Murdoch's Disastrous Triumph
How Rupert Murdoch won the Wall Street Journal and lost billions in the process.
So central are newspapers to Rupert Murdoch's psychological well-being that one of his business intimates claims that the saddest years of the media mogul's adult life probably came between 1988 and 1993—the only time that he lived in a city where he didn't own a newspaper.
Reportorial nuggets such as this abound in Sarah Ellison's exhaustive book—War for the Wall Street Journal—on Murdoch's acquisition of the newspaper and its corporate parent, Dow Jones and Co., helping to explain why he spent $5.6 billion on a transaction that 1) ended up reducing his personal net worth by $5 billion and 2) required his company, News Corp., to write off $3 billion of the investment by 2009.
According to his children, Murdoch had stalked the Journal for decades out of a desire to own a newspaper in the United States that had more influence than his New York Post tabloid. The quest seemed impossible because the Bancroft family that controlled the Wall Street Journal didn't want to sell, and if they did, they weren't about to soil their precious property by selling it to a person with Murdoch's politics or tabloid ways.
Even if Murdoch had been the perfect suitor, the 35 adult members of the Bancroft family had made themselves hard to approach. For several generations, they had quietly cashed their handsome Dow Jones dividends and given company managers near-complete autonomy to run the firm, a process that Ellison aptly describes as paying the family elders to stay out of company affairs. So subservient was the family to their hirelings that most of them subscribed to the company's romantic vision of itself as a "quasi-public trust."
What shattered everybody's dreamy notions was an April 2007 offer by the Murdoch-family-controlled News Corp. to pay $60 per share for Dow Jones. A 67 percent premium over the company's trading price, the offer steadily eroded family resistance and even that of Dow Jones executives, many of whom owned stock and stock options and would end up benefiting from the sale. Outside a few pockets of resistance among the Bancrofts, the most sustained criticism of the bid during the 3½ months it took to consummate the deal came from some corners of the Wall Street Journal newsroom and from Murdoch-watchers who predicted that he would defile the much-respected paper. (Disclosure: I was one of those Murdoch-watchers who frequently and quite vociferously predicted that he would ruin the Journal.)
Ellison, who covered the takeover of Dow Jones as a Wall Street Journal reporter, uses her access to "all of the significant players in the narrative," as she puts it in her source notes, to chronicle the deal with precision. Inside the news business such detailed narratives are called "tick-tocks," and hers beats like a metronome. That's not to say that the reader won't need the dramatis personae at the front of the book to keep the cast of characters straight or that Ellison doesn't occasionally overdo the specifics by listing what was served at a meal or the dog breeds that a Bancroft family member owned. But these are mere book-reviewer quibbles.
Besides fracturing the Bancroft family's unity, Murdoch's offer and acquisition disrupted succession plans just completed or pending at the Journal. A new publisher, Gordon Crovitz, had just been appointed, and before him, a new Dow Jones chief executive, Richard F. Zannino.
Just days before the Murdoch offer became public, the Journal appointed a new top editor, Marcus W. Brauchli, who now serves as the executive editor of the Washington Post. Ellison paints Brauchli as an operator who "became known to most reporters in the Journal newsroom as a master manipulator of newsroom politics."
Although the Bancrofts insisted on an oversight committee that would protect the Journal's editorial integrity from Murdoch's meddling, Murdoch and his new publisher, Robert Thomson, surprised nobody by repeatedly undercutting Brauchli after they took over, forcing his resignation in April 2008. "Not for a day had Brauchli appeared truly in charge," Ellison writes.
As usual, Murdoch got what he wanted. He's also had his way with the paper itself. But he hasn't tabloidized it or used it to advance his personal interests, as many of us warned. He may have deemphasized the paper's traditions of storytelling and investigative reporting in favor of producing a compact, daily news atlas. Yet he's unlike so many other publishers, who are cutting budgets. He's expanding the Wall Street Journal from a newspaper about business into a newspaper about the world.