Defending a newspaper empire amid scandal, splitting a global media conglomerate into two public companies, enduring a high-profile divorce, and struggling to repair frayed relationships with grown children — it’s been a trying few years for Rupert Murdoch. A week after turning 83, Murdoch sat down with Fortune senior editor-at-large Pattie Sellers for his first wide-ranging interview with the press since 2009. He was feisty, highly opinionated, and game to talk about the biggest challenges of his storied life (save for the allegations of phone hacking by News Corp. journalists in Britain, which he declined to discuss for legal reasons).
And though battered by turmoil and strife — and a recent fall on his head, as he revealed in this Q&A — Murdoch seems newly secure as the world’s most powerful global media billionaire. Starting with a single Australian newspaper that he inherited from his father in 1952, Murdoch built News Corp., which owns the Wall Street Journal, the New York Post, the Times of London, the leading newspapers in Australia, and book publisher HarperCollins. Last July he split News Corp. from 21st Century Fox, which owns the Fox broadcast network, cable assets including Fox News and new ESPN rival Fox Sports 1, the 20th Century Fox movie studio, and satellite broadcasting operations across Europe, Asia, and the Middle East. The combined stock market value of his two companies exceeds $80 billion. Murdoch owns nearly 40%, controls the voting stock, and calls the shots.
Murdoch recently handed the keys to the kingdom to his two sons. Lachlan, 42, is the new nonexecutive chairman of both News Corp. and 21st Century Fox — a stunning comeback for Murdoch’s elder son, who in 2005 quit his News Corp. job over clashes with senior management and returned to Australia to build his own empire. Son James, 41, who was tarnished in News Corp.’s phone-hacking scandal, moved up to co-chief operating officer at 21st Century Fox.
Fortune: You’ve had a very eventful past few years. How have you come out of this, and has it taught you anything?
Murdoch: Oh, it’s been stressful. I’m quite open about it. I was reluctant to see the company split, and now I’ve got to say that I’ve been proved wrong. I think it’s been a great success. And I’m not talking about the share market. I think the two companies, which were all in one before, are now much more focused, which will lead to faster growth.
Why were you reluctant to split the company?
I guess it was emotional.
You, some say, “endowed” News Corp. with close to $3 billion in cash. Meanwhile, Time Inc. is spinning off from Time Warner with $1.3 billion in debt. Does that make sense to you?
No. Well, I don’t want to criticize here. It’s a very fine company with great assets. But print is going through a tough time. There’s got to be a lot of money spent on digitizing everything. You’ve got to keep improving and competing in a new world, as well as keeping your old world going. So to have some spare cash gives you a lot of security. Whereas at Time I would imagine that the new management is going to be looking immediately at how can they save money. I hope we’re not wasting money, but we’re spending.
What don’t people understand about you?
Well, they perhaps tend to think I’ve not got as thick a skin as I have. You know, I don’t mind what people say about me. I’ve never read a book about myself.
Has this been your toughest period ever?
Well, everything has sort of come at once. But I was in an unhappy situation, and all I’m worried about or do worry about is two beautiful little girls from that marriage [to Wendi Deng, whom he divorced last November]. And they come and stay with me a great deal. I feel like I’ve turned over a new page in my life.
How long do you think you will live?
Well, my mother just died at 103, so that’s a start. You should live 20 years longer than your parents. [Laughs.] That may not be realistic, but I’m in good physical shape, according to the doctors. And don’t worry — my children will be the first to tell me if I start losing some mental ability. That will be the time to step back.
News Corp. acquired Dow Jones in 2007, bringing the Wall Street Journal into its stable of print assets needing to adapt to a digital age. Efforts to leverage Dow Jones’s Factiva business database have faltered.
Let’s talk about the newspaper business. Is it fair to say that the game is to cut costs faster than revenue declines and —
Why is that wrong?
Well, obviously when you come to a difficult period, you look at all your costs very, very carefully. But we haven’t gone nearly as far as some of the other papers have, like the L.A. Times and the Chicago Tribune or a lot of lesser papers. We’ve added a lot of things to the Wall Street Journal. We honestly believe that it’s the best newspaper in America, if not the world.
Why keep the New York Post going? I don’t know what it lost last year, but I think that in 2012 it lost $40 million.
It’s in that area.
Why keep it alive?
Advertising has been very difficult. We’re looking at various plans for the Post. We are working very hard on the digital edition.
Are you suggesting that in the next five years the Post as a print newspaper could go away and digital would be it?
