The Man Who Owns the News (5 page)

Well, yes. All true enough. But still fantastic. Empires like the one Murdoch will create are most commonly built on some structural advantage: a monopoly, a financing strategy, a technology, a unique idea, some marketing genius. He has none of these.

At the end of the day, it may be just freakish relentlessness and opportunism. He tends to create a disturbance, or pick up the tremulous motion of a disturbance, that in the chaotic motion of the atmosphere becomes amplified, eventually leading to large-scale atmospheric changes…or some such. Or it’s the business equivalent of superb hand-eye coordination—of knowing when the opportunity presents itself and how to snatch it.

1997

The opportunity Rupert Murdoch will act on in 2007, more than three decades after arriving in New York, actually begins its slow unfolding ten years before. It’s an opportunity that comes as the result of a large and old family’s inability to express its desires, not least of all because it can’t quite figure out what those desires are. It’s a muddle that a lot of people have had a vested interest in encouraging.

Dow Jones, publisher of the
Wall Street Journal,
which Murdoch has fantasized about owning almost since his arrival in the United States, is controlled by descendants of Clarence Barron’s wife, Jessie Waldron—with whose money Barron acquired Dow Jones in 1902. This is the Bancroft family, named for Hugh Bancroft, a Boston Brahmin who married Jessie’s daughter and Barron’s stepdaughter, Jane Barron, and who killed himself in 1933.

The Bancrofts are a totemic American newspaper family not least of all because they have owned their paper without having much to do with it other than on a ceremonial basis. They leave the paper to be run by its editors—and have been militant (or, depending on your point of view, negligent) in guaranteeing this independence, though some of the younger generation of Bancrofts might argue they’ve been tricked into granting it.

When Joseph P. Kennedy tried to buy the paper after Jane Bancroft’s death in 1949, Jane’s daughter, Jessie Bancroft Cox, pronounced the oath: Grandfather’s company is not for sale to anybody, at any time, at any price. This was not only an oath but a commandment: If A (an inquiry about the possibility of the family selling the company) happens, B (“no way”) is the response. The paper’s very identity has been derived from that implacable guarantee of independence and freedom.

As it turns out, the Bancrofts have been as protected from reality as they are virtuous, idealistic, or committed.

Indeed, the managers of the paper believe the Bancrofts have granted them a sort of trust to run the paper for the paper’s sake. In many ways, they believe that it is their right to run the paper as they see fit—and their right to take advantage of the curious situation that has let them. After all, among the famous names associated with the paper’s excellence, none is Bancroft. The Bancrofts are merely a fluke of trust and estate law—a rather happy fluke.

Such happiness has not been taken for granted by the people running Dow Jones. The Bancrofts are never to feel need (the paper has always paid a king’s dividend) or anxiety—the family is never to be presented with a quandary or an alternative to their continued passive stewardship.

In the 1980s and 1990s, as the media business came to be more and more about roll-ups and acquisitions (particularly of superior brand names) and as the business of business information exploded, it became increasingly anomalous that Dow Jones was neither acquirer (which it would be hard-pressed to be, paying out so much of its earnings in dividends) nor acquiree.

This irregular, or quaint, situation has been largely the product of one man’s conduct—his tone, touch, bearing, and demeanor. Mien is as valuable to him in his job as it would be to, say, a funeral director in his.

Everybody gets along with Peter Kann, the Pulitzer Prize–winning foreign correspondent at the
Wall Street Journal,
who in 1989 became the
Journal
’s publisher, and in 1991 the CEO, and subsequently chairman and CEO, of Dow Jones. He is unfailingly soft-spoken, eminently reasonable, pleasantly self-effacing, even charmingly bashful. That is Peter Kann’s ultimate skill, or his most brilliant tactic: being liked so much that nobody wants to disappoint him, wound him, or confront him. He is a principled conservative, a cultured New Englander, and a man of some ineffable sadness—his first wife, Francesca Mayer, died in 1983. His demeanor also serves to hold people at arm’s length, to keep them from pressing him. It is perhaps noble that he puts his sadness or diffidence or ability to deflect in the service of maintaining a great journalistic organization.

