NEW YORK — Last Nov. 14, 38-year-old Martin A. Siegel, one of Wall Street’s leading investment bankers, was spending the afternoon in the Park Avenue offices of Martin Lipton, an eminent takeover lawyer and a man Mr. Siegel had come to regard almost as a father.

Suddenly a federal marshal burst in upon the two men, thrusting a subpoena into Mr. Siegel’s hand. When Mr. Siegel read the subject matter of the investigation—Ivan F. Boesky—and the accompanying list of his own takeover deals at Kidder, Peabody & Co. in the 1980s, he knew his career was over. He began sobbing, as a horrified Mr. Lipton rushed to comfort him. [1]

The Wall Street Journal leder. Has modern American newspapering produced anything better, or at least more elegant? The nation’s leading financial daily has produced long-form narratives on its front page since Bernard Kilgore decided after World War II that the nation’s business news was of interest to people other than the nation’s businessmen and women, and that the interests of the nation’s businessmen and women were broader than just business news.

NEW YORK — On Jan. 17, Patrick Ward, the chief operating officer of Helmsley Enterprises Inc., dashed off a note to the real-estate company’s chief executive, Leona Helmsley.

“Dearest Leona,” it began. “A note to say thank you for the beautiful gift, and for caring about me enough to go to such efforts. You do not know how much you are loved, and I am on top of the list.”

It wasn’t exactly the usual correspondence between top executives of a multi-billion-dollar enterprise. But then, Mr. Ward didn’t follow a typical route to his position within the massive real-estate empire that Mrs. Helmsley inherited in 1997 when her husband Harry died.

Mr. Ward, a 45-year-old optometrist, had no professional experience in the real-state or hotel business when he met Mrs. Helmsley, 80, about four months earlier at a Miami dinner party. They started seeing each other socially before she asked him to take over day-to-day operations of her company. Many of his notes to Mrs. Helmsley highlighted their emotional ties rather than business strategy.

“I care deeply for you and will stand in front of any moving train before I will let that train hit you,” the Jan. 17 note said.

Mr. Ward got hit by a train, all right. Less than one week later, their relationship exploded after a rival executive informed Mrs. Helmsley that Mr. Ward was gay. [2]

How about one, pulled almost at random from the work of James B. Stewart, revealing how watchdogs of the New York Stock Exchange and the Securities Exchange Commission allowed insider trading to flourish during the 1980s, turning our capital markets into a rigged roulette wheel. Drexel Burnham agreed to finance the buyout of National Can Corp. and a few days later a partnership of Drexel principals quietly bought 23,000 National Can shares, before the deal was announced and the shares soared. The emphasis is mine:

Whether or not Drexel or the partnership was involved in any wrongdoing, how such suspicious trading escaped serious scrutiny is a story of regulatory ineptitude. It may help explain why insider trading could have flourished unchecked for so long on Wall Street. [3]

Who else writes with that kind of authority today about both the original wrongdoing and the regulatory failure? Why do we take these stories for granted?

MORTON, Miss. — They call it “the chain,” a swift steel shackle that shuttles dead chickens down a disassembly line of hangers, skinners, gut-pullers and gizzard-cutters. The chain has been rattling at 90 birds a minute for nine hours when the woman working feverishly beside me crumples onto a pile of drumsticks.

“No more,” she whimpers. [4]

Aficionados won’t need the footnote to know who wrote that. Or this one, same author, on Dickensian conditions in a Hagerstown, Maryland, bank-statement processing center, where windows are covered and talking is forbidden.

This total focus may boost productivity, but it makes many workers feel lonely and trapped. Some try to circumvent the silence rule, like kids in a school library. “If you don’t turn your head and sort of mumble out of the side of your mouth, supervisors won’t hear you most of the time,” Cindy Kesselring explains during her lunch break…

During lunch, workers crowd in the parking lot outside, chatting nonstop. “Some of us don’t eat much because the more you chew the less you can talk,” Ms. Kesselring says. There aren’t other scheduled breaks and workers aren’t allowed to sip coffee or eat at their desks during the long stretches before and after lunch. Hard candy is the only permitted desk snack.(5)

Hard candy.

People wonder why the looming buyout of the Journal’s parent, Dow Jones & Co., by News Corp. is a big deal for people who aren’t journalists or don’t work for journalism reviews. My colleague Jon Fine of Business Week teases me for fulminating and tut-tutting about the consequences of a News Corp. deal. And he’s not the only one.

