The Wall Street Journal newsroom throws up a “save us” flare on page one with a story about Rupert Murdoch stepping on the gas in his bid to change the august newspaper.
The WSJ’s top editor, Marcus Brauchli, confirmed yesterday he was resigning, saying “the new owners should have a managing editor of their choosing.” The paper says Murdoch is “impatient with the pace of change.”
A week and a half ago, the Journal’s Murdoch-installed publisher summoned Brauchli to a meeting to tell him they’d be better off with their own man, the paper says, something they’d been considering doing for several months. The paper’s independence committee, set up to shield it from its owner, says Brauchli told them he wasn’t resigning over any “integrity issue,” which is as close as the WSJ gets to spelling out the fact that its new owner has an, ahem, unsavory reputation among real journalists.
The New York Times on its page one says:
Mr. Brauchli’s colleagues and friends say he championed some of the changes and acted as a brake on others. But they say it was increasingly clear that much of the direction was being set by Mr. Murdoch and the publisher he installed, Robert J. Thomson, who oversees news operations and has none of the usual business duties of a publisher. Editors and reporters say Mr. Brauchli’s authority was being undercut, a message reinforced by plans to give Mr. Thomson an office in The Journal’s main newsroom.
There was particular tension lately over calls by the News Corporation team to thin the ranks of The Journal’s editors, and to put short articles on the front page or the fronts of sections that would not continue on inside pages.
The Times says with Brauchli’s ouster and his pending purchase of Newsday, Murdoch “is moving to tighten his already-imposing grip on American news media.”
Some have suggested antitrust concerns could scuttle the Newsday deal, and the Times says New York Daily News owner Mort Zuckerman will try to top Murdoch’s bid later this week and that real-estate scion Jared Kushner is meeting with the cable tycoon Dolan family to consider a joint bid (the Times says it was “shocked” that the handshake deal was announced so soon). If it goes through, Murdoch would control three of the ten biggest papers in the country.
On C1, the NYT looks at the antitrust issue in more depth, noting a new rule at the Federal Communications Commission that prevents one owners from owning more than one paper and TV station in a top twenty market. If he buys Newsday, Murdoch would own three papers and two TV stations in New York.
The Times says the FCC commissioner has said he’s pretty much against granting waivers, which Murdoch has already applied for for the New York Post and the Journal. The paper says Congress is taking up a bill to prevent owners from controlling a newspaper and TV station in the same city at all.
Get the Magic 8 Ball
The Los Angeles Times reports that foreclosures in California in the first quarter more than quadrupled from a year ago, while defaults were up 143 percent.
The San Bernardino County deputy sheriff, talking about evictions, has perhaps the pithiest summary of the housing crisis we’ve seen, and it’s our Quote of the Day:
“A lot of the homes were 5 or 6 months old. The people got in by the skin of their teeth,” Strickland said. “They can’t afford their payments, they skip.”
In Imperial County in southern California, foreclosures rose an astonishing 653 percent.
The Journal on page three says there are signs the housing market is stabilizing despite news yesterday that existing home sales fell another 2 percent last month (they’re off 19 percent from a year ago). It says two gauges measured upticks in sales prices, one for the first time since June.
But those measures have problems that undermine their usefulness, as the WSJ acknowledges, but it says they could show price declines are slowing and quotes an economist, who’s seen silver linings before, as saying sales will “stabilize” in a couple of months.
The Associated Press, on the other hand, says the “severe slump in housing showed no signs of abating.”
Did SEC pull back on Bear?
The Journal scoops on C1 that the Securities and Exchange Commission is refusing to cooperate with a congressional inquiry into why it dropped a Bear Stearns investigation into collateralized-debt obligations way back in 2005.
The SEC was considering bringing two cases against Bear for improperly valuing CDOs and now says it can’t discuss investigations with Congress. But the WSJ says the agency has shared much more sensitive date with legislators in the past.
Keep your eye on this one.
And we note that in the first day of the post-Brauchli era, three of the four stories on C1 don’t jump to the inside pages (two stories on Marketplace are limited to the front page).
FT reheats small-bank story
The Financial Times leads with a U.S. banking regulator saying he’s concerned about a “wave” of bank failures.
John Dugan, the Comptroller of the Currency, says small banks in particular are worrisome because of their commercial real-estate lending frenzy of the last few years, but there’s not much here that hasn’t been reported elsewhere. This is interesting, however:
More than a third of smaller community banks have made commercial property loans that exceed 300 per cent of their capital, the OCC says. By comparison, in 1987, when hundreds of banks failed amid a commercial property collapse, such banks had commercial property loans equal to 175 per cent of their capital.
Gimme a sign, any sign
The FT also reports on page one that American financial institutions have raised $28 billion in capital in the last several days by issuing debt and preferred stock, something the paper says shows that investors are less worried about the sector’s health than they have been in recent months. It says regulators are pleased that they are shoring up their capital reserves to guard against future losses.
Steven Pearlstein, in his Washington Post column, has a good take on why it’s extremely premature to say we’ve hit the bottom.
More cuts at Ford?
The WSJ takes an in-depth look at what it says is a surprise turnaround at Ford, but reports that the carmaker is considering another round of job cuts, selling Volvo and shutting down Mercury.
The Journal says CEO Alan Mulally has helped the company improve earnings (though they’re still negative) every quarter since he took the reins two years ago and that quality improvements have made Fords almost as good as Toyotas, slashing its warranty costs by a billion dollars. It notes that he has streamlined operations by selling off three car lines and that if Ford gets rid of Volvo and Mercury it will have just two remaining—Ford and Lincoln—and that he’s helped shifted its sales mix from 70 percent trucks in 2004 to just 43 percent in March.
King coal
The NYT says on page one that Europe is moving toward using more coal to fuel its energy needs. Italy, for instance, will increase its coal usage in five years to 33 percent of the total from 14 percent today.
And Italy is not alone in its return to coal. Driven by rising demand, record high oil and natural gas prices, concerns over energy security and an aversion to nuclear energy, European countries are expected to put into operation about 50 coal-fired plants over the next five years, plants that will be in use for the next five decades.
In the United States, fewer new coal plants are likely to begin operations, in part because it is becoming harder to get regulatory permits and in part because nuclear power remains an alternative. Of 151 proposals in early 2007, more than 60 had been dropped by the year’s end, many blocked by state governments. Dozens of other are stuck in court.
Miscellaneous bad economic news
The Times says on C1 and the WSJ on B4 that health insurer UnitedHealth slashed its profit forecasts and blamed much of it on the slowing economy. Its CEO says fewer companies are offering health care to employees and fewer employees are taking it.
The Times:
In recent years, despite soaring medical costs, insurers have made big profits by keeping premiums well ahead of health care inflation. But analysts say that business strategy may be reaching its limits, with companies finding it harder to raise prices without losing substantial numbers of customers.
The news follows WellPoint’s announcement last month that it faced similar problems.
United Airlines parent reported a $537 million loss on higher fuel costs and said it will cut 1,100 jobs. Its stock was “bludgeoned” as the WSJ puts it nicely, falling 37 percent.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.