War at the Wall Street Journal

by Sarah Ellison

  As we go forward you'll probably find, particularly on the management side but all across, an ever increasing concentration on globalization in the whole world and digitization. In spite of that, for many, many years to come, the Wall Street Journal will be a key frontispiece to everything we do. So thank you very much. I'd like to pass you over to Les Hinton.

  The newsroom applauded, and Hinton stepped up onto the boxes and delivered a brief, encouraging speech before stepping aside for Thomson, who had been standing behind Hinton with his half-glasses balanced on the tip of his nose. He had looked over his notes as Hinton spoke and stepped onto the boxes, offered a brief smile, and then delivered the first warning shot to the reporters who stood before him. He enjoyed provocation and elaborate speeches and took pleasure in the opportunity to strike fear into the hearts of his new charges.

  "We as journalists all know that the world is not only changing but changing exponentially," he began. "And while it's right to be respectful of the past, these days, it is certainly fatal to be haunted by history.

  "He who stands still, will be overrun. And yet the global demand for journalism of integrity, quality, of perspicacity and of immediacy has never been greater. So I have no doubt that as long as there is a willingness to create and to change that the Wall Street Journal and Dow Jones will have success beyond its recent imaginings. And we are genuinely looking forward to sharing in that success with you. Thanks very much."

  Thomson would be Murdoch's messenger. Despite his fearsome reputation, Murdoch disliked direct conflict and would allow Thomson to carry out the more difficult assignments. Murdoch quickly stepped forward again. He would, as he knew how to do, lighten the mood: "Well, I think that's all we have to say so you'd better get back to work and make sure you're not scooped tomorrow."

  18. Chiefs

  IN JANUARY, the Wall Street Journal's top editors came from across the country and around the world to New York for the biennial ritual at the paper, the bureau chiefs' meeting. In years past, this meeting collectively shaped the direction of the paper and, in turn, the country's thoughts about business and commerce. Chiefs could air pettier concerns as well, push their agendas, and show off in front of the crowd. The three days were like a family gathering at Thanksgiving, where each editor inevitably fell back on his or her assigned role—the curmudgeon, the gadfly, the intellectual, the fashion diva. The group would argue and grumble, and everyone would return home feeling oddly reassured that despite all the discussion of new priorities for the year, little about the newspaper would in fact change.

  To open the meeting, Brauchli had arranged a dinner for the attendees and asked Murdoch to speak. Before the dinner, the group assembled for cocktails at seven. Because the Journal needed to be printed and distributed across the entire country, the paper's deadlines were early. Reporters filed stories at 5:00 p.m. for the early, "two-star" version of the paper that served a large chunk of the nation, then updated their stories for the three-, four-, and five-star versions of the Journal. At seven in the evening, many of the Journal's reporters were still furiously updating breaking stories for later editions to make sure they weren't shamed the following morning by a competing story in the New York Times. For this special occasion, however, the bureau chiefs left their offices—some had flown from halfway around the world—and put their deputies in charge for the next couple of days. They were having dinner with Rupert Murdoch, and very few things were more important than that. So on Wednesday, January 9, 2008, the bureau chiefs streamed across the street from their nondescript Battery Park City newsroom, across West Street, and over to the New York Marriott Financial Center. Murdoch had made the same trek, waving off his chauffeur's offer of a ride and offering the car to Dot Wyndoe, his faithful assistant.

  When Murdoch entered the small, windowless ballroom where the chiefs had gathered, he could barely get past the door. He was stopped immediately by one of the editors, who was trying to impress Murdoch with his smart commentary. Patient and convivial with his new staff, Murdoch chatted while Les Hinton went to fetch him a drink. The three men—Murdoch, Hinton, and Robert Thomson—were the celebrities in the room. It was almost a month since they had addressed the newsroom from their makeshift stage. Eyes darted toward them as the others in the room attempted their own separate conversations.