I would be surprised. I’m not saying it’s impossible. I would think it might be quite likely in 10 years.
What about the Wall Street Journal? Is that likely to exist in print form in 10 years?
I think so. Maybe not in 20. A lot of people are very happy to read their newspaper either on their iPad or — startlingly and faster and faster the figures go up — on their telephone, on their smartphone. At the London Times a third of our circulation is on a tablet. And people who read it on their tablet are spending 20% more time than if they’re reading the paper.
In looking to expand News Corp., the biggest challenge, I would assume, is monetizing digital efforts.
Yeah, and that leads us to all sorts of things. For instance, in London our digital includes video. We bought the video rights to the Premier League [England’s top soccer league] and their highlights. Now if you look at the London Times, you’ll find that with quite a number of the photographs, you touch them and they turn into videos. I think newspapers come alive that way. We talk about “papers.” We should cut out the word “paper,” you know? It’s “news organizations.”
That’s a good idea.
We have duties to our shareholders to give them the best possible returns, but we see them also as much more. They can be a great power for good. And that takes me back all the way to my father, who specifically had left me, by the standards of those days, a silver spoon — but still a tiny paper, half a tiny paper, my sisters and I. He hoped that I would have the opportunity to have a useful life in media. And he wasn’t talking about making money.
Do you think about your father a lot?
Yes. If I’m looking backward, which I don’t do much, he’s quite the most important sort of formative influence and figure that I would admire in the past.
News Corp. created a subscription-based web venture, DJX, that bundles data services to compete with Bloomberg and Thomson Reuters. It stumbled out of the gate, didn’t it?
What is the lesson and what’s the future of that?
Well, I think the lesson was that we didn’t do a good job. I think the concept is absolutely right, but we should have taken longer and got all those things right. The heart of that is Factiva, which we are now spending a lot of time improving, and repairing the relations with the people. People loved Factiva. [We said to Factiva customers:] “Look, you’ve got to pay much, much more money, and you’ve got to take everything or nothing.” They said, “Nothing.” So we’re now repairing that. First we get Factiva right; then we get the other special services right. Whether we’ll bundle them exactly in that way, I’m not sure.
Do you look with envy or admiration at Bloomberg? The company, not the man.
I look at the man more than the company.
What do you think of the man?
I like the man. And admire him. As for the company, he took an incredible stroke of luck and saw this great opportunity and established something. And he kept pushing it. And now those who use it buy it at a huge price — can’t live without it. Mike’s got a virtual monopoly there. When their costs go up a bit, they put the prices up, and no one cancels. And they keep growing slowly. It’s a very small market, a very elite market. I remember when he rang me one day to complain about some criticism in the Post. I said, “I’ve just read Bloomberg View, and it absolutely lacerated me.” He said, “Oh, nobody reads that.” [Laughs.]
News Corp. owns a successful Australian business called Realestate.com.au that many of our readers have probably never heard of.
It’s been growing so fast. My son Lachlan bought that. He bought the first 44% in 2001 for $1 million.
Are you serious?
Yes. And some free publicity. And it cost us about $100 million to buy the next 18%. Now we’ve got 60-odd percent. And it’s got a market cap of $7 billion Australian [$6.5 billion U.S.]. It’s got huge viewership. People go to it just to look at how other people live in houses. And some of them say, “Oh, perhaps I’ll buy that.” If you talk to any agent in Australia, they’ll say that over 90% of their business comes from REA, which of course has devastated the classified advertising in some of our newspapers.
What’s the lesson? And is Realestate.com.au replicable?
We’re looking at expanding REA a lot outside Australia. We’ve looked at all the companies in America that stand out: Zillow and Trulia and so on. And we’ve thought they were overpriced.
News Corp. began expanding into the TV and movie businesses in the mid-1980s. Today 21st Century Fox, the holding company for those assets, has a market cap more than seven times as large as Murdoch’s once-core newspaper business.
Let’s talk about 21st Century Fox.
The film company is doing very well, and of course it’s got a bonus now with the Netflixes and the Amazons coming in buying programs. We plan to step up our production of major films. We’ve got on our plate one or two or maybe more sequels to Avatar, which was the biggest film in history.
I knew about one. There may be two sequels?
The end of ’16 is the first sequel. If we make it, it will be the first time Jim Cameron’s been on time or on budget. But he’s never lost me. When he finally comes through, they’re just huge hits.
Are you going to hire [DreamWorks CEO] Stacey Snider?
