War at the Wall Street Journal

by Sarah Ellison

  Early on, she wanted to confide in her new group of advisers. "I had been arrested for drugs. I had a felony charge. I wanted them all to know right up front because I knew it would come out," she remembers. Buffett, in particular, didn't care. He encouraged her to seek a seat on the board. "Warren did say, 'Well, who are they comparing you with, Jesus Christ? Everybody's got skeletons in the closet. That's ridiculous.'"

  The confession—and absolution—emboldened Elisabeth. She and Billy called on cousins of their generation who might be sympathetic to their cause, and family elders who were not. Whenever she doubted her path, there was an army of her advisers cheering her on, unlike her family, who seemed only to withhold and judge.

  Billy could not contain his enthusiasm for the progress they seemed to be making. "Finally," he thought, "we'll get the company to where it needs to be." As he and Elisabeth continued their crusade, word eventually trickled out—"It was very orchestrated," Billy remembers—about the dissatisfaction within the family. "Disgruntled Heiress Leads Revolt at Dow Jones" appeared in the February 3, 1997, issue of Fortune magazine, publicizing the cousins' attempt to challenge Peter Kann and the lawyers at Hemenway & Barnes. The piece laid out all the company's ugly numbers and talked about family rifts.

  Even the elders who wanted to gloss over the troubles couldn't deny them: "I think Lizzie is very much behind the company," Martha Robes, a family board member and one of Jane Cook's New England daughters, told Fortune at the time. Robes was particularly close to Kann and lived in Etna, New Hampshire. She was a member of the older generation and had inherited her mother's blind loyalty. "But she's listening to a lot of outsiders ... who are getting her all wound up." Later that year, Robes resigned from Dow Jones's board from her sailboat, where she and her furniture-maker husband had begun a six-and-a-half-year circumnavigation of the globe.

  Though there had been tension before, airing the dirty laundry in the press was a step too far. Elisabeth's uncle Chris barely spoke to her. Billy left his job at Dow Jones just before the article appeared. (He wrote a resignation fax and left a voice mail for his boss; he packed his office over the weekend.) After the story appeared, Hemenway & Barnes called an emergency meeting of the family, extracting loyalty oaths from each of the attendees. The four family members on the board—(Elisabeth's uncle) Christopher Bancroft; (Billy's father) William Cox Jr.; his sister Jane MacElree, the Hill family matriarch; and Martha Robes—decided to make their own public statement, which they did to the Wall Street Journal and Fortune. The outrage under the surface was hard to detect in the tight-jawed statement:

  We are members of the Bancroft family and directors of Dow Jones & Co. On behalf of the family, which has controlled the company for nearly a century, we want to respond to your recent articles so that there can be no misunderstanding about our family's long-term commitment to Dow Jones.

  The Bancroft family met this past weekend at one of our regular meetings. At that meeting family members representing all parts of our family unanimously reaffirmed their commitment to Dow Jones's remaining an independent public company and the world's premier business news and information company. The family has absolutely no interest in relinquishing control of this important and unique enterprise. At the same time, as owners, we, along with the rest of the board of directors and management, want to see increasing shareholder value over the long term.

  A sound system of corporate oversight is critical to the success of the company. Dow Jones has a long history of strong and capable independent directors. We all believe that this tradition should be continued.

  The family is confident about the future of this great company and fully intends to be part of it.

  The cozy relationship between Dow Jones and its ruling family was never the same. Billy and Elisabeth were thrown together by the circumstances of their rebellion and grew closer. But their actions catapulted Dow Jones & Company into a most unwelcome spotlight and put Elisabeth and Billy at bitter odds with the elder generation of Bancrofts. They forever cemented their joint reputation as Bancroft family rogues.

  The articles heightened Murdoch's interest in Dow Jones, and he lined up with the other circling CEOs—among them Don Graham of the Washington Post Company, Arthur Sulzberger of the New York Times Company, and Marjorie Scardino of Pearson PLC—to see Kann. Murdoch, obviously not the most prized suitor on this occasion, eventually got a meeting. He had heard about Kann—the Pulitzer Prize–winning CEO with the close relationship to the Bancroft family. Murdoch told Kann he'd love to own Dow Jones; Kann told him it wasn't for sale. He might as well have added the words "especially not to you."