Among the arguments is that there is no shortage of other business-news outlets, including Business Week, Forbes, Fortune, Bloomberg, The Financial Times, now Portfolio, and many more. That’s an argument about news organizations’ relative resources, quality, and self-perceived mission, and it’s an argument I would love to lose. But that’s for another day.

Michael Wolff, writing in Vanity Fair, a publication that knows something about storytelling, makes a fair point:

This is part of the rub: journalism at the Wall Street Journal level is an Ivy League profession (or it’s people who would have liked to have gone to the Ivy League), with a set of conceits about process and legitimacy and respectability; journalism on the Murdoch level is a rougher trade, faster, more direct, less “precious” (and graduating from a crappy college isn’t a problem).

And:

Journal readers surely want insiderism more than outsiderism. They want a knowledgeable reflection of the prevailing business winds. (Dean Starkman, writing for the Columbia Journalism Review, went so far as to argue that the Journal’s mission is to be a watchdog of the capital markets instead of, in fact, their handmaiden, the paper’s historic role.) To the degree The Wall Street Journal is supposed to reflect the business establishment—and that is, surely, what the paper is supposed to do—it could, in Murdoch, hardly have a better owner.

He’s wrong about the liveliness of Murdoch’s stuff. Even the New York Post lost its headline magic long ago. And to dismiss the Journal as capital’s spear-carrier is facile, at best. But he’s right in one sense: the fewer sparkling stories you do, and the more run-of-the-mill corporate ones, the more people will see the paper Wolff’s way.

Fact is, Journal readers are no different from any others. They want great stories. And that’s what the Dow Jones affair is about.

Take a longer view and look at the paper for what it has been, still occasionally is, and could be again if given a few years to get clear of the un-Murdochs who’ve been managing the place under an unimaginative board of undertakers, er, directors. Steve Yount, the head of the union that represents the paper’s employees and a newscaster for the WSJ Radio Network makes a nifty case that Murdoch is buying low. Long overdue changes on the editorial side had just been put in place when the News Corp. bid became public.

Insiders and elite snobs such as myself are on the edge of despair because we know too well the bureaucratic barriers—the fear, the loathing, etc.—that are already rooted in newspapers. We know why newspapers read like they are produced by terrified bureaucracies. Because they are.

Great is an overused word, but Great Stories, when they do happen, are almost mini-miracles. They require talented, forceful and occasionally odd individuals operating in an environment where they feel they are, more or less, free to do what they do. News Corp. is a big, important company with diverse goals— the China market, TV regulation, Hollywood. Murdoch has shown, if nothing else, a devotion to those goals and a willingness to sack editors, kill books, even the drop whole news organizations to help achieve them. That’s ok with me, in the end. That’s News Corp.’s business, and it works for shareholders.

But I don’t see how it works for readers or how an already anxious staff of reporters and editors on a business-and-finance newspaper operates in that context. If you want great stories, you need money, yes. But, much more important, there has to be breathing room. Look what McClatchy’s Washington bureau does with a few dozen people. Newsrooms need to feel free enough to write about otters [6], an eight-year-old leukemia patient, inner-city kids trying to get into M.I.T, and a pharmacist’s experience after a robbery.

Or absinthe, which we learn was invented in 1792 by French pharmacist Pierre Ordinaire.

With a disposable lighter, Mr. Hudson lights the spoons. As the alcohol burns off, he drips tiny balls of flaming sugar into his glass of absinthe. “You have to do it slowly. Otherwise, the glass catches on fire,” he says. He claims the technique increases absinthe’s hallucinatory power by raising its temperature.
Suddenly, trouble strikes. The reporter pours in the flaming sugar too quickly. His glass ignites. He tries to cover the glass with his hand to extinguish the fire. But it is hot, he pulls back, and the rim of the glass, covered with sugar, sticks to his palm. As he shakes it off, the glass spills. The table and his hand become covered in a beautiful blue flame. “I’ve never seen that before,” Mr. Gray says, as he removes his sweater to douse the budding conflagration. (7)

Or about how major tobacco producers use ammonia to hook smokers, published in the face of vehement denials by what was then still known as Big Tobacco.

Leading U.S. tobacco companies enhance nicotine delivery to smokers by adding ammonia-based compounds to their cigarettes, according to two major internal reports by Brown & Williamson Tobacco Corp.