I would like to. I’m a great admirer of hers. And I’ve had long talks with her. I think they’re at a stage — it would be improper to talk more about that. It’s really for [Fox Studio chief] Jim Gianopulos to hire her.
Your new Fox Sports 1 network is a very big bet.
Well, it’s a pretty big bet. We certainly expect to lose a couple hundred million dollars for a year or two, and then we expect it to turn, and we’ll gradually make it into a major alternative to ESPN. We’re not going to put ESPN out of business.
Why does ESPN need an alternative?
I think the public deserves choice.
ESPN is a very, very good operation, and it’s a gold mine. It’s an even bigger gold mine than Fox News. Not that Fox News won’t get there. Fox News is going to make over $1 billion this year, and can do a lot better. No cable company in the world is going to drop it unless they want their houses burned down. [Laughter.] But ESPN has managed to ride this Monday Night Football to the point where they’re charging every home in America with cable. Over $5 a head. How many people watch ESPN? A third of the public, half the public?
21st Century Fox sold its 47% stake in STAR China TV in January. Why bail on China? Is this coincidental with your divorce?
No. We had a couple of channels in China, which were making nothing. And to our happiness and surprise, they were valued at a couple hundred million by Shanghai Media Capital. They took 52% and made it profitable. And then they took up their option to buy us out of the other half.
But is it fair to say that you kind of got fed up with China?
Look, if you want to run your own media — have control of it in China — you’ll get fed up very quick. But is there room to make interesting investments in China? It’s obvious, yes. There’s a huge amount of innovation going on in China. And we have a lot of relationships there: partly friendships, like with [Alibaba founder] Jack Ma, but also with Edward Tian, who’s starting a vast cloud operation in Beijing. He runs funds, a few funds, in which we have 20% stakes, which have done very well. As for making movies in China, we’re going to try again. But in the past it has been impossible to get American directors to go there. Because once you get there, they want to censor every line in every movie, and they can take a month giving you a decision on one line.
Part of the reason Murdoch is so globally powerful — and controversial — is that he has used his media properties to wield political clout. In the U.S. there’s no better example than Fox News, which routinely tramples on its own slogan, “Fair and balanced.”
Does it bother you at all, Rupert, that there is a view that Fox News has contributed in a big way to the political discontent in the U.S., degraded the political process, and maybe, in spotlighting the Tea Party, even hurt the Republican Party?
I think it has absolutely saved it. It has certainly given voice and hope to people who didn’t like all that liberal championing thrown at them on CNN. By the way, we don’t promote the Tea Party. That’s bullshit. We recognize their existence.
Does it bother you that Facebook is as successful as it is, and MySpace could have been Facebook?
I think that was one of our great screwups of all time.
What was the mistake? Buying it?
It was part of Fox. No one knew anything about it, so they [installed] a bunch of people to try to watch it. If they weren’t happy with the people running it, they should have gone and hired Mark Zuckerberg or someone like him, all right? I mean, when Mark came, we had just bought it for $600 million. Everybody thought [it was worth] $6 billion, and we were hailed everywhere for a very short time. I remember Mark coming down to visit my ranch. He was a very shy, quiet young man of about 20 or 21. And he was all for us getting together. And I didn’t take him up on it. I think he’s done a brilliant job.
Would you put your money into Facebook today?
The people in Silicon Valley don’t agree with me, but I think that $200 billion [market cap] for that, no matter how good the company, is going to be very hard to justify in the long term. I don’t have confidence in the permanence of any particular social app or social network, you know?
Obviously you like Twitter.
My family are horrified that I’m on it. They think it’s ridiculous. And people like [News Corp. CEO] Robert Thomson have said, “No, it’s extremely good personal public relations to show you’re interested in more than just making money.”
Is cable consolidation your biggest worry? No.
We’re all standing back at the moment and having a look at this big cable consolidation and haven’t decided yet whether it’s any threat to us. And that would go for other broadcasting companies and Silicon Valley companies. We’ve not decided to make any submissions or get too excited about it. Look, Comcast gives a very good service. And if they could make Time Warner as good as they are, a lot of people would benefit.
What kind of a leader are you?
I’m a permanently curious person. I probably waste my time being curious about things that have got nothing to do with the business sometimes. What keeps me alive, certainly, is curiosity.
What are your thoughts on the next U.S. presidential race?
Oh, I have no settled thoughts at all. I’m watching it with great interest.
What are your unsettled thoughts?
I think there are some very interesting candidates.
