War at the Wall Street Journal

by Sarah Ellison

  The disrepair of the news floors was indicative of the slow deterioration that had begun years before, as the pretenders to Steiger's throne had tired of their place in his court and left. Years before his retirement, Steiger's deputies had begun auditioning to replace him. Their stage was often the daily morning news meeting, which took place every weekday at 10:30 a.m., when the top editors of the most influential business paper in the world gathered together in a conference room overlooking the Statue of Liberty.

  Steiger, an understated and affable manager, quick to laugh and slow to anger, was facing a looming deadline. He and Peter Kann, Dow Jones's chairman and chief executive, had acknowledged years earlier they would retire together. The board had cut short Kann's CEO tenure. With Steiger's own retirement approaching, the meet ing became a regularly choreographed exercise of preening and intellectual one-upmanship for the paper's top editors. Beneath the civility, it was a roiling cauldron of office politics.

  Following the Journal's tradition, the editors wouldn't talk about the biggest news of the day. Unlike every other newspaper in every jurisdiction of every country in the world, the Wall Street Journal didn't put news on its front page. The paper relegated the biggest news stories to the inside of the paper, on page A3. Epic features and investigations for Page One were mapped out weeks if not months in advance. Because of this Journal peculiarity, the morning news meeting was not a frenetic debate about the most disastrous or dramatic news events, but rather a mannered recitation of the day's "sked" of stories. In a business of attention-grabbing headlines and color photos, the paper treated its front page like a quiet haven for reflective storytelling. Breaking news was important, and the paper did plenty of it, but the craft of feature writing was the center of the paper's identity. Such a tempo left plenty of time for the auditions.

  Bureau chiefs, news editors, and page editors would file into the conference room or log on to the conference call. Steiger supervised this discussion. He would indulge his entourage and listen patiently to the story lineup. Mid- and lower-level editors hoped to be noticed for their clear-sighted news judgment or a lucid explanation of an arcane story. The less ambitious kept their heads down and hoped not to be put on the spot. The participants were well aware of the importance of their decisions: they were helping shape the agenda for the nation's business paper, regarded by the country's corporate executives with a combination of admiration and fear. CEOs often asked themselves, "How would this look if it appeared on the front page of the Journal?" The paper held sway simply by existing.

  Those gunning for the top job could exhibit how much they deserved to run the most powerful business paper in the world. They tortured their underlings with probing questions. Some of the interrogations were sincere attempts to delve into an important topic; others were merely the kind of showmanship that played well when positioning oneself for advancement. Like any live show, wardrobe played a role: once, a deputy managing editor and candidate for the top job performed a 360-degree turn at Steiger's behest to show off her snazzy suit before taking her seat at the meeting.

  In his later years, his detractors in the newsroom whispered, Steiger had started showing interest in the latest celebrity gossip and fashion trends. He was reading Women's Wear Daily magazine and paying attention to the vogue in women's shoes. His editors attributed these attractions to his third wife, Wendy Brandes, a striking young jewelry designer and fashion blogger twenty-five years his junior who looked like a modern-day Snow White with a high-fashion wardrobe and a sleek bob. As his retirement approached, Steiger joked that Brandes had threatened him: "The first day she finds me in the apartment in sweatpants after 10:00 a.m., it's not divorce; it's murder." He hadn't yet determined what he would pursue after retirement, but he didn't plan to be idle.

  A year before Steiger's retirement, New York's media world was scattered with the erstwhile candidates: Larry Ingrassia, the former Journal money and investing editor (and brother of Paul Ingrassia, president of Dow Jones Newswires), had left to become the business editor of the New York Times; Steve Adler, the top investigative editor at the Journal, was now the editor in chief of BusinessWeek; Joanne Lipman, the steward of the paper's lifestyle sections, had just left for Condé Nast's new glossy monthly business magazine, Condé Nast Portfolio. Daniel Hertzberg, long Paul Steiger's main deputy in the newsroom, was still at the Journal, but he was too close in age to Steiger to be considered a successor. Of the original pool of Journal candidates to succeed Steiger, only Marcus Brauchli, the youngest of the group at forty-four, remained at the paper.