  As the group sat down for dinner, Brauchli stood to introduce Murdoch. He began with a story about Murdoch's grasp of the details of newspaper production—he had walked into a printing facility and immediately spotted the capability of the plant to produce and ship regional coverage—and praised his new boss. "He is someone who is interested, knowledgeable, and passionate about newspapers," Brauchli said from a raised podium in front of the round tables of editors, "and as you know that's not exactly a common quality among people in business these days ... We're fortunate he can be here to talk to us."

  Murdoch was on his best behavior and thanked Marcus for his generous introduction. "I consider myself extremely lucky to find myself the head of Dow Jones at this particular time," he began, as if he had happened on the post by chance. He praised the company's heritage and traditions and told the crowd that the assets of the company went far beyond the Journal. There were also Newswires, Barron's, the company's Indexes business, MarketWatch, and Factiva to consider. All were capable of "great expansion," he said. "But first we should take stock. Print and especially newspapers are in trouble for many reasons we have to face and be honest about. Circulation is appalling," he said, for reasons that started twenty years ago—"a change in lifestyle, women going to work, all that sort of thing"—and of course there was the Internet. But Murdoch was not going to lose this opportunity to tell the editors how they were implicated in this decline. "If I may be so bold as to say that in this country newspapers have become monopolized. They've become—some of them have become pretty pretentious and suffer from a sort of tyranny of journalism schools so often run by failed editors." At this, the crowd laughed, perhaps approvingly, perhaps a bit nervously. "But circulations have all sunk even more than the figures would suggest," Murdoch continued. "Let me just tell you before we congratulate ourselves too much tonight that the single-copy sales of the Wall Street Journal since 2000 have fallen 55 percent."

  Murdoch had done his homework and come armed to the dinner. He would not allow the self-satisfaction of this crowd to continue for long. "You go across the country and the fall-off in readership of news on printed paper is pretty dramatic ... I think there are many reasons for this but they're the facts of life." And then he presented his solution, in the same calm, almost bored tone he often used when speaking publicly. "Of course our first priority is to urgently make the Wall Street Journal more attractive. We must go to a wider circulation and get more readers per copy, as well as improve everything we already do ... As far as we're concerned, of course, it involves a lot of change," he said. "I'd like to take the opportunity to compliment Marcus on the changes he's already made." Brauchli had begun to put more news on the front page. Just that morning, which was the day after the New Hampshire primary in which Hillary Clinton and John McCain had won their parties' respective primaries in those states, Brauchli had put the news on the front page and coupled it with a feature on McCain's comeback from his blistering defeat eight years before by George W. Bush. Murdoch praised the McCain coverage and then moved on to one of his favorite topics.

  "Talking of opportunity, and I don't want to get into a flaming match, but there is of course the lamentable state of the New York Times." Murdoch said he saw the Times as the Journal's main competitor. Over at the Times, they were bracing for Murdoch's attack on their business. The Times had set up a war room with the guiding principle "What Would Rupert Do?" The Times had a weakness, Murdoch explained. "One of the great frailties, I think, of that paper is that it seems to me their journalists are pandering to powers in Manhattan. You know"—he paused for dramatic effect—"reporters are not writers in residence." Stories in a newspaper were not magazines
or books; they had to be more direct and less complex. This message was directed as much to the editors in the room as to the Times editors in midtown. Murdoch made that explicit: "This is true for the New York Times and I'm sure that most of you can see the need for some streamlining at home right here."

  He then outlined the strategy he had used countless times before in Britain to attract greater readership through newsstand sales. "We must be proud of what we do, proud enough to project it more boldly than we have in the past on the newsstand. Retail sales will be an increasingly important part of our strategy. We must entice, engage, and excite readers or else we will lose them. A new reader caught at the newsstand is the best possible prospect for a long-term subscriber." Murdoch had his playbook and he would not alter it for the United States, where most papers, and certainly the Journal, relied mainly on subscriptions for circulation. As the Detroit bureau chief commented to his colleagues that night, "We don't even have newsstands in Detroit." But Murdoch was unfazed. He would follow the same playbook he always had.