  Though he had a global empire of cable networks, movie studios, and satellite businesses, Murdoch loved to think of himself as a newspaperman at heart. The identity, inherited from his father, Keith, was as important to him as the trappings that came along with his wealth and held far more appeal than the other entertainment holdings Murdoch had acquired. The Wall Street Journal and the New York Times were the best newspapers in the United States, Murdoch's adopted home. Owning either paper would be the epitome of being a newspaperman. (Owing to its conservative editorial page and its devoted coverage of the business world, Murdoch had always preferred the Journal. He had once joked in front of a crowd of admiring CEOs, "I'd love to buy the New York Times one day. And the next day shut it down as a public service.") And he always enjoyed owning a hometown paper. "From 1988 to 1993 were probably the unhappiest years of his life," notes his longtime former general counsel Arthur Siskind. "It was the only time in his adult life that he lived in a city [where] he didn't own a newspaper."

  Despite the pressure, Kann survived, though even his most loyal supporters had begun to doubt his skill as a CEO. The nepotism factor, too, troubled the Bancrofts. In an age when modern boardrooms were bowing to shareholder pressure and demanding CEO performance, a husband-and-wife team atop a publicly traded company was difficult to defend. To appease the family, Dow Jones appointed some new independent directors to its board in 1997, ones who were meant to increase the professional quotient on the board and keep management in check. The family, eager for a more forceful presence on the board, pushed for Hammer to take a seat as a director.

  Murdoch would remember his meeting with Kann for years to come. Kann dismissed the meeting so entirely that ten years later, he couldn't be sure it had even happened.

  After the Fortune piece surfaced, Jimmy Lee called Roy Hammer and asked him, "What do we need to do?" There was a motive, of course, in this method: he thought the financial stress of the Telerate debacle—Dow Jones had to take a nearly $1 billion write-down in its investment in the firm the year after Bettina died—might help move the Bancrofts toward selling. But Hammer, loyal to the family elders and mindful of his 6 percent fee derived from the company's generous dividends, was characteristically standoffish and gave Jimmy little hope.

  Jimmy had continued to think about ways the mogul Murdoch might move on his prey, and he broke through personally with him at Herbert Allen's Sun Valley conference in 1998, nearly a year and a half after the world learned of Elisabeth's revolt. Jimmy was pleased to be attending the conference; he was the only investment banker allowed inside the exclusive gathering of the world's most powerful media executives and their families. He had been coming since 1994, and every year he plotted his movements carefully. Ever since the meeting here between Buffett, Michael Eisner, and Tom Murphy in 1995 sparked the merger between Disney and Capital Cities/ABC, the demand to attend the gathering had exploded. The guest list expanded, and the relaxed cocktail parties, hayrides, and white-water rafting outings promised billions of dollars in business to attendees who made the most of their visit.

  One by one, the gleaming Cessnas, Falcons, and Gulfstream jets filed into the small Hailey airport, on the edge of the Sawtooth Forest, their passengers transferring to SUVs that whisked them to the green oasis that was the Sun Valley resort in the shadow of Dollar Mountain, transformed every year into a high-powere
d playground for media barons. The conference took over the entire town that week. Herbert Allen was one of the most powerful bankers in the entertainment and communications business, and he drew his pick of influential and rich moguls each year to the resort where Ernest Hemingway had started to write For Whom the Bell Tolls. The conference had grown considerably to four hundred or so attendees and now included tech geeks such as Microsoft's Bill Gates and Intel Corp.'s Andy Grove—but Allen still reached for the old Hollywood glamour that had initially defined the gathering. Everything was studiously casual, and Allen wrote a personal note to every conference goer that was waiting in his or her suite or cottage upon arrival, often perched on the fleece jackets Allen doled out each year for chilly nights. Jimmy kept close tabs on who would be invited to the chalet-style resort, and once in his room, he carefully looked through the meticulous conference agenda and list of attendees.

