Chernin’s ascendancy to the COO spot at News in 1996 has helped normalize the company. The most significant divisions of the company report directly to Chernin, leaving Murdoch free to play the role of wide-ranging, visionary-ish CEO. That’s the way it’s done. Let the CEO think great thoughts, let the operator keep the lid on. Under Chernin, News Corp. has become less omnivorous, less restless, less unpredictable—less Murdoch.
Chernin would certainly argue that this has been good for the company and good for Murdoch too. The company has become rather a good neighbor—no longer on a constant acquisition spree. Murdoch himself, in the last five or six years, has become less a figure of controversy and more the ultimate elder statesman. Fox News, which rubs Chernin, a Democrat, wrong, is still an irritant, but Murdoch, with a little help from Chernin and Gary Ginsberg, has even been warming up to the Democrats.
On Wall Street, which has always been suspicious of Murdoch, investors have something like a crush on Chernin. He’s restrained the beast—and by the summer of 2004, with his contract up for renewal and the Disney talk rife, he had cornered Murdoch. What Chernin wanted was straightforward. He wanted it understood that if, perchance, the company needs a new CEO during the term of his next four-year contract, it will be him.
It was galling for Chernin that Murdoch continued to single out Lachlan, even before his thirtieth birthday, even before he had any serious management experience at all, as his likely successor. Along with running the Australian newspapers (if this was the historic core of the company, it is no longer germane to the big picture), Lachlan got himself involved in a disastrous investment in a telecommunications company involving a partnership with Jamie Packer, the son of one of Murdoch’s longtime rivals, Kerry Packer—together they lost a billion dollars. Not long after that, Murdoch brought Lachlan back to New York. His main responsibility is the New York Post. For more than thirty years the Post has been News Corp.’s flamboyant, money-losing (up to $50 million a year), and eccentric flagship property in the United States. It has no business reason for being other than to prosecute political and business grudges and to entertain Murdoch himself, but it remains the sentimental heart of News Corp.
Chernin, with an astute sense of his own power base, began a campaign of nearly open disparagement of Lachlan. The disparagement was Hollywood-style—that is, the veneer of smoothness, even courtliness, of deniability, of the deftest political behavior, and gracious accommodation remains the norm. But beyond that façade, the triangulation took place.
Chernin enlisted Roger Ailes, the Fox News chief and possibly the one man of whom Murdoch is afraid. Chernin and Ailes do not particularly get along, partly for political reasons, and partly for temperamental ones, because Chernin is deft and smooth and Ailes is glowering and bullish. But in this, against the prince designate, whom they both find callow, insubstantial, and, ironically, un-Murdoch-like, not to mention standing in their way, they were glad to double-team. If they both block him, then Lachlan has nothing to do besides run the New York Post, which neither Chernin nor Ailes care a whit about. Indeed, which because it is a newspaper—a newspaper!—neither thinks should even be part of this vast modern media enterprise.
Murdoch understands he is going to have to choose between his top executives and his son.
There are other frictions too between father and son. The family situation, which became so fraught in 1998 with the elder Murdoch’s breakup and then, in 1999, with his remarriage, and which for a time was back on an even enough keel, has again hit the rocks.
When he divorced Anna in 1999, Murdoch agreed that in exchange for her giving up her community property claim to half of his assets, the trust under which his four children would inherit their father’s interest in News Corp. would never be changed. Now, pressured by Wendi, he wants his older children to voluntarily agree to admit his two new children into the trust. Lachlan and his siblings—still bitter about the divorce—are resisting.
It’s all too much for him, this emotional stuff. He always has to move the emotional to the tactical.
It’s at this moment, in the spring of 2005, that an idea begins to take shape for him. As with so many of his notions, the more unexpected the thing he does, the bigger it is, the more it shakes everything up and lets him start again. It changes the conversation. It orders the mess. It’s like shock therapy. This is often how he deals with his own troubles—he changes the game. He does something so epic and transformative that everybody else is stuck following his lead.
