When billionaire James Packer agreed to do an interview about his friend Lachlan Murdoch, my producer and I dropped everything to fly to Las Vegas. Packer was in town to watch the rugby league's "Vegas Round" extravaganza from the Fox Sports box where Lachlan was playing host.

We knew James could tell us a lot because he knows Lachlan well and they have much in common. They even share a birthday, September 8, although James is four years older.

Third-generation media heirs, Packer and Murdoch have lived parallel but contrasting lives – like twin strands of DNA, they have tracked the same lows and highs, all the while remaining very different characters. Lachlan stayed in his father's business, while James got out. Lachlan stayed married; James has twice divorced.

But if we are all stamped early on, the defining characteristic of both men is that they grew up in the shadow of media moguls – in James's case, the late Kerry Packer, long Australia's richest man; in Lachlan's case, Rupert Murdoch, perhaps the most influential Australian in history.

The long shadow cast by their famous fathers has shaped every aspect of their lives. In James's case, it has driven him out of the media, and ultimately out of Australia, the country of his birth. In Lachlan's case, he is only now emerging from Rupert's shadow and may never leave it completely, even after his father dies, no matter where he chooses to live.

'Lachlan is an amazingly good friend to me'

Packer was comfortably ensconced in the presidential suite at Wynn casinos. According to Packer's adviser, he'd booked a more modest room but Wynn's management recognised the Packer name (the doorman told me everyone had fond memories of Kerry's Sin City exploits) and immediately upgraded him to their best accommodation. It was a two-storey multi-room apartment in the luxury wing of the complex, with its own private pool and garden.

We set up in the big entertainment area, with its own bar. Outside, palm trees bent and cushions flapped on banana chairs as 100kph desert winds howled through Vegas, causing airport chaos. Inside, it was quiet and snug.

Accompanied by his new girlfriend and his minders, James was warm and welcoming, if a little awkward about the opulence of the suite. Though his battles with mental health have been well chronicled, James was calm and sharp under the glare of cameras through a long, 90-minute sit-down interview. He knew what he wanted to say about the friend he sees maybe half a dozen times a year.

"[Lachlan] is one of my favourite people in the world," he said. "I adore him. He's been an amazingly good friend to me through good times and bad times."

Packers v Murdochs: The rugby league war

The bad times came first. James went out of his way to welcome Lachlan to Australia when he came from New York in 1994, a fresh-faced 22-year-old, not long out of college. James invited Lachlan out to a Sydney restaurant, where they were immediately recognised and written up in the gossip pages.

But not long after, they were pitched headlong into the Super League wars, when News Corp tried to privatise rugby league and use it as fodder for its new pay-TV business Foxtel, a joint venture with Telstra. The Packer-owned Nine Network, which held the broadcast rights to the rugby league and was aligned with a rival pay-TV venture, saw News Corp's bid as an existential threat.

It was on for young and old, and Lachlan and James were at the front lines, signing lucrative contracts with players in a race for the best talent in the game. The hostility was intense — Packer describes it as "dog eat dog" and admits his relationship with Lachlan became "strained" — and both sides were in and out of court.

In early 1997, at the height of the crisis, with rugby league now running as a split competition, James invited Lachlan for a cruise on his father's superyacht Arctic P — appropriately, given the circumstances, a converted icebreaker. It was a prelude to peace between the two families.

Lachlan took his then best friend Joe Cross and his brother James. Also on the boat was Kathryn Hufschmid, who would later become James Murdoch's wife. "That's where James and Kathryn met for the first time," Packer recalls. "I also remember that Lachlan and I probably drank too much. And, you know, Lachlan and I have enjoyed over the years having a drink together."

The ground was laid for a reunification of the game to form today's National Rugby League and to divide the pay TV spoils. Foxtel would become a joint venture between News Corp, Nine and Telstra. James and Lachlan's fathers subsequently did a handshake deal on their yachts off New Zealand.

"When it became obvious to everyone that it made sense for the codes to recombine, I think Lachlan and I probably played a constructive role in getting our respective fathers to the table to do that," Packer recalls.

Both sides lost a fortune during the Super League wars and hopes for an international competition never eventuated but the rapprochement initiated by James and Lachlan set the stage for closer collaboration between the two families. "What Super League demonstrated is if the families worked together, we could make things happen," Packer says. 

The next collaboration, however, would test the relationship.

'One.Tel was 99 per cent my fault': Packer

"I remember going to Lachlan one day," Packer recalls, "and saying, 'Instead of looking at this small pie that's free-to-air television, why don't we actually think about taking on the big pie?'"

That 'big pie' was telecommunications. These were the heady days of the early dotcom boom and all the talk was about the convergence of media, technology and finance. James Packer persuaded Lachlan Murdoch that News Corp should invest half a billion dollars in an upstart mobile phone company called One.Tel.

When the dotcom bubble burst and One.Tel ran out of money in mid-2001, the Packer and Murdoch's companies lost almost a billion dollars combined. It was a very public humiliation for both men and a big hit to shareholders.

To this day Packer takes the blame for the failure of One.Tel, and for convincing News to invest. Lachlan Murdoch had relied on Packer, who was close friends with founder Jodee Rich, and testified during later court hearings that James had burst into tears when he apologised for the disaster in his kitchen in Sydney's eastern suburbs.

"One.Tel was 99 per cent my fault," says Packer, who admits he had a breakdown in the aftermath. "Lachlan was incredibly loyal to me. He saw that I was hurting. I think he took the view that I didn't do it on purpose … and that's something that I'll never forget."

Somewhat surprisingly, the humiliation the two junior moguls suffered after One.Tel's collapse only strengthened the friendship between them.

