Murdoch and Robert Thomson would appoint their own editor of the magazine, Tina Gaudoin, who had worked for Thomson at the Times of London as editor of that paper's upscale Luxx magazine. Slim and fashionable, Gaudoin came from a world where magazine editors accepted gifts from fashion designers. The Journal's "Code of Conduct," which applied to every employee from the chief executive down to the news assistants, prevented such fringe benefits. Gaudoin appeared loath to give up the perks.
She had told colleagues that the strictures at the Journal against accepting gifts made life impossible for an editor like her. On an editor's salary, one couldn't traffic in the appropriate circles without taking advantage of the generosity of the magazines' advertisers and article subjects. Deep discounts on fashion were common for editors at many women's magazines, in both the United Kingdom and the United States.
Gaudoin appealed to the Journal's ethics czar, Alix Freedman, who had won a Pulitzer Prize for the paper years before for a series in which she investigated the efforts of tobacco companies to increase smokers' intake of nicotine. In a contentious meeting in Freedman's office, Gaudoin made her case, gesturing to her handbag and other articles she was wearing. She had done things quite differently in London.
Freedman said there would be no exceptions. The story quickly circulated in the Journal newsroom as evidence of the culture clash between an institution with ethical standards and ones without them. In any event, Gaudoin signed the Dow Jones Code of Conduct (which she later said she was happy to do). She gave up her Barneys discount card.
17. Interregnum
FOR THOSE FIRST MONTHS before he had officially taken over, Murdoch reveled in his position. Everyone inside Dow Jones, from Rich Zannino on down, acted as if Murdoch were already in charge. Marcus Brauchli had started back in June assembling his new team of editors to lead the paper, and his activity since the announcement of the deal had only accelerated, now that the Bancrofts were no longer a concern and he had more time to devote to the internal workings of the newsroom. He didn't make a move without considering Murdoch, of course, though he still hoped he could impress the mogul with the Journal's homegrown talent and way of doing things. He urged his editors to think of every possible suggestion News Corp. might have for the Journal in order to come up with a response that would allow the Journal to fashion its own destiny under the conglomerate. Even though he thought of them often, and how to protect them, he grew more distant from his editors during this period; he was so busy strategizing how to save the paper that he spent little time with the people who were putting it out. He was practicing the age-old strategy of "managing up" and spent hours with Murdoch, attempting to charm him.
No matter what Murdoch would tell his board or his investors about the rich array of businesses at Dow Jones, it was the Journal that he wanted and the Journal he watched. So Murdoch was willing to allow Brauchli to stay in his position as long as Thomson was the one with real control. Over time, however, it became clear to him that Thomson wasn't running the paper with a free hand, and Murdoch wasn't allowed the fun he thought he would have—daily chats with his editor and a ringside seat at the inner workings of the daily diary of the American dream—while Brauchli was in charge.
Brauchli continued to work feverishly on a plan to redesign the Journal, in hopes his stamp on the paper would be to Murdoch's liking. Brauchli was a fan of wonky political and financial reporting. His taste for corporate dramas paled in comparison to his liking for analyses of the global financial system or a quirky tale about a corrupt foreign dictator. He wanted to bring more political reporting into the paper, a goal that jibed with Murdoch's vision. The internal name for the planned redesign, which was in the works before Murdoch's bid even surfaced the previous April, was "Project Kilgore," a reference to the famed Barney Kilgore, who transformed the Journal from its narrow stock-tip roots to a national daily that covered a wide range of business and society. Project Kilgore would bring more politics to the front page of the paper; refocus the entire front section of the Journal more toward politics, culture, art, and science; and move corporate coverage to the second section of the paper. That second section, "Marketplace," had been a home for media, health, and technology feature stories, but in the redesigned Journal the biggest corporate news stories of the day would reside there.
Brauchli insisted to anyone who would listen that the changes he planned to make were his and his alone; he had talked about what he wanted to do with the paper for years, he said. Some of his friends backed him up. But even he admitted that Murdoch was coloring his every move, and Brauchli began to suffer from the disease that plagues every Murdoch editor: whether he made his own decisions or not, nobody believed he had a thought or utterance that didn't originate from Murdoch.
The newsroom of the Journal had never been full of firebrands, and the interregnum—when Dow Jones was promised yet not delivered to Murdoch—was no different. Paranoia suffused the newsrooms and the corporate offices. Though Murdoch thought little about the individuals in One World Financial Center—he had, after all, taken over newspapers many times before and heard howls of protest, only to overcome them—their minds were preoccupied by his every utterance and perceived preference.
