War at the Wall Street Journal

by Sarah Ellison

  The paper spent the next few months in a convulsion of newsgathering. The journalists broke plenty of news, but the paper, which had adopted a new editing "hub" under Thomson that September, was a mess. The "hub," designed to centralize the power of the news desk and break some of the tyranny of the bureau chiefs who oversaw groups of reporters, had a rocky beginning. Stories that were filed to the editors through the new system were often lost. The paper's notoriously early deadlines, which Murdoch had said repeatedly he hoped to move later so the Journal could be more competitive, moved earlier instead so the "hub" wouldn't miss "lockup," the hour when the paper needed to be sent to the printers to avoid costly delays and missed deliveries. "Most of us were able to get our college papers out more effectively," one reporter joked.

  Word came down from Thomson that reporters needed to be more "productive." The top editors began paying more attention to byline counts for reporters, a measure of how many stories a reporter produced for the paper. Leders sat on the Page One desk for months, usurped by news of the market's fluctuation on a given day. Veteran reporters said that reporting daily on the dips and rallies of the stock exchange with banner headlines across Page One made the Journal seem naive. These hurried and perfunctory dispatches failed to explain for readers why the entire system was wobbling. Slowly, the supply of leders started to dry up. "Incentives have consequences," reporters said to each other, as they scurried to please their editors by penning brief news stories for the following day's paper.

  Not everyone was despairing of the Journal's new direction. On June 26, 2008, Ivanka Trump stopped by to talk to Robert Thomson and declared cheerily, "I just love what you've done with the front page!" Tina Brown praised Murdoch's influence: "I think he's put muscle into it, flair and focus," she said.

  News Corp. editors engineered some of the chaos intentionally. Murdoch's newsrooms were often chaotic and boisterous, exactly the opposite of the Journal newsroom, which staffers often compared to an insurance company. That atmosphere confirmed to Thomson the plodding, overly planned nature of the Journal. With his reorganization, he wanted to rattle the reporters and editors, turning the paper into something more recognizable to both him and his boss.

  The world was gripped by financial collapse, but the Journal often focused inward on its own tumult. The paper didn't step back to explain how the world got to where it was. To do so would have taken it away from the most urgent news of the day. The paper still managed fantastic reconstructions of key events, the midnight meetings in corporate boardrooms and the desperate brinkmanship of business titans and government appointees—the "tick-tocks" for which they were famous. The paper published remarkable stories on the downfall of Bear Stearns and the management lies at Lehman Brothers. But the readers of the Journal were left without a sweeping explanation of the systemic causes of the crisis. The paper didn't muster coverage to match the historic nature of the moment. Thomson, who had decried the culture of the Journal, now had to reap what he had sown: the newsroom was in a state of confusion with no strong editorial voice leading the coverage.

  "Sending the staff to chase news like so many hamsters on a wheel is not the same as editing a great newspaper. Neither is festooning page one with the news everyone else already has," the Columbia Journalism Review lamented in December 2008, for a piece entitled "In the Crisis, the Journal Falls Short."

  Though he knew from the moment Murdoch won the paper that he would play a significant role in the Journal's future, Thomson hadn't actually planned to be the Journal's editor. He had his eye on bigger targets. He thought he would climb within the ranks of News Corporation. He had, he told people, already been the editor of the Times of London. At the Journal, Thomson grew lonely for the camaraderie of his old colleagues. He remained distant and difficult to discern for the Journal's editors. "It's almost a year in, and we're tired of being on probation," one said.

  Thomson's impression of Journal editors and reporters as out of touch was cemented at the Democratic National Convention in Denver at the end of August. The Journal's Washington bureau chief, John Bussey, had suggested he and Thomson have dinner one night. Instead of arranging a dinner surrounded by other journalists and potential sources, Bussey, always mindful of budget restraints, took Thomson to a pancake house in suburban Denver. The Australian dined on a stack of plain, undressed pancakes and retired to the hotel. Just when the evening seemed like a complete failure, his cell phone rang. "Hey, we're here with some of Obama's top aides and they want to meet you," the voice on the other end said. It was Gerard Baker, the British-born Times of London's U.S. editor. Thomson joined Baker for an evening of drinks and schmoozing, leaving Bussey alone. "Journal reporters should drink more," Thomson later joked.