"One.Tel went broke at the end of May 2001 and September 8th, our birthday, was Lachlan's 30th birthday," Packer recalls. "So out of nowhere, I get this invitation. If I was Lachlan, I think I'd probably never speak to me again. So Lachlan is giving a speech and in the middle he stops and says that I'm there and it's my birthday and he wants to wish me happy birthday. And it was one of the most moving things that's ever happened to me in my life.

"It's easy to be loyal when things are going well," Packer says. "It's when times are bad that you really see who's genuine and who's not genuine."

A masterstroke leads to Australia's 'best ever media deal'

There was one silver lining to the One.Tel debacle, for Lachlan Murdoch at least. In the aftermath of the tech wreck, which had contributed to the breakdown of investor confidence in One.Tel, Murdoch was persuaded to invest in the website realestate.com.au, which was going broke. News Corp invested a bit over $10 million — about $3 million in cash and the rest in contra advertising — to acquire a minority stake in the company.

It would prove to be an extraordinarily canny investment. That struggling website went on to become REA Group, a digital real estate giant that News Corp eventually took control of and which is now worth around $US25 billion ($37.4 billion).

"REA is, you know, the best media deal ever done in Australia," Packer says. "When I say that I'm saying Lachlan's deal to take control of REA was a better media deal than any deal Rupert ever did in Australia. I'm saying Lachlan's deal to take control of REA was a better media deal than my father ever did in Australia."

When Lachlan Murdoch sought to get full control of REA he approached Packer about buying his 10 per cent stake. Packer, still feeling bad about One.Tel, agreed, selling it to Lachlan for a bargain-basement $10 million.

"I wanted to be helpful because One.Tel had been so bad," Packer recalls. "But let me be very, very clear about one thing – I never thought that 10 per cent stake that he bought from me for $10 million would be worth $2.5 billion. And," he continues with a laugh,  "I do feel less guilty about One.Tel because of what happened with REA."

'Underestimating Lachlan is a mistake'

James and Lachlan's third and final joint business venture came at the end of 2009, when they took over the ailing TV network Channel Ten. It would turn out to be a disaster. The network's fortunes plummeted, and the company finally went broke in 2017, costing Packer and Murdoch hundreds of millions of dollars combined.

Although the initial investment was Packer's idea, he refuses to shoulder all the blame for the failure of Channel Ten. "I blame myself for One.Tel," he says. "But Ten, you know, I think we were equally at fault. We both should have been smarter than we were. What we should have both done is just buy more REA shares."

While the "misses" of Lachlan Murdoch's business career — especially One.Tel, Ten — have received enormous attention, some of his "hits" have been comparatively overlooked. Through his private company Illyria, he bought the Australian commercial radio network Nova, which has turned out to be a cash cow.

He has also done a series of smart deals since he took over as Fox Corp chief executive in 2019, including buying a valuable stake in sports-betting giant Flutter, and acquiring the ad-supported free streaming service Tubi, which has enjoyed explosive growth in the US and has expanded to the UK and Australia.

While Fox Corp's share price has remained flat since Lachlan took over in 2019, the share prices of comparable media companies such as Warner and Paramount have dropped dramatically.

"I think some people have underestimated Lachlan," Packer says. "I think underestimating Lachlan is a mistake."

What next for the Murdoch dynasty?

The respective histories of the Murdoch and Packer family dynasties may offer a clue to Lachlan's next major move.

James Packer, born in 1967, was the only son of Kerry, who had fought and won his own succession battle against brother Clyde. James never had to compete with his older sister Gretel, who took no interest in the family's media business.

When Kerry Packer died in 2005, James was 38, about the same age as Kerry when his own father died. Within a year, James Packer had begun the sell-down of the family's media assets, culminating in his 2013 exit from the industry altogether to focus exclusively on the Crown casino business. The $9 billion sale of Crown to Blackstone two years ago has left Packer free to invest wherever he chooses.

Lachlan Murdoch, by contrast, worked for his father on and off for 30 years before taking over the family business. And even now his father, at 93, takes a keen interest in the companies' affairs. Packer shared a meal with Rupert and Lachlan a few weeks before our interview and I asked if Rupert seemed to be enjoying retirement. "He had a suit on," Packer observed with a smile.

Unlike Packer's sister Gretel, Lachlan's two siblings – older sister Elisabeth and younger brother James – have been actively involved in the family business and at times jockeyed for position.

Lachlan and James Murdoch shared power in the company until 2019, when many of the assets were sold off to Disney. After that sale, James left the family business. Lachlan and Rupert were in charge of the companies that remained – Fox Corporation, which owns Fox News, and News Corp., which includes the global newspaper assets.

Since James Murdoch's departure, the relationship between the brothers has deteriorated.

Packer acknowledges the deep political differences between Lachlan and his brother James. "I think Lachlan is pretty conservative. I think James — and I hope I don't say the wrong thing here — sometimes is embarrassed by Fox News. I don't think Lachlan is embarrassed by Fox News; I think Lachlan's proud of Fox News. That's probably one of the reasons why Lachlan is where he is, and James isn't."

Under the terms of the Murdoch Family Trust, once Rupert dies Lachlan will share control of the media empire equally with Elisabeth, James and his older half-sister Prudence, the product of Rupert Murdoch's first marriage. That arrangement, however, is currently being challenged by Lachlan and Rupert, who are attempting to guarantee Lachlan's control of the family's media assets after Rupert's death.

It's an explosive development in a succession battle that has bubbled away for decades and there's no doubting what side James Packer is on.

"I've met James a couple of times, I've met Liz a few times and I've met Lachlan a hundred times. I got on Team Lachlan a long time ago. I'm Team Lachlan."

Part two of the Australian Story series – Making Lachlan Murdoch: Money – airs tonight at 8 on ABCTV and  ABC iview.

Stream part 1 now on YouTube and ABC iview