  A journalism enthusiast, Brauchli had spent virtually his entire career at the Journal, minus a requisite year and a half as a copy boy at the New York Times, a stamp for any and all aspiring journalists of a certain generation. He was among the last of that old breed, yet despite his youthful demeanor he affected a world-weariness that made him seem a seasoned member of the club. Slim and good-looking, with a broad nose and a boyish face, he had a hairline that had receded to the point where he had adopted the closely shorn haircut of many middle-aged men hoping to look less aged. His suits, many of which he brought back from his years as a correspondent in China, were bespoke; he bought them from the cut-rate De-Luxe Tailor Shop in Hong Kong.

  Brauchli spent twelve years in Asia with Dow Jones and a year and a half in Europe (with a short break for a prestigious Nieman fellowship at Harvard). As a foreign correspondent, he wrote creative, probing stories and seemed to model himself as a swashbuckling reporter much like Peter Kann.

  But he occasionally grew frustrated with taking orders from New York; Brauchli wanted to try his hand at delivering the orders. In 1999, he got his chance and was offered the position of national editor at the Journal. Brauchli planned the move back to New York and thought of it as an experiment. As he traveled through Mongolia the summer before he returned, Brauchli promised himself that if he was good at navigating officialdom, and enjoyed it, he'd stay. But if not, he'd be right back out on the road.

  He took easily to the series of managerial projects that awaited him upon his return. These propelled him up the ladder of the newsroom so quickly that he became known as "the Rocket." Brauchli just laughed at such monikers and kept moving ahead. Often, however, he would think back wistfully to his years as an Asia correspondent as he suffered (and thrived) through bureaucratic newsroom meetings. Despite these yearnings, he became known to most reporters in the Journal newsroom as a master manipulator of newsroom politics. His roles expanded, and he began to take on more business-oriented projects. In 2005, he helped redesign the paper's small and struggling European and Asian editions, turning them into smaller tabloid formats, which sold better on newsstands in Europe and saved the company money in production costs. By the end of that year, he had started to work on a redesign of the paper's U.S. edition.

  When Zannino was appointed CEO, Brauchli saw the move as favorable to his chances at the managing editor slot; he and Zannino had gotten to know each other through Dow Jones's Senior Leadership Team events, meetings for the company's executives to brainstorm about strategy. Brauchli sensed that Zannino liked him.

  The redesign of the U.S. paper was gaining momentum just as Zannino took on the CEO role. To save money, Kann and Zannino and House had agreed on one thing: to shrink the size of the Journal by three inches to save on newsprint and production costs. The old size of the paper, an expansive fifteen-inch width, made it unique, but such grandiosity was no longer possible in a world of dramatic budget constraints. The paper would shrink to become a foot wide.

  Now, the project was Crovitz and Brauchli's to implement. The Journal, like every other newspaper in the country, was suffering from an identity crisis. Not only was advertising down, but the paper was competing with online news sources and twenty-four-hour cable news. The immediate reason for the redesign was the adoption of a narrower-size paper that would allow the Journal to be printed on presses across the country that weren't owned by Dow Jones. The move would save $18
million a year. Crovitz refused to blame the change on the tough times. Instead, in an Orwellian twist, he would take this literal shrinking of the paper and sell it to readers as a sign of a strong future.

