The Man Who Owns the News (28 page)

And now his climactic eighties moments are at hand.

Except, not yet—first there’s some personal business. This occurs out of view of most of the world. Indeed, he is using his eighties might to do something very un-eighties. He buys his father’s old company, the Herald and Weekly Times, which, with his own holdings, gives him almost 60 percent of the newspaper market in Australia.

The deal is significant not just because of its impact on Australia (and its price: $1.6 billion) but because it makes no sense from the point of view of the new global media company he’s created in the United States. Or it only makes sense if one is to conceive of the company not at all as a coherent vision, a calculated strategy, but as a hodgepodge of Murdoch’s own interests, hankerings, experiments, bets—and personal, idiosyncratic acts of dominance. It makes no more sense, at this point in its development, for News Corp. to monopolize the newspaper business in Australia than it would for Time, Inc., to monopolize it.

From the strict eighties point of view of brutal corporate rationalization—wherein a company should be a cold and efficient instrument for maximizing value—the renewed interest in Australia seems preposterous. But from that other eighties construct, the charismatic CEO—wherein certain rare executives are believed to be so prescient and all-knowing that they can, like a big star who can carry a dog of a movie, defy logic—is what you’re betting on.

The second climactic moment of the Murdoch eighties is Wapping—the newly built headquarters and printing facility for his U.K. newspaper operation in east London. Grasping historical imperative and the zeitgeist, he makes common cause with Reagan and Thatcher (Murdoch might arguably join them as part of the eighties values triumvirate) and in 1987 breaks the British print unions after a strike that lasts more than a year.

The success of his move is not just in the breaking but in the historical revisionism. At the time, having erected a prison-like, totalitarian-seeming printing complex on the bank of the Thames and then secretly moving his strikebreakers in and keeping his unionized workers out, he creates one of the ugliest, potentially most explosive standoffs between labor and management in industrial history. Murdoch is anathema to all right-thinking liberal people. He is the thug, the brute, the boot.

At twenty years’ remove, however, there will be only one story line: The union printers are thieves and nihilists who hold newspapers hostage and have brought the business to the point of bankruptcy (they are also censors who will regularly stop the presses over articles they don’t like), and Murdoch is the bloke who finally says,
Enough!
What’s more, he is the clever bloke, creating at Wapping one of the most brilliant subterfuges, one of the grandest deceptions—he manages to convince the unions that he is starting an entirely new paper there—since D-Day. He’s even credited with some altruism: It is his move against the unions that empowers his competitors too, indeed even provides the wherewithal for the
Independent
to launch and compete directly against Murdoch’s
Times.

It doesn’t stop. He owns a minority position in William Collins & Sons, a leading British book publisher, and so acquires the U.S. publisher Harper & Row ($300 million), and shortly thereafter turns around and scarfs up the rest of Collins, which he has previously promised not to touch. And suddenly News Corp. owns one of the world’s biggest book publishers—a business or pastime (reading books) he has almost no interest in at all.

He grabs 20 percent of Pearson PLC, which owns the
Financial Times.
His notion is either to buy Pearson outright or, failing that, get it to give him the concession to publish the
Financial Times
in the United States. (This doesn’t happen.)

He hits number eight in 1987 on
Forbes
magazine’s list of the four hundred richest Americans, with an estimated net worth of $2.1 billion.

Oh, and there is the
South China Morning Post.
For $300 million he converts a minority stake into a controlling interest because Dow Jones, with 19 percent, decides it doesn’t want to be in business with Murdoch and agrees to sell him its shares. (Doing this deal is the first time Peter Kann meets Rupert Murdoch.)

And there’s the greatest cash suck News Corp. has ever faced: the launch of the four-channel Sky satellite service in Britain. While he wins his battle to launch before his better-funded competitor BSB, the problem is that it’s a business without customers—and, practically speaking, without a business plan. Indeed, he’s launched into the void before anybody has satellite dishes to support his programming.

Then, straining all credulity, he makes his costliest purchase so far. For $3 billion, he buys Triangle Publishing, which owns
TV Guide.

And he is thereby, at the close of the 1980s, $7.6 billion in debt—and shortly to be on the brink of ruin.

But pay no attention to that.

Dow Jones in the late eighties, with its three-section
Wall Street Journal,
the world’s dominant business information brand, misses the main point of its own success: The
Wall Street Journal,
for better or worse, construes its role as that of observer, its job as journalism, rather than seeing its business as business. That, because business has become so complex, so competitive, so fetishized, really—and because the amounts of money in business have become so much greater—information about business has become so much more sought-after and valuable. While the
Wall Street Journal
understands that the business world has undergone a profound change in character and function, it doesn’t understand that it should, accordingly, undergo such a change too. Its resistance may well be honorable—if you change your function, you change your meaning. It wants to stay a newspaper, that leisurely, narrative, fussy, everyman thing.

Meanwhile, other, lesser providers of business information—not least of all Michael Bloomberg’s new company and Reuters—are servicing the business information customer with much more specific, efficient, accessible data for which they can charge a hell of a lot more.

Murdoch, who, like the people at Dow Jones, enters the eighties as principally a publisher, a man who understands the publishing business, exits it as a practitioner, a connoisseur, a lover of business itself—committed to going wherever the transforming nature of business per se, and the media business in particular, takes him.

The people at Dow Jones enter and exit the eighties as newspaper people.

