The Man Who Owns the News: Inside the Secret World of Rupert Murdoch

by Michael Wolff

  Amidst all the class distinctions that have arisen at the company—business reporters looking down on business, managers looking down on owners, owners so long in awe of employees—Zannino’s appointment is an act of something like petulance. As though the family now wants someone it too can look down on.

  Rupert Murdoch has a sense he might get along with Zannino. This is partly because JPMorgan Chase’s Jimmy Lee is telling him he will. Lee, who tried to get Murdoch together with Zannino in 2005 before he was even CEO (before cooler heads got Zannino to cancel that unapproved meeting), banked Zannino at Saks Fifth Avenue and then again banked him when he was a finance executive at Liz Claiborne (Lee uses the word bank as a verb without self-consciousness). But he is even more pleased with himself that he knows Zannino because they are neighbors in Greenwich, Connecticut, and because their sons play on the same prep school hockey team.

  Lee’s point about Murdoch getting along with Zannino is partly a business point but a class point as well. Murdoch, no matter his own aristocratic background, likes rough-and-ready business guys, strivers, and—possibly because of his aristocratic background—men who look up to him. As opposed to, say, Peter Kann, and so many others at the Wall Street Journal, who look down on him.

  Many people at the Wall Street Journal look down on Zannino too—they are at the Journal not least of all because it gives them a pedestal on which to look down on strivers such as Richard Zannino. Partly what the people at the Journal look down on—and in this they are certainly joined by the Bancrofts—is business itself. Or the business of getting ahead.

  Zannino got his MBA at Pace University, a New York commuter college. It’s not at all clear that if Rich Zannino had gotten his MBA from Harvard or Wharton he’d be held in higher regard (he got a B.S. from Bentley College in Waltham, Massachusetts, which doesn’t help matters).

  Though business has become one of the dominant cultural drivers—even, arguably, where the best and the brightest gravitate—and a major journalistic story, there remains a subset of media organizations, of which the Journal and the New York Times are the leaders, in which the left intellectual brain is contemptuous of and determined to resist the right business brain. If business has conquered, leveled, or even destroyed most other journalistic organizations, then these are the last redoubts of reason, dedication, civility, grace, professionalism, fairness, and civic responsibility (all the virtues that Peter Kann embodies so earnestly).

  It is this remove from the realities of business, this condescension toward people in business, and this sense of entitlement that comes from believing that you are involved in endeavors worthier than business that distinguish what Murdoch calls, with as much disdain for them as they have for him, “the elites.”

  Indeed, it is a rarefied position: There are few journalistic or media organizations left that are not run by the strictest return-on-investment calculation (except, contrarily, some of Murdoch’s newspapers, which is quite another story).

  Still, the fact that a business guy is now running Dow Jones seems more difficult for Zannino himself than for the journalists. The weight of the culture is against him. Having worked for the clothing manufacturer Liz Claiborne, Zannino is to Wall Street Journal staffers a “garmento.” There is his “shit-eating grin”—that is, his evident insincerity and phoniness—and all-around salesman’s demeanor. There are the references to his sleaziness, his oiliness, his cashmere socks, his plucked eyebrows, his expensive suits—his essential superficiality, in other words, and soullessness.

  As the Journal moved, beginning in the 1980s, from being a strictly business-oriented publication—a trade publication of the securities industry—to being a more well-rounded, top-notch, prize-winning journalistic organization, it developed a deep suspicion about business and the interests of businessmen, in spite of the fact that business is its subject area. Of course, the resistance to the hurly-burly and undignified aspects of trade was once part of the high WASP canon of behavior, attributes that used to make you a proper Eastern establishment Republican but which now indicate that you are a proper Eastern establishment liberal—exactly like the Bancrofts, and unlike the Murdochs.

  It is this inversion that now defines both families—and that will come to be at the core of the fight for both the soul and the equity of the Wall Street Journal.