The $45 billion tobacco industry vehemently denies that it seeks to keep smokers hooked by increasing nicotine levels in cigarettes. But the confidential reports obtained by this newspaper indicate that, while cigarette makers may not bolster nicotine content per se, most are adding chemicals that increase the potency of the nicotine a smoker actually inhales. (8)

Or whether the U.S. bombed the right target:

Some U.S. allies and Washington officials still doubt the U.S. hit a legitimate target, and the full truth of El Shifa, wrapped in the divisive politics of antiterrorism, may never be known. The hardest evidence is a scoop of soil, taken near the plant and judged by the U.S. to contain a chemical used to make nerve gas. But other evidence becomes murkier the closer you look.(9)

Or about the state murder in China of Chen ZiXiu:

The day before Chen Zixiu died, her captors again demanded that she renounce her faith in Falun Dafa. Barely conscious after repeated jolts from a cattle prod, the 58-year-old stubbornly shook her head.

Enraged, the local officials ordered Ms. Chen to run barefoot in the snow. Two days of torture had left her legs bruised and her short black hair matted with pus and blood, said cellmates and other prisoners who witnessed the incident. She crawled outside, vomited and collapsed. She never regained consciousness, and died on Feb. 21. (10)

Or, what the heck, about how a thirty-one-year-old Chinese immigrant wed a powerful media baron and took on important, though unofficial, duties at a large public company. Here’s how: be sponsored by an American family, marry the soon-to-be-divorced husband, then leave him for a younger man soon after becoming eligible for a green card.

Mr. Cherry [the sponsor/husband] says he and Ms. Deng [now Mrs. Rupert Murdoch] briefly reconciled at one point, but they split for good when it became clear she was continuing to see Mr. Wolf [the younger man]. “She told me I was a father concept to her, but it would never be anything else,” Mr. Cherry recalls. “I loved that girl.”

Divorce records filed with the Los Angeles County Superior Court show that the Cherry-Deng marriage lasted two years and seven months. That was seven months longer than what was required for Ms. Deng to obtain a “green card,” allowing her permanently to live and work in the U.S. as a resident alien. Mr. Cherry says he and Ms. Deng actually lived together for “four to five months, at the most.” (11)

Handmaidens don’t write that.

My personal favorite will always be Susan Faludi’s masterpiece [12] on the human costs of leveraged buyouts.

On the Friday afternoon before the dismissals went into effect, Patricia Vasquez, a 14-year systems analyst, heard that her name was on the list. That evening, Mrs. Vasquez, a Safeway devotee famous for her refusal to take lunch hours, packed her service citations in a cardboard box and left looking pale and drawn. The next morning her two young children found their single mother on the bathroom floor, dead of a heart attack.

Was “Safeway” controversial? You bet it was.

The story, among other things, introduced us to Peter McGowan, better known today as slugger Barry Bonds’s enabler, who sold the company his family started to a buyout firm. We even meet McGowan’s mom, who clearly doesn’t understand high finance:

Will anyone get hurt? Mrs. Magowan pressed her son at the time, according to company staff members. Will anyone lose his job?

No Mom, Mr. Magowan promised, according to the staffers’ account. No one will get hurt.

“Yes, I was greatly concerned about the people,” Mrs. Magowan recalls today, in her mansion overlooking the San Francisco Bay. She declines to comment further.

In fact, 63,000 Safeway employees lost their jobs.

But the story also showed—as only the Journal could— that the buyout didn’t even do Safeway any good.

The public offering completed recently didn’t quite go as planned. The offering’s underwriters knocked the price down to $11.25 from the $20 a share envisioned last summer. Mr. Magowan himself concedes, “I think if we had known right at the start that this was the price that we would’ve gotten, we probably wouldn’t have come out with our offering.” He blames the much-publicized problems of other leveraged companies for unjustly tainting Safeway’s offering and driving away stock shoppers.

But some potential investors say that it was Safeway’s own financial condition that turned them off.

The company labors under an interest bill of about $400 million a year, a negative net worth of $389 million, and a remaining $3.1 billion in debt. The company’s net income was only $2.5 million last year (after accounting for nonrecurring expenses), down from $31 million the year before. Safeway lost a whopping $488 million in 1987, the first year of the LBO.

A large amount of capital improvement has been postponed, with such annual spending falling from an average $600 million to $700 million in the three years before the buy-out to an average of $300 million in the years since. The company estimates it must spend $3.2 billion on store remodeling and openings over the next five years. And Safeway now has few assets left that it can justify jettisoning.

Listen, Rupert Murdoch is a great deal-maker, innovator, crockery-breaker. I’ll even throw in heart-breaker and love-taker. Is he a great story himself? Yes. Has he on balance helped media more than he’s hurt it? I have no idea, but I’m willing to concede the possibility. He should live to be a hundred and thirty.

But, really, is Murdoch a great newspaperman?