  Crovitz decided he would call the new iteration of the newspaper "Journal 3.0." He arrived at the name—never popular in the Journal's newsroom or executive floor—by taking particular note of the Journal's lead front-page story the day after Japan attacked Pearl Harbor: "War with Japan Means Industrial Revolution in the United States" read the headline. The story outlined the implications of the attack on the country's economy, industry, and financial markets. For Crovitz, it also marked the end of the first phase of the Journal—"Journal 1.0," the time between the paper's founding in 1889 and December 5, 1941. During that period, the Journal reported the news like any other outlet. After that headline and under Bernard Kilgore, who became the paper's managing editor the year of the Pearl Harbor attack, the Journal started adding more analysis to its stories and expanded its coverage beyond business and finance. Crovitz defined "Journal 2.0" as starting on December 8, 1941. He planned for it to end on December 31, 2006, when he would usher in the paper's third phase. To compete against the immediacy of the Web, Crovitz wanted the paper, instead of running stories that rehashed what people had learned the day before on their BlackBerrys, to become more analytical. Journal reporters would break news on the Web site and then examine it in the next day's paper.

  Though Brauchli appeared largely unchallenged inside the Journal newsroom, another candidate from another Dow Jones division, Paul Ingrassia, was a leading contender for the managing editor post. Ingrassia, who had served as the Journal's Detroit bureau chief in the 1990s, had won a Pulitzer Prize in 1993 for his coverage of the automobile industry. For the past ten years, however, since 1996, he had served as president of the company's storied "ticker," which was one of Dow Jones's largest and most profitable divisions, and one that Journal reporters had always dismissed as a journalistic stepchild. Newswires wrote bare-bones stories for investors. They had no pretensions to craft a gripping narrative; their job was to report on the corporate news of the moment, updating the investors who subscribed to their service. Newswires reporters were judged on how many seconds their stories appeared before competitors' at rival newswire services Reuters and Bloomberg. During Ingrassia's tenure as the head of Newswires, he had maintained its profitability and built up its journalistic credibility, though the division still lagged in reputation behind Reuters and the ever dominant Bloomberg. Still, Ingrassia had done good work. The ticker hadn't won a single award for its journalism in the 115 years prior to Ingrassia's arrival but then accumulated thirty during his time in the job. The position gave him what Crovitz called "management maturity."

  Ingrassia had been talking to Crovitz about a strategy for all of Dow Jones & Company, one that included gradually merging the reporting bureaus of the Journal and Newswires. It was, in some ways, an obvious step. The wire had a huge reporting staff of 700; the Journal, 250. On any given day, the two newsrooms often covered the same story, be it an earnings release from a company or the market's movements for the day. The newspaper industry was facing an increasingly demanding shareholder base. Given the mounting financial pressures on the business, it only made sense for the two units to coordinate. But such a combination was anathema to the proud staff of the Wall Street Journal, where many reporters saw themselves as storytellers with a powerful audience, not stenographers for the broker set. Indeed, cooperation between the two staffs had been attempted before, never with much success. Each time, after a few months of halfhearted coordination, the two staffs would re treat to their spheres of comfort, where Journal reporters would file their stories on a 5:00 p.m. deadline for the paper, long after it was of much use to the Newswires staff, who had to feed investors during the stock market's open hours between 9:30 a.m. and 4:00 p.m.

  Under Zannino and Crovitz, the idea was gaining new momentum yet again. Ingrassia found himself in a horserace with Brauchli, and surprisingly, at least for observers in the Journal newsroom, which backed Brauchli, Ingrassia had the early lead. In fact, one could say he had already won the race in early 2006. In the first few weeks after Zannino officially took over the CEO spot in February, Crovitz had been talking regularly with Ingrassia and assured him "there's no one else" for the job. It was over a year before Steiger would reach retirement age, but Zannino and Crovitz were ready to make a move. They agreed that Ingrassia, with his experience, his attention to the bottom line, and his position somewhat outside the Journal newsroom, was the right choice.

  They made that choice without consulting Steiger, a practice that would seem perfectly acceptable in any other company, where typically a sitting executive doesn't pick his successor. But Paul Steiger had been shaping the Wall Street Journal and its journalism for fifteen years as managing editor, encouraging his reporters to dig out "the definitive story" on their beats and pursue stories with "moral force." He had learned to court and when necessary deflect the powerful executives who had been an almost continuous presence on the job, at cocktail parties or editorial lunches, or in an angry telephone call after an unflattering Journal story. The proximity to such power and his comfort with it had lent Steiger an air of gravitas. He showed the subjects of the Journal's stories respect and deference, but he landed careful blows when he had to. Through this measured approach, he had become one of the great newspaper editors in the country.

