War at the Wall Street Journal

by Sarah Ellison

  His impression of the Journal had been forged during his years as the editor of the U.S. edition of the Financial Times, when he had a crack mergers-and-acquisitions reporter who beat the Journal on a series of stories. But the scoops may well have not happened at all, so little attention did the Journal pay them—or at least that was Thom son's impression. When the Journal did follow the stories, it failed to credit the Financial Times. Such arrogance enraged him.

  Even so, he had made quite an effort to be noticed back then, booking his writers for television appearances and enjoying the additional attention the FT was getting through its marketing push. A series of Dan Aykroyd television spots for the FT sought to soften the paper's stodgy image in the United States. Thomson had a flair for self-promotion and a competitive spirit, two aspects of his personality that must have attracted Murdoch early on. Now he was here at the Journal, where he was once utterly ignored, at the helm of a newsroom that would no longer brush him aside.

  His audience got immediately restless. "I don't understand," piped up one reporter seated around the conference table in the meeting. "I mean, Marcus left for a reason. He wasn't doing what you wanted him to do. But I still don't have a clue what you're going to do now that he wasn't already doing."

  Thomson quickly brushed aside the question of Brauchli—"History will reveal what happened last week with Marcus, but he behaved extremely professionally"—and got to talking about the changes he wanted to make. "A year ago we were looking at something called 3.0 and that was about how headlines would start with the word how. We've reversed that now. That is a very fundamental change." He kept returning to the theme: "You will learn that there will be strategic change. And it will be change where you all are participating in the debate, the news desk, or the bureau chiefs." He went on, "I can't be specific, but it will be change of quite a different sort from what people are used to."

  The meeting continued, and reporters asked him whether Journal reporters would become wire service reporters (the answer was a resounding no) and how the front page was going to change. Then came a question that was close to Thomson's heart. "One of the things we worry about a little bit in the newsroom is that we're being sent forward into a U.S. version of the Financial Times," said an unsuspecting reporter. "I was wondering how you see us vis-à-vis the FT and how you see the FT."

  The question gave Thomson a chance to expound on his—and Murdoch's—belief that British papers were more competitive than Amer ican ones and therefore better. The Journal, by developing an acute sense of itself, didn't concern itself with bridge collapses in Minneapolis; that was what the other papers were for. Murdoch wouldn't tolerate that. "In 1998 and 1999, the odd thing was the people at the Journal didn't feel enough pain," Thomson said. "They thought, 'We're the Wall Street Journal.'" The choice of dates would have been meaningless to the assembled crowd unless they remembered that those were the years Thomson was running the Financial Times in New York.

  Thomson continued, expounding on why the Journal should be more ambitious in its coverage: "Why should the New York Times own international coverage?" he asked. He then outlined for the reporters how to be more receptive to pain: "Journalists should be nervy. Journalists should be edgy. If journalists aren't nervy or edgy they're in the wrong profession. You need to wake up every morning wondering if someone's stealing your story. That's part of the culture that's inherent in the profession, or the craft, depending on how you define it," he said. He told them the paper was poorly organized before he arrived: "One of the problems previously was that you weren't quite sure where to find stories in the Journal. It's more manageable now at the paper. You know where to find things."

  Deogun, who had been at the meeting but largely silent, weighed in from time to time. He provided backup evidence for Thomson's assertion that stories in the Journal were too long. Dow Jones had conducted research recently that showed that only 40 percent of the readers of the "Money & Investing" section turned past the front page of the section to read beyond the jump. "So," he said, "that's pretty sobering."

