War at the Wall Street Journal

by Sarah Ellison

  As people filed into the 10:30 meeting, Brauchli thought back to the very early morning. He had sent his e-mail to the staff at 6:45 a.m., having reread it and rephrased it before finally hitting Send. An exercise in management-speak crossed incongruously with precise journalistic prose, the note urged his staff to stay focused on their jobs and not be distracted. With a simple subject line—ON THE NEWS—the e-mail began:

  Today's news that a decisive proportion of Bancroft family trusts will vote in favor of News Corp.'s proposed acquisition of Dow Jones begins a process that will affect us all, but won't change what we do in the newsroom.

  As journalists at Dow Jones and The Wall Street Journal, we have always focused on maintaining the high quality and integrity of our work, without regard to our ownership. We will continue to do so.

  Our journalism defines the Journal. A change in ownership won't change our understanding of what's important; our ability to compellingly explain the world, politics and business; or our commitment to reporting that is accurate, honest and free of slant.

  We know that a successful news organization's first obligation is to its readers. We must serve them, recognizing that their interests and needs change constantly, and that we will have to change with them.

  It is too early to know how or even whether News Corp. ownership might alter priorities or structures at Dow Jones. Our current and likely future owners have given formal assurances, however, that the newsroom will retain its independence.

  An owner who values editorial independence is essential to the Journal's success. Yet it is we who ultimately will ensure it, through the continued quality and integrity of our work.

  Clarence Barron's heirs in the Bancroft family have been loyal and proud stewards of The Wall Street Journal for nearly 80 years. The Journal today, in print, online and in new media, in the U.S. and internationally, sets the highest journalistic standard thanks to their long support. I hope you share in my deep gratitude to them.

  Regards,

  Brauchli, New York

  The language was characteristically understated for a twenty-year veteran of the Journal, where euphemism approached an art form.

  It fell to Brauchli to hold things together in the newsroom. He was barely perceptible to Murdoch, who in his career had encountered and dispensed with many more established editors. But Brauchli hoped and believed that he could outwit the cadre of News Corp. higher-ups who governed his future. He shifted immediately into a protectionist mode. The incredible thing about Brauchli's note to his staff that morning was not its astonishing banality and familiar corporate-speak of the conquered, but that in a newsroom full of gimlet-eyed cynics, so many people believed it.

  As he began the morning meeting, Brauchli kicked things off with a joke about the wide range of the Journal's coverage in the current edition. That day, the paper was filled with stories about Dow Jones as if little else in the world mattered. He urged the editors to continue, despite uncertainty around the future of the paper, to focus on doing what they did best: produce stories the paper could be proud of. Just then, Brauchli's assistant appeared at the door.

  "Rupert Murdoch is calling."

  And there it was, the new order. Her words interrupted the usual banter. Brauchli jumped to take the call. The first news meeting of the Murdoch era, and already the old man had interfered with the process. This would become a familiar ritual in the coming months. The remaining editors couldn't help but note the irony in the moment. Then they continued on, amid nervous laughter, to discuss the contents of the next day's paper.

  When he walked back to his office to pick up the phone, it turned out his haste was unwarranted. Murdoch left him on hold for a few minutes before picking up. The mogul gave a terse apology, quickly moving to the business of the call.

  "I hear you are worried about people leaving the paper," he said. He knew his reputation and had been reminded of it in the past three months as every major media outlet in the country scrutinized his record. He and those around him saw the coverage as an attack from a biased media. Murdoch would later say he withstood the barbs due "a genocidal tyrant." Media critic Jack Shafer of Slate.com would adopt the phrase as his pet name for Murdoch, who nursed a sense of aggrievement. This attitude helped fuel his perennial exhortations to staff to challenge the establishment and helped him galvanize his almost sixty thousand employees. It gave the company, an otherwise inexplicable jumble of media and entertainment properties, its identity. News Corp. grew thanks to Murdoch's opportunistic and haphazard acquisitions, but it never had a coherent reason for being as a business. The company did what Murdoch wanted. Despite some very high-profile mistakes (near bankruptcy in the early 1990s and disastrous acquisitions such as Gemstar and TV Guide), everyone had benefited. Now he was nearing eighty years of age. Newspapers were dying. News Corp.'s stock price had plummeted. The old titan still dodged questions about his succession. But some in his circle had started to think, gingerly, about how to define the company beyond the man.