  Under the plan Zannino and Crovitz had in mind, Ingrassia would take over for Steiger, who would, for the last year before his retirement, take on a senior editing role overseeing both Dow Jones Newswires and the Wall Street Journal. It amounted to a proverbial kick upstairs for Steiger. For Zannino and Crovitz, it kept Steiger's name and reputation attached to the Journal, helpful for this brand-new executive team. Steiger's new position atop both the Journal and Newswires would bless the Ingrassia-outlined revolution.

  Zannino and Crovitz discussed their choice of managing editor with Dow Jones's directors. Lewis Campbell, the Textron CEO who had worked at General Motors when Ingrassia served as the Journal's Detroit bureau chief, had lobbied for him with fellow board members. Peter Kann personally blessed the pick. A press release was drawn up to announce the move as part of Zannino's other executive appointments. Only then did Zannino and Crovitz approach Paul Steiger with their decision. Crovitz took Steiger to lunch at City Hall restaurant, a Tribeca establishment blocks away from the Journal's offices, to lay out the plan. Steiger listened patiently. But he had something else in mind. He calmly explained that he felt the new scenario would give him no authority. Ingrassia would be designated heir apparent, rendering Steiger a lame duck.

  "I've had this job for fifteen years, longer than anyone else," Steiger told Crovitz. "If you think I've had it too long, I'm happy to step out of the way," he added, in the same calm, soft-spoken, and halting tone that neutralized irate CEOs and staved off complaints from embittered editors and reporters. "But if you want me to stay, I want to be the managing editor of the Wall Street Journal."

  Crovitz asked Steiger to come talk to him and Zannino together, which he did, and he repeated his arguments. A job that lacked real authority was not a job Steiger wanted. "Why make a decision before you have to?" he said. To rush the selection of managing editor, Steiger reasoned, seemed ill-advised. The editors were busy working on the planned redesign of Journal 3.0. "Why don't you put off the decision until the redesign is complete?" he said. The launch of the new paper was still nearly a year away. When Zannino pressed Steiger, he voiced some reservations about Ingrassia, saying he had been out of the Journal newsroom a long time and didn't have an easy relationship with his former colleagues. But he reserved his harshest criticism for later.

  Zannino and Crovitz, brand-new to their jobs, had underestimated a seasoned corporate operator like Paul Steiger. They both respected Steiger and knew they needed him. They were about to learn how little power they wielded within the company. Until Zannin
o, Dow Jones had been run by journalists. Now, even though there wasn't a reporter in the corner office, the newsroom maintained its sway over the company.

  Zannino now had to deal with the veiled threat that if he went ahead with his existing plan, Steiger would leave. He, the non-journalist CEO, the guy who had come from Liz Claiborne, didn't want to be responsible for that. This battle between the Journal and the business side would go to the newsroom. Zannino and Crovitz put off the decision on the managing editor by placing Ingrassia in charge of a "news strategy" committee that would spend the next year exploring ways to get the Journal and Newswires to cooperate. It would give Ingrassia something to do for the year until they made a final decision.

  That spring, Zannino was mounting another project as CEO: meet the other chiefs in the media business and take Dow Jones out of its isolation. During his three months in the chief executive's office, Zannino had been making the rounds with his counterparts at other, larger, more dynamic media companies. He was warming to his role. He had gone to breakfast and lunch with media players such as IAC's Barry Diller and Reuters's Tom Glocer, and after a concerted effort by Jimmy Lee, he was going to have dinner with Rupert Murdoch. Jimmy had been trying to get Zannino to attend his annual JPMorgan Leadership Conference earlier that spring in Deer Valley—where Murdoch had been—but Zannino demurred, telling Jimmy the venue was too public for such an introduction.