  The meeting continued, with the resentment growing on both sides. Finally, Jim Browning, a union activist and a veteran Journal reporter, spoke up. "I apologize, and I hope I don't sound disrespectful, but I was dumbfounded a few minutes ago to hear you saying that you felt that people at the Journal didn't feel they competed with anybody, and that people felt that stories that hadn't appeared in the Journal hadn't been written about. I have to tell you that maybe I'm lying, but I think if you talk to Nik or Mike or to Ken [the group's leadership] or any other people who have helped edit the news we put in the paper, if you ask them, they would take issue with that. I would take strenuous issue with that. In all the years that I've been here the credo of the paper has been that if we aren't first with all of our news, then something is very, very wrong. And if somebody is scooped on a significant story here, I can assure you that for many, many years since 1979 when I joined the paper, and I think for many years before that, we all felt—" He paused, clearly exercised. "I mean, I just wonder where in the world did you get that notion? Anything we can do to sit down with you and discuss that thought, we'll do, because my worry is that if people are making decisions on the theory that there was a lack of competitive vigor at the paper, and that the people running the paper and the people reporting the news didn't feel competitive every day, well, what worries me is that may be a misconception. Did I misunderstand you or...?"

  Thomson jumped in. He had to stop this rant or it would overtake the entire discussion. "Well, I wasn't talking about the vast majority of the paper. Look, I had noticed this when I was competing with the Journal when I was in midtown. I certainly did not mean to cause offense." Thomson was talking quickly now. "That is exactly the right attitude that the Journal should have, and I know a great many people do, but there were people here that didn't share your passion or share your concern," he concluded in an attempt to defuse the tension. "And it certainly wasn't meant to be a characterization of any individual or any department, but more a general warning about the need for competition, frankly, in an age of ultra-competition." The meeting couldn't end quickly enough at this point. "Thank you all very much," he said. "I think you've put out a great paper."

  If Thomson tracked the coverage of the Journal, he was none too pleased by the report on the gossip site Gawker the day after his meeting with the "Money & Investing" section. "Civil War at the Wall Street Journal" the headline read, outlining the most explosive parts of the meeting and delivering a who's who of the inside players in a newsroom that was wholly unaccustomed to such attention.

  Nik Deogun, according to Gawker, was a "potential quisling," and Paul Steiger "was beloved but is now being talked about like a greedy bastard." Steiger's wife, Wendy, was pictured with a screen grab from her "bosom-revealing blog." The gossip may have been shrugged off in a newsroom more inured to such darts, but the Journal had al ways labored outside a certain media glare. How exciting could gossip about stock market reporters be? Now, with a dash of Murdoch, even a small editorial meeting was noteworthy. The mean-spirited glee took Journal folk by surprise.

  After one such article in this period that suggested Thomson was not just the acting managing editor but the permanent head of the newsroom (an observation obvious to any but the most wishful of old-school thinkers), Thomson e-mailed deputy managing editor Bill Grueskin late on a Sunday night and asked him to call. As the man in charge of the news coverage at the paper, Grueskin was the closest thing it had to a nominal leader. Thomson wanted to assure Grueskin that he wouldn't interfere with the running of the paper while he was only acting managing editor. "Believe me, if I were managing editor, you'd know it. I'd be in there every day," he said, a message meant to be reassuring but one that had, in the end, the opposite effect.

  A week after news of Brauchli's departure broke, Thomson's figure appeared in Grueskin's doorway, holding a mock-up version of the next day's paper with a hand-drawn bar graph Thomson had sketche
d just moments before. The graph displayed the day's news of newspaper circulation for the past six months among the country's largest papers, a data set that had been released earlier that morning by an industry group. The data indicated that among the top ten newspapers in America, only the Wall Street Journal and USA Today showed modest increases in circulation, while the rest of the papers' circulation numbers continued to slide. Newspaper circulation figures were dutifully reported in the Journal every six months. The story was the same almost every time, ran between five hundred and a thousand words, appeared on the inside page of the paper, and was greeted with little more than a shrug of resignation from the editors and staffers who paid attention to it at all.

  This Monday afternoon, Thomson was energetic. The bar graph he had drawn, which on its x axis tracked the rate of growth of circulation and on the y axis listed the nation's largest papers including the New York Times, the Los Angeles Times, the New York Daily News, and Murdoch's own New York Post, showed the results, which framed the meager growth of the Journal in a positive light only through comparison with its peers. "Even the New York Times was down," Thom son enthused to Grueskin, taking obvious glee in the pain of the Journal's main competitor. Thomson suggested the graphic could run on the front page of the paper.

