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

by Michael Wolff

  Before this, the Bancrofts may only have assumed Murdoch is some helluva piece of work, but now they have proof. You can’t get slimier than “Page Six” you can’t find someone who runs a slimier organization than Rupert Murdoch.

  Indeed, family members will report that Pulitzer Prize–winning reporter James Bandler turned up at their house to lobby them to say no to Murdoch. Bandler accidentally left a “pitch book”—outlining Murdoch’s sliminess and all the reasons why the Bancrofts shouldn’t sell—on the lawn of one of the family members’ homes.

  Murdoch begins to feel the momentum recede—he really might not get Dow Jones.

  What he does not know is that Lisa Steele has been moving away from her emphasis on liberal morality and focusing on, well, business.

  Steele, fifty-eight, a liberal New England aristocrat (in 1996, Forbes named her mother, Jane Bancroft Cook, as the wealthiest woman in Massachusetts) living outside of Burlington, Vermont (an alternative-lifestyle capital), and running a “sustainable and socially conscious redevelopment company,” is the Bancroft family member who, by nature, is most repelled by the very idea of Murdoch.

  It is her family—the Cook branch—that has been most unwavering in its belief in Dow Jones. While others sold down as much of their shares as possible, she and her sisters held.

  On May 14, there was a conference call that Mike Elefante had set up involving him, the three family board members, and Michael Costa from Merrill. It was to be a run-through on Costa’s part for the presentation he was going to give to the whole family on the twenty-third. The mood before the call was of a relative level of superiority. If they were in a certain maelstrom, they were getting used to it—whatever the pressures, the decision was theirs, the family’s, to make when they made it, after the facts were in. Even Michael Elefante—more impatient than he knew he should be with the more difficult family members—still felt this would be a long process of weighing many factors before arriving at a considered decision.

  But it was Mike Costa—affable, reassuring, without airs, not someone you’d expect to say anything profound—who changed the mood. Costa’s main point was that the combination of Thomson and Reuters removed the two bidders who might—just might—have reached Murdoch’s $60 range. And, in Costa’s estimation, that left nobody else.

  What’s more, Costa felt—and Merrill was working the numbers—that Thomson-Reuters materially changed the business environment for an independent Dow Jones. There followed, then, a bit of discussion about Murdoch’s letter—these so-called editorial protections he was bringing up.

  Two days later, Steele, along with Chris Bancroft, Leslie Hill, and Elefante teleconferenced into the Dow Jones board meeting where Clare Hart, who ran the newswires and digital business, spoke. Hart’s presentation too was unexpectedly grim. Thomson-Reuters had turned everything upside down. The entire basis of Dow Jones’ profitability was, in essence, compromised. Its business would be under relentless competitive pressures.

  Throughout the next week, Elefante and Steele end up speaking frequently with each other. Elefante knew where Steele (and, in turn, her sisters Martha Robes and Jean Stevenson) was going.

  At the same time, Steele was having mournful conversations with Peter Kann. He was certainly against selling, but he understood, or said he did. They go back too long for him not to. The sense of a shift in Steele’s views make them all talk about the editorial-protections stuff—it was something for Steele to hold on to. Kann demurred about what he thought Murdoch’s word might be worth.

  Everybody’s at the Bostonian Hotel for the family meeting on the twenty-third (except for Chris Bancroft and Bill Cox Jr., who says he’s fed up with these people). The atmosphere is tense—although the overriding sense is that the family still remains opposed to Murdoch, there’s a feeling of deeply divided agendas, of loyalists and of potential betrayers of the family trust. They’re all asked to sign confidentiality agreements. (Indeed, Leslie Hill accuses Billy Cox of being the source of leaks from their meetings—most of all to the Journal itself.) Mike Costa is there. So is Josh Cammaker from Wachtell, Lipton.

  Elefante opens the meeting with a five-minute talk in which he says he’s changed his position: Even if he doesn’t personally want the company to lose its independence, it’s time to explore a sale, if not to Murdoch, then to somebody. With the Reuters-Thomson deal, that’s the only reasonable fiduciary view. Lisa Steele also reverses her position: Her branch of the family simply lacks the “appetite for risk” that an independent Dow Jones would require. And, especially, if it is possible to sell the company but ensure some measure of protection for the editorial integrity, well, then that’s what they ought to be thinking about.

  Cammaker is delegated to draft a statement about the family’s current wishes. Still, nobody calls or writes Murdoch—who is nearly beside himself with worry and a sense of lost opportunity, and even belated fury at “Page Six” and Richard Johnson and Col Allan.

  The next day, the Journal goes with this: “An influential member of the family that controls Dow Jones & Co. said he opposes selling the company to Rupert Murdoch’s News Corp. for fear such a step would endanger the Wall Street Journal’s independence. ‘Why would I risk that?’ said Christopher Bancroft, who also is a Dow Jones director, in his first public comments about News Corp.’s $5 billion bid. ‘I’m open to any situation that benefits the Wall Street Journal and Dow Jones and its shareholders. At the moment, I don’t see anything that would do that.’”

