War at the Wall Street Journal

by Sarah Ellison

  The summer had begun to drag on with the efforts to find alternatives to Murdoch. In all, Dow Jones's advisers had been in touch with twenty-one potential suitors for the company but had received only one bid, from News Corp. General Electric Company and Pearson PLC had fleetingly joined together to make a bid for Dow Jones, but never followed through. Brad Greenspan, the former CEO of Intermix Media, Inc., the parent company of MySpace, and supermarket magnate Ron Burkle had teamed up to bid for a portion of Dow Jones, but nothing concrete ever materialized. Even the state-controlled Russian oil and gas giant Gazprom briefly considered an offer.

  Finally, in mid-July, in what appeared to be an exhortation to the Bancrofts to wind it up, Peter Kann told the Journal that, while he still hoped the family would keep Dow Jones independent, "if the family is going to sell I see no point in pursuing industrial conglomerates, Internet entrepreneurs, supermarket magnates and real-estate developers. None know anything at all about journalism. As to Mr. Murdoch, at least he loves newspapers, presumably would invest in the WSJ and Dow Jones, and would seem to have little incentive to tarnish a trophy he has coveted for so long." Even Kann was pushing them into Murdoch's arms.

  The week prior to the meeting in Boston, Dow Jones's board of directors had voted to accept the $5.6 billion offer from Rupert Murdoch's News Corporation. (Murdoch had agreed to assume $600 million in Dow Jones's debt, which boosted the value of the offer.) Dow Jones director Dieter von Holtzbrinck abstained from the vote and relinquished his board seat in protest. "Although I'm convinced that News Corp. offer is very generous in financial terms," he wrote in his resignation letter to directors, "I'm very worried that Dow Jones unique journalistic values will long-term strongly suffer after the proposed sale." He continued, "I do not believe that the 'Special Committee' can finally prevent Mr. Murdoch from doing what he wants to do, from acting his way." His resignation, though symbolic, was qui etly celebrated by the deal's opponents, and all eyes trained on the Bancrofts.

  Now, the only step left to make Murdoch the owner of Clarence Barron's old paper was the approval of Barron's descendants. The reality of the Bancroft family that damp Monday in July 2007 hardly lived up to their mythic possibilities as one of America's great newspaper families. They faced an important decision—whether to end 105 years of independence for the Wall Street Journal and add it to the media conglomeration of the Fox News television channel, the New York Post newspaper, and the MySpace social networking site.

  The afternoon meeting had kicked off with a welcome from Mike Elefante, whose friendly eyes were sagging with weariness, punished as they were by the summer's proceedings. Not only did he have to act as the intermediary among Zannino, the Dow Jones board, and the rest of the Bancroft family, all of whom seemed to have different agendas, but he was juggling the Hill clan, who were in the midst of pulling their money out of his law firm, Hemenway & Barnes. He found his best strategy was to appear as opaque as possible and say very little to anyone questioning his motives or position. He dealt with Murdoch's banker Jimmy Lee—who still called him almost every day in hopes of gleaning some information—in much the same way he dealt with his own clients: be friendly and accommodating, but never say what you're really thinking. The strategy had served him well enough so far, and he hoped he was nearing the end of this hellish ordeal. He had barely had a summer at all. Instead of heading to his country house just outside the city on weekends, he spent Saturday and Sunday on endless calls with his fellow trustees at the firm and coaching Bancrofts through their decision. He had also been dealing with one of the peskiest of the Hills, Michael, who was the youngest of the three Hill brothers. Mike Hill appeared to have determined that Hemenway & Barnes was the root of all the Bancroft family's ills. Early Bancrofts designed the trusts that held their money so trustees could be removed only through a court order. The Hills had been battling to kick Hemenway & Barnes lawyers off their trusts and pull their money out of the firm since before the Murdoch offer surfaced. Hemenway & Barnes refused, not wanting to lose one of its biggest clients and suffer the negative publicity that was certain to come from such a move. But slowly the two sides had come to an agreement: to get their money out, the Hills would agree never to speak of their dissatisfaction with Hemenway & Barnes. The relationship would remain, as Hemenway & Barnes needed it to be, pristine in the eyes of the rest of Boston's wealthy families.