  Baker was known for his right-leaning columns in the Times. After Michelle Obama said that her husband's candidacy made her proud of her country for the first time, he wrote a column headed, "Obama: is America ready for this dangerous left winger?" In another column, he satirized the enthusiasm surrounding Obama's candidacy, likening him to a messiah, and read the piece aloud on Fox News's right-wing Hannity & Colmes show.

  Thomson wooed Baker to the Journal shortly after the Democratic convention, demoting his existing deputy, Mike Miller, and the rest of the Journal editors a notch. Thomson told people that he brought Baker over because he didn't feel any of the Journal editors were senior enough for the deputy post. He told the Journal editors, when announcing Baker's hiring, that he missed Baker's wit.

  Though leders had been dying a slow death, Thomson issued their obituary with a memo in March 2009 to the news staff outlining his plans for the Journal to cooperate more fully with Dow Jones Newswires. While the staff of the paper had always contributed to varying degrees to the newswire, Thomson had something more dramatic in mind. He wanted the Journal reporters to finally see that their story- telling wasn't at the top of the pecking order at Dow Jones. In an acerbic memo to staff, he wrote:

  Dear All,

  There is no doubt that co-operation between Newswires and Journal journalists has improved markedly over the past year, but true fraternity remains more nascent than mature. Our structure must complement the needs of all Dow Jones readers and reflect the contemporary value of what is crudely called "content." A breaking corporate, economic or political news story is of crucial value to our Newswires subscribers, who are being relentlessly wooed by less worthy competitors. Even a headstart of a few seconds is priceless for a commodities trader or a bond dealer—that same story can be repurposed for a range of different audiences, but its value diminishes with the passing of time.

  Given that revenue reality, henceforth all Journal reporters will be judged, in significant part, by whether they break news for the Newswires. This is a fundamental shift in orientation which will also require a fundamental change in the inaptly named Speedy system. The Speedy was designed with a simple objective: the urgent dissemination of breaking news unearthed by WSJ reporters. Apart from being an important facet of the Newswires service, the system was intended to enhance the newspaper's reputation as the world's leading source of financial, business and general news. In the age of digitally compressed content, the Speedy should have been a defining advantage for Dow Jones—but, alas, too many of these items were written in a way which neither made sense to Newswires users nor maximized the value of the news they sought to convey.

  The system is in need of revolution, not reform. We must all think of ourselves as Dow Jones journalists and, at the least, have some comprehension of the life-cycle of a news story and its relative worth to our readers around the world. Not all content demands to be free and our content, in particular, has a value that is sometimes better recognised by our readers than our journalists. That we have multiple opportunities to generate income from this content is in stark contrast to many other revenue-challenged news organizations, which have not sold their soul—they have merely given it away.

  With these objectives in mind, we are sending Speedy to the
knackery and saddling up a successor, the URGENT. New nomenclature alone will not generate news, so there must also be basic changes of principle and practice at the Journal. A guide to the new system will be published next week and we are aiming to launch on April 15. In coming days, please raise any relevant issues with your bureau chief or editor. There is much angst-ridden, vacuous debate about the fate of American journalism—this is an important practical measure to secure the long-term future of journalists at Dow Jones.

  Robert

  Reporters speculated, rightly, that Thomson directed the memo not solely to them, but to an audience of one sitting in midtown: Rupert Murdoch. The tone of his missive exemplified the culture war waging every day in the minds of Thomson and his boss.