  The bureau chiefs had an opportunity to ask Murdoch questions. He started off easy. In response to a question about the competitive dynamic with the Financial Times, Murdoch replied, "The whole company is very vulnerable. Let's hope that some crazy megalomaniac buys it and wrecks it." The room erupted in laughter, a release of nervous energy. He backed off his previously stated desire to make WSJ.com free, calling his prior analysis "much too simplistic." He answered a question about how he felt about the Journal's front page and its longer features.

  "There was a feeling in the past that people get all their news on the Web and we just do analysis," he said, referring to Brauchli and Crovitz's pet project Journal 3.0. "I think we have to have news and analysis and we have to break hard news. And I think when there is very big news such as last night, don't run away from it. Go with it. I'd like to pick up the paper and say, 'Gosh, I must read that—did that really happen?' And then let's get the facts of the stories, the key facts, in the first paragraph and then go to the analysis. When you talk about long-form journalism, one of the things I would say is just remember the readers and how much time they have. And don't confuse the time you spend on a good story with the need for length in writing it. A story is a story and should be told in as few words as possible."

  At this lecture, many of the chiefs looked at each other, thinking, "He's telling us how to write a story?" He sounded very much like an editor talking to a cub reporter, in a tone that seemed misplaced given the speaker and his audience. He told the editors that long stories were best put in the paper on the weekend, which brought him back to his favored topic: the New York Times. "The Sunday New York Times is by far the worst edition of the week. Even what used to be their strength with the color magazine is not what it was. It's just massive, gray, and written way before midday on Friday before they leave for the Hamptons." Again, the editors laughed, but it was becoming clear to them that his impression of the Times staff was interchangeable with his impression of the editors in front of him.

  The questioning continued. Would Murdoch make the Journal less of a business paper? It would still be "mainly" business, he said, but he had greater ambitions than that. "I think people in business, in law, and people with money—investors—and for that matter people in academia, too, we should be the paper, the absolute number-one paper in this country." As for the chiefs' concern that the Journal would join in the pack mentality of other media, Murdoch said, "The fact is that this year so far the political season has really caught the imagination of the public ... There's something out there that's stirring people and we can't afford to ignore that." The notion was counter to what the editors of the paper had done for years, which was ignore the most obvious headlines and go for those that lurked in the corners of a major news story.

  After a time, Brauchli cut off the questions and dinner was served. The chiefs talked at their tables, trying to remain optimistic about the future that lay before them.

  Two days later, Rupert Murdoch looked out at the row of editors lined up against the wall like captured prisoners of war, ready to recant their prior allegiances and adopt a new oath of loyalty.

  Shuffling toward the front of the room, they were going over in their minds what they would say in their two minutes in front of the assembled group. The meeting had been moved to the India House in lower Manhattan. Murdoch wasn't on the agenda; it was the editors' time to talk. But Murdoch had shown up that morning in what was a surprise to most of those assembled. That he attended the meeting at all was a signal of how much he was personally invested in this latest purchase. Robert Thomson had delivered his message the day before, warning the group that from conceptualization to publication, a story's life should not last "the gestation of a llama," or 350 days. Now, on the third day of the meeting, each editor was to outline his (most of the editors were men) bureau's priorities.

  There were two types of editors at the Wall Street Journal. There were the editors who controlled "bodies," and there were editors who controlled "real estate." The editors in charge of bodies had journalists reporting to them. These were the bureau chiefs, whose job was to pitch their charges' stories and lobby forcefully for their underlings. The other group was the page editors. They decided which stories would appear on the coveted Page One and which would be relegated to the inside pages of the paper. The inherently oppositional forces of those two groups had cultivated one of the greatest newspapers in the world. That bizarre and yet delicate ecosystem had been built over a century. Outsiders, like the victorious News Corp. executives, focused on the ecosystem's peculiarities and waste.

