By JOE NOCERA
Published: June 2, 2007
When I hear Rupert Murdoch talking about all the steps he’s going to take to preserve the editorial integrity of The Wall Street Journal, I can’t help thinking about The New Yorker.
You remember when S. I. Newhouse bought The New Yorker, don’t you? It was 1985, and the moment was as traumatizing to The New Yorker’s staff as Mr. Murdoch’s now all-but-certain buyout of Dow Jones is to the journalists at The Journal. The New Yorker had been owned by a family that kept its paws off the product, and allowed the legendary — if wildly overrated — William Shawn to edit the magazine as he saw fit. Staffers were aghast at the idea that their beloved publication was going to be owned by someone they viewed as lacking the appropriate seriousness — someone who was so crassly commercial, and was far more likely to meddle than the previous owners.
To assuage those concerns, Mr. Newhouse promised that The New Yorker would be maintained as a separate entity, and would never be folded into Condé Nast, his large magazine empire. He promised that Mr. Shawn would run it as long as he wanted to. He even promised Mr. Shawn that Ved Mehta, the turgid Indian memoirist for whom the New Yorker editor had an inexplicable fondness, would always have an office there.
Within two years, Mr. Shawn was gone. Mr. Mehta lost his office (as did many others). Not long after that, Mr. Newhouse brought in Tina Brown as editor, with a mission to produce a magazine that was more appealing to advertisers and readers alike, that is, to make it more commercial. And by the late 1990s, the fiction that The New Yorker was a stand-alone entity was dropped entirely. When Condé Nast moved into its spanking-new high rise in Times Square, The New Yorker went in there with the rest of the magazines.
Now, I happen to think that the objections of the staff to Mr. Newhouse had more to do with their own prissy insularity than with anything real. Indeed, to my mind, The New Yorker is a far better magazine under the current editor, David Remnick, than it was during most of the Shawn era. Still, Mr. Newhouse made promises that he eventually reneged on. And he made them because he so badly wanted to own The New Yorker, viewing it as the ultimate prize.
Which pretty much sums up how Mr. Murdoch feels about the prospect of owning The Wall Street Journal. He’s wanted it forever. He’ll promise just about anything to get his hands on it, including setting up a special editorial board that will protect the paper’s independence and integrity. But once he gets it, all bets are off. Of course he’s going to meddle — he’ll be the owner, for crying out loud, and he has very clear ideas about how a newspaper should look and feel and smell.
This is not to say that Dow Jones won’t vastly improve under his stewardship. I can guarantee you that it will. The reason Dow Jones is going to be sold to someone almost no one connected to the company wants to sell it to is precisely because it has been so poorly run over the past quarter-century. If there is one thing Mr. Murdoch knows how to do, it’s run a media company. It’s just sad that it’s come to this, that’s all.
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As regular readers know, I don’t harbor much sympathy for the dilemma the Bancroft family finds itself in. The Bancrofts have owned Dow Jones for over 100 years, and laudably, they have always been passionate about the first-rate journalism produced by The Wall Street Journal. That passion has become part of the family’s DNA, passed on from generation to generation. Roy Hammer, the family’s longtime (and since retired) trustee, told me more than once over the years that the Bancrofts viewed their ownership of Dow Jones as “a public trust.”
The problem was that two consecutive chief executives, Warren Phillips and Peter Kann — along with Mr. Hammer himself — took advantage of the Bancrofts’ passion, and their fundamental ignorance of the business. They convinced the family that it was duty-bound to stand by management, in the name of editorial integrity, even as they were running the company into the ground. And the family let it happen. Dow Jones is far and away the greatest brand in financial news and information, yet it is dwarfed by the likes of Reuters and Thomson. And as newspapers have struggled with the loss of advertising and the rise of the Internet, The Journal’s profits have shrunk drastically. Standing pat has become untenable.