  At the meeting, Elefante's bland introduction was fitting for a man whose primary goal was to ignite no great passions in his audience. Emotion, he knew, was his enemy at this stage of the game. Standing at a scuffed podium at the front of the cramped and windowless twenty-five-by-forty-foot conference room, he stared out on the rows of stained, gold-patterned chairs filled with the family he had come to resent. He introduced his fellow directors—chairman M. Peter McPherson and Lewis Campbell—to this motley bunch. Campbell, the CEO of Textron Inc., had fashioned himself as something of a consigliere to Leslie Hill. He appeared the homespun family man who understood the value of blood ties and legacy. And yet as the CEO of a successful aeronautics firm he could talk to the bankers on Wall Street as one of their own. He had, in fact, played both sides of this crowd successfully, chatting with Murdoch one afternoon and taking Leslie Hill to lunch the next. He knew that if this deal fell through, he would have to resign from the board. His mantra as CEO of Textron was "shareholder value," and he used the term constantly for his shareholders and fellow CEOs. If he let a deal like Murdoch's slip through his grasp, he would be ashamed to face any of his cohorts again. Leslie's opposition to the deal was a problem, he knew. But he determined early that it would be easier to jump through Leslie's hoops than to attempt to persuade her stubborn mind, so he had urged Zannino and the rest of the board to entertain—throughout the drawn-out summer negotiations—the cockeyed offers from the likes of kid-CEO Greenspan and Ron Burkle. Today, he knew, would involve a bit of pandering to the crowd, but he was determined to close the deal.

  The conference rooms in the interior of the hotel's ground floor didn't provide the kind of accommodations Elisabeth Goth Chelberg was used to. Accustomed to more civilized shelters such as Claridge's in London and the Carlyle in New York, Elisabeth had borrowed a friend's plane for a few hours to make this family meeting and was staying in Boston only for the day. Draped in a buttery yellow cashmere wrap, she looked out of place among her relatives, who wore nubby fleece zip-up jackets and slip-on rubber-soled shoes. More than a decade after her mother died, this meeting seemed the culmination of what Elisabeth had started so many years before with Ira Millstein, Warren Buffett, and her cousin Billy. The family, though still divided, was coming to terms with its inadequacy as a steward of Dow Jones, she thought.

  After Mike Elefante defended the deal he had initially opposed to the assembled Bancrofts, Lisa Steele followed him at the podium. With graying curly hair and attire that announced its Burlington, Vermont, origins, Steele looked warily around a room full of the relatives she had grown tired of dealing with over the past two months. When the offer from Murdoch first surfaced, she was deeply against it. She had inherited an independent Wall Street Journal and along with it, the notion that its independence should be defended at all costs. The summer had been long and painful for her, and she rarely imagined her family would have to face this kind of hopeless scenario in her lifetime. She felt she had worked hard—unlike many of her cousins—to get the facts right on this deal, mainly through talking to Elefante, who was, by that day at the end of July, the only person she felt she could totally trust. She had made a list of the pros and cons of retaining Dow Jones's independence versus selling the company to Rupert Murdoch. When she looked at the lopsided lists, she felt the deal was a no-brainer.

  The decision, desperate and discouraging as it seemed to her earlier in the summer, had long settled into inevitability, and by that late-July afternoon, she arrived ready to defend her view. Despite warnings from some of the Journal's reporters, Steele felt that the future without Murdoch would be m
uch bleaker than one with him. She saw her family, through leaks to the press and indecisiveness and internal infighting, as unable to stand together.

  Steele didn't realize, as she took the floor after Mike Elefante, that one of her relatives was reporting the meeting in real time to Murdoch's unofficial lieutenant Andy Steginsky. Steele told her family that she had done "her own due diligence" on the deal and had come to the painful conclusion that it was time to sell the company. Her words—"It will be irresponsible to walk away from this deal"—were welcomed warmly in the News Corp. camp.

  Leslie Hill's opposition to the offer had blossomed over the past two months since her last meeting with Murdoch. She had been deeply affected by letters sent earlier in the summer from Wall Street Journal reporters urging her and her family members to reject Murdoch's offer. She had, by the time her family gathered for this meeting, grown entirely mistrustful of Dow Jones's advisers and many on the company's board.