He has a habit or compulsion of upending the company every ten years or so. It’s management by upheaval, or management by distraction, or management by force of will—he makes his enthusiasms everybody’s enthusiasms. He changes the game so much that it stays his.
Now he’s entertaining a new game changer, something that could help him take back the story.
It would help him deal with Malone—force him to solve that problem that he allowed to be created. It would help him deal with Chernin—while he had to give in to Chernin over his contract demands to get the top spot if Murdoch “departed,” he’d better be damned sure Chernin doesn’t wind up strong enough, nor his children weak enough, for Chernin to renew the contract on the same terms. And it would help him solve the family problem—which is, in his mind, about legacy. So he’ll do what he’s always been doing: creating a legacy. He’ll just create a bigger one—which is, in fact, just what he’s always been doing.
In the spring of 2005 Murdoch has lunch with Bruce Wasserstein, one of the most famous dealmakers of the 1980s, who more recently took over the investment bank Lazard. Wasserstein, fishing for business, mentions Dow Jones. It’s impossible, but on the other hand, the business is in decline, while the Bancroft family’s needs are ever-increasing…might be something there…Everybody knows Murdoch has a thing for Dow Jones, so if you want Murdoch’s business, it’s the obvious thing to offer him. And if you know anything at all about doing business with Murdoch, you know you have to gossip about something, have to hold out the possibility of unsettled relationships, of changing alliances, of exploiting other people’s weakness, of far-flung, unthought-of opportunity. No matter that you might be exaggerating or even making the whole thing up.
Then Vernon Jordan, the Clinton confidant and corporate-board gadfly, who’d been forced by age limits to retire from the Dow Jones board, presses him: “Put the money on the table and the family will take it. They’re just a bunch of coupon cutters.”
Then there’s James Lee Jr., vice chairman at JPMorgan Chase, almost comic in his enthusiasms and salesmanship, who’s been obsessive about repeatedly urging Murdoch to look at Dow Jones. He knows Murdoch has a nagging interest in the company, and he knows Dow Jones has problems—and Lee has nothing to lose by conflating those two facts.
In May, Norm Pearlstine and John Huey, both former WSJ editors and now the two top editors at Time, Inc., call on Murdoch to get his support for Time’s fight with the Justice Department in the Valerie Plame case over a journalist’s right to keep sources confidential. They too know about Murdoch’s longtime interest in Dow Jones and about offering Murdoch gossip to curry his favor, and during their conversation—which Murdoch will later claim not to remember—they point out that the Bancroft trustee at the Boston law firm Hemenway and Barnes, Roy Hammer, has once again repeated, in a current Fortune article, that Dow Jones is not for sale—at least not, Hammer quips to Fortune, for less than $60 a share.
Pearlstine, who has mentioned this as well to the Washington Post Company’s CEO, Donald Graham, who dismissed the figure out of hand, will recall later, “Rupert’s eyes sort of lit up, and he said, ‘Huh, $60 a share.’ He started trying to figure out how to get there almost as we were sitting there. Whereas Don Graham is a prudent man who would say that was an absurd price for Dow Jones, Rupert was trying to figure out how he could do it.”
The Wall Street Journal, along with the New York Times, the big-three networks, and CNN, are the things he could never buy—estab
lishment things, elite things. Indeed, at one time or another he has tried to buy every national news company in the country—and been rebuffed. (Hence, he started his own network and his own twenty-four-hour cable news channel.) So whenever the subject comes up of actually owning what he is not supposed to ever own…
When Peter Chernin first gets wind in the spring of 2005 that Dow Jones is once again an idea in Murdoch’s head, his reaction—beyond that Dow Jones is not available, not a chance—is Why in hell? What possible advantage would Dow Jones offer News Corp.? As Chernin sees it, everything from a corporate point of view that might be accomplished with the acquisition of Dow Jones has already been accomplished, in spades, ages ago.
This has been the premise of News Corp., which has become the premise of all other big media companies: By acquiring a famous media brand, you take over its cachet and standing—as well as its cash flow. The New York Post, New York magazine, the Village Voice, the Times of London, Harper and Row, TV Guide, Twentieth Century Fox—these are the brands that put Murdoch on the map.