  He had come that year to Sun Valley troubled by the fact that while JPMorgan had a leading relationship with almost every big media firm in the world, there was a glaring hole: News Corporation. As he looked through the conference schedule of speakers and their topics, he noted the mix of mogul and celebrity—Barry Diller, Edgar Bronfman Jr., Harvey Weinstein, Diane Sawyer, Tom Brokaw—and his eyes stopped and lingered on three names: Lachlan Murdoch, Rupert Murdoch, James Murdoch.

  His opening to introduce himself to this dynasty came at the cocktail party by the resort pool Friday night, where Jimmy had arrived early. He grabbed himself a beer and amid the quietly gathering crowd, he noticed the three Murdochs, off by themselves, seemingly unaware of any alternative purpose to the night other than enjoying a beer in the evening sun. Murdoch was tanned from time on his yacht, the Morning Glory, where he worked as obsessively as he did in his office in midtown Manhattan. The only difference was that on the yacht Murdoch traded pinstripes for casual slacks and open-necked shirts.

  The Murdoch sons were conspicuously young—in their late twenties and vulnerable after the shock of their father's separation from their mother a few months before, which they still thought might just be temporary. All their lives, the younger men had alternately sought or shunned their father's approval, but on that night, as the CEOs and founders hovered, the three Murdochs appeared relaxed and supremely comfortable with one another, despite the marital discord. Surrounded by his sons and his fellow robber barons, Murdoch was in his element.

  As Jimmy Lee approached this triumvirate of casual ease and staggering wealth, he saw generations of business before him. Happy-go-lucky Lachlan was the deputy chief operating officer of News Corporation, running the company's thirty-five TV stations, its Australian newspapers, the New York Post, and HarperCollins. As the elder son, he was the heir apparent (temporarily, as it played out) to all his father had created. Murdoch said at the time that the children had reached a "consensus" that Lachlan would take over for him. "The children selected him," he said. "It was their vote." James was fifteen months younger than Lachlan. He had yet to rise to the role of his brother's challenger. Lachlan was still seen as the Murdoch most like his father. He had started out working as an apprentice with the printers in the pressroom of Murdoch's Adelaide paper, the one from which Murdoch had grown his empire. He was also, at least at this time, the least rebellious of the children. James had dropped out of college but quickly came back into the fold, joining News Corp. in 1996, and was at the time working, with only limited success, on scouting out digital investments for News Corp. Their sister, Elisabeth, almost thirty, was at the time of the conference running digital operations for Murdoch's SkyTV satellite operator. She had given birth the previous year to her second child with Vassar classmate Elkin Pianim, the son of a once imprisoned opposition figure in Ghana. More recently, Elisabeth had begun an affair with public relations impresario Matthew Freud, great-grandson of Sigmund, much to the delight of the British tabloid press. She and Pianim divorced, and her father hadn't approved of any of it. Prudence, Murdoch's eldest daughter and only child of his first marriage, lived in Australia and stayed out of the succession race.

  At the time of Jimmy's approach, the sons and their father were in the middle of talking about a subject near and dear to their hearts: their workouts. James was slim, a black belt in karate; Lachlan, a hunkier-looking athletic type with spiked hair and a tribal tattoo. The men compared notes and swapped stories. "Do you lift?" Jimmy asked. "Do you run?" It was a comfortable, manly conversation between a banker and moguls, and Lachlan asked Jimmy if he would like to work out the following day.

  "Geez, I'd love to. No sweat," Jimmy replied. "What time?"

  "Oh, around five," Lachlan said.

  "Great, but doesn't dinner start then?" Jimmy asked.

  "No," Lachlan corrected. "We meant five in the morning." Jimmy got up early to make the appointment.

  Murdoch, always seeking to guarantee his longevity, was accompanied by the former captain of the Australian Rugby team, who was traveling with him. The men worked out together and discussed, among other things, Dow Jones. After Jimmy flew back to New York, he drew up a "book"—a financial brief—outlining how Dow Jones could fit into News Corp.