MAY
2007

Late in the day on May 1, after CNBC’s disclosure of Rupert Murdoch’s bid for the
Wall Street Journal,
Michael Elefante publicly releases the results of the poll he’s been trying to conduct since the April 24 family meeting. By his tally—and he’s careful to describe the equivocal nature of the count—family members representing slightly more than 50 percent of the vote seem to be opposed to Murdoch’s offer. The message here, of course, is not about the majority being against the deal, but rather that the historic, vaunted, implacable opposition of the family is so weak. It is a sign of such clear uncertainty, ambivalence, and, apparently, consideration of the offer that by the end of the market day, Dow Jones, which has been trading in the thirties for the past three years, closes at $58.

At their hastily convened board meeting the next day, the new financial reality is explained in terms that nobody on the board had quite ever appreciated or considered. The nature of trading practices that began in the 1980s, which the
Wall Street Journal
wrote so vividly about, has now consumed the company. That is, between David Faber’s first report of the offer at noon and the close of the market, Dow Jones has had a profound turnover in its shareholder base. Its long-term, stalwart, and, to a degree, understanding holders of its common stock have been replaced by arbitrageurs—including Warren Buffett—who have bought the stock at well north of its natural price and who will only be satisfied if there’s a deal (Murdoch’s or anyone else’s) struck for $60 or higher. In other words, Dow Jones is now formally in business with partners who will do everything possible to make it sell—and who will be impossible to live with if it doesn’t sell.

And then, on May 5, another 1980s-style shoe drops.

Four days after news of the Murdoch offer for Dow Jones goes public—and likely spurred on by this announcement—Canada’s Thomson Corporation, one of the world’s largest publishers of business information, and Reuters, the news service and business data supplier, announce their plan to merge, presaging all sorts of vast dislocations in the market.

This could seem just like Murdochian dumb luck. Here he is trying to buy a company and, voilà, its two most logical saviors—his most logical competitors for Dow Jones—decide to merge, meaning they won’t be able to bid for Dow Jones. What’s more, Dow Jones, already dwarfed as a supplier of financial information, is suddenly even more circumscribed, reduced, limited.

Even Murdoch thinks he’s been strangely and inexplicably smiled on by this development. But other than that, the announcement is so fortuitously timed for him, it seems rather predestined—just one more piece of historical inevitability that Dow Jones has been in denial about for years.

Oh, shit,
is what Michael Elefante thought when he got the call on March 29 about Murdoch’s expected $60 bid for Dow Jones.

Oh, shit,
is what he thinks again when, five weeks later, he hears about Thomson and Reuters.

EIGHT
It’s a Tabloid World

MAY
11, 2007

Murdoch is restless—annoyed by the Bancrofts’ lack of response to his offer.

While he knows what they must think of him, he still can’t believe that they really think this—they must just be listening to other people who don’t know him.

He decides to write directly to the family. He means his letter to be from one newspaper family to another. He talks about his father being a wonderful guy and mentions Gallipoli (which may be puzzling to members of the Bancroft family not up on their World War I secondary-battle history). He talks about his own children and how News Corp. is a family company. And that he thinks that interfering with the
Journal
and its long history of editorial independence would be bad for business. He mentions that he’d be amenable to an editorial board structure similar to what was put in place at the
Times
of London and
Sunday Times
newspapers when he bought them in 1981.

The Bancrofts receive his letter as though it’s a communication from a far-off planet: While it is perhaps meaningful, there’s no sense that a timely response might be in order.

It’s confounding for him being out here in what feels like limbo. He isn’t often ignored.

MAY
18, 2007

By all rights, the bottom should have fallen out of the deal. Or, if the issue actually was the standards and practices of journalism and the Bancroft family’s commitment to protecting the same—and if a bald demonstration of Murdoch’s idea of standards and practices was needed to remind everybody about what exactly was at stake—the deal should have died on the spot.

That morning, “Page Six,” the
New York Post
’s gossip franchise run by Richard Johnson, publishes an item about itself. Scooping everybody else, “Page Six” confesses to a long list of extraordinary ethical derelictions and abuses of power of which it will shortly be accused in a lawsuit by a disgruntled former employee.

One disgruntled former employee is piggybacking on the charges of another disgruntled former employee, and both stories provide a window into the Murdochian tabloid world. In 2004, Ian Spiegelman, a “Page Six” legman of long standing, used the page to wage a vendetta (his e-mail threatened violence as well as bad press) against a demimonde flack over a woman. In 2006, Jared Paul Stern, another legman on the page—both Spiegelman and Stern had rather styled themselves in the tradition of the most cynical and noir gossip columnists of the forties—was accused by supermarket billionaire and Bill Clinton friend and partner Ron Burkle of conducting a shakedown. Burkle, who was secretly video-taping the meeting, had Stern name him a price for arranging favorable coverage and for smoothing the unfavorable.

Stern, who was fired shortly after Burkle made the claims, is now threatening to sue News Corp., in the process revealing that Johnson himself took at least one bribe, which “Page Six” now admits to (terming it a “Christmas gift”). In addition, Stern is set to claim in his suit that the editor of the
Post,
Col Allan—the thirty-four-year News Corp. veteran and Murdoch family favorite—was regularly provided with liquor and sex at a New York strip club. While “Page Six” does not deny that he frequented the club, it advises nevertheless that Allan’s behavior was “above reproach.” The litany of other claims that have been acknowledged with great umbrage and fulmination but not explicitly denied (save for boilerplate protestations about “smears and lies”) include all manner of other extortions, pay-for-coverage schemes, and, in one instance, the allegation that the price of Lachlan Murdoch’s house in Australia, when purchased by the actor Russell Crowe, included a guarantee protecting Crowe from bad press in the
Post
.