Except now the Murdoch brand is bigger than all of them. Bigger, certainly, than Dow Jones and the Wall Street Journal. And certainly News Corp. would get no advantage from Dow Jones’ pitiful cash flow.
From any prudent, standardized business-practices view—and the media business, once a business of audacious and often ridiculous moves, is becoming nothing if not standardized—trying to take over Dow Jones is illogical.
Not to mention the potential PR disaster. In the standardized playbook of modern corporations, the idea is to avoid controversy. Truly, there might not be any greater desire at the highest reaches of corporate life than to avoid bad press. Bad press kills. It hammers your share price, it rattles your board, it undermines you with your friends and family, it discourages your customers, it challenges your vanity, and eventually it gets you fired. For any executive, how the media might respond is a major strategic calculation. Beyond containable levels, if the press is going to be bad, you just don’t do it.
Chernin has enough trouble dealing with Fox News. The last thing he needs is endless stories—and this is how it would play—of tawdry, dubious Fox News taking over the respected and unimpeachable Wall Street Journal.
Even more to the point, for Chernin the Wall Street Journal, however iconic, is the newspaper business—that dying animal. (Murdoch not only mocks Chernin for not reading newspapers, but points out that Chernin can’t get his college-age children to read a paper: “They won’t even read one. They refuse. He keeps sending out subscriptions for the New York Times to college and they won’t even open them.”) The company’s newspapers in London and Australia, once great cash contributors to the company, are now, like newspapers everywhere, fading enterprises. They aren’t the company’s future. They aren’t anybody’s future. They’re just Murdoch family lore.
Anyway, Murdoch is always buying Mars—at least until some other more distracting planet comes along, and then he’ll be buying that. It is Chernin’s job to help dissuade, distract, and keep the focus on the real business at hand, which is entertainment, not news. And while he knows that Murdoch has told his people to start a book on Dow Jones, collecting all the public data about the company’s performance, Chernin isn’t worried. Murdoch has been ordering up that book for the past twelve years. They call it the Olympic book because it gets forgotten about and then dusted off every few years. Dow Jones—Chernin knows, everybody knows—is not for sale, and, famously, does not want to be sold. Not now. Not ever.
It’s true enough: Nobody has any reason to believe that the Bancroft family, or the people who shield the Bancrofts from people such as Murdoch, would react any differently than they have in the past. No means, as it has always meant, no.
Still, it’s just a phone call. In fact, when Murdoch hears that Michael Elefante, a younger lawyer at Hemenway and Barnes, is replacing Roy Hammer, who ran the trusts for more than thirty years and is due to retire—and who has snubbed Murdoch before—he calls him up.
“I’d really like to come and see you. I’ve got a lot of ideas, which it’d help to share, and at least you can get to know me, or see that I’m not growing horns,” Murdoch will later recall he said, trying to charm Elefante. But once again, Murdoch is rebuffed. Elefante rushes him off the phone—says he’ll call him back. When he does, it’s once again with a firm no: not interested, don’t want to sit down with you, thank you very much, go away. (Murdoch says he hears later, through his deep network, that Elefante and Dow Jones’ lawyers high-five each other that Murdoch has not offered a price—meaning, they believe, that it is not necessary for them to take a solicitation to the shareholders if it doesn’t come with a firm offer. Murdoch will take heed of this lesson.)
And then something else occurs in the summer of 2005: Lachlan resigns. In 2001, Elisabeth Murdoch walked out of BSkyB for much the same reason that her brother is leaving now. Their father tempted, teased, even seemed to promise that each was the anointed, then left each looking foolish. It hurt him when Elisabeth left, and it hurts him all the more now that it is his firstborn son who is leaving—packing up and going back to Australia, which Murdoch himself has managed to get so far from (there is irony here, because Lachlan was born in London and grew up in New York and is far from Australian). When New York magazine runs a blind-sourced piece, clearly from Lachlan’s perspective, about the Murdoch family’s travails, Murdoch rails against the leaker. His closest associates don’t really have the heart to tell him that Lachlan himself was obviously telling the tales.