  When Leslie stood up after her cousin's comments, she walked to the front of the room and then stopped. "I have two speeches I could give," she said, "but I can't give either one of them." She then held up a manila envelope, a half-inch thick, stuffed with letters from Journal reporters who protested the deal and wrote to her and her cousins to urge them to reject it. "These are letters from Wall Street Journal reporters," she said, her deep voice quavering. "They wrote to urge us not to accept this offer. I could say a lot of things about this deal," she continued, "but it is their voices that matter." She was waving the manila envelope, clearly choked up. "We owe it to them not to sell."

  Following Leslie was Chris Bancroft, who wore a blue baseball cap embroidered with a fishing lure and a not-so-subtle message to his relatives: Bite Me. He had hired his own lawyer and banker and was becoming annoyed at the money he was spending to explore the options he felt the company's advisers were allowing to pass by unexamined. He knew time was running short and Zannino was moving ahead with due diligence with Murdoch. If he could find a way to take a principled stand and still have the deal go through, that might solve his dilemma. He stood up and walked to the front of the room and didn't stop pacing until he finished his short talk. "We're not broken," he told his family. "Dow Jones is doing just fine, and if Rupert is offering sixty [dollars a share] then it must be worth a lot more," he said. "Selling now is like selling the milk cow for beef," he said, his voice rising.

  Chris made it clear in his speech that he wasn't in favor of the offer, but he also delivered a message that showed he was as much a pragmatist as the advisers he so mistrusted. "I am going to vote no for the family shares I control, and I'm going to take the advice of my legal counsel for my votes as a trustee." The legal counsel for such a lucrative deal would almost certainly be to vote yes for the deal, Chris knew. If he voted yes for those shares, he would deliver the company to News Corp., since the vast majority of the shares he controlled were in Article III, which he oversaw as a trustee. But he couldn't bring himself to vote for this deal on his personal shares. His older brother, Hugh, was in favor of the deal, as was his niece Elisabeth Goth Chelberg, making his stance all the more controversial within his own family.

  After Chris, the elders had their say. Jane MacElree, the Hill family's matriarch whose seven children were split over what to do with Dow Jones, approached the front of the room, her soft, round cheeks framed by a simple gray bob. Dressed in a soft purple sweater, she looked the part of the kind grandmother. Her mother, the boisterous and foul-mouthed Jessie Cox, would have had harsher words for a day like this, but MacElree was subdued. "We are lucky that we inherited the stock we have," she told the group. "We are blessed because of it." The journalists at the Journal "risk their lives every day," she continued. She couldn't help but mention Daniel Pearl. "He put his life on the line for the paper," she said, pausing to hold back tears. She spoke as if she were giving the eulogy for the Journal. She told the group a story of a man she had met several years ago when she and her daughter Leslie took a course at Harvard Business School for family-run companies. The man, she said, felt the weight of his grandfather on one shoulder and the weight of his great-grandfather on the other. "I feel the same weight of the past on me now."

  But MacElree, too, had pragmatic considerations. Her considerable voting power over Dow Jones came from her role as a trustee over trusts controlling nearly 15 percent of the company's shares. In keeping with the Byzantine trust structure controlling Dow Jones, some of the beneficiaries of MacElree's trusts were the women of another branch of the family: Martha Robes, Jean Stevenson, and Lisa Steele, who, guided by Steele's painstaking deliberations, had come to favor the sale. MacElree's brother, William Cox Jr., whose frequent exhortations that the Journal was "the best damn paper in the country," spoke briefly. He remained, he told the crowd, against the deal. Everyone in the family realized, to varying degrees, that the power over Dow Jones and the Bancroft family's fortune lay not with the people with Bancroft blood running through their veins, but with the law firm that had advised them for so many years, Hemenway & Barnes. The earliest Bancroft trusts dated back to the mid-1930s and were established for the three grandchildren of Clarence Barron: Jessie, Jane, and Hugh. The Bancrofts hired Hemenway & Barnes in the 1940s and had relied on them for counsel ever since. Mike Elefante informed the thirty-three Bancrofts in attendance that they had a deadline of about a week from that meeting to vote on the deal.

