The Man Who Owns the News (17 page)

After that, now in the constellation of News Corp.’s bankers, Lee keeps trying to move a deal—any deal—to the front burner. Because everybody knows the
Wall Street Journal
gets Murdoch’s attention, Lee keeps bringing it up—telling Murdoch about how tight he is with Rich Zannino because of the hockey-dad thing, how key Rich is to what’s going on at Dow Jones, and what a mess it is down there and how something’s got to give.

Actually, it’s by no means clear who, in the end, will pay Jimmy’s fee. JPMorgan Chase has had a relationship with Dow Jones—if there is a deal, Jimmy would definitely be interested in banking Dow Jones. But Murdoch would be the better play—except if Dow Jones gives Murdoch the cold shoulder and gets interested in somebody else. But first things first.

Jimmy tells Rupert—who’s partly inclined to believe the company will give a new CEO at least a few years to see if he can work a turnaround—that Rich is hot to trot. To Rich, Jimmy renews his offer of an important rite of passage for any media business honcho: an introduction to Murdoch. And now, because Rich is the CEO, he doesn’t have to clear the meeting with anyone.

Of course, Zannino knows that Lee is shopping him. At the same time, he regards his de facto openness to being shopped—why else go out to dinner with an investment banker and someone who has made no secret of wanting to buy your company?—as a white-lie pretext to meet Murdoch. Who in his position wouldn’t want to meet Murdoch? The truer point, though, is that Zannino wouldn’t necessarily know which is the real pretext for what—is he pretending to be a seller in order to meet Murdoch, or pretending he wants to meet Murdoch in the hopes of selling to him?

The get-together happens at the Links Club on 62nd Street on the Upper East Side of Manhattan. It’s a place at which neither Zannino nor Murdoch is particularly comfortable. It’s Jimmy Lee’s place. He’s putting his imprimatur on the meeting. It’s a WASPy, stuffy, rather ridiculous old-fart place. (The Wall Street guys have taken over all the venerable establishments.)

A banker, at this point in a deal (substantially before there is a deal), is kind of a professional annoyance. His job is to be the unsubtle one, even the clown. Let the principals blame the gaucherie of bringing up business on him. But Murdoch is an exceptional client. Whereas, to most bankers, the principals so often get off track and need to be prodded back into line, with Murdoch there is the sense that, even as he dangerously digresses, he knows where he is going. As it happens, this is not necessarily because he knows where he is going, but because he is Murdoch. Everybody knows what Murdoch means. If you’re sitting with Murdoch, it’s, well, big. You end up assuming a lot about Murdoch—most of all that he must know what he is doing.

In fact, on the most obvious level, Murdoch can seem rather out of it. That’s partly the hearing issue, which no one acknowledges. On the other hand, this sense of him not listening to you, of him just taking the conversation anywhere he wants, makes him more Murdoch too. He’s on a higher plane. You’re just pleased to see what Murdoch is really like—and not sure what to make of it, but nevertheless fascinated, captivated. It’s not something you’ve seen before: this old man, among the world’s most powerful men, musing, mumbling, forgetting, recovering with a sharp remark.

Zannino is nervous and eager to please. He wants to be liked, respected.

Lee knows that Murdoch, if just automatically, is making an estimation about Zannino’s type. Is he one of
them
or not? This is the way Murdoch assesses everyone. Are you pretentious or are you not? Do you want to make money or are you interested in other sappy stuff (like what the hoity-toity people think of you)? Are you wet or are you made of sterner stuff? Do you hate him or not?

Now, Murdoch has made many deals with
them
types. It’s a simple technique to make a deal with one of them—Murdoch just denies that he is Murdoch. As it happens, people are often so relieved to find out that he is actually soft-spoken, reasonable, intelligent, and witty that they relax. They’re so relieved they lose their critical faculties. They all of a sudden believe, for some reason, what they want to believe about him. (It’s this relaxation on their part that has often gotten him accused of being a liar—and while in truth he does lie or misrepresent, isn’t it their fault for believing him? Is he expected not to take advantage of their lapse in judgment?)