  Anyone assessing Murdoch's bid for the Journal that summer felt obliged to mention, ominously, that "the alternatives" to Murdoch were grim. The Bancrofts had grown up with the implicit assumption that the moment they decided to sell the paper they would face an eager line of buyers. However, when they finally realized they were ready to sell, they saw it was too late for all that. Their erstwhile suitors had problems of their own, and if they didn't, the Journal was no longer as attractive a partner. They judged Murdoch not solely on his merits but against the dearth of other options.

  The Journal's newsroom hadn't launched a serious revolt against Murdoch's bid, a signal of the staff's weak position in a shrinking industry. Murdoch's reputation in the United States had benefited from his longevity. As Noah Cross said in Chinatown: "Politicians, ugly buildings, and whores all get respectable if they last long enough." He could have added newspaper barons. At other outlets, such as New York magazine, the staff had staged a deadline walkout to protest Murdoch's imminent takeover of their publication. At the Journal, a lonely group of reporters tried to drum up a protest to the offer and were admired but largely ignored by the nervous staff. Most were too busy watching counterparts at other struggling papers lose their jobs as newspaper executives more fearful than Murdoch retreated from the industry even as he dove in. Still, the group had coaxed a good many of the Journal's staffers to write letters to Bancroft family board members urging them not to sell. And those letters were the weapon Leslie Hill chose to brandish when she stood in front of her family and urged them, fruitlessly, not to sell the company her great-grandfather had bought and her family had controlled for 105 years. Brauchli was worried that each person who had penned an impassioned plea against Murdoch might walk out now that the deal was signed. "I'm more concerned about people feeling morally obliged to resign because they campaigned against you," Brauchli replied.

  But Murdoch, whose relationship to most reporters who worked for his papers was that of a man to his desk chair—"Murdoch looks upon you as furniture," the mogul's lawyer told Ken Auletta during the New York magazine takeover—urged Brauchli not to worry. "You shouldn't hold on to people to just hold on to them," he said.

  Wanting to quickly acquaint himself with this editor at the top of the crown jewel of his $5-billion-plus purchase, Murdoch invited Brauchli, whom he had never met, to breakfast or lunch that coming Friday. Perhaps in retaliation for waiting on hold for a few minutes and perhaps because he needed some time to think about the shark before he climbed into his tank, Brauchli told Murdoch he would have to check his calendar and give him a call back.

  That afternoon, Dow Jones CEO Rich Zannino came down from the executive eleventh floor to the newsroom to address the staff about the morning's announcement. In a French blue shirt with linen trousers and brown loafers, he was improbably tan and healthy given how much time he had spent these past three months in conference rooms negotiating to sell the company. Next to him, Brauchli looked pale and thin, a mien that would on
ly amplify in the coming months. Zannino's message about the deal was simple: "A lot's been written, a lot's been said about it, and as I think about it and as I cut through it all, my summary of it would be: this deal makes a tremendous amount of sense for Dow Jones. It's a terrific opportunity for the company; it's a terrific opportunity for our shareholders; it's a terrific opportunity for all of us as employees of Dow Jones." He didn't mention his $16 million severance payment, which made it a terrific deal for him, but the crowd before him didn't need to be reminded. He went on for just a few minutes and then asked for questions. As Zannino fielded them, and passed many of them on to the new managing editor, Brauchli felt all the responsibility for the Journal accumulate at his feet. It was his paper to protect, not Zannino's, he realized.

  On August 3, Brauchli arrived in one of the small executive dining rooms on News Corp.'s third floor for his appointed breakfast with Murdoch. He saw the scalps of former conquests hanging on the walls around him: dust jackets of HarperCollins books and corporate paraphernalia were the décor. The two chatted about the economy, and Murdoch grilled Brauchli on his opinions. It was clear to Brauchli that Murdoch was testing him, seeing how much or how little he enjoyed his new editor's company.

