffrey Lurie, who divorced after 20 years of marriage. Ms. Lurie remained a part owner of the team.

Because he keeps divorce representations to a minimum, Mr. Zabel often refers cases to his former wife, Eleanor B. Alter, herself a prominent matrimonial lawyer in New York.

On Tape, Murdoch Criticizes Hacking Investigators, Broadcaster Says

In the recording, apparently made in March during a meeting with journalists at Mr. Murdoch’s tabloid The Sun, Mr. Murdoch is heard saying of the investigation: “It’s a disgrace. Here we are, two years later, and the cops are totally incompetent.”

“The idea that the cops then started coming after you, kick you out of bed, and your families, at 6 in the morning is unbelievable,” he said, dismissing the investigation as “the biggest inquiry ever, over next to nothing.”

Channel 4 News, which broadcast the recording, said it had been obtained by an investigative Web site called Exaro. The channel said the tone of the remarks seemed markedly at odds with Mr. Murdoch’s public insistence that he felt “humbled” by the hacking scandal.

Since July 2011, Mr. Murdoch’s newspaper outpost in Britain has been under close scrutiny by Parliament, by a separate judicial inquiry and by the police, who are investigating accusations of illicit phone tapping, corruption and other misbehavior, particularly at The News of the World, a Sunday tabloid that is now closed. Scores of former Murdoch employees have been arrested as the scandal raised questions about hidden ties among the news media, the police and the political elite.

In the recording, Mr. Murdoch also referred to a decision by his company’s management and standards committee, referred to in the recording as the M.S.C., to hand over a trove of e-mails and other material to investigators.

“It was a mistake, I think. But in that atmosphere, at that time, we said, ‘Look, we are an open book, we will show you everything.’ And the lawyers just got rich going through millions of e-mails,” he said, promising to support journalists caught up in the investigation.

“I will do everything in my power to give you total support, even if you’re convicted and get six months or whatever,” he said.

“You’re all innocent until proven guilty,” he said. “What you’re asking is: What happens if some of you are proven guilty? What afterward? I’m not allowed to promise you — I will promise you continued health support — but your jobs, I’ve got to be careful what comes out — but, frankly, I won’t say it, but just trust me.”

Mr. Murdoch’s News Corporation, based in New York, said in a statement, “No other company has done as much to identify what went wrong, compensate the victims, and ensure the same mistakes do not happen again.”

Tom Watson, a legislator who has taken a lead in criticizing Mr. Murdoch, said he hoped that the police would now investigate Mr. Murdoch “about what he did know about criminality in his organization.”

Some British news media analysts suggested that the fact that Mr. Murdoch’s remarks had been recorded and leaked — potentially turning tabloid eavesdropping tactics against the tycoon himself — showed that not all of the Sun journalists attending the March meeting had been satisfied by his assurance of support.

Media Decoder Blog: Murdoch Publishing Wing Shows Loss of $2.1 Billion

Potential investors got a glimpse of the financial challenges that Rupert Murdoch’s soon-to-be spun-off publishing company could face. In a regulatory filing, News Corporation said its publishing businesses lost $2.1 billion in the fiscal year that ended June 30.

The disclosure was filed to the Securities and Exchange Commission on Friday, as the media conglomerate prepares to split its publishing assets from its more lucrative entertainment segments. The new, stand-alone company will retain the name News Corporation and include newspapers like The Wall Street Journal, The New York Post and The Times of London; the HarperCollins book publisher; and a handful of fast-growing Australian pay-television assets.

The entertainment company, which will be called the Fox Group, will include 20th Century Fox studios, Fox Broadcasting and cable channels like Fox News and FX. That company has annual revenue of more than $23 billion.

The losses in the publishing business came largely from $2.8 billion in impairment and restructuring charges, mostly related to the closure of the tabloid News of the World in Britain, which was shut in July 2011 after revelations of widespread phone-hacking. Revenue at the publishing business fell to $8.65 billion in fiscal year 2012, from $9.1 billion a year earlier.

The S.E.C. Form 10 filing moves the company closer toward the split and gives shareholders a better idea of what the stand-alone publishing company, called the “New News Corporation” in the report, will look like financially when the spinoff is completed in mid-2013.

The company warned investors that “newspaper and advertising circulation revenues have been declining, reflecting general trends in the newspaper industry.” In addition to industrywide headwinds, the company said illegal activity at its British newspapers “could damage the New News Corporation’s reputation and might impair its ability to conduct its business.”

As additional civil lawsuits related to phone hacking are filed in Britain, News Corporation said it “is not able to predict the ultimate outcome or cost associated with these investigations.”

The fallout from the phone-hacking scandal, and an investor base that increasingly expressed disapproval of the newspaper business, prompted Mr. Murdoch to announce the split of his $60 billion media conglomerate in June.

“The filing of the Form 10 is another important step forward in the evolution of our company and in the establishment of two independent global leaders in Fox Group and the new News Corporation,” said Mr. Murdoch, who serves as chairman and chief executive of the combined News Corporation.

Earlier this month Mr. Murdoch said Robert Thomson, a confidant and the former managing editor at The Wall Street Journal, would serve as chief executive of the new News Corporation. Mr. Murdoch will continue to serve as chairman of both companies and chief executive of the Fox Group.

In his new role Mr. Thomson, 51, will have a base salary of $2 million with a performance-based $2 million bonus, according to the filing.

In addition to hundreds of newspapers on several continents, the publishing company will also include Australia’s RealEstate.com.au; Fox Sports in Australia; 50 percent of Foxtel, the No. 1 pay-TV provider in Australia; and 44 percent of Sky Network Television in New Zealand. Analysts expect those businesses to drive profits and support some of the weaker newspapers.

Fox Sports had revenue of $3.6 billion and Foxtel of $2.5 billion in 2012. Those results were not included in the publishing company’s 2012 earnings, but will contribute to the new company’s bottom line.