By the drift of the conversation into the larger media world—they talk a lot about
American Idol
, Fox’s blockbuster show (a show that Murdoch’s daughter Elisabeth first mentioned to him when it ran on British television as
Pop Idol
)—it’s immediately clear to Murdoch that Zannino is not one of
them,
he’s not Peter Kann. Zannino is not interested in newspapers for themselves. He’s obviously interested in business as a larger construct. He’s more interested in deals—the higher business currency—than the product per se.

They’re over the sensibility hurdle.

Now, what Murdoch has to do is weigh Zannino’s level of resistance without confronting it. Were he asked outright, Zannino at this point would be forced to commit himself to not being a seller. Murdoch wouldn’t do that—wouldn’t put him in a corner. What Murdoch is trying to figure out (his drifting almost visibly moves to acuteness) is if it’s worth the time and energy to create a situation in which Zannino might come to him.

How do you turn a nonseller—a man who has far more to lose by selling than he has to gain—into a seller? Into your partner in a deal? How do you make him your ally? How do you loosen him up? How do you subvert? How do you make an intractable situation fluid?

Of course, there is no reason, this evening at the Links Club, to believe that Murdoch is thinking about any of this, that he’s thinking about anything other than the opportunities of reality television. Murdoch’s lack of introspection, his disinclination to talk in large, abstract, or theoretical ways, is his form of poker. He’s listening to you (though, you suspect, not really listening) or he’s rambling about something not too relevant.

Zannino leaves dinner not quite sure what
that
was about, feeling, somehow, that he has not interested Murdoch quite enough—feeling just a little bad about himself.

FIVE
The Outsider

FALL
2006

People are against him. They are against him because…well, he is who he is and they are who they are. He stands here; they stand there. His world is his world—it is not necessarily a part of other worlds. He exists in opposition. You are with him, you are against him, or you are irrelevant to him. Arguably, he has overcome most obstacles by that simple analysis. If you are against him, then you are his enemy and he fights you—it becomes binary. Sometimes it seems that he creates enemies just because it simplifies the world.

This makes him somewhat less than rational as a businessman—noneconomic, even. Wanting to buy the
Wall Street Journal
is not simply about one company that has analyzed that it might gain an advantage from acquiring the assets of another company. It is more about one man who believes he can profoundly adjust the balance of power between those who are for him and those who are against him.

And he’s right about this. The
Wall Street Journal
sees itself as opposed to
him
. It represents something he cannot have,
should
not have. He wants it because they don’t want him—it’s fairly primitive.

On the other hand, part of his method is to place the most economically irrational of motivations into a straightforward marketplace context.

It’s almost a sleight-of-hand play on his own character. He’s not outsized, dramatic, mercurial. He’s methodical, thoughtful, and, seemingly, extraordinarily reasonable. Everybody around him acts as though they are involved in considered economic pursuits, rather than substantially primitive ones; they have convinced each other of this, and often have convinced the world. For almost a year now, John Nallen, the number two accountant at News Corp. and part of Murdoch’s inner circle on the eighth floor of News headquarters at 1211 Sixth Avenue in Manhattan, has been quietly updating the book on Dow Jones as new pieces of information emerge about the company. The level of Murdoch’s interest in Dow Jones can be measured by how frequently the book is updated. How much is he talking about Dow Jones? Nallen is tracking and anticipating, trying to make everything logical about this wildly imprudent pursuit.

Richard Zannino, too, has been able to pretend that he is engaged in a perfectly straightforward, even workaday discussion of mutual business interests—instead of what it obviously is: Murdoch, in his us-against-them mode—almost Cold War–like in its notions of loyalty and betrayal—is evaluating him, judging him. Will Zannino turn? Will he come over? Will he be the mole?

