COMMENTARY - NYT on the outcome ~~
In the end, Murdoch wanted Dow Jones more
By David Carr
YOU can bet serious money - billions even - that the article about the sale of The Wall Street Journal and the rest of Dow Jones in today's Journal will be fully and ferociously reported, with no quarter given to its new owner, Mr Rupert Murdoch.
But given Mr Murdoch's history and human nature, how long will that last?
The reputation of the Journal is now in the hands of Mr Murdoch, who did not end up as the owner of one of the world's best newspapers because he is a paragon of journalistic principle. In the end, News Corp's capture of Dow Jones can be boiled down to one simple fact: Mr Murdoch wanted it more.
He wanted it more than other potential bidders, like General Electric, the Financial Times' Pearson and California billionaire Ronald Burkle, who never came close to challenging his audacious bid. He wanted it more, in the end, than many of the Bancrofts did - or at least he offered more than they were able to pass up. He wanted it enough to make a deal for editorial independence that seems to run against his entire history as an owner.
We tend to overanalyse media moguls, in part because of their primacy in the current age.
Yes, owning a pivot point in financial news will create some tidy synergies - content for a new Fox business channel to compete with CNBC on cable television, a global foothold for financial data, coverage of all his competitors in the Journal.
But his purchase is a reminder that the unthinkable is often doable, given the loot and the will. Mr Murdoch is buying an American newspaper because he's a sentimentalist, not because he has shown any particular skill at making money with them. His Midas touch in foreign tabloids, television, movies and, more recently, digital properties turns a little rusty when American publications are involved.
His ownership of the New York Post (twice) is an artistic success, but it also suggests that his love of American print is just that - irrational, driven by an attraction for the kind of power print conveys and only made possible through his success on other platforms.
The Bancrofts have a sentimental side as well, but the resolution should not have surprised anyone. If the family members did not want to sell, they would have had to slam the door and get the nail gun out on May 2, the day the offer was made public.
The Bancrofts' wan demurral set in motion market dynamics that blew the door open. Once a stock that had been mired at US$36 goes to US$60, a huge new constituency for change buys into the stock, one that will sue like crazy if change is not forthcoming.
After Mr Murdoch made his bold offer, the Bancrofts suddenly woke up and were cast in the role of parents seeking to adopt a child that they had neglected in the first place. The Hail Mary passes, which Mr Christopher Bancroft and others who fought against the sale heaved late in the fourth quarter, were no substitute for the lack of basic blocking and tackling back when they were still in the game.
What will the Journal be with Mr Murdoch at the helm? At heart, he's a tabloid newsman, but critics expecting headlines like Hedgeless Funds In Stop-loss Market may be disappointed.
Mr Murdoch will be challenged early by the Journal staff in the form of a hard-hitting story about one of his many business interests. Mr Murdoch is probably too smart to take the bait.
In the long run, however, it will be outside scrutiny from readers that will more likely keep him from interfering in the paper's news pages, not an editorial independence committee.
Like most of its fans, I will continue to read The Wall Street Journal expecting the best, but keeping an eye out for the worst.
NEW YORK TIMES (ST, 2 Aug 07)
And this from the WSJ.com itself - the news halfway down the opening page ...
Murdoch's Next Focus:Business-News Battle
By MARTIN PEERSAugust 2, 2007; Page A2
News Corp. Chairman Rupert Murdoch, having finalized a deal to buy The Wall Street Journal's publisher, Dow Jones & Co., is expected to turn his attention to figuring out his strategy for each of its businesses.
Among the issues Mr. Murdoch will focus on initially is how to shore up Dow Jones Newswires, whose business faces the prospect of tougher competition as a result of the pending merger of Reuters Group PLC and Thomson Corp., say people close to News Corp. Another issue he will be pondering: How to use the Journal to buttress News Corp.'s planned business-news TV channel, given restraints imposed by the Journal's existing content-sharing agreement with General Electric Co.'s CNBC.
THE NEWS CORP.-DOW JONES DEAL
News Corp. and Dow Jones signed a definitive agreement for the deal, which they valued at $5.6 billion, including debt, early yesterday, hours after the boards of each company approved the sale Tuesday. News Corp. is offering $60 a share for Dow Jones, payable in cash, though it will offer securities exchangeable into News Corp. stock for up to 10% of Dow Jones shares. Dow Jones shares were up 1.3%, or 72 cents, to $58.10 in 4 p.m. New York Stock Exchange trading yesterday. News Corp. shares rose 16 cents to $22.82.