  Soon after, back in New York at a Fox News party, Jimmy sought out Murdoch to tell him, "I've done a lot of work on Dow Jones." He presented the book to Murdoch and his loyal chief financial officer, Dave DeVoe, with whom he discussed the logistics of how such an offer might work, such as whether to offer News Corp. stock to buy the company or just cash, or a combination of the two. Jimmy was determined that JPMorgan would land some News Corp. business, and so he stayed in touch, always looking for ways to be useful to Murdoch. With Hammer and Kann still in place at Dow Jones, however, no one could make much progress. "The art of the possible wasn't possible while we had guys who wouldn't have the conversation," Jimmy remembered.

  3. The Unraveling

  ON THE COLD MORNING of November 12, 2005, Mike Elefante arrived in New York with an unlikely ally for an unprecedented task. He was joining with one of his most persistent critics in the Bancroft family—Leslie Hill—to drive Peter Kann, Dow Jones's most powerful executive, from his chair.

  Elefante had earlier that spring taken over Roy Hammer's seat on Dow Jones's board. Elefante, the son of a New Jersey hairdresser, grew up far from the country estates inhabited by his clients. He had been working for Hemenway & Barnes since 1970, a year out of Harvard Law School, and had grown to know the New England Bancroft sisters after working for years as a lawyer on their account. Elefante now served as a trustee on almost half of the family's trusts.

  Like his imperious predecessor, he had long held the view that Dow Jones was best as an independent company under the control of the Bancroft family. Unlike his predecessor, however, he was open and friendly. Tall, with salt-and-pepper hair, he kept a mustache long after it was out of fashion.

  In the spring of 2005, Elefante was facing an increasingly restless Bancroft family. Throughout Elisabeth's campaign, one group of cousins had watched her travails with particular interest. The Hill family—rooted in Philadelphia but spread now to Hawaii, California, and up and down the East Coast from Washington, DC, to Boston's quiet suburbs—were by far the least glamorous of the Bancrofts. They were argumentative, a trait the more docile factions of the Bancroft clan blamed on their upbringing. The Hill matriarch, Jane MacElree—married to Louis Hill, an ambitious, hard-working Pennsylvania lawyer and state senator who left her in 1975 for the campaign manager of his unsuccessful Philadelphia mayoral campaign—had encouraged her children to discuss the events of the day, and disagree, at the dinner table. With seven children, the family couldn't help but be a touch cacophonous, an unusual trait in the broader family tree and one that made MacElree and her children particularly irritating to Roy Hammer and Peter Kann. Unlike their cousins, they held down unglamorous jobs and seemed the unlikeliest of newspaper scions. MacElree's oldest son, Crawford, was a high school biology teacher; his youngest brother, Michael, worked as an environmental scientist; their olde
st sister, Leslie, was a retired airline pilot. They didn't keep horses the way their cousins did, race cars, or throw elegant dinner parties. They lived in relatively modest houses with threadbare furniture and came to their lawyers' offices carrying documents in tattered bags.

  They did, however, take great interest in the business of Dow Jones. Growing up, the Hill family visited Jessie Cox's rambling mansion on Cohasset Harbor. The Hill kids played with their Cox cousins—Billy Cox III among them—and dug through Clarence Barron's old trunks full of his canes and hats that their grandmother kept in the attic, using the paraphernalia as props for plays.

  Leslie Hill was the Hills' representative on the Dow Jones board of directors. Her decidedly demanding profession suited her perfectly. She was the picture of WASPy practicality. She wore no makeup, and her brown hair ran chin length and showed streaks of gray. Her husband, whom she met at a flight school on Cape Cod, loved her willful manner. Like her siblings and cousins, she didn't advertise the family's connection to the paper. Her house, on a leafy block in suburban Washington, DC, was filled with modest sofas and armchairs that had been clawed by the family cat. Many of her neighbors knew her only as a pilot, not as a member of the Bancroft dynasty.

  Inside her family, she was well known for her stubbornness. She tended to disagree with whoever was speaking or whatever proposal was on the table at that moment. She loved Dow Jones, but she was tired of what she saw as the company's inept management. If somebody came along to save the company, she would support him or her. Unless she decided she wouldn't.