  Then he laid out for Brauchli his vision for the paper, one he had shared broadly during the deal negotiations: "The New York Times sets the national agenda, and we should," Murdoch said, already slipping easily into the role of owner. Brauchli smiled imperceptibly at Murdoch's mention of "we." He wasn't used to the concept of him and Murdoch being on the same side. Brauchli wasn't surprised that Murdoch wanted to attack the New York Times; he had received ample warning of that desire. But the Journal's sensibility was more subdued, and strategic. Journal editors picked their shots; Murdoch wanted all-out war. Traditionally, the paper had been a newsroom of midwesterners in the center of New York, a group happy to exist outside the glamour of the city. The Journal was well read in flyover country and in the investment banking corridors of Wall Street, but among the literati and the culture set of Manhattan, it was viewed with a certain disdain, almost as if it were a trade paper. The reporters and editors often thought that was part of the beauty of the place. The Journal told its readers stories they never knew they wanted to hear. The paper revered surprise, running a quirky, often hilarious story every day down the middle of the front page, internally called the "A-Hed." The Journal's investigative reporters often remarked how welcomed they were by corporate executives, who thought that the paper was a friendly outlet. One of the paper's great specialties was the "tick-tock," often riveting reconstructions of significant events that had occurred months earlier. Almost to a fault, the Journal avoided using the influence of its news pages to full effect.

  Murdoch wanted to wipe all that away. He wanted the Journal to lead the media pack. It was antithetical to the Journal ethos. "Even if you're leading the pack, you're still part of the pack," Peter Kann, the Journal's former CEO, liked to say. "If there's something everyone is talking about, that should be on the front page of the Wall Street Journal," Murdoch told his aides.

  He continued his list of priorities for Brauchli. "We should break more news," he said. Already Murdoch had planned to add four pages to the paper to accommodate the expanded political and general news he wanted to see in it. While Murdoch had been sipping cocktails on Diller's yacht, a bridge had collapsed in Minneapolis, killing 13 rush-hour commuters and injuring 145. The New York Times and the Washington Post had splashed the story on their front pages. At the Journal, however, it had appeared in a 117-word brief item in the "World-Wide" column, a list on the paper's front page where the Journal relegated non-business news. "We should cover the bridge collapse in Minneapolis," he continued. "It's a big infrastructure story. I could see that on the cover of 'Marketplace' [the paper's second section]." Brauchli wanted to point out that the very morning of their breakfast, the paper carried a lengthy story on the front of the "Marketplace" section discussing how the collapse had revived the infrastructure debate in the country. Murdoch either missed that story, or it had come too late. When the Times had a color photo of the bridge collapse the day after the event, the Journal's brief mention was insufficient, Murdoch felt.

  Talking about the paper's international coverage, Murdoch was less precise. He wanted to beef up the European and Asian editions of the Journal but didn't have specific prescriptions for how to do so, and he wondered aloud if the paper should combine its foreign bureaus with those of the Times of London, another of Murdoch's "quality" papers. Brauchli knew that even a cowed Journal newsroom would be appalled by the suggestion. He pushed back, suggesting that the two papers could have access to one another's content and share certain stories but only if they were properly labeled to identify the difference between Journal content and articles from the Times of London. He wouldn't become "we" so quickly.

  Murdoch spent much of the meeting recounting News Corp.'s strategy. Brauchli asked Murdoch if he had decided on a CEO structure for Dow Jones, and Murdoch said he hadn't thought about it yet. He delivered a damning pronouncement about Zannino: "He's not a media man. He doesn't know media." Like everyone granted a moment with a powerful ruler, Brauchli attempted to save his friends. He encouraged Murdoch to get to know Journal publisher Gordon Crovitz and Todd Larsen, chief operating officer for half of Dow Jones—two executives Brauchli liked and hoped wouldn't be fired. Murdoch said he would, just as soon as he got back from spending the month of August on his boat in the Mediterranean.