  That week was a frenzy of activity and great stress. In the days leading up to the deadline for votes, William Cox Jr. went into diabetic shock. Leslie Hill, principled to the end, resigned her Dow Jones board seat in protest of the now inevitable decision.

  Chris Bancroft took a different path from his cousin. Having made it known that he was going to straddle the offer, he realized that through their endless wavering the Bancroft family had forgotten the first rule of bargaining: if you are selling, ask for more. He and others made a last stab to get Murdoch to raise his offer. By then it was too late. The News Corp. camp knew they had the company at $60 a share, not a penny more. In an embarrassing denouement, Chris tried to chisel out of News Corp. a pledge to pay his legal fees.

  Over the next several weeks, the Bancrofts suffered a final ignominy. After the deal was signed, they attempted to choose their representative to the News Corp. board, the family member who was to preserve Barron's legacy. Fractious as always, the Bancrofts missed their deadline. Murdoch made the choice for them, vetoing the family's first selection and instead picking a twenty-seven-year-old opera singer, Natalie Bancroft, whose greatest qualification for Murdoch was that unlike some of her Hill and Goth cousins, she held the right surname and wouldn't raise a fuss in the boardroom.

  15. First Day

  ON AUGUST 1, 2007, the morning of Barry Diller's party, Steiger was not the man in the newsroom's big office. Three months before, Steiger had retired from his role and handed the reins to his successor, Marcus Brauchli. Now, the morning meetings were more businesslike and less political. But another presence, though not in the room, loomed over the proceedings. That particular morning, after 105 years, Dow Jones was promised to a new owner, Rupert Murdoch. The news of the offer dominated the Journal's own front page, a sign that even this paper could make accommodations to the day's news. Murdoch was a man widely mistrusted and quietly despised in the newsroom. The editors in the meeting, few of whom had made any feeling toward Murdoch known throughout the long battle for ownership of the paper, were skittish. They worried about the future of the newspaper business and they feared for their own employment. The new regime would come to see their morning gathering as a sleepy vestige of the Journal's stultified past. Under Murdoch, the meeting would shift to mimic those in countless newsrooms across the country. They would talk about the biggest news of the day and those stories—scoops or not, fresh or not—would go on the front page.

  Brauchli had yet to develop into his new role, though he had been training for it for years. He still seemed uncomfortable standing in the spotlight rather
than sitting in the peanut gallery with everybody else. Every new editor is deemed unworthy at the start, and Brauchli was no exception. He was much younger than some of his erstwhile rivals, and his methods sometimes left the vanquished feeling stung. "You have to remember how Marcus rose to power," they would say. "It wasn't through building alliances; it was through proving that he was smarter than the rest of us." Brauchli seemed younger than he was and did little to change others' impressions of him. He tried to remain chummy in the newsroom. While Steiger took a car service to work, Brauchli still hopped on the subway every morning, and if he ran into a colleague, he would regale the listener with his latest take on the economy or finance or the odd dinner he had had the night before.

  His most important quality, however, at that moment, the morning when the Wall Street Journal became a Murdoch paper, with its attendant stigma, was that Brauchli was one of those in the newsroom who knew and loved the old Journal and appreciated the old way of doing things. Though Brauchli had campaigned hard for his job and made some sacrifices to get there (spearheading an effort to shrink the width of the Journal in an effort to save money and win favor with his bosses), he was a more trusted source than the mogul waiting uptown.

  Earlier that morning, Brauchli had sat at his desk in his corner office on the ninth-floor newsroom staring at an e-mail he had written the previous weekend. Just three months earlier he had moved in, and the office was barely unpacked. Boxes and papers sat on the floor, and the shelves held a few stacks of files and a handful of books, but there were no family photos, no happy souvenirs to mark his short tenure in this prestigious post. The entire summer had been an exercise in political survival. He had advised the Bancroft family on an editorial independence agreement they wanted in order to protect the Journal from Rupert Murdoch, while at the same time he had back-channeled with his friend and Murdoch intimate Robert Thomson to protect himself. If you were lucky enough to find him in his office at all that summer, he would often be rubbing his hands to stay warm in the air conditioning, looking more tired than was humanly possible for a man of forty-six and, in private moments, a bit stunned by the turn of events.