He was particularly outspoken about his desire to change the one successful business strategy for which former CEO Peter Kann could claim credit: a paid subscription model for WSJ.com. Murdoch didn't like how it limited the audience for the Journal's Web site. He viewed the success of his media properties largely through one lens: the size of their audience. On Fox's hit show American Idol, the audience, not the judges, voted for the winner. That was the real measure of success. Both properties needed to win large audiences to be successful. He wanted to harness the power of the Journal's brand and use it online. Unlike other CEOs who would evaluate the financial implications of such a move before talking about their plans, Murdoch, with his characteristic disdain for such dithering, talked openly about making WSJ.com free before consulting anyone at Dow Jones about the move, or finding out how much it might cost the company. In mid-September, he told investors that a free WSJ.com "looks like the way we are going." The comments made Dow Jones executives, who prided themselves on their carefully constructed online strategy, apoplectic. They hadn't had a chance to present Murdoch with their evaluation of what such a move would mean financially. That didn't stop Murdoch from speculating aloud to an investor conference: "Would you lose fifty million in revenue? I don't think so ... But you'd lose some tens of millions to start with. Then, if the site is good, I think you'd get much more than that back just in textual search. And I think you'd get not one million paying customers, but, around the world, you'd get ten to fifteen million regular daily hits on it, and that would be the most affluent, the most influential people in the world ... And I think that could grow," he said. His numbers were all off, but no one with the real numbers had a chance yet to tell him, nor did they want to. After all, it was Rupert Murdoch, who had built a then $9 billion fortune from a single newspaper in Australia, they thought. Who were they to contradict him?
That fall, Murdoch continued on his tour of the Journal, meeting with everyone Brauchli would provide to him. He paired up News Corp. executives with their counterparts at Dow Jones and urged them to swap information. Though there was an army of executives coming from News Corp. to scout out Dow Jones, there was only one person whose opinion mattered, and that was Murdoch's. The executives at Dow Jones weren't certain about how to deal with the new focus. They were used to lengthy meetings, complete with ordered presentations and formal strategy sessions. Murdoch detested such formality. He ran News Corp. like a small club.
In early October, Brauchli arranged for Murdoch to meet with top editors from Dow Jones Newswires, MarketWatch.com, WSJ.com, and the Journal. They gathered in Harborside, New Jersey, in the Newswires headquarters. The discussion ranged widely, and as he often did, whether alone or surrounded by Journal editors or News Corp. executives, Murdoch went page by page thr
ough the Journal, critiquing the stories, their placement, and their length. At one point in the gathering, discussion turned to MarketWatch.com, a site Dow Jones had purchased in 2005. MarketWatch published short pieces of financial news and opinion but didn't charge for access the way the Journal did. Buying MarketWatch was supposed to give the Journal exposure to the growing online advertising market, which the Journal couldn't really access because of its paid subscription model on-line. David Callaway, editor in chief of MarketWatch, was telling Murdoch about Dow Jones's takeover of MarketWatch and the fevered interest in the site in 2005.
"You had a lot of people after you," Murdoch remarked, responding to Callaway's enthusiastic discussion of the pursuit. Both Dow Jones and the New York Times Company were circling the site back then, Callaway told Murdoch.
"How much did you make in profit last year?" Murdoch asked him flatly.
"Four million," Callaway replied.
"And how much did Dow Jones pay for you?" Murdoch asked.
"Five hundred and twenty million," Callaway said.
Murdoch paused, his mouth dropping into a reflective frown. "That's almost as bad as me paying five billion for Dow Jones," he said. An almost imperceptible smile from Murdoch gave the editors permission to laugh, and the group erupted.
***
In November, Paul Steiger got his official Dow Jones retirement party. Treasury secretary Hank Paulson, New York mayor Michael Bloomberg, New York Times Company chairman Arthur Sulzberger Jr., and other luminaries showed up to toast and roast Steiger. Murdoch had said he might come but wasn't able to because of another engagement. Steiger closed the evening with comforting words for the staffers assembled. He knew some of them were nervous about what the future under Murdoch would bring, but he urged them to maintain the same standards that had defined the Journal for decades: "In the coming months and years, I am sure you will uphold the long-standing traditions of the Journal," he told the assembled reporters and editors. "Some of it's going to be scary. Some of it's going to be wonderful," he said. He spoke in his same halting tone, the one they had grown to trust during his sixteen years at the top of the paper. Following him, the comedian Andy Borowitz took a less sanguine view with his short close to the evening: "Some of it's going to be scary. Some of it's going to be wonderful. But mainly it's going to be really fucking scary."
In early December, as the deal was about to officially close, Murdoch made his executive appointments. The most significant announcement for the company's future was that James Murdoch was taking over as CEO of News Corp. for Europe and Asia (he got everything except the United States and Australia, where Murdoch's son-in-law, Alasdair MacLeod, and his elder son, Lachlan, resided). The moment marked James's true ascension to heir apparent of News Corp., though as anyone who knew James's father understood, such things were never set in stone.
Simultaneously, Murdoch named Robert Thomson publisher of Dow Jones. Thomson, fresh off six years of running the Times of London newspaper, was Murdoch's man for the Journal. Thomson's job as publisher, designed specifically to subvert the carefully constructed editorial independence agreement, gave him authority over a wide array of Dow Jones's businesses, including the digital properties and Dow Jones Newswires. Murdoch was focused on the Journal, and he held Thomson responsible for it. Leaving Brauchli in place, he rea soned, might create less upheaval, but in Murdoch's mind, Thomson was in charge.
