War at the Wall Street Journal

Title Page

Table of Contents

Copyright

Dedication

Cast of Characters

Prologue

1. The Fix

2. Cousins

3. The Unraveling

4. The Newsroom

5. Billy

6. The Chase

7. The Letter

8. The Wait

9. Personal and Confidential

10. Not No

11. Exploring Alternatives

12. Family Meeting

13. Editorial Independence

14. Decisions

15. First Day

16. Meet Mr. Murdoch

17. Interregnum

18. Chiefs

19. Taking Bullets

20. Resigned

21. Thomson's Journal

22. One of Us

23. Urgent

Epilogue

Acknowledgments

Sources

Index

Copyright © 2010 by Sarah Ellison

ALL RIGHTS RESERVED

For information about permission to reproduce selections from this book, write to Permissions, Houghton Mifflin Harcourt Publishing Company, 215 Park Avenue South, New York, New York 10003.

www.hmhbooks.com

Library of Congress Cataloging-in-Publication Data
Ellison, Sarah.
War at the Wall Street journal : inside the struggle to control an American
business empire / Sarah Ellison.
p. cm.
ISBN
978-0-547-15243-1
1. Wall Street journal. 2. Dow Jones & Co. I. Title.
PN
4899.
N
42
W
28 2010
071'.3—dc22 2009046266

Book design by Brian Moore

Printed in the United States of America

DOC
10 9 8 7 6 5 4 3 2 1

Excerpts from "Family Dynamics: Behind the Bancrofts' Shift at Dow Jones—Mounting Pressure from Dissident Wing Raises Odds of a Sale," by Matthew Karnitschnig, Sarah Ellison, Susan Pulliam, and Susan Warren (June 2, 2007), and from Richard F. Zannino's letter to the Dow Jones board are reprinted by permission of Dow Jones & Company.

For Jesse

THE BANCROFTS

Clarence Barron, Bancroft patriarch, early Dow Jones owner

Hugh Bancroft, Clarence Barron's son-in-law, early Dow Jones president

Jessie Cox, Clarence Barron's granddaughter

Jane Cook, Clarence Barron's granddaughter

Hugh Bancroft Jr., Clarence Barron's grandson

Jane MacElree, Jessie Cox's daughter

Bill Cox Jr., Jessie Cox's son

Jean Stevenson, Jane Cook's daughter

Martha Robes, Jane Cook's daughter

Lisa Steele, Jane Cook's daughter

Christopher Bancroft, Hugh Bancroft Jr.'s son

Hugh Bancroft III, Hugh Bancroft Jr.'s son

Bettina Bancroft, Hugh Bancroft Jr.'s daughter

Elisabeth "Lizzie" Goth Chelberg, Bettina Bancroft's daughter

Leslie Hill, Jane MacElree's daughter

Michael Hill, Jane MacElree's son

Tom Hill, Jane MacElree's son

Crawford Hill, Jane MacElree's son

William Cox III, Bill Cox Jr.'s son

 

ADVISERS

Michael Puzo, Hemenway & Barnes attorney, Bancroft trustee

Jim Lowell, financial adviser to Hemenway & Barnes on Bancroft accounts

Roy Hammer, Hemenway & Barnes attorney, Bancroft trustee, Dow Jones board member

Michael Elefante, Hemenway & Barnes attorney, Bancroft trustee, Dow Jones board member

Martin Lipton, partner at Wachtell, Lipton, Rosen & Katz, adviser to Bancroft family

 

THE MURDOCHS

Rupert Murdoch, News Corp. chairman/CEO

Wendi Deng Murdoch, Rupert Murdoch's wife

Prudence MacLeod, Rupert's eldest daughter

Elisabeth Murdoch, Rupert's daughter

Lachlan Murdoch, Rupert's elder son

James Murdoch, Rupert's younger son

Grace Murdoch, Rupert's daughter

Chloe Murdoch, Rupert's youngest daughter

 

ADVISERS

Andrew Steginsky, independent money manager, adviser to Rupert Murdoch

 

DOW JONES & COMPANY

Peter Kann, former Dow Jones CEO, president, and
Journal
publisher

Karen Elliott House, former
Journal
publisher

Paul Steiger, former
Journal
managing editor

Richard Zannino, former Dow Jones CEO

Marcus Brauchli,
Journal
managing editor

Gordon Crovitz,
Journal
publisher

Irvine Hockaday, Dow Jones board member

Frank Newman, Dow Jones board member

Peter McPherson, Dow Jones board member

Harvey Golub, Dow Jones board member

Lewis Campbell, Dow Jones board member

William Steere, Dow Jones board member

Bill Grueskin,
Journal
deputy managing editor for news coverage

Paul Gigot, editorial page editor of the
Journal

Nikhil Deogun,
Journal
editor

Martin Peers,
Journal
editor

Paul Ingrassia, president of Dow Jones Newswires

Joseph Stern, Dow Jones general counsel

James Ottaway, Dow Jones board member

Richard Beattie, chairman of Simpson Thacher & Bartlett, adviser to Dow Jones's independent directors

 

NEWS CORP.

Gary Ginsberg, News Corp. EVP of global marketing and corporate affairs

Lon Jacobs, News Corp. general counsel

David DeVoe, News Corp. CFO

Roger Ailes, chairman/CEO of Fox News Channel and Fox BusinessNetwork

Leslie Hinton, former executive chairman of News International

Robert Thomson, former
Times
of London editor

James Bainbridge Lee Jr., JPMorgan Chase banker, adviser to News Corp.

Blair Effron, Centerview Partners, adviser to News Corp.