After their dinner at the Links Club, Murdoch has been pacing his moves as he takes in more information, as Andy Steginsky continues his intelligence gathering. Learning that the Bancroft family’s solidarity is much less than it seems and that its moral high ground is pretty shaky to boot, he has Jimmy Lee take the next step with Rich Zannino as soon as summer is over and everyone is back at work.

In October, Lee invites Zannino to lunch with Murdoch in a private dining room at JPMorgan Chase at Park Avenue and 47th Street. Once again Zannino does not tell his board or his shareholders that he’s meeting with the company’s most eager suitor and his investment banker. The meeting is self-consciously secret. By plan, Murdoch and Zannino arrive at JPMorgan Chase thirty minutes apart.

The stakes are high for Zannino. If he allows this to proceed, it results either in a sale of the company or, quite likely, in his own dismissal. He could be an amply rewarded hero who will go on to run another substantial company—or a business disgrace whose career will stall out. The threshold issue for Zannino is whether Murdoch will go the distance. That, if the game begins, will Murdoch see it through—can he carry a deal across the finish line?

What Murdoch has to estimate is if Zannino will play the Judas role. Not just selling the company but selling it to the very person it derives part of its identity from, by virtue of his not owning it.

And Murdoch has to figure out his price. At what level will Zannino go for broke?

This is not all about Zannino as a turncoat; in part it’s also about him as a rationalist. Can Zannino find a way to believe that what he is doing, or what he is allowing to happen, is the best thing for the company? Later Zannino will insist on his literal responsibility: to increase shareholder value. In order to take that position, he must be the ultimate rationalist. He’s decided that he can’t increase shareholder value. He’s given up that point of pride.

It is partly too about Zannino’s sense of his own role. The people around him—the family, the board, fellow executives—are saying one thing: The company is not for sale. But they may not mean that. They may just mean they personally don’t want to sell the company; they don’t want that burden, that scarlet letter. But—and Zannino is acutely aware of this point—the board, with family members leading the charge, threw out Kann, the guy who expressly did not sell the company (or increase shareholder value) in favor of Zannino.

At the
Journal
there will be the lurking suspicion that Zannino might have engineered the whole thing. The theory here is that even for Murdoch—coming up with the right price, then having to depend on Zannino’s acquiescence, then getting the family to fall into place—it’s just too much good fortune and coincidence and amazing chess playing and successful manipulation. The true conspiracists will put it all on Zannino.

The problem with the conspiracists’ theory is that it turns Rich Zannino from a fledgling CEO—a longtime climb-the-ladder company man, a man very pleased with his own chance elevation to the top spot, a quiet, eager-to-be-liked, eager-to-be-respected, eager-to-live-in-Greenwich man—into an extraordinary rebel.

Still, if not a rebel’s nature, Murdoch sees something in him—plasticity, ambition, openness, reverse snobbery (he’s more in awe of Murdoch than he is of the
Wall Street Journal
).

Of course, nobody has to believe they are thinking about this or, in fact, about anything—except having lunch in the JPMorgan Chase private dining room. Even if, as it happens, Jamie Dimon, the new CEO of JPMorgan Chase, stops in for a little chat—adding to the sense of moment.

It’s obvious, though—the predator, his bankers, and the air of attention can only mean something large is expected, that Rich Zannino is being asked to choose.

In fact, nothing happens. It’s all, pretty much, a replay of the spring dinner. Which is exactly the point. Zannino becomes the rebel and turncoat just by going along, by not changing tone, by not seeming skittish, uncomfortable, resistant.

Zannino is falling for Murdoch’s trick. Murdoch has a way of seeming like the most rational player. Even if everybody knows—and they do; how can they not?—that Murdoch has it in for established norms and polite society and customs of the nation, that, at root, he is always making some primitive, emotional, I-can-live-only-if-you-die assault, still, he always somehow makes it look as if the numbers add up.

The outsider is surrounding the insiders.

But first there’s another piece of business to take care of. It’s the kind of move that marks him as different not just from you and me, but from other businessmen too. He’s so outside, so from his own world, that he can’t be trusted to behave with the same logic or emotion as the rest of us.