  Murdoch’s worry about the deal and his irritation with his tabloid reporters’ inability to keep their noses clean will result, for the first time in News Corp.’s history, in the implementation of an ethics test for his reporters (granted, if you don’t pass it, you just keep taking it until you do), and the very counterintuitive practice of gossip reporters signing confidentiality agreements about their work as gossip reporters.

  NINE Who’s the Boss?

  A key reason the Wall Street Journal has achieved such lofty standing is that it has not really had any active input, much less interference, from its proprietors for seventy-five years. Independence, along with a good budget, tends to make for quality journalism. The reason Murdoch’s papers don’t get awards or respect (at least from journalists who don’t work for him) is that he’s as involved a proprietor as any.

  The hatred of Murdoch by the great population of journalists who don’t work for him is stoked by many things, but underlying all these things—and forming the real, gut-level antipathy for him in the newsroom at the Wall Street Journal, a sense of the end of the world—is the structural difference that he actually runs his newsrooms. If you work for Rupert, you do his bidding. You submit to Rupert. He gets his newspapers wherever he is in the world, gets out his red pen—just like his father before him—and puts a cross through stories that shouldn’t have run, circles a photo and draws an arrow to show where it should have been placed, notes a headline that should have been two lines rather than one, and so on.

  He denies that he interferes—sort of (he doesn’t actually want people to think he’s not involved). The people around him, his executives and his editors, defending their own bona fides, deny this categorically. This—such denials about interference—is the artifice that Murdoch and his people believe everybody is practicing. They actually don’t accept that a hands-off structure truly exists anywhere. And if it does exist, then something has gone radically amiss—and you’ve a fool for an owner.

  From his view—and understand that, except for his brief internship with Beaverbrook, he has only ever worked for himself; he has no idea, really, how other journalistic organizations function—it would be absurd and irresponsible for him not to run his papers.

  MAY 31, 2007

  As the Wall Street Journal deal progresses in slow motion, all the ritualistic behavior—the wooing, the assurances regarding editorial independence—on Rupert Murdoch’s part ought to be understood not necessarily as farce, but certainly as Kabuki. And yet
the earnest Bancrofts respond earnestly.

  This is partly a sense of the turn in mood—if Lisa Steele and her sisters are going for the deal, and carrying Michael Elefante with them, that’s a major shift—but there is an additional purposeful feeling. A kind of Let’s hear what the man has to say.

  While Murdoch would gladly lead the Bancrofts into exactly the kind of trap they are walking into—showing their hand before the other guy shows his, revealing their intentions well before it is necessary to reveal them—the Bancrofts are really going out of their way to be naifs and victims. Selling a company, or not selling a company, is a highly codified drama in which a buyer or seller ultimately bests the other by their knowledge of the nuance of the process. It’s balletic. And the Bancrofts are now on the verge of committing some ghastly, and mortal, ritual missteps.

  How is this happening? True, Michael Elefante has little idea what he’s doing when it comes to mergers and acquisitions, but that’s why he’s hired Wachtell, Lipton, the most hallowed M&A firm in the country. The family’s advisors, Merrill Lynch along with Wachtell, should have told the family that the moment they start negotiating on editorial agreements they won’t get a price higher than $60—because they are effectively telling Murdoch they’re willing to do this deal for the editorial protections.

  But the problem is…well, the Wachtell and Merrill people won’t say it’s the most frustrating deal they’ve ever done, but it’s close. So frustrating that they just want to get the deal done—get their fee and get out. If the client won’t acknowledge the rituals in a highly ritualized situation…if people don’t listen, if they can’t listen no matter how you explain…well, fuck it.

  It’s Josh Cammaker who has to put this ungodly mishmash of wishfulness and good intentions into some sort of statement.

  Meanwhile, the Journal itself isn’t helping. A good part of the family’s information is coming from the paper itself. It’s coming from reporters who are calling up whatever individual members of the family they can get on the phone and sharing with them the latest gossip they’ve heard—and, in return, hoping for family gossip—which is then passed from one family member to another. Or they’re reading it in the paper itself—the Journal is churning out all manner of wacky stuff coming from inside the family (the wackier the family member, the more likely it is he or she is talking to reporters, most likely reporters from the Journal).

  Indeed, from reading the Journal the Bancroft family comes to believe that, in fact, it is more than likely not selling the company—at least not to Murdoch. On May 31, the paper, reflecting the anybody-but-Murdoch view sweeping the newsroom, reports the possibility that Dow Jones will be sold at a lower price to an alternative buyer because the family hates him so much. (That same day, Billy Cox sends an e-mail, which he leaks to the Journal, accusing family members of leaving him out of the process, and saying they don’t have “the foggiest idea what is going on.” Murdoch, he adds, is the best person to sell to.)

  The three family members along with Michael Elefante go into the May 31 Dow Jones board meeting believing that the Bancrofts are in control of the process. They’ll meet with Murdoch and solicit his views on editorial protections, and to boot they’ll begin discussions with other possible buyers. Then they’ll weigh their options. What could be more reasonable?