  Grueskin, a thirteen-year Journal veteran, was a no-nonsense, glib newspaperman with a dry wit. He knew there were a lot of close ethical calls a newspaper editor would be forced to make on any given day when determining how to cover a given news event, but this one—the question of whether to trumpet the Journal's own good news on the front page of the paper in contrast to a competitor's misfortune—wasn't even close. This was a New York Post-like tactic of self-promotion, he thought, one that belonged in the realm of the marketing department, not the paper's newsroom. He told Thomson his opinion (omitting the dig at the Post) and directed him to the appropriate person in the marketing department who might handle such a matter. After a brief quizzical look, Thomson retreated from the office. The exchange was perfectly pleasant, but Grueskin kept Thomson's scribbled chart, in case the difference of opinion became more complicated. Two days later, Thomson returned with a copy of the day's paper with a full-page color ad touting the Journal's rise. Grueskin would resign from his job a month later.

  The Journal's modest circulation increase had been cemented before the deal had even closed. During the destabilizing interregnum in the moments of what Brauchli had called "preemptive capitulation" (a term he did not apply to himself but that others did), Dow Jones's marketing department had arranged an additional $17 million in spending to boost the paper's circulation in the period following the close of the deal, a tidy sum that would guarantee the perceived success of the upcoming changes to the "new" Wall Street Journal. By the time Leslie Hinton, Murdoch's hand-selected CEO of Dow Jones, took the helm of the company, the campaign had been scaled back, but a portion of the money had already been spent on hefty direct-mail campaigns and granting subscriptions to frequent fliers. Of course, Murdoch's tactics weren't unique to him, and there wasn't a paper in the country that hadn't bulked up its circulation. But a successful businessman knew the importance of the impression of success, and Murdoch wouldn't risk losing a game of perception in this newspaper battle.

  22. One of Us

  IN ABOUT A MONTH, Thomson arrived at the conclusion that he was, indeed, the best man to take over the Journal newsroom. He moved into Brauchli's office (finally attaining a prominent ninth-floor spot) days after the short-lived managing editor vacated it. Even though it was obvious to anyone who knew Murdoch that Thomson would be the paper's next managing editor, speculation about other candidates had persisted inside the Journal newsroom in the weeks preceding the announcement. The speculation illustrated a newsroom's capacity for self-deception in the face of the uncomfortable reality that this Murdoch takeover was proceeding exactly like every other. Murdoch was not going to make an exception for the Wall Street Journal.

  Journalists are, typically, a self-loathing bunch. Driven as they are to see the flaws in other people and institutions, their eyes often train on themselves, uncovering the weaknesses in their own and colleagues' stories and reporting styles. Self-recrimination ran rampant at the Journal in the weeks and months after Brauchli's resignation. The Wall Street Journal, despite being one of the most powerful papers in the world, retained the defensive status of a runner-up to the New York Times. Though it sold double the number of papers the Times did, and was the newspaper of choice in the heartland, it was less important in the corridors of New York and Washington. Murdoch obsessed about replacing the Grey Lady with his paper. Rallying his band of pirates had always been one of Murdoch's easiest tasks. News Corp. executives and editors often used the phrase "one of us," as if they were members of the mob. Thomson wasn't an old-school Murdoch hand like the New York Post's Col Allan or Dow Jones's Leslie Hinton, but he was able and willing to wage guerrilla warfare against his rivals. While he took swipes at the Times at every opportunity, through his alliterative digs—he once labeled the uptown rival "sanctimony central" and on the same occasion said the paper was full of "preening, posturing, and pretentiousness"—the rallying didn't give the troops back at 200 Liberty a surge of solidarity with their new boss. For Thomson was still waging his own war inside the paper, against his own staff, to shake them out of what he would happily call the complacency of editors who stayed too long in their posts, preening for one another and writing only for prize packages. "I mean no disrespect to Paul Steiger," he would say, as he launched into one of his screeds, "but I think it's good for editors to not stay in their jobs too long."