  Days after the memo, two of the Journal's strongest investigative reporters in Washington, Glenn Simpson and Sue Schmidt, announced their resignations. They were the latest in a series of departures of prize-winning journalists frustrated with the Journal's changed priorities. Simpson, a Journal veteran, specialized in complex stories about terror financing. In one such story in February 2002, the Journal said that Saudi Arabia, at the behest of the United States, was monitoring bank accounts of prominent Saudi businesses and individuals to determine whether they were being used to siphon money to terrorist groups. A Saudi Arabian company mentioned in the story, Abdul Latif Jameel Company Ltd., and its general manager and president sued the paper.

  Having spent millions of dollars on its defense, the Journal lost in trial and on appeal, winning only when the case reached the House of Lords. That ruling changed British libel law, which had required newspapers being sued to prove the truth of the allegations they had printed. In the United States, by contrast, the burden of proof falls on plaintiffs to demonstrate reckless disregard for the truth. The Jameel ruling strengthened the ability of the media in Britain to report stories in the public interest, as long as they act responsibly.

  Jameel later sued the Sunday Times of London over a different story. In that case, the Sunday Times settled.

  When Simpson had met Murdoch in the Journal newsroom in 2008, he was introduced as the investigative reporter who wrote a lot of stories about the financing of terrorism and wealthy Arabs who allegedly finance terrorism. "It was then noted that I had caused several of these wealthy Middle Eastern oligarchs to file libel cases against the Journal, all of which we prevailed in ... one of these cases actually set a new precedent for freedom of the press in the UK," Simpson later remembered. "At that point Murdoch had a glimmer of recognition. 'Oh, yeah, that same guy sued us at the Times of London,' he said, 'but we just fixed it.'" Then Murdoch turned and walked away.

  Shortly after Simpson's and Schmidt's departures, another Journal feature writer, Josh Prager, said he was leaving the paper because he and the Journal were no longer a "good fit." Prager wrote less than a story a year. His pieces were long, never relevant to the news of the day, and their subjects were totally unexpected: the family saga behind the royalties from the children's book Goodnight Moon; the story of how the New York Giants stole signs from the Brooklyn Dodgers during the game when Bobby Thomson hit his "shot heard 'round the world"; the identity of a previously anonymous Iranian photographer whose photo of assassinations during the Iranian revolution had won the Pulitzer Prize.

  Prager's departure note attacked Thomson directly, saying, "The worship of byline and word counts and all that is 'urgent' has doubtless stifled the boundless creativity of the Journal staff. I hope the paper will address this problem. Implementing some version of the rule at 3M that lets employees spend 15 percent of their time on 'projects of their own choosing' would benefit morale and yield wonderful stories."

  For Murdoch, these departures were just the noise associated with a staff sorting itself out. As his editor, Thomson, would note, if people weren't happy, they were free to leave.

  The journalistic culmination of the year came when the Pulitzer committee announced its prizes. In a year of the most important business and financial events of all the editors' and reporters' lifetimes, the Journal had been shut out. The paper hadn't won a prize the year before, either; the prize had eluded the Journal ever since Murdoch took over. In the previous ten years, the paper had won at least one Pulitzer in all but two years.

  The reaction from News Corp.'s executives was clear: the journalistic establishment was out to get Murdoch. Baker told reporters they deserved to win, but that the journalism profession hated Murdoch too much to reward him. News Corp.'s mindset was confirmed.

  Epilogue

  RUPERT MURDOCH was waging wars on all sides. He had gone to battle with his own staff within the Journal. He took the fight to the New York Times. He threatened to sue the BBC. He came to blows with the White House. He invited the conflicts and thrived on them. What would he do, after all, without a competitor to batter? The Murdoch juggernaut was working, and the collateral piled up.

  Indeed, the feud Rupert Murdoch promised Arthur Sulzberger Jr. after Barry Diller's party came as promised and inflicted casualties on both sides. Of course, both men were battling a common enemy in the Internet, which easily did them more damage than what they inflicted on each other. But as their own fortunes faded, they fought each other even more fiercely than before.

