Egadzooks! Does Murdoch purchasing Dow Jones mean that we'll soon be seeing Page 3 Girls in the esteemed WSJ? We already have the CNBC "business" news channel, don't we? Martin Wolf doesn't suggest this may happen, but is concerned that it will move downmarket nonetheless. For once, Wolf doesn't sing the praises of markets:Two months earlier, at a secret March 29 breakfast in the News Corp. building, Murdoch had told Dow Jones CEO Richard Zannino about his $60-a-share offer for the company — a staggering price for a stock that had been trading around $36. But the family that has controlled Dow Jones for more than 100 years, the Bancrofts, at first rejected Murdoch's bid because some of its members loathed his tabloid style and feared he would trample the Journal's independence. The family haggled for two weeks over a proposal designed to buffer the Journal's newsroom from Murdoch. A few hours earlier on this Friday afternoon, Zannino had called Murdoch to say the proposal was finally on its way — and Murdoch had gathered that he'd be pleased with it.
It didn't turn out that way. Murdoch hated the proposal. In his view, it would give the Bancroft family more involvement over the Journal after they sold it than they had exercised before. So he rolled up his sleeves and started working the phones, making his feelings known to key players in the deal, turning up the pressure and threatening to pull his offer — a move that would have sent Dow Jones stock plummeting back to earth. "Dave, you can put the $5 billion away," he told News Corp. CFO Dave DeVoe. He consulted with three advisers about whether to withdraw: group general counsel Lon Jacobs and corporate-affairs chief Gary Ginsberg, who were in the room, and his son and News Corp. heir apparent James Murdoch, the CEO of News Corp.'s European satellite-TV system, who called in from a yacht near Valencia, Spain. Murdoch wanted to jolt the Bancroft family back to reality, and if the deal was going to die, he wanted to be the one to kill it. "If we clean this up to our satisfaction, the family will reject it. So why don't we just reject them?" The phone buzzed again. Zannino was on the line.
"Hello, Rich. I've read it," Murdoch said. "I don't know what you were thinking." He walked through all the ways the proposal was unacceptable. "Oh, yes, we reject this."
As it turned out, Murdoch didn't have to withdraw his bid. The threat of pulling was enough to get the family to budge. Within days, Murdoch and the Dow Jones board had agreed on an independent editorial-oversight committee; a sufficient percentage of the Bancrofts were expected to agree as well, though that wasn't a sure thing. Any deal can blow apart at any time, and this one was especially combustible, but what seems clear is that the Bancrofts, whose Class B supervoting shares give them effective control of Dow Jones, would now find it difficult to pull back from selling their cherished newspaper and the company that owns it.
Should the deal close as expected, Murdoch — the ultimate outsider, the ink-stained interloper who started in 1953 with a single paper in Adelaide, Australia — would add capitalism's daily chronicle to an empire that now comprises the Fox movie studio and television network, satellite TV systems in Europe and Asia, more than 100 newspapers and a fast-growing Internet division that includes MySpace, the massively popular social networking site. Two years ago, Murdoch's archrival, Sumner Redstone of Viacom, thought he had a deal for MySpace, but News Corp. swooped in and snatched it, bidding $580 million, $30 million more than Redstone and far more than anyone else thought it was worth. Then the site grew from 20 million members to almost 200 million, Google paid $900 million for the right to advertise on the site, and suddenly Murdoch's price looked cheap — and Murdoch looked like an Internet visionary. "I love being called that," he says, "but the truth is, I'm just lucky and nimble." He generates his own good fortune by being perhaps the most gifted opportunist in media, a man whose nose for a deal makes him the last of the true media moguls, the one who's still building — grabbing Dow Jones, dreaming about trading MySpace for a big chunk of Yahoo!, trying to launch a Polish TV network. News Corp.'s voting stock, of which the Murdoch family owns 31%, has gone up 18% in the past year, making him worth $9 billion...
Murdoch has invested billions in newspapers when few others were willing, but he has also kept them alive through a lowest-common denominator approach typified by the trashy Sun, with its topless Page 3 girls on the breakfast tables of a million Britons. Murdoch wouldn't be Murdoch if he didn't love sticking it to sanctimonious J-school toffs. "When the Journal gets its Page 3 girls," he jokes late one night, "we'll make sure they have M.B.A.s."
Rupert Murdoch is a great businessman. The Wall Street Journal is a great newspaper. Which of these reputations is likely to survive Mr Murdoch’s prospective purchase of the Journal? Despite the high price he offers, “his” is the plausible answer.
Business magazines and business television stand on the shoulders of the few newspapers that do the reporting, and analysis, day in and day out. The Journal is the world’s leader, if only by circulation. It is also two papers in one. Its news coverage is independent, questioning and authoritative. Its research is superb and its editing professional. Meanwhile, its editorial pages are the engine of US conservatism [TRANSLATION: it is a neocon bastion].
The WSJ’s readers should imagine what their world would be like if it disappeared. The obvious response is that the WSJ is not threatened with disappearance. But it is threatened, instead, with inclusion in the world’s most dynamic media empire. There it will reside alongside such beacons of excellence as the UK’s News of the World and the New York Post.
Why should that matter? After all, Mr Murdoch owns some better products: the perennially lossmaking London Times, for one, and the more profitable Sunday Times, for another. Many admired former colleagues of mine work for News International.
Yet I wonder how many even of his admirers would argue that Mr Murdoch, for all his successes, has created even one serious, authoritative and truly independent newspaper. That is not what Mr Murdoch is about. He is a populist, a lover of tabloids and a brilliant businessman. We already know three things about his influence on his publications.
The first is that the editorial line will almost certainly be pro-business and conservative. In the case of the WSJ, this would mark no change from its present line [well, duh]. That was untrue in the case of the New York Post, to take a celebrated earlier example. Indeed, since Mr Murdoch is sensitive to changes in the political mood, he may take the WSJ’s editorial line to the left (it can hardly be taken to the right). But wherever it ends up, it is unlikely to be as independent.
The second thing we know is that the paper is likely to become shriller and more populist, across the board. Down-market is the direction Mr Murdoch knows. That has been the direction in all of his publications with which I am familiar. Mr Murdoch can take substantial credit for the tide of vulgarity that now floods the UK. For good or ill, he has helped transform my country...[Murdoch has blighted Blighty?]
...Many newspapers exist to entertain. Business papers exist to inform. Any doubt about the accuracy and independence of their coverage destroys their value as tools. Such questions are, in this case, inevitable.
A notionally independent board can be created to protect editors’ independence, as at The Times. But in the end, editors must be aware of the interests and prejudices of the people who employ them. In some cases, they can be sure that the owner will not interfere. Where Mr Murdoch and a paper as influential as the WSJ are concerned, how credible could that belief possibly be?
A cynical employee of the FT might argue that any faltering of the Journal can only be to its benefit. I am not that cynical. The world needs at least two respected, editorially independent and authoritative English-language business papers. One is too few. None would be a catastrophe. Great newspapers are more than just businesses. They provide the public good of reliable information on which our knowledge-intensive society depends. Competitive markets do not provide public goods well. We may discover quite soon just how bad at it markets can be.