Two hurdles must be cleared before the deal can close: shareholder and antitrust approval. As News Corp. has support from Dow Jones's controlling Bancroft family members with 37% of the company's voting power, obtaining majority shareholder approval at a meeting later this year isn't expected to be difficult. There is a chance News Corp. may win more family votes to give it more of a mandate for the acquisition.
Dow Jones is contemplating a possible deal under which Dow Jones would pay the legal fees of holdout shareholder Christopher Bancroft in exchange for Mr. Bancroft not blocking a trust he oversees from voting to approve the sale. That trust holds 13.2% of Dow Jones's voting power, so such a deal would increase to 50.6% the amount of family-voting power that favors the deal.
Antitrust approval isn't expected to be hard to get. The merger is expected to close in three months, Dow Jones Chief Executive Richard Zannino told employees yesterday.
News Corp. executives are expected to spend that time pondering strategies for Dow Jones's businesses and the makeup of management. There has been speculation Mr. Murdoch may want to name Times of London editor Robert Thomson to a senior role, helping to oversee the Journal. A person close to News Corp. said Mr. Thomson is likely to "play a part" at the Journal but it wasn't clear exactly how.
At the same time, there are questions about the future of existing Dow Jones executives, particularly Publisher Gordon Crovitz. Mr. Murdoch has the flexibility to appoint his own publisher: The post isn't covered by an editorial-independence agreement negotiated by Dow Jones, which prevents Mr. Murdoch from unilaterally replacing certain other top executives, such as the managing editor. A person close to the situation said Mr. Murdoch has no intention of replacing any of the senior management. "I'd certainly like to stay," Mr. Crovitz said.
Also in the spotlight is Mr. Zannino, who told staff yesterday he hopes to stay at Dow Jones under its new owner. A person familiar with the matter said Mr. Murdoch likes Mr. Zannino and wants him to stay as CEO of Dow Jones.
Once the deal closes, Mr. Murdoch is expected to spend much of his time dealing with Dow Jones, reflecting his habit of focusing intently on new businesses for a period of time before shifting his attention elsewhere.
While the editorial-independence agreement is aimed at stopping Mr. Murdoch from interfering with the Journal's coverage, the News Corp. chairman is free to voice his opinion about the newspaper, Mr. Zannino told employees yesterday. Numerous journalists both at the Journal and elsewhere have raised concerns about Mr. Murdoch's history of interfering in his newspapers, but Mr. Zannino emphasized that the editorial agreement had enforcement provisions that blocked Mr. Murdoch from making changes at the paper unilaterally.
"Nobody can make us do what we don't want to do," Mr. Zannino said.
Mr. Murdoch has promised to invest in Dow Jones, particularly its digital properties, as well as expanding its editorial presence overseas. But in the short term, News Corp. is likely to look for ways of bolstering Dow Jones Newswires, a business Mr. Murdoch wants to "aggressively" develop, he said in an interview Tuesday. The unit, which employs more than 850 journalists and publishes business news and data on about 298,000 English-language terminals world-wide, is one of Dow Jones's most profitable. But its outlook has been clouded by the Reuters-Thomson deal. Dow Jones Newswires doesn't distribute its product directly to institutions, but instead uses other companies, led by Reuters and Thomson. A combined Thomson-Reuters could make Thomson less likely to distribute Dow Jones's content.
As for potential synergies between the Journal and News Corp.'s new business-news channel, Mr. Zannino hinted that the CNBC agreement may not block other TV channels from access to Dow Jones's "brands and content" when it is related to "nonbusiness journalism." Journal opinion-page editors appear on News Corp.'s Fox News Channel and it is possible News Corp. could expand those kinds of appearances, Mr. Murdoch said earlier this week in an interview.
CNBC says it expects its contract "to be honored."
Meanwhile, some readers voiced their displeasure with the deal in emails, and by late yesterday afternoon about 170 of them had canceled their subscriptions, citing News Corp. as the reason. The Journal has about 1.7 million print subscribers.
--Sarah Ellison contributed to this article.
Write to Martin Peers at martin.peers@wsj.com
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