Could you live with Hillary Clinton as President?
I could live with Hillary as President. We have to live with who we get. We don’t have any choice.
Can you envision yourself supporting Hillary?
It would depend on the Republican candidate totally.
Who do you think the Republican candidate will be, or who would you like it to be?
I think it’s between four or five people. It’s not necessarily, although slightly, in order of preference: Jeb Bush, Paul Ryan, whom I have particular admiration for. I do for both. [Chris] Christie could recover. Scott Walker, whom I don’t know, and Rand Paul, whom I agree with on a great number of things but disagree strongly on some things — too strongly perhaps to vote for him.
You disagree with Paul most strongly on what?
Why do you admire Paul Ryan?
He is the straightest arrow I’ve ever met. He’s hardworking. He knows where every dollar goes in Washington. He’s emerging as the natural leader. I almost think that because of the position he’s in, he’s not the most important, but he’s the most influential Republican in his party at the moment in Washington.
What do you like about Jeb Bush?
I think he’s a man of very fine character. He was a great governor. And I particularly like his policy on education, which I’m hardest on. My number one.
You’re spending a lot of money in the education space. I’ve read about Amplify. It looks like, “Oh, boy, this is one of Rupert Murdoch’s passion plays.”
It’s a big passion play gamble, yes. Well, we would not think it a gamble. We have hundreds of people on it, preparing these classes and the software that goes into them. When you get a tablet, which allows the teacher to assess each child day by day, it’s a huge teachers’ aid and a huge aid to kids. Because kids, when they’re 3 years old, never mind when they’re 10, would rather be working on an electronic device and learning. Every lesson now is animated, so that’s what’s taking time. And then we test them in front of kids and bring in groups of teachers on every single 40-minute class we prepare.
Do you envision this to be a high-return business?
Potentially it will be, but it’s a few years out.
Let’s talk briefly about HarperCollins. Book publishing is another business under great stress.
We were going to make a record profit this year. We find electronic publishing of books very good. People are buying more books. They buy them at lower prices. We still get a good margin, and we don’t have to have huge warehouses and take returns from every bookshop in the world. Our experience with ebooks is very good, and we intend to expand it.
Do you read books on your iPad?
I’ve got to confess, I don’t. It’s a generational thing. I’ve never bought a Kindle. I ought to get one, I guess. If you look at our business, Kindle is infinitely bigger (than the iPad), Amazon infinitely bigger than Apple. Apple may catch them, I don’t know.
It’s been a challenging decade for Murdoch’s adult children. After Lachlan left News Corp. to go back to Australia in 2005, James served his father loyally — and got tarred in the phone-hacking scandal after taking charge of News Corp.’s British newspapers in 2007. Family ties frayed in 2012 when Rupert’s daughter Elisabeth, who chairs London-based TV production company Shine Limited, spoke disapprovingly of News Corp.’s handling of the hacking scandal while delivering an address in Scotland known as the MacTaggart Lecture.
Do James and Lachlan’s new positions mean that they are first in line to lead the businesses after you retire?
Well, the job is not over yet. But yes, it does. But I’m going to be here for a long time. And so will [21st Century Fox president and COO] Chase Carey and Robert Thomson, the CEO of News Corp. Robert is the youngest of the three of us, so we’ll get more years out of him.
Is James an equal or almost-equal to Chase Carey, who is president and COO at 21st Century Fox?
Chase is president of the company. [James] certainly will be reporting to Chase, but a lot more people [than before] will be reporting to James.
How did you persuade Lachlan to come back?
Look, he was always going to come back. Lachlan is someone who’s been in love with media from the age of 12. He spent all his vacations working in pressrooms. But Lachlan and James and I had a very serious talk about how we can work as a team in July of last year. It was at the Allen & Co. conference. We broke away for a meal. We had two or three hours together. Lachlan was not not going to come back. It was a question of how we would work together. How would we be a team?
Lachlan is a wonderful human being with his feet very firmly on the ground. He has built a very interesting business in Australia for himself, although he stayed on our boards.
And James too. Everyone talks about hacking in London. That all happened long before James took charge. He took STAR television and [made it] the No. 1 broadcaster in India, with about eight channels, and is making a big difference to that country. And then he went to BSkyB, where people said, “Oh, that must be nepotism.” But in fact, he went through a lot of tests. And when we took him out of his day-to-day role there and made him chairman, the same shareholders complained and said we can’t lose him. He completely changed BSkyB and lifted the bar there in every way — and added huge value to News Corp.