A week after Murdoch's executive appointments, at ten o'clock in the morning on a cold, blustery December day, Dow Jones convened its last shareholder meeting. It was here that Murdoch's deal for the Journal officially closed. In the "grand ballroom"—actually a windowless conference room with a small stage of the Marriott hotel across from the Dow Jones headquarters—a small crowd gathered. The meeting was anticlimactic, subdued. Murdoch had already been spending much of his time in Dow Jones's headquarters. He knew the details of every budget. He had his own office and had arranged to remove much of the top layer of Dow Jones's management, including Rich Zannino, who had been so helpful in making the deal happen.
The meeting concluded quickly. "This has been a difficult and for many a sad set of discussions," said Peter McPherson. "I thank you for attending this last meeting of Dow Jones."
As the fewer than one hundred attendees streamed out of the conference room, Jane MacElree stood at the doorway, dressed in yet another multicolored wool jacket, with tears wetting her round cheeks. Her daughter Leslie and son Mike stood together. Displaying the family discord that had long been bubbling under the surface, Elefante, Lisa Steele, Martha Robes, and her husband sat apart from the Hills. Dow Jones's directors filed downstairs to have lunch with their lawyers and advisers after the meeting, to thank them for their services during the deal and convene their last board meeting. The Bancrofts dispersed, to nowhere in particular.
At eleven thirty that day, the makeshift theater of Murdoch's arrival began. Gary Ginsberg called Robert Christie, Dow Jones's vice president of communications. "Can you keep a secret?" he asked. "Rupert wants to address the staff at two thirty this afternoon. Can you set it up?"
Christie did what he could to prepare for the new boss's arrival. He pushed four boxes of printer paper together in a corner of the ninth-floor Journal newsroom and set up additional phone lines so foreign and domestic bureaus could listen in. An e-mail went out to the Journal's staff that afternoon, giving them roughly a half-hour to assemble. Murdoch had arrived in the building and was up in Rich Zannino's office with Ginsberg, Robert Thomson, and Leslie Hinton, the newly named CEO of Dow Jones who had worked with Murdoch for nearly fifty years, in Australia, the UK, and now here in New York. Ginsberg, wanting to imbue the moment with some historic significance, snapped photos of the men as they waited to address the newsroom. They eventually filed downstairs, Murdoch leading, followed by Hinton, Thomson, and Ginsberg. They walked into the newsroom, which was packed with Journal reporters, Dow Jones business managers, security staff, and maintenance crews. All had gathered to hear what Murdoch had to say. Brauchli stood off to the side, uncertain whether he would be called on that day. "What if they ask me to say something?" he asked a colleague.
The last time the room had approached such a capacity was the previous May when Peter Kann addressed the newsroom in his retirement speech. At the time he told the admiring crowd: "The best protection for honest, independent journalism is in an independent company under the stewardship of a family that views publishing and the Wall Street Journal as a public trust as well as a financial investment. These days, of course, there is an external challenge to that independence. The Bancroft family is showing some resistance. The drawbridge is still up. So far, so good."
Seven months later almost to the day, Rupert Murdoch had a different message. As he stepped onto the boxes, tan against his white shirt, he looked quickly at the piece of paper he had folded in his left hand.
"Naturally it's very exciting for us," he said, looking out over the crowd.
Maybe it's more a day of nervousness for a lot of you, but I hope it's also a day of excitement because it is a new day in the history of this company. We've come here to expand it, to develop it, and, where possible, to improve its product. I know that change is often difficult or creates nervousness. If it's particularly nervousness then certainly let us know. We're very accessible people.
But I just wanted to say that we do know and understand the tremendous values of Dow Jones and particularly of course of the Wall Street Journal and the very high bar you have set yourselves. If anything you will find us trying to set a higher bar. So we want to see a better paper. It's already a great paper but everything can always improve. And we'll be there encouraging you and helping you in every way we can.
Our aim is pretty simple. We have to entertain, inform, enrich all our readers in their lives and in their businesses. We must be the preeminent source of financial information and comment in the world. And we must put ourselves beyond there being any doubt in that regard.
&nbs
p; This last bit hung in the air. "We have to entertain, inform, enrich all our readers." The message was simple and unobjectionable enough, but the order of delivery struck many in the newsroom. Where Peter Kann had warned the group against "mixing news and entertainment," Murdoch wanted them first to entertain. Kann warned them against "pack journalism" and the journalism of "buzz and hype." Murdoch wanted to lead the pack and create the buzz. Murdoch hadn't mentioned a word about holding companies accountable. He continued with the part of his speech that Thomson had drafted for him:
This really is a moment of great opportunity in the world. We are seeing—we don't see it in New York—but outside in the world, there are a hundred million people a year coming out of dire poverty and joining the world economy, causing tremendous creation of wealth and capital formation and desperate desire—need, also—for information. It's up to us be out on the frontline providing that information in the most helpful way and the most reliable way possible.
War at the Wall Street Journal Page 22