  There is almost a plaintive sense among the younger Bancrofts, the fourth generation, about their attenuation from the family business. Dow Jones has, by the modern era, floated beyond the reach, culture, and interests of the Bancrofts. Except in a ceremonial sense, it isn’t even talked about in the family all that much. “It wasn’t like you should work there,” one family member will later reflect in an interview for this book. “We knew we owned the company but we didn’t know we could work for the company…. Like, you are not good enough to work for the company.” Somehow Dow Jones and the Bancrofts have come to inhabit entirely different worlds—a divide that Murdoch believes he is uniquely positioned to appreciate and exploit.

  THE BANCROFTS

  Charles Dow and Eddie Jones, who dislike each other, start a financial news service and newspaper in 1882. They have a news-sharing arrangement with Clarence Barron, who has his own news service in Boston. Jones leaves, Dow dies, and Barron, five foot five and 330 pounds, buys their business in 1902. Okay, technically he doesn’t buy the business; his wife, Jessie Waldron, who runs a boardinghouse, buys the business, which he will run. It is to Jane Barron—her daughter, whom Barron adopts along with her sister—that the shares are passed. Jane’s sister, Martha, who has made a propitious marriage to H. Wendell Endicott, of the Massachusetts Endicotts, does not need to be left anything—hence the Barron-Endicott line is severed from the story.

  Jane Barron marries Hugh Bancroft, himself quite a Boston Brahmin type (though not nearly as Brahmin as the Endicotts), who goes to work for Barron, enduring his difficult father-in-law—a bully and a screamer—until Barron dies in 1928. Hugh Bancroft runs Dow Jones for barely five years until his death by suicide at fifty-four, in 1933. Bancroft, the rival New York Times discovers, spent his last days reading up on poisons before stuffing the doors and windows of a blacksmith shop on his property in Cohasset, Massachusetts, and gassing himself. Suicide by coal-gas fumes.

  Dow Jones’ owners—Hugh’s wife, now Jane W. W. Bancroft, and her children—pretty much never darken the door of the paper again. Says Jane W. W. Bancroft to Kenneth Craven Hogate, as she appoints him the company’s president, in words repeated down the years at Dow Jones: “I want you to do what’s best for the company. Don’t you and the boys worry about dividends.”

  The dividends, which the company would in fact lavishly supply, support the next four generations of Bancrofts, and ancillary family lines, in aristocratic style.

  It’s helpful to remember that Clarence Barron is just a generation older than Keith Murdoch. In the 1920s, when Barron, who had made it squarely into the American power structure, was dining with Calvin Coolidge, Sir Keith, also having made it, was dining with Australia’s prime minister.

  From 1933 to the relative present, nothing much disturbs the Bancroft family—except that in 1963, Dow Jones goes public, allowing the family to take for itself a load of cash. In 1986, the company is organized into a two-tier voting and nonvoting hierarchy, so the family can get even more cash but maintain control. (Nothing changes except that they are richer.) From the time that the Bancroft family’s “permanent control” plan is instituted until the present, the family will sell off more than 60 percent of their shares. That leaves them with 24.7 percent of the company’s shares, but by the terms of two-tier voting structure, under which any shares that are sold immediately become nonvoting shares, the family retains 64.2 percent of the voting power.

  The story of the Bancroft family in 2006 when Rich Zannino becomes Dow Jones’ CEO is the story of an American milieu and class that in some strange, almost macabre sense just shut down and went out of business. The WASPs—who were likely Re
publicans too, whose families dominated prestigious social, business, educational, and religious institutions in the northeastern United States, whose gray-flannel husbands and fathers were the Wall Street Journal’s archetypal readers—had given up. Capitulated. Just sat down and refused to go on.

  The Bancrofts recall—in a rather jolly, pleasantly nostalgic, hard-to-suppress-a-giggle way—nothing so much as the unreconstructed New England patrician, remote and snobbish.

  But even this is not exactly true. The family, or the fourth generation of the family, has mutated from its patrician roots into something much more ordinary and unremarkable and dysfunctional, and, in its way, even more remote from Dow Jones.

  There’s the Cook branch, representing the families of the three daughters of Jane Bancroft Cook—the Steeles, the Robes, and the Stevensons—who have become New England liberals, earnest to a fault, dependable, clichéd, crunchy granola types.