Kann’s mandate as the CEO of Dow Jones is taken from the family’s historic instruction not to sell; the mandate he takes from the
Wall Street Journal
is not to have the mandate not to sell revoked or modified. He has to be so dignified, so pained, so reasonable that the Bancrofts, and specifically the older Bancrofts in control of the family’s money and ethos, will continue to want to protect him in the same way that they believe he is protecting them and their company. Still, if the older generation might be aghast at the thought of having to deal with something related to
business,
the young generation might be less so. But if there is no issue, nothing to deal with, then no foul.

Kann has decided that if nobody makes an offer to buy Dow Jones, then there will be nothing to discuss with the company’s controlling shareholders. An expression of interest without a number, Kann and Dow Jones’ lawyers long ago concluded, is not an offer. What’s more, Dow Jones being a public company, they have constructed a rationale about insider information—they don’t tell the family what they have to know to make reasonable decisions about the company because, well, they aren’t allowed to tell; keeping information from the family has become a cherished legal obligation.

Protecting the family like this, cosseting them (or keeping them in the dark), has produced not just a docile controlling shareholder group but a remarkably sanguine and unified one. Indeed, to appear otherwise—to ask questions, for instance—is a gaucherie of high order and, too, might possibly be construed by Peter Kann as an affront, a break in propriety and politesse, which would be quite horrifying to the Bancrofts.

This holds true even as the company has been bypassed by so many business opportunities that might have not just helped the company but profited the family. There was Bloomberg, for instance, and the new market for financial data, a business that might seem a natural one for Dow Jones. Or cable television, in which it briefly dabbled. Or a business news channel—which it bid for but lost to NBC.

Dow Jones instead banked on something called Telerate, which it first invested in and then bought outright. Telerate might have competed with Bloomberg, except for the fact that it didn’t. At Dow Jones itself you could find executives and reporters consulting their Bloomberg terminals, while the Telerate machines weren’t even turned on. Where Bloomberg was clever and fast and satisfying, slicing and dicing data in all sorts of new ways, Telerate was kludgy and slow and so often infuriating.

In the fall of 1996, Dow Jones baldly and innocently confessed to the market (the company was not only bad at technology but bad at PR) that its big electronic media bet would need vast new investment—and thereby tanked its stock. It was the biggest dive in the company’s history as a public corporation.

And it
took
the biggest dive to raise the Bancroft family’s eyebrows. But even here, the family has remained mostly understanding. In fact, if there are some grumblings inside Dow Jones about Kann, he knows he has the nonjudgmental support of the Bancrofts. And if there are some Bancrofts who might feel some vague frustration over the way things are going, there is the weight of the rest of the family to buffer any expression that might be seen as ungenerous.

The exception is Billy Cox III, from the Cox-Hill branch of the family. Billy’s grandmother is Jessie Bancroft Cox, the daughter of Jane Barron and Hugh Bancroft. His father is Bill Cox Jr. His father’s sister is Jane Cox Hill MacElree. Of the three branches of the Bancroft family, the Cox-Hills are famously the most difficult—although, in their fashion, nobody in the Bancroft family quite acknowledges that anyone can be difficult.

Billy Cox—forty-one in 1997—and his father, Bill Cox Jr., and grandfather, William C. Cox, are the only Bancrofts to have actually worked at Dow Jones since Hugh Bancroft’s suicide. Bill Cox Jr.—whom everybody in the company tends to call Bill Cox Sr.—has with equanimity worked out a middle-manager position for himself in the company. He has become a kind of affable mascot. His charm is in the constant assertion of his insignificance.

His son, Billy, hasn’t been so deft or submissive. Genteelly put (at least by management), he hasn’t been able to do what his father did: find the right role. Less genteelly put (also by management), he is a disgruntled employee.

Telerate, whose failure he thinks he understands from his view inside the company, becomes Billy’s opportunity to express his anger. In a series of letters to Kann and to the Dow Jones board, he becomes an annoyance and, although no one will admit this, an unsettling reminder of ultimate accountability.