  As he stepped out of the nondescript News Corp. tower onto Sixth Avenue and into the August morning sun, Brauchli felt encouraged. He thought that there was plenty of overlap between his vision and the baron's.

  16. Meet Mr. Murdoch

  RUPERT MURDOCH visited the Wall Street Journal's newsroom for the first time as its future owner on September 12, after a relaxing month aboard his Rosehearty yacht. To prepare for his arrival, reporters festooned the newsroom with enlarged "hedcuts" of Murdoch—ink portraits the paper used to illustrate its stories instead of photos—accompanied by the caption "Show Us the Money." Negotiations between Dow Jones's management and its small, ineffectual union were ongoing, and the reporters wanted to pressure Murdoch into treating them fairly. They knew of his reputation. A union buster, he had singlehandedly broken the British print unions back in 1986 by dismantling the legendary presses on London's Fleet Street with his Wapping complex in East London. But they hoped—against hope—he would put on a friendlier face for his takeover of Dow Jones and the Wall Street Journal.

  Once inside the door of the paper he had sought to own for as long as any of his associates could remember, Murdoch was not the evil genius many expected him to be. While he was no friendlier to unions or patient with the "respectable" American newsroom he saw rife with self-importance, he cut an almost grandfatherly figure. His hands, worn down by years of pampering, had grown papery and soft, and the deep crevasses in his face made him seem frequently tired, even when he was full of energy, as he was the day he stepped into One World Financial Center to visit his prize.

  He had come the week before to see Dow Jones's executives. CEO Rich Zannino made sure he would feel welcome in part by turning the televisions from CNBC to Fox News. Zannino had also set up an office for Murdoch just two doors down from his own. The maintenance staff in the building initially marked the office with a nameplate for "Rupert Murdoch," but Zannino scolded them—such a welcome was too obvious and crass and, frankly, modest—and they took it down.

  Brauchli was jittery on this first day with his new boss. He pulled Murdoch from meeting to meeting, introducing the editors and showing off the newsroom. Brauchli believed in the Journal and wanted Murdoch to be impressed. Brauchli especially wanted to display the planned launch of a glossy magazine called Pursuits, unabashed advertiser bait that would mimic the profitable ventures at the New York Times such as the fashion-focused T magazine. Dow Jones executives and Journal editors would unveil a prototype of the magazine to
Murdoch. Even though he wasn't yet officially the owner, they wanted his approval for the project. Since it would be his decision ultimately whether the magazine would launch, and in what form, it only made sense to include him, Zannino reasoned.

  In the meeting, Murdoch's mind was elsewhere. "We've got to have a much smaller meeting and figure out how to cripple, really cripple the New York Times," he said quietly as the group sat down to begin. The editors showed him the prototype, and Murdoch nodded occasionally, providing his own commentary. "We've got to lower the advertising rates to make them comparable to the Times's weekly magazine," he said. He leafed through the prototype, and the attendees from Dow Jones craned their necks closer to better understand his rumbling speech. He told them that there should be more beautiful women in the advertisements in the magazine. "My wife brings home these magazines and just pages and pages through them, looking at the ads," he said, with contented befuddlement. "She loves it." When he spotted a photo of an older CEO in the prototype, Murdoch exclaimed, "He's really shrunk." The others laughed, a bit nervously. "I've shrunk. I mean, you'll shrink," he continued, pointing to one of the younger editors in the room. "But why is it that some people shrink?" The attendees, including Zannino, Brauchli, Gordon Crovitz, and the Journal reporter who had done the lion's share of the work on the prototype, Robert Frank, said little, offering an occasional comment, though never a contradictory one. This was not the razor-sharp titan of legend. Murdoch said he wanted Leonard Lauder, the chairman of Estee Lauder Companies, to advertise in the magazine. "But Len always asks for coverage in exchange for ads," Murdoch mused, "and I'm going to be the one who tells him no. That'll be fun."