  The Cox-Hill branch, the children and grandchildren of Jessie Bancroft Cox, who have lived in Philadelphia and New York, have become almost self-consciously middle-class, with many of them actually holding jobs; they are regarded as the troubled, angry, resentful people in the family.

  The Bancrofts, descendants of Hugh Bancroft, live in the Southwest and southern California. They’re the flashy side, the idle rich—race car drivers, equestrians, people who live in Europe, all a bit embarrassing and confounding to the others.

  By the time Murdoch enters the picture, the Bancrofts have, in the geographic and emotional distance they’ve put between each other, largely broken the oppressive family structure. Without the money, by now they’d probably have reverted to a norm—cousins and second cousins who barely know each other. Were it not for the money, the different branches of the family would likely have no connection at all. But there is the money, binding them to this family tree and its attendant dysfunctions.

  It is a family tree that from September 2005 until the summer of 2006, Andy Steginsky—both on Murdoch’s behalf and to curry favor with him—painstakingly assembled.

  It goes, specifically, like this.

  Clarence Barron’s stepdaughter, Jane W. W. Bancroft, wife of Hugh Bancroft, had three children:

  I. Jessie Bancroft Cox, born in 1908, the dedicated horse-woman, who played mahjong with FDR, and whose Massachusetts estate, the Oaks, serves as a Bancroft family ancestral home, married William Cox, took over as family matriarch—she died after collapsing at the one hundredth anniversary party for Dow Jones in 1982—and had two children, who make up the Cox-Hill branch:

  A.) Jane Cox Hill MacElree, seventy-seven, who relocates to Philadelphia and marries Louis Hill, a state senator who runs for mayor against Frank Rizzo in 1975 in the Democratic primary. She has seven children—among the most vocal in the Bancroft family.

  B.) William Cox Jr., seventy-six, who moves to New York, and who, together with his son Billy, represents the only Bancrofts to have actually worked for Dow Jones, albeit in an undistinguished capacity. He and his wife have four children.

  II. Jessie’s twin, Hugh Bancroft Jr., who died in 1953, and had two wives and four children, who all relocated to Santa Fe, New Mexico. They make up the Bancroft branch:

  A.) Bettina Bancroft (died in 1996 at fifty-five), who had one child.

  B.) Hugh Bancroft III, fifty-eight, who has three children.

  C.) Christopher Bancroft, fifty-five, who has three children.

  D.) Kathryn Bancroft Kavadas, fifty-four, who has two children.

  III. Jane Bancroft Cook, who was on the Dow Jones board from 1950 to 1985 and died in 2002, who had four husbands and three children, who comprise the Cook branch:

  A.) Martha Robes, sixty-two, who has three children.

  B.) Jean Stevenson, sixty-one, who has three children.

  C.) Elizabeth Steele, fifty-eight, who has one child.

  In other words, Clarence and Jessie Barron’s daughter Jane produced three children, who in turn produced nine grandchildren, twenty-seven great-grandchildren, and so many great-great-grand-children that nobody in the Bancroft family seems to have an up-to-date count.

  And while all, more or less, will weigh in on the decision to sell the company—indeed, it is likely the last event that will bring all the members of all three branches of the family together—for the purposes of this story, the focus is on the following:

  Elizabeth (Lisa) Steele—she’s a Dow Jones board member, holds the votes for a large stake in Dow Jones, has always been vociferous about protecting the independence of Dow Jones, and is seen as being closely aligned with both Peter Kann and Hemenway and Barnes.

  Brother and sister Jane Cox Hill MacElree and William Cox Jr.—these are the oldest living members of the family and control a big Dow Jones stake.

  Billy Cox III—he’s the troublemaker who first breached the family’s unity in 1997.

  The three Hill brothers—Tom, fifty, Michael, forty-six, and Crawford, fifty-five—who’ve begun their own battle against the family trustees.

  Leslie Hill—the fifty-three-year-old American Airlines pilot, now retired, a Dow Jones board member, and regarded by just about everybody as the most difficult, intractable, and unpleasant member of the family.