He is joined in his agitating by his second cousin Lizzie Goth—thirty-two in 1997. Lizzie Goth is the daughter of Bettina Bancroft, who is the only child from Hugh Bancroft Jr.’s (the son of Jane and Hugh Bancroft, from whom everyone in this tale is descended) first marriage, to Bettina Gray.

Lizzie’s mother, Bettina Bancroft, died in 1996, at the age of fifty-five, leaving all her holdings to Lizzie, the first member of the younger generation to receive a direct stake in the company—hence her sudden and uncharacteristic (for a Bancroft) activism: It is her money.

Together, Billy and Lizzie start asking advice of investment bankers (among them Nancy Peretsman at Allen and Company, Murdoch’s longtime banking firm) and—most noxiously to the rest of the family—going to the press. Such media attention, notably an article in
Fortune
by Joe Nocera for which Cox and Goth were obviously the source—draws a parade of suitors to the
Journal
’s office. These include Arthur Sulzberger Jr., chairman of the New York Times Company; Donald Graham, chairman of the Washington Post Company; Marjorie Scardino, chairman of Pearson; Michael Bloomberg, chairman of Bloomberg LP; and Rupert Murdoch. (Ten years later, though, Murdoch won’t remember that it was the Cox-Goth contretemps that caught his attention. His visit will blend with all the other times he thought about how much he’d like to buy Dow Jones.)

All suitors are given the prescribed response: “No way!”

But neither Billy Cox nor Lizzie Goth nor any other members of the family, including those on the Dow Jones board, are informed that the company has suitors—not a peep. So the possibility that the family might convert its holdings into cash is not broached, nor is the possibility that it might create with the
Times, Post,
or
Financial Times
a quality publishing powerhouse, with the scale, brand, and cash flow that might dominate the information industry.

After they blab to
Fortune
, Cox and Goth are, for all practical purposes, shunned by the rest of the family. Shortly after the article appears, Cox is forced out at Dow Jones. Both Cox and Goth will move overseas. While other younger Bancrofts—those in their thirties and forties—are also full of questions about their odd inheritance and enforced stewardship, they are all rich enough and passive enough not to want to deal with the cold shoulder that would greet them if they voiced too many complaints within the family. What’s more, in 2000, with the bull market surging and technology advertising at its peak, Dow Jones will reach $75 a share—its pinnacle.

And yet 1997 leaves the family and its trustees jittery—the Bancroft trustees, at the family’s ancestral (well, since 1940s) trusts and estates firm of Hemenway and Barnes, in Boston, now ask for and get a position on the board alongside the three seats reserved for the three branches of the Bancroft family. Since the trustees control the trusts that control the company, “ask” can well be read as “demand.” There is a regular effort now to deal with the obvious fact that Dow Jones isn’t the best investment in the world. On the advice of its trustees and advisors, the family sells down as many shares as it can while still keeping control.

But in the fashion of a family that dislikes overt conflict, nothing happens. And nothing changes either. Except that everybody gets older, including Kann, including the Bancroft cousins, including Murdoch—moving everything toward…something. Nothing—even nothing itself—goes on forever. A lack of movement is itself odd and disturbing, and if you are finely attuned to these sorts of things—stasis where there should be progress—it suggests its own sort of opportunity.

Which falls to the person who plays the longest game.

TWO
Around the Corner

LATE
2004

There are two events at the end of 2004 that might have raised questions about Rupert Murdoch among his closest advisors—if doubting him or having any skepticism at all about him was an option, which it was not.

This is not just because he surrounds himself with particularly compliant lieutenants—or, as they tend to call one another, henchmen. But because the men (all men) who surround him—and many have been with him for decades—have come to believe that he has special powers, that he can “see around corners.” They not only believe this but
need
to believe this. Where, in other companies, other executives wait for the top executive to falter, count on it even, here any sign of faltering or error is adjusted or rationalized or made part of the plan by the people around him. They believe in him—if not as an omnipotent person, then as the closest version of one they ever expect to come upon. His near omnipotence is their meal ticket; his near omnipotence is their brand. What is News Corp. but a company built around the instincts, impulses, and gambles of its leader?