  Dow Jones plunged into a period of high anxiety. The staff waited for the influx of Aussies to start and for the old Journal heads to roll. Outside the walls of the Journal, Thomson's style of boosterish support for the paper began, and he lashed out at the New York Times repeatedly in a Fleet Street-style attack that cheered Murdoch and drew confused head shaking from those inside the Journal. Perhaps they had been trained to be too gentlemanly over the years with their midtown rival, but the Journal prided itself on its passive aggression toward competitors. Under Steiger, understatement ruled the day. Though the newsroom had stopped recruiting primarily from the Midwest for its leaders, the sensibility still reigned. Murdoch, of course, wanted nothing of understatement. His game was one of splash and headlines, not subtleties and nuance.

  Murdoch appeared at the Dow Jones-sponsored "D: All Things Digital" conference in Carlsbad, California, at the end of May and sounded off, once again, that the average story at the paper was touched by a "ridiculous" 8.3 editors. None of the reporters at the paper could figure out where he got such a hyperbolic figure. Papers, Murdoch said, would survive by writing stories people wanted to read instead of stories to win Pulitzer Prizes. Editors began to adjust to this familiar refrain.

  Oddly, a period of calm followed. The expectation of a violent bloodletting and daily rumors of imminent layoffs gave way to low-level anxiety and a general feeling of hopefulness that perhaps things wouldn't be so bad after all. Thomson put what he called a troika of editors in place to run the newsroom, with another veteran as his direct deputy who would run the paper when he wasn't around. The triumvirate comprised Nikhil Deogun, Deputy Managing Editor, International; Matt Murray, Deputy Managing Editor, National; and Mike Williams, Deputy Managing Editor, Page One. Mike Miller, the former Journal Page One editor, became Thomson's senior deputy.

  The Journal editors and reporters realized they couldn't dig in their heels and resist the changes Thomson clearly wanted. No longer would stories last the gestation of a llama. They wouldn't be overwrought or slowly and painstakingly researched. They would be energetic and full of news. The formula sounded appealing until the editors and the staff slowly began to realize that the Wall Street Journal, the paper founded by Dow and Jones and built by Clarence Barron and revolutionized by Barney Kilgore, hadn't gotten to its vaunted status by being a lazy, diminished product that couldn't
handle a major news story. There was something in the ecosystem that worked, albeit imperfectly, and the tearing and scraping away that Thomson had done over the past months had destabilized the soil.

  As the reporters were growing accustomed to writing shorter stories and scrapping long-term leder projects for news stories, the biggest downturn since the Great Depression hit the Wall Street Journal newsroom when it was in the midst of its own crisis.

  23. Urgent

  ON SEPTEMBER 15, 2008, the Wall Street Journal's main story on Page One began simply, "The American financial system was shaken to its core on Sunday." Over the weekend, some of the most vaunted names on Wall Street had crumbled. Lehman Brothers, denied a bailout by the federal government, was teetering on the brink of liquidation. Merrill Lynch, on the verge of collapse itself, had agreed to be bought by Bank of America. The largest insurance company in the world, AIG, was desperately trying to raise cash to avoid ruin. Ten major commercial and investment banks pooled $70 billion to create a lending facility for their ailing brethren.

  The turmoil in the markets marked the first time since September 12, 2001, that the editors of the Wall Street Journal thought the events of the day warranted a headline that ran across the entire width of the front page. (Prior to that, the only other banner headline of the sort announced the attack on Pearl Harbor.) Across six columns of the paper in huge, bold font, the paper announced: CRISIS ON WALL STREET AS LEHMAN TOTTERS, MERRILL IS SOLD, AIG SEEKS TO RAISE CASH. Then, the unusual became quotidian: the rest of the week the Journal carried similar paper-spanning headlines.

  The week also marked the first time that Rupert Murdoch sat in on the paper's morning news meetings. He said little and attended only a few, but his presence alone was remarkable. Never had a Bancroft requested or received an invitation to go to a news meeting. Peter Kann rarely saw the inside of a Journal news meeting. Yet, after all the concerns—and denials—that he would meddle in coverage, there Murdoch was. Murdoch found great entertainment in being at the table of the nation's top financial newspaper while the nation's financial system was collapsing. "Nobody could fail but to be excited by the whole thing unraveling," he later remembered.