  Christopher Bancroft—he’s a Dow Jones board member who controls a 15 percent voting stake.

  Lizzie Goth Chelberg—the forty-two-year-old equestrian, the first of her generation to control her inheritance upon the death of her mother, Bettina Bancroft, joined with second cousin Billy in the 1997 brouhaha.

  It’s a simple tale: While everybody lives off the proceeds of Dow Jones, they do not, by the logic of trusts and the math of reproduction, share equally. Nor is there any consistency in the way the various trusts established by Jane Barron Bancroft after her husband’s suicide—most of them were set up in 1934 and 1935—are organized. So what you have is just one of fortune’s inevitable messes, always ending in the acrimony and squabbling of heirs clinging to ever decreasing portions of the original estate.

  By 2006, with Steginsky making his inquiries, parts of the family, spurred on by the younger members, have begun actively trying to unlock more cash from their billion dollars (give or take) that is stuck in Dow Jones and losing value. The $80 million or thereabouts in dividends that the family gets each year from Dow Jones (a significant part of the company’s profits) isn’t quite enough—not just because there are so many members of the Bancroft family, but because much of that money still flows to the third generation, leaving the fourth to scramble and implore. Hemenway and Barnes, which acts not only as the family’s lawyer and trustee but also as their money manager, is being pressured—particularly by the Cox-Hill branch—to look for solutions. The firm brings in a few investment banks to mull over the problem.

  Merrill Lynch makes a proposal that the family should radically sell down its equity. But nobody wants this—nobody wants really to change anything. They just want more money. Meanwhile, Hemenway and Barnes doesn’t want to change anything either. Its business since the 1940s has largely been built on the Bancrofts and their quiescent ownership of Dow Jones—maintained, in much the same way that Peter Kann maintained his relationship with the Bancrofts, by treating them as investors who wanted to know as little as possible about their investments.

  Part of the job—Kann’s job with Billy Cox and Lizzie Goth in 1997, and Michael Elefante’s job now at Hemenway and Barnes—is to manage the natural inclination of younger people to exert themselves.

  Michael Hill has actually taken a course at Harvard specifically about what families ought to do with their businesses and fortunes. He has the idea that there are opportunities close to him that he ought to try to find something out about it. He has begun to believe that what stands between him and Dow Jones and him and his money is Hemenway and Barnes.

  What Andy Steginsky has learned is that the Hills are not just unhappy with Hemenway and Barnes but are thinking about suing the firm. To Murdoch, this is, to say the least, a sign of the disarray he’
s been counting on. On the other hand, one solution (or effort to mollify) that Hemenway and Barnes has proposed is to create a voting trust similar to the one the Sulzberger family has at the New York Times—in essence, pledging the family to vote together—which would allow the Bancrofts to sell down more stock but continue, with their secure voting bloc, to maintain control. This proposal for unity would be bad for Murdoch.

  But, in a sign of ultimate disarray or paralysis, neither development—neither the lawsuit nor the voting trust—seems to be proceeding, leaving the family to descend further into feuding and discord.

  THE MURDOCHS

  Rupert Murdoch loves hearing the gossip about the Bancrofts. The e-mails he has been getting regularly from Andy Steginsky about the crazy Bancrofts are the high point of his day.

  He is an expert on anybody who owns any media, but he has a special feeling for the history of families who own newspapers. That is his field of play. Since arriving in the United States in 1973, when he purchased the San Antonio papers, he has kept a clear schematic in his head of who is who—updated on a virtually daily basis. He admires the way the Sulzberger family has stayed unified and protects its interests. However, the present scion—Arthur Sulzberger Jr., the company’s chairman—is, in Murdoch’s estimation, an ineffective leader and lousy businessman (he is thin-skinned too, and more than once has tried to call Murdoch to complain about something the New York Post said about him—Murdoch doesn’t take the calls).

  The Sulzbergers are followed by the Grahams, where Katharine Graham was the first lady and matriarch of the press. Her son Donald is a low-key and methodical steward who carefully developed the company’s interests in the education market; its Kaplan unit, which offers preparation for standardized tests and mail-order degrees, is now the company’s main profit driver.