“I want you to do what’s best for the company. Don’t you and the boys worry about dividends.”—Jane Bancroft, of Dow Jones’s controlling family, giving instructions to a Dow Jones executive after the suicide of her husband, Hugh, in 1933.
“The family was screwing it up right and left. My focus was more on, Jesus Christ, how am I related to these people?”
—Natalie Bancroft, an heir, after the family approved Dow Jones’s sale to News Corp. in 2007. She is now a News Corp. director.
It was inevitable, wasn’t it, that the scandal now consuming News Corp.’s U.K. wing would spread to the New York unit that publishes The Wall Street Journal, Dow Jones, formerly an independent, financial-information powerhouse, now a blip on News Corp.’s balance sheet.
Les Hinton, whom Rupert Murdoch named Dow Jones CEO after the 2007 takeover, resigned this afternoon, having previously presided over rampant phone hacking at News International, the British newspaper unit, and having told Parliament that he had looked into the matter and found that only a single reporter —one—had been involved.
The WSJ’s top editor, Robert Thomson, in praising his friend Hinton in a memo to staff (h/t Peter Kafka), said, “There will be a certain amount of uncertainty in the coming days….” That’s putting it mildly. As it is, the WSJ, the global financial news leader, has been an afterthought in News Corp.-self-immolation coverage, a story it would, under other circumstances, own. Its biggest contribution so far has been an interview with the boss. Naturally, the staff is at sixes and sevens, as the Daily Beast reports, trying to divine the future of their employer while trying to cover the story from the inside out. That can’t be easy.
But the larger issue for readers is that Dow Jones was fumbled away to a company that sneers at public-service journalism, and was so fumbled at the very brink of an historic financial crisis. I wrote that the Journal missed the moment in the first critical year, then moved on way way too early, leaving others to do the best work, and leaving so, so much undone. Who knows what we still don’t know?
So it was annoying, to say the least, to see members of the Bancroft family step forward after all these years to say they wouldn’t have sold to News Corp. in 2007 if only they had known then what they know today.
Here’s a snipped from the piece by ProPublica’s Dick Tofel, a former Dow Jones executive and Barney Kilgore biographer:
“If I had known what I know now, I would have pushed harder against” the Murdoch bid, said Christopher Bancroft, a member of the family which controlled Dow Jones & Company, publishers of The Wall Street Journal. Bancroft said the breadth of allegations now on the public record “would have been more problematic for me. I probably would have held out.”
The quote that rankles the most is from Bill Cox III:
Cox said he is “happy about the price we got” for Dow Jones. “I’m pretty happy being out of the newspaper business altogether.”
But it must be remembered that Bancrofts talking here were mostly among the hardy few who back in the late 1990s, after DJ had already run aground on the shoals known as Telerate (backgrounder here), pushed for leadership and strategic changes and were ostracized for their efforts. Too bad. DJ still had ten full years to come up with a new strategy before it was sucked into the News Corp. maw.
Ah, well.
It’s tempting to compare the stalwart behavior of the older generation with the madcap money grab that marked the Bancrofts’ sale in 2007 and see a sad commentary on the decline of the elite stewardship. After all, when Jane Bancroft told the Dow Jones executive, Casey Hogate, during the depths of the Depression to forget the dividend and do the right thing (See Tofel’s biography, page 72), the company was desperate. The WSJ’s circulation was a mere 30,00, down from 50,000 before the Great Crash, and the company even missed payroll. Dow Jones survived, mostly thanks to the brilliant Kilgore, and the Bancrofts were able to hand down to their heirs special “B” shares that gave the family the power, and responsibility, to protect the newspaper from unwanted suitors.
Ironically, as I argued back in ‘07, it was the excessive dividends, paid out year after year to a growing number of Bancroft heirs, that hamstrung the company during a time of media dislocation. Maddeningly, the family stood pat, collecting dividends, while turning away an array of suitable suitors (for background, see this Ken Auletta piece from ‘03). Finally, after the company was dead in the water, Murdoch’s bid came along, and it was a mad dash for gold.