  This year, the meeting wasn't a pleasant family gathering filled with ritualistic squabbling. As they gathered on the second-floor conference room of the India House, they were preparing for their moment in front of the new boss.

  Managing editor Marcus Brauchli had directed the bureau chiefs to present four priorities in two minutes—thirty seconds per topic. Some took insult from the directive. They had just heard Murdoch's disdain for stories that were too long. Already they were meant to show they could be brief.

  Despite the fact that they were top editors at the premier business publication in the world, many of the assembled had few options to find jobs outside the paper. Journalism was a shrinking field. There were fewer papers in the world than when they started out. Maybe it was true that there were more Web sites and blogs, but few of those had demand for middle-aged editors prized for their experience and news judgment. This crowd was a captive work force. At another time they may have faced their new owner with a righteous protest, but that kind of romantic resistance was a luxury they could no longer afford. That Friday morning in January, they were meek, easily disheartened, and scared. They were auditioning for the jobs they already had.

  Murdoch was growing weary. He sat through presentations from page editors, bureau chiefs, deputy managing editors, and news editors—all these layers of management. What did they do all day? From his seat in the third row of tables, Murdoch spent most of his time at the meeting quietly conferring with his newly appointed publisher of the paper, Robert Thomson, his tour guide. Murdoch trusted Thomson to recognize the pomposity of the assembled crowd, to break through the rigid traditions that these journalists were clinging to out of fear or laziness or both. The two had been whispering to each other during several of the presentations. As was his custom, Murdoch had a pen in his hand and was scrutinizing the day's Journal. The presentations continued, about such topics as computer-assisted reporting, writing an investigative "leder," reporting and writing "scoops of thinking," a type of story the Journal prided itself on dominating. Murdoch was not impressed.

  Now it was time for the bureau chiefs to stand before the group and present their priorities. Brauchli had been excited about the idea. "Let Murdoch and his lieutenant meet the editors at the Journal," he thought. "Show them how smart and down-to-earth these editors are. Show Murdoch that the paper isn't made up of the media elit
e he so despises. Let him see the good midwestern roots at the core of the paper, its work ethic, its heart. This will convince him not to gut the paper. Let Murdoch inside and he will be impressed with us. We will change him. We will be the exception." But as the editors lined up, they began to have second thoughts. The plan to introduce Murdoch to the brilliance and humility of the Wall Street Journal's staff seemed foolish, even disastrous. So much for the celebration of the greatness of an iconic institution. Instead, Brauchli had put on a parade of humiliation where the conquered were being made to sing for their new master. The only consolation to the editors: Murdoch barely looked up to hear them speak.

  19. Taking Bullets

  BRAUCHLI VALIANTLY CONTINUED onward, putting the paper out every day and second-guessing himself more often than that. His busied himself with keeping Murdoch and Thomson out of the newsroom. He was in a race to change the paper in a way that satisfied them, yet Brauchli insisted that neither man meddled in coverage. "I had more contact with the previous publisher than the current one," he told colleagues. But avoidance took more energy than engagement, and in his furious rush to keep them out of his affairs, Brauchli appeared constantly preoccupied.

  On February 4, News Corp. released its quarterly earnings for the first time as an official owner of Dow Jones. That day, the company reported a 24 percent increase in operating profit, though its net income rose fractionally—just 1 percent. Thomson strolled by Brauchli's office and said, in a stage whisper, "Operating profit, operating profit, operating profit." Brauchli was initially puzzled but then realized that Thomson must be referring to the earnings release. Brauchli brought Thomson into his office and explained that the Journal always emphasized net income first in its stories. That figure took into account taxes, depreciation, and all the other costs that affected a business's performance, and the paper considered it the most important figure in a company's earnings release. Any other number allowed a corporation to include and exclude various charges and other figures that could massage the earnings to make them appear rosier.