Under News Corp., the Journal doesn’t do Wendi Deng, Falun Dafa, or the 2007 China Pulitzer series.

A lack of pollution controls has contaminated China’s soil, water and air with lead, mercury and other pollutants — and left millions of children with dangerously high levels of toxic metals in their blood. Making matters worse, much of the manufacturing that used to pollute the West has found a ready home in China, where environmental regulations are loosely enforced.

Murdoch dropped the BBC and the ex-governor of Hong Kong. Those stories don’t even get proposed, let alone published.

And anyone who thinks “Safeway” runs in a News Corp. paper is dreaming. With the risks it took, it wouldn’t be published today by anyone, for that matter.

And this is to say nothing about the issues raised and the actual people—Chen Zixiu, Patricia Vasquez and the unnamed woman who collapses on a pile of drumsticks—given voice in these stories.

But, surely, you say, everything else runs, especially the great Wall Street reporting, right?

I report. You decide. News Corp. was once a customer of Michael MIlken, who helped raise a crucial series of junk bonds that the company misleadingly booked as “shareholder funds”, aka equity. Milken was a powerful executive at—who remembers?— Drexel, the crew in footnote 3.

With all due respect to Murdoch, who deserves some, the stories won’t survive this combination.


1. Insider Trading: The Scandal Spreads —- Unhappy Ending: The Wall Street Career Of Martin Siegel Was A Dream Gone Wrong —- Disgrace of Arbitrager Was Self-Fulfilling Prophecy; It All Began With Bendix —- Dinner at the Boesky Estate
By James B. Stewart and Daniel Hertzberg,
Feb 17, 1987

2. Palace Intrigue: Courting the Queen Led to a Big Position With Leona Helmsley —- The Optometrist Checked In But Didn’t Check Out; Hotel Empire Is at Stake —- `I Don’t Trust Men Anymore’
By Peter Grant,
April 2, 2001

3.Drexel Group Bought Stock in National Can Before Buy-Out Move; But Big Board’s Watchdogs Found ‘No Connection’ Of Buyers to National Can How Regulators Fell Short Dubious Deals: How Drexel Group Acquired Stock In National Can Co. Before a Buy-Out Agreement
James B. Stewart,
July 15, 1988.

4. 9 TO NOWHERE
These Six Growth Jobs Are Dull, Dead-End, Sometimes Dangerous They Show How ’90s Trends Can Make Work Grimmer For Unskilled Workers Blues on the Chicken Line
By Tony Horwitz,
December 1, 1994

5. Mr. Edens Profits From Watching His Workers’ Every Move
By Tony Horwitz,
Same day

6. Heartbreaking Fight Unfolds in Hospital For Valdez Otters; Rescuers Battle to Save Them With Antitoxins, Prayers; Otter 76 Strains to Breathe
By Charles McCoy,
Apr 20, 1989.

7. In Prague, Absinthe Makes Heart Fonder, And Head Cloudier —- It Remains Illegal Elsewhere, But Enthusiasts Are Blind To Its Advertised Dangers
By Greg Steinmetz,
Dec. 24, 1996

8. ‘Impact Booster’:
Tobacco Firm Shows How Ammonia Spurs Delivery of Nicotine —- Brown & Williamson Papers Claim Wide Industry Use Of Additive in Cigarettes —- Inside `the Soul of Marlboro’
By Alix M. Freedman,
Oct 18, 1995.

9. After the Bombings:
The Difficult Search for `Truth’ —- Blasting Flap: In Sudanese Bombing, `Evidence’ Depends On Who Is Viewing It —- Dissident Fans Terror Links, But Factory Owner Says The U.S. Got It Wrong —- Worm Medicine in the Rubble
By Daniel Pearl,
Oct 28, 1998

10. A Deadly Exercise:
Practicing Falun Gong Was a Right, Ms. Chen Said, to Her Last Day — Cellmates Recall the Screams Of the Chinese Retiree Before She Died in Jail —`No Measures Too Excessive’
By Ian Johnson,
April 20, 2000

11. Work and Family
Meet Wendi Deng: The Boss’s Wife Has Influence at News Corp. —- Murdoch Spouse, 31, Has Come A Long Way Since Leaving China a Dozen Years Ago —- A Yale Connection in Beijing
(Bylines Withheld By The Audit),
November 1, 2000

12. The Reckoning:
Safeway LBO Yields Vast Profits but Exacts A Heavy Human Toll —- The ’80s-Style Buy-Out Left Some Employees Jobless, Stress-Ridden, Distraught —- Owner KKR Hails Efficiency
By Susan C. Faludi,
May 16, 1990

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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.