  The board, waiting now for nearly a month to hear from the family, has remained in its disinterested pose—that is, It’s the controlling shareholder’s duty to advise us of its desires. But as the meeting begins—most participants are connected by telephone, which compounds the sense of confusion—the mood gradually shifts from disinterest to concern to incomprehension.

  Elefante begins by reading the Josh Cammaker–drafted statement that the family wishes to release. It says that the Bancrofts want to explore alternatives with regard to the future of Dow Jones and, at the same time, meet with Murdoch to discuss his ideas about protecting the editorial freedom of the paper.

  There is a painful irony here, because reporters from the Journal are at that moment, in an exercise of editorial freedom or subversion, receiving what seem to be virtually real-time reports from the board meeting. Elefante, who has begun to regard the Journal staff as yet another pressure group lobbying his clients against a sale, will wonder later if a Journal reporter isn’t surreptitiously listening in on the call. Indeed, the Dow Jones board will later consider whether to discuss an investigation into the leak, but it decides in light of the Hewlett-Packard scandal—wherein members of the HP board authorized phone taps—to grin and bear their own leaker.

  Various members of the board now try to clarify what they’ve heard. The Bancroft statement, they begin to realize, goes too far. It opens the door to all discussions. It’s saying, Yeah, we’re for sale to the highest bidder—when, in all likelihood, the highest bidder has already bid. The only leverage they have with the highest bidder is him thinking there might be another bid. If you make it clear that there isn’t, and they’ve already been advised that without Reuters or Thomson there probably isn’t…Shit.

  There’s a sudden moment of disarray—which is duly reported in the Journal—in which the board does not know what to do or what’s about to happen (or what has just happened). Peter McPherson asks the Bancroft representatives to drop off the call while the rest of the board discusses the implications of the Bancroft family statement. Michael Elefante objects, arguing that there is no reason for the family not to participate. Dick Beattie, representing the board, argues that the board, in this instance, may have different fiduciary duties than the family does. The family representatives begrudgingly agree and accept their timeout.

  The board conversation is basically, How can these people not know what they’re doing? Are they so hopeless? What are Wachtell and Merrill doing? How can they be so hopeless? The board consensus is that the family should be asked to withdraw this statement.

  When the family comes back on the speakerphone, Chris Bancroft says, in effect, wait a minute, the family didn’t mean to say that the company was for sale.

  Dick Beattie says…Ahhh…Um. He’s just at that moment looking at the Journal Web site and…Ahem…the family’s statement has already been posted by the Journal reporters who are eavesdropping on the call. (The Journal reporters who have posted the story will subsequently report the fact of the post.)

  Murdoch is thus alerted to the sea change in the family’s views—and to the potential success of his editorial integrity gambit—by the very publication he intends to buy. Indeed, the family has opened the door to eliminating any other potential bidders—Murdoch, who has been working the phones and feeling out all the other potential bidders, is sure there won’t be any—and to certifying him as a reasonable editorial steward.

  That’s the beauty of an editorial-protections plan—it commits them so much more than it commits him.

  How can they not know this?

  IT’S HIS NEWS

  It was Murdoch’s takeover of the Times of London—for which he made similar promises of editorial protections—that turned him from a vulgarian operating at the margins of the business into, well, a threat to truth.

  The transformation of the paper is an event that is still bitterly contested, in which who did what to whom, who was righteous and who not, and what has been lost and what saved are still, more than twenty-five years later, touchy matters.

  The anti-Murdoch argument is that he took an upmarket paper famous for its probity, detail, and specialized focus on matters of policy and government, with long-practiced standards and traditions of fairness, restraint, expertise, and impartiality, and transformed it into a middle-market paper expedient about its coverage and its quality controls, casual about its areas of expertise, and willing to sacrifice the attention to detail sought by a limited group for the general-interest superficiality sought by a larger audience. All true enough.

  Murdoch himself argues that between 1981, when he bought the money-losing paper of record for the establishment,
and now, the transformation that has occurred at the Times simply mirrors what’s happened in the news business overall. General-interest news outlets that once maintained a strict, hierarchical sense of news have—in the face of competition from specialty outlets and in an effort to attract a wider, often younger or more female demographic—embraced a softer, more feature-oriented idea of what’s important. And sure enough, that broadening and softening could just as easily define the transformation of, for starters, Time magazine and the New York Times.

  Not to mention that Murdoch has turned a twenty-four-page broadsheet selling not much more than 200,000 copies a day into a 120-page tabloid selling 700,000 copies a day.

  But it is not just that such a transformation occurred, and it is not just the nature of the transformation, but that he bullied it into being. In fact, he carried it out as something of a jihad against Times people themselves—anyone who represented the older order was part of the problem. The transformation was a statement about who he was and who they were. Of what he wanted and what they’d have to become—or get out.

  He blames the journalists who worked at the paper for not knowing that they had to change—for resisting his program of change. The way he sees it, he is strong, direct, practical, and strategically deploying his own money; journalists, given their natural inclinations, are weak, self-indulgent, and, given the opportunity, absolutely sanguine about wasting his money.