G
AIL GREGG WALKED
confidently up the gangway to join the small gathering on Barry Diller's yacht on a warm August night in 2007. Yet when she saw Rupert Murdoch, nemesis of her husband,
New York Times
publisher Arthur Sulzberger Jr., she forgot the promise of the evening and almost threw herself into the Hudson River.

The tabloids would note the party briefly, but this event wasn't designed for mentions in columns with boldface names. No press passes had gone out to humble journalists. The powerful would mingle privately, exchanging pleasantries and tidbits, setting up potentially useful future exchanges. Relationships would evolve quietly under the setting sun. Yet beneath the clinking of cocktail glasses something else was taking place, namely, the latest phase of a competition involving the future of two of America's most important publications and a battle for supremacy over who would control what the nation read, thought, and believed.

 

The guests aboard Diller's beautiful 118-foot cruiser knew that reality was the creation of the highest bidder. Their media empires didn't merely report the news; they chose and shaped it. Yet tonight's stated purpose was not strictly business: at the top of the agenda was the viewing of Diller's new IAC/InterActiveCorp headquarters from the water, with a tour to follow. Diller, a comfortable host and a bit of a showman, had arranged things a week or so earlier. The evening light would perfectly showcase the rather controversial building, designed by architect Frank Gehry to evoke eight wind-whipped sails ready to glide out onto the river. But the strange and graceful edifice was no one's notion of the big news story on that particular evening.

In the wee hours of that morning, Rupert Murdoch had secured a $5 billion deal to buy Dow Jones & Company and the
Wall Street Journal
from the Bancrofts, one of the country's last remaining newspaper families, who had owned the company for 105 years through thirty-three Pulitzers. The only other time Dow Jones had been purchased was for $130,000 in 1902 by Clarence Barron, whom some called the originator of financial writing but whom the Bancrofts referred to as "Grandpa." The founder of the Boston News Bureau, he had purchased the company with a $2,500 down payment loan from his wife, Jessie Waldron, whose cooking the five-foot-five, 330-pound patriarch had enjoyed as a longtime guest at Ms. Waldron's boarding house.

The purchase had ensured that the later generations of the Bancroft family were bonded together, however reluctantly or tentatively. Without it, the Boston-based clan would feel like "just another rich family," a status the elders in the clan were reluctant to embrace. As the generations progressed, their relationships grew ever more tenuous. Murdoch's money would allow them to be rid of one another. It would allow him something else entirely: the $5 billion purchase of the "daily diary of the American dream" was the likely culmination of his controversial career, which had helped shape the century. The paper would become the flagship of his News Corporation.

 

The seventy-six-year-old Murdoch, his auburn-dyed hair receded halfway back his head, his brow permanently creased as his smile emerged from the crevasses that lined his face, looked relaxed and vibrant in the stifling summer heat. He accepted congratulations in his softly accented Australian mumble. For almost two decades he had coveted just these plaudits. But the question of whether the purchase was actually a triumph would be avidly debated in the Hamptons and elsewhere as the summer came to its close. Some called his timing all but laughable, given the print medium's sorry state. Most noted that the man who had always indulged his penchant for what he called "populist" papers had now steered himself into an impossible challenge—engineering the subtle metamorphosis of a beloved, sophisticated publication with a dwindling audience in the midst of the scariest media moment in recent memory.

Murdoch, worth $9 billion and ranked thirty-third on the
Forbes
list of the four hundred richest Americans that year, remained an awesome competitor. His challenges were just beginning. After capturing the
Journal
with a motley team of advisers and his shareholders' cash, he faced an inevitable battle with its staid newsroom along with emerging calamities that would transform what had seemed a trifle in his mammoth empire into a drain on his business—and his reputation.

 

Gail Gregg held a unique position as the first lady of Murdoch's biggest competitor, the Sulzberger clan who controlled the
New York Times.
She and her husband had fallen in love when they were both young aspiring journalists, in the days when, thanks to Woodward and Bernstein, journalism was steeped in romanticism. After Nixon's fall, reporting was glamorous; the country had loved the Fourth Estate. The adoration was short-lived.

It was no longer easy to enjoy being a member of America's most powerful publishing dynasty, reigning as Manhattan's all-but-official royal family. Online competitors mocked the self-importance of the once unassailable
Times
from cyberspace as the accountants forecast the demise of the entire newspaper industry.

Many of the other guests at the dinner party were also under siege and uncertain. Technology was upending the old monopolistic industry models, which had made newspapers one of America's great businesses. Media companies were collapsing as the nation fell out of love with publications upon which they once depended. Readers' patience was wearing thin. They had continued to subscribe to papers they perceived as lifeless, drained by their corporate owners of local muckraking, voice, excitement, individuality. Scores of papers across the country were closed or clinging to diminished existence, though the news—wars, terrorism, economic disaster—was more epochal than ever.

Even the proud Sulzbergers seemed insecure. Gail's entrance to the festivities didn't cause the guests to look up as quickly as it once would have. Yet, despite her earlier temptation to brave the waters of the Hudson, she was too tactful to make any sort of scene. Instead, as she spied Murdoch, she slipped off her shoes so she wouldn't scuff the gleaming white deck of the yacht, pulled her lips into a smile, and made her way on board.

 

The year had been terrible for the
Times
with an ever diminishing paying readership and plummeting ad revenues. (The company would end up mortgaging its new headquarters, taking a usurious loan from Carlos Slim Helú, a Mexican billionaire.) Still, the Sulzbergers saw themselves as survivors. Among old-fashioned American journalism's most serious advocates, they were nearly unapproachable, closely engaged in the business, influential with editorials and endorsements, and involved in a modernization of the paper. But would they, too, be unseated? Would Murdoch or another usurper set his sights on their old Grey Lady? Would his ownership of their rival, the only other truly nationally influential paper, damage the
Times
by forcing it to become more commercial, or further weaken its already addled business?