  In the wake of Murdoch's deal for Dow Jones, Sulzberger's company lost $60 million and cut one hundred newsroom jobs. The Times Company's shares traded below $8 for most of 2009, making Murdoch's $60 a share for Dow Jones seem even more unreal than it had back in 2007. To survive the onslaught, the Sulzbergers canceled their generous dividend payments, a test of loyalty the Bancrofts surely would have failed. Murdoch lost an estimated $5 billion of his personal net worth, cut his own pay by 28 percent, and eliminated 3,700 jobs at News Corp. He wrote down $3 billion of his company's $5.6 billion investment in Dow Jones, a move that was as explicit an admission of error as anyone could ever hope to get from him. Murdoch began renting out his Rosehearty yacht for $350,000 a week. Sulzberger and Gail Gregg divorced. News Corp. stock, above $20 a share at the time of the Dow Jones deal, sank below $6 in the spring of 2009. The Journal alone lost $87 million in a year.

  But Murdoch was unbowed. In the summer of 2009, Murdoch moved the Journal and Dow Jones Newswires to his midtown News Corp. headquarters at a cost of more than $60 million. The location, in the heart of the city, improved upon the old Battery Park ghetto. The restaurants were superior and powerful sources were closer at hand. The newly designed offices were sleek, with understated gray carpets, glass-walled conference rooms, chrome accents, and a news "hub" overseen by Thomson and his deputy, Gerard Baker. Nicknamed the "death star" by Journal reporters, the hub showcased mammoth screens that hung above the desks of Journal editors broadcasting the Fox Business channel. The new offices highlighted the favored status of the paper versus the New York Post, for which Murdoch's affections seemed to have faded. Still, as some Journal reporters walked past the "Fox Nation" billboards in the lobby of the headquarters, their hearts sank.

  That fall, the Journal's online circulation edged up to round out the paper's overall circulation at 2.02 million, surpassing USA Today to become the largest paper in the nation. It was a crowning achievement for Murdoch, a debt he owed to former Dow Jones CEO Peter Kann. (Because people paid for the online Journal, it was the only paper in the country permitted to officially count its online circulation as part of its overall circulation number.) In the same period, the Post's circulation declined more than 20 percent. Never mind that the Journal's print subscriptions had declined 3 percent in the two years since Murdoch had agreed to buy the paper; the bundled online and print subscriptions secured increased overall circulation for the Journal and big headlines for Murdoch when the results came out.

  At the same time, the Times and the Journal expanded their fracas to the West Coast. Both papers launched regional editions in the San Francisco area in October and November of 2009, to pick up the readers who had defected from the ailing San Francisco Chronicle. Simul
taneously, the Times said it was launching a regional edi tion in Chicago; the Journal quickly said it would follow. To hit the Sulzbergers and the Times where they most valued it, Murdoch announced plans in October 2009 to hire a group of reporters to cover local New York news. The fight to be the nation's national paper was happening just as Murdoch had hoped it might.

  But the real threat was not the Sulzbergers and their devotion to the Times no matter what the cost. Murdoch faced the Internet, and it was an enemy he wasn't quite sure what to do with. He had long ago abandoned his plan to make WSJ.com free. And though he had once seen the paid subscription wall around the Journal's Web site as a barrier to his grand expansion of the paper, in May of 2009 he embraced a vision of a paid online Journal with a vehemence that even Kann had never mustered. Murdoch promised that the company would start charging for the content at all of its newspapers by the summer of 2010. Several months later, as his newspapers around the world struggled to find a model to charge readers for their online content, Murdoch became an outspoken proselytizer for paying for the news. He talked of online "content kleptomaniacs" and told his Sky News Australia channel that the people "steal our stories, we say they steal our stories—they just take them." He publicly threatened to cut off Google News's access to News Corp.'s stories to encourage people to pay for his content.