the audit

The WSJ‘s Little Committee That Failed…

To protect the paper’s editorial independence
April 24, 2008

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So much for the editorial side agreement that was supposed to protect The Wall Street Journal’s editorial independence from News Corp. meddling.

And so much for the five luminaries who make up the committee designed to enforce the agreement.

The rapid ejection of Marcus Brauchli as managing editor of the world’s leading financial publication—like a dead dugong blown from a didgeridoo—reveals the value of that particular bureaucracy.

Five Mr. Bill dolls molded with facial expressions of concern and dismay would have done as well. Oooh nooo! There goes Marcus. Oooh!

The fact is, however, that the committee’s powers are broader than cynics—and there are so many of them—would have you believe, and that the committee, led by Chairman Thomas Bray, a former Detroit News editorial page editor, in fact does have sign-off responsibilities on this particular staffing change.

Other committee members are: Lou Boccardi, former CEO of The Associated Press; Jack Fuller, former president of Tribune Publishing; Susan Phillips, dean of the George Washington University business school; Nicholas Negroponte, founding chairman of M.I.T.’s Media Lab. Each is paid $100,000 a year, plus expenses.

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Efforts to reach Bray and other committee members were unsuccessful. A Dow Jones spokesman declined to comment.

Under the deal’s terms, the committee has rights of approval not only over hiring and firing of the M.E., but over material changes to the terms and conditions of his employment.

The language is here, with my emphasis:

The Special Committee shall have rights of approval over…

(i) Appointment and removal of each of the Editors (including any material changes in the terms and conditions of employment of each such Editor that could give rise to constructive termination, such as a material reduction in compensation, relocation of principal place of employment, material change in duties or responsibilities and the like); and

(ii) Changes to the authority, reporting relationship and consultation rights

(“Consultation rights” are extensive and include Brauchli’s power to hire and remove subordinates and control the news budget. “Editors,” uppercase, refers to the managing editor, the editorial page editor, and, for some reason, the head of Dow Jones Newswires, all of whom are supposed to be protected.)

The fact that Brauchli didn’t object, and in fact is rumored to be handsomely compensated in return for his resignation, does not let the committee off the hook, if that’s what it is looking for.

Its duties are not to Brauchli, but to the newspaper, and to readers, for that matter. And if changes to the “authority, reporting relationship and consulting rights” were not apparent from the huge changes brought by the installation of Robert Thomson as Brauchli’s boss, which committee members could have learned from reading the newspaper they are supposed to protecting (1), then it was clear this week, when Brauchli exited and said in a memo to the staff that he had “come to believe the new owners should have an editor of their own choosing.”

If it had any doubts, the committee even has the power to hire lawyers and investigators if needed “in connection with performing its duties and responsibilities, or exercising its rights,” the deal says.

In his statement, Brauchli characterizes the editorial deal narrowly, saying the document was “designed to protect our independence” and “to block commercial or political interference in our journalism.” He says, “new management scrupulously has avoided imposing any political or business viewpoints on our coverage and rigorously has enforced the code of conduct.”

That may be true, but the document doesn’t actually include any broad statement of purpose. It doesn’t say why it was “designed.”

One could much more easily make the case that the document was “designed” to do what it says: give an outside committee veto power over “changes to the authority, reporting relationship and consultation rights” of the three “Editors,” including Brauchli.

Again, consultation rights are extensive and mean “all news decisions” and “use of staff.”

If one wanted to depart from the four corners of the text, as Brauchli’s statement does, one could say the agreement is designed to give the managing editor the authority to run the news operation, which it obviously is.

The committee clearly also misunderstands its own role, as the Journal reported:

In a statement late Tuesday, committee members said they’d questioned Mr. Brauchli about his decision, and he had assured them that his exit had “nothing to with any integrity issue at the Journal.” The committee said it would “exercise its responsibility in connection with the selection of a successor.”

Yes, but the departure had everything to do with his job being changed wholesale, which is the committee’s key, probably sole, responsibility.

The agreement is cleverly written. It says, for instance, that a change to the M.E.’s job has to be such that “it could give rise to constructive termination,” and so, if one was looking for a way out, one could argue that since Brauchli agreed to leave, the change doesn’t rise to the standard.

But it doesn’t take an employment lawyer to see that of course the changes to Brauchli’s job easily surpass that standard; Brauchli says as much in his statement: News Corp. wanted to run things its way.

It also says the M.E. would “continue to report to the publisher,” so, I suppose, one could argue that Brauchli was never supposed to be more than a functionary.

But that’s not the deal’s clear intent, and the deal doesn’t say that. Moreover, Thomson has radically transformed, or materially changed, the publisher’s job, which materially changed the M.E.’s job.

I mean, how clever is the committee trying to be here?

The fact that Brauchli didn’t object means, apparently, that the committee can argue that it is not required to act. But, nothing—nothing at all—prevents it from acting to preserve its own prerogatives under the deal. if you’re a committee
with one job in life, why not do it?

Now, of course, cynics will say that this committee was a Potemkin Village all along, and that the luminaries have no interest in protecting the “authority, reporting relationship and consultation rights” of the world’s most important financial news editor.

What does the committee say?

1. “News Corp. Duo Set To Lead Dow Jones As Zannino Resigns”

By Sarah Ellison
7 December 2007
The Wall Street Journal

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.