It’s easy to say today, if we had known of rampant hacking and coverups, we would have done something differently. But of course, there was nothing short of a firestorm in 2007 (the best account is Sarah Ellison’s book, which also recounts the family’s bumbling response referred to by Natalie Bancroft above). There’s no need to cite chapter and verse, but no one was more eloquent than their fellow “B” shareholder, James Ottaway [UPDATING: Forgot to mention, he’s now on CJR’s Board of Overseers), who urged the Bancrofts to resist the Murdoch temptation:
I’m arguing that there’s a moral issue here. Rupert Murdoch…I admire his business skills, but I despise his journalistic practices, and even if I admire him, I’m concerned, and I think the Bancroft family should be concerned, about what kind of a home News Corp. makes for Dow Jones long-term.
It was because of these very concerns that the Bancrofts insisted, futilely, that the Journal’s editors be protected by that silly committee of luminaries, the agreement running 7,000 words and filed with the SEC. (Breaking Views thinks the committee might yet be a factor, but even it wanted to, and it doesn’t, its mandate is far too narrow—the protection of three Dow Jones editors, and that’s it.)
It’s too late for expressions of shock and regret now. But it is another reminder, if we needed one, how much news ownership matters.
It's even worse than you describe--the WSJ's 'story' on News Corp. buries the fact that it's a subsidiary.
And larger (in the scheme of things) and even worse realities: while arguably the country's largest financial story of the decade--the debt crisis--plays itself out in Washington, the online version of the WSJ leads with stories on--I'm not kidding you--a gun nut in Montana who is 'challenging' the federal government on interstate commerce and the day prior--I don't even remember--that's how ridiculous it was. I can tell you it wasn't about the debt crisis (What debt crisis? Is there a debt crisis? Who says there's a debt crisis? We're only the WSJ--why would we be interested in covering THAT???!!!)
#1 Posted by shwartzy, CJR on Fri 15 Jul 2011 at 11:25 PM
Compare a WSJ of January 2007 with a WSJ of 2011. A big picture paper slowly morphing to a general rag with the same insane editorialists and mostly mad columnists. Clearly story selection and placement based on the master's bent mind. I used to tolerate it because of the judicious reporting and general thoughtfulness in the pre-Murdoch days. Now it soils the breakfast table by its shabby presence. Cancelling today.
#2 Posted by Richard McDonough, CJR on Sun 17 Jul 2011 at 12:50 PM
You neglect to mention that Ottaway subsequently changed his mind, saying in 2008 "Things that I spoke about publicly that I feared Murdoch would do, that would be bad for Dow Jones and for the Wall Street Journal, have just not happened," Ottaway affirmed. "Yet, anyway."
He added:
"He has done more to keep it going as, what I think now is the best newspaper in America while other publishers have been cutting staff much more vigorously and reducing their coverage and quality." It is pretty dumb to argue that the WSJ would have somehow ferreted out the roots of the financial crisis early on, or made readers understand it better or worst of all, and what appears to be your real complaint, accomplished anything by using your preferred editorial slant of savaging Wall Street much more, all while you hand-wave away borrowers' roles, particularly considering the WSJ would be even smaller today if Murdoch hadn't tried to revive it. No existing newspaper or broadcast media business, including the WSJ and BSkyB and The Economist and the NYT, is going to survive the next 5-15 years, so it is particularly silly of you to bash Murdoch for investing in these failing and admittedly unprofitable operations, simply because he has a soft spot for his first business, just because he then tries to actually turn them into going concerns by adding some puff pieces here and there.
#3 Posted by Ajay, CJR on Sun 17 Jul 2011 at 03:37 PM
Takes about three generations to blow a business up, usually. First one founds and builds, second one expands to empire status, keenly aware that good fortune requires an industrious and dedicated partner. The third or fourth generation, with rare exception, is so entitled and myopic that crisis spells doom. This is a pattern you see in many times and places, so it's hard to blame the individuals or the specific circumstances.
Just something about inherited wealth and power.
#4 Posted by edward ericson jr., CJR on Mon 18 Jul 2011 at 07:27 AM