And there is another development that summer: Murdoch has a crush. This is a theme of Murdoch’s management style. He will, on occasion, become infatuated with someone and then, in not so subtle and sometimes not so logical ways—before he falls out of love—reorganize the company around that person.
It is impossible to ignore that this crush—or, changing the metaphor, the choice of a new son—comes as his real son is so painfully leaving him.
Robert Thomson is a Melbourne boy, thirty years younger than Murdoch—both were born on March 11, which Murdoch seems to find significant—who started at the Melbourne Herald as a copyboy. He has covered Asia for the Financial Times (another paper that Murdoch, at various times, has desired), and helped direct the FT’s expansion into the United States. He lost a bake-off in 2001 to be the editor. Bitter about the slight, Thomson put out feelers about his availability—and Rupert called. They met for beers at the Dervish—a Times Square Turkish restaurant and one of the News Corp. joints (which qualifies by proximity and bad food) where Rupert and Lachlan, often with New York Post editor Col Allan, had their regular Friday lunch.
In one of those soul-mate flukes, Murdoch became almost immediately enthralled with Thomson for all the reasons he is so often suspicious of others. In the FT, Thomson has a prestige journalistic credential; he has a certain expertise in Asia (Murdoch was not someone who particularly valued independent expertise); he carries himself like an intellectual; and, unlike the garrulous reporters with whom Murdoch surrounds himself when he is in the mood for reporters, Thomson is restrained in the care with which he speaks, to the point of crypticness.
Rebekah Wade, the editor of the Sun in London, recalls Murdoch telling a joke after a few drinks, as they wait for Robert Thomson to arrive at a posh London restaurant. “God this is brilliant…what’s the difference between a fridge and a poofter?” Murdoch booms to Wade. “Well, when you pull the meat out of the fridge, it doesn’t fart!” But, then, seeing Thomson coming into the restaurant, Murdoch urgently whispers, “For God’s sake, don’t tell Robert what I said. He’s a gentrified man…very clever.”
Murdoch, in 2002, hired Thomson to take over for Peter Stothard as the editor of the Times of London. Their relationship deepened. Australianism is never incidental to Murdoch—he’s more comfortable with Australians. What’s more, Thomson’s wife, Ping, like Wendi Murdoch, grew up in China. The Thomsons and the Murdochs began to spend social time together.
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br /> It is, in the summer of 2005, with his crush (or adoption) in full flower, that Murdoch begins to talk seriously to Thomson about the Wall Street Journal. It is as likely that Murdoch is trying to charm Thomson with this idea as it is that Thomson is trying to please Murdoch by encouraging him. They are enabling each other in what they have no logical reason to believe is anything more than a pipe dream.
It is not just that Dow Jones is not for sale, has never indicated any basis on which it might be for sale, is in fact locked up in a corporate structure that ensures against its being sold, nor that there is no possible way it can be sold without the agreement of its controlling shareholder, who has not only as emphatically as possible said no deal ever, but who is not available even for a discussion. Rather, it’s that, were the stars to somehow miraculously align, the last person anybody who has anything to do with Dow Jones would sell it to would be Rupert Murdoch.
But pay that no mind. If only to distract himself from John Malone and his threatening intentions, from his issues with his son Lachlan and their mutual pain, from the demands of his wife and her own desires for legitimacy, and now the aggravations of having to renovate and decorate the most expensive apartment in New York—not to mention having to live up to it, having to be measured against both the Rockefeller history and dynasty—he is taking the next step. He and his little band are considering how exactly to buy an unbuyable company and, by so doing, change the game at News Corp. How, after fifty years of almost nonstop acquisition, to put the latest touch on his perennial unfinished enterprise—to burnish the legacy before…
Well, there is, suddenly, a speeded-up sense of where he wants to go, of what he wants to happen, of how he wants it to be. This most impatient of men is in a new sort of hurry.
The Man Who Owns the News: Inside the Secret World of Rupert Murdoch Page 6