Liz sold her production company, Shine, to News Corp. Why did she decline to go on the News Corp. board?
I don’t know. I’d rather not go into that. We’re a very, very close family. You know what close families are like. They meet at breakfast. They meet at dinner. And they have good arguments. That doesn’t mean they don’t love each other or have room for each other in each other’s lives.
Were you bothered by Liz’s MacTaggart Lecture?
She put a lot of work into that and was very proud of it and got congratulations from everybody, except me. Because I thought it was falling in line too much with the sort of BBC and establishment. I think she was hurt when I said I didn’t really love it or like it.
Do you feel that stresses in the family have been repaired?
Oh, I hope so. I had a long and warm and loving hour with her on the phone yesterday. But mainly talking about her kids and not about the business.
Is it likely that she will get involved in the business again?
It’s more than possible. That’s all I will say.
Murdoch and Wendi Deng divorced last November after 14 years of marriage. A Vanity Fair story in March included alleged diary entries by Deng about other men. Since the divorce, Murdoch has bought a 13-acre vineyard, Moraga, above Bel Air, Calif. He also purchased a 10,000-square-foot apartment, near Madison Square Park in Manhattan, for $57.25 million.
Rupert, what did you think when you read Wendi’s [alleged] diary entries?
I was shocked. But I didn’t read them and I was not given them until after I had filed for divorce.
I’m sure it made you feel as if you made the right decision.
Right. I mean, I regret the whole Vanity Fair thing. I wish we just could have got divorced quietly.
There is this view out there, and I’m sure you’ve heard it: “Boy, Rupert, he makes a decision and he moves on.”
Well, you know, everybody was talking about these things and never telling me anything. I don’t really want to go into this. But then I was told two pretty circumstantial things about the ranch [where Deng had been staying, according to Vanity Fair]. I was in Australia. When I got back, I naturally asked the staff, and it opened up. That’s the story. And then, you know, a week later I filed. As soon as I could find a lawyer.
You’re moving on now and buying real estate. You bought Moraga, a new ranch, plus a new apartment in New York.
Well, it’s like turning a new leaf. I saw the story in the Wall Street Journal Mansion section about Moraga and realized that I had met the owner 20 or 25 years ago with President Reagan at a social party, although he wasn’t a very political person. He was dying because he was 93 and had very bad emphysema. And he wanted to sell it to someone who said, “I will keep it going and not subdivide this land.”
The owner was Tom Jones, a former CEO of Northrop, which became Northrop Grumman.
He had a fascinating life. At 19, he [worked on designing] dive-bombers, which sank the Japanese and saved Australia. Before his retirement he invested in the stealth bomber. So I wanted to talk about his career at Northrop Grumman. He wanted to talk about how to grow grapes and get better wine. So we formed a real friendship. I expected him to live a bit longer, but I said he could stay in the house. I’ve now taken possession of the house. I have hired a modest decorator. I just want it to be rustic.
You have another house near Moraga, don’t you?
Yes. I have a beautiful house, which the family is screaming about me selling. I don’t want two houses a couple of miles from each other.
Is the other house on the market?
It was, and I took it off. On the pleas of James and Lachlan.
Did they say, “That’s our house and you can’t sell it”?
I said, “Put your money up.” But I haven’t seen it.
And how did you find your New York apartment?
Natalie [Ravitz, his chief of staff] found it. I was away. I’d been ill. I had a very bad month in January and February. I had a fall in San Francisco. I fell on my head. It was just stupidity in a hotel room. I’d put on some boots to go for a hike around San Francisco to be shown by Natalie, and I went down and hit my head very hard. And I got, I guess you’d call it, a hair fracture across my spine. I landed on a carpet, but on my head. I’ve never had such pain in my life. A friend of mine sent a friend of his, a neurosurgeon, down to see me, who quickly said I didn’t have any concussion. After that, I just went to my ranch and rested for three weeks.
You were lucky. When will your New York apartment be ready?
Ask the decorator. I told him four months, and he said eight. And everyone tells me it’s 12.
It’s like James Cameron making a movie.
Yeah. I will be fairly modest, to start with. I’m not going to put in great antiques or have major things that take a long time to do. I’ll buy nice, not-too-modern furniture. But it’s a modern place. It’s very high.
On 58, 59, and 60. It’s a triplex. And I assume that my two daughters will each have their own rooms for the first time in their lives. And they’re decorating them, they think.
This story is from the April 28, 2014 issue of Fortune.