This is what the Bancrofts have come to realize over the course of the last few weeks. Their advisers at Merrill Lynch have repeatedly pointed out to them that Dow Jones will continue to struggle as an independent company, and that it would be far better off joined at the hip with a stronger, more diverse entity. The family now fully understands what a mistake it made not holding management’s feet to the fire — and the likely, painful consequence. That is why the family announced on Thursday evening that it would meet with Mr. Murdoch, and that the company was on the block.
Within The Wall Street Journal, there is a palpable sense of sadness, a feeling that a glorious era of journalism is coming to an end. One reporter talked to me about how wonderful The Journal had been when Norman Pearlstine had been the managing editor and James B. Stewart, the Pulitzer Prize winner now at The New Yorker, had been the Page 1 editor. “Murdoch has already said that he wants shorter stories,” this reporter said. “Those great long stories we used to do, the stories that made us special, will be gone.” (Like everyone at The Journal I spoke to, he declined to speak on the record about his prospective new boss.)
Others worried that linking The Journal with Mr. Murdoch’s coming new Fox business channel would be ruinous. After all, Fox has already said its channel is going to be more business-friendly than CNBC (though it is difficult to imagine that such a thing is possible). Surely, they felt, using Journal reporters to bolster the channel would harm The Journal’s well-deserved reputation for writing tough, smart stories. Still others feared that Mr. Murdoch would interfere in the paper’s political coverage or that he would dumb-down the paper, that he would act like the heathen they all think he is.I have no idea whether these fears are overblown. The Murdoch side insists that he has no intention of mucking with The Journal. “The currency of The Journal is its credibility,” a Murdoch spokesman told me. “He’s not going to pay $5 billion just to gut it.” On the other hand, there was a powerful essay in The Washington Post this week about how Mr. Murdoch has too frequently done the bidding of the Chinese government. Harold Evans, the former editor of The Times of London, has written in his memoirs about how Mr. Murdoch meddled once he bought the paper. The current editor, Robert Thomson, denies that his boss is a meddler.
(I did get a sense, by the way, that not everybody at The Journal is upset about the prospect of getting a paycheck from Mr. Murdoch. The folks on the editorial page, though they won’t say so publicly, are rooting for him. And it’s worth pointing out that in the immediate aftermath of the News Corporation offer, when the stock jumped from the mid-$30s to $60 a share, over a million stock options were sold by insiders. Clearly, some of the same reporters who are bemoaning the prospect of working for Rupert Murdoch are perfectly willing to take advantage of his offer.)
There are plenty of people, though, who think Rupert Murdoch might be just what Dow Jones needs. One of them is Mr. Pearlstine, who is now a senior adviser at the Carlyle Group, the big private equity firm. (Before that he was the editor in chief at Time Inc., where he was my boss for about a decade.) Mr. Pearlstine likes the fact that Mr. Murdoch has talked about making a serious investment in The Journal’s international editions, “which has not been a hallmark of Dow Jones.” He suggested that Mr. Murdoch has done a terrific job over the years getting the various parts of his empire to work together — something he would be able to do as well with Dow Jones.
He felt that if Mr. Murdoch were to expand the definition of The Journal — viewing it less narrowly as a pure business publication — it might be able to better compete with The New York Times. He wasn’t even that ruffled by Mr. Murdoch’s good relations with government officials around the world. “It’s terrible if it affects coverage, but good if it makes governments more tolerant,” he said. Mr. Pearlstine believes much of that problem could be mitigated with a strong editorial board.
Still, this is a family where even those who most strongly want a deal would prefer to find an alternative to Mr. Murdoch. When I talk to big holders of Dow Jones stock, they suggest that Mr. Murdoch will probably sweeten his $60-a-share offer to bring over reluctant family members.
But I have my doubts. Truth is, if The Washington Post showed up tomorrow and offered $55 a share, the Bancrofts would leap at it. They would happily leave money on the table to be able to say they didn’t sell out to Rupert Murdoch. It’s not going to happen, though. When you look at the list of potential bidders, it is a lot easier to see why they wouldn’t bid than why they would. Of course, Mr. Murdoch had figured that out before he made his offer five weeks ago.
Going once, going twice...
