War at the Wall Street Journal (22 page)

Zannino was concerned that the family might reject the offer out of some unrealistic hope for independence for the
Journal
under News Corp. There could be a conflict, Zannino warned, if the highest bidder was somehow unpalatable to the family. "We have to look at it through a lens of the practical, not the perfect," he said. Brauchli flinched at this. While Zannino had maintained a public stance of neutrality on the deal, it was clear to Brauchli that he favored it. Zannino offered the listeners this final thought, cementing in Brauchli's mind Zannino's pro-deal stance: "There is something to be said for being part of a larger enterprise in terms of access to capital, access to platforms. This isn't the end of the world."

Just as the call was about to end, Brauchli asked Crovitz and Zannino to stay on. After the others had hung up, he told them that the recently retired Paul Steiger would oversee the coverage of the Dow Jones deal for the
Journal.
At last, he could delve into the story he had necessarily avoided for so long. Brauchli was recusing himself to focus on editorial protections for the paper. He wanted be involved in the question of editorial independence. The coming weeks would put him on conference calls with his CEO and publisher, shaping the future of his newsroom under a potential new owner. Brauchli gravitated to these power sources. But he was still ambivalent about his comrades in arms. "One other thing I want us to be very careful about," he said to them, "is the inherent conflict between the obvious interest of some people, and possibly the board, in getting a deal done at a high price, and the need to ensure absolutely that we are coming up with the best possible structure for preserving the
Journal
's editorial integrity, even if it might lead the family to a conclusion the board might not agree with."

Crovitz concurred. Zannino appeared patient but was tiring of this chatter. What did these people understand, he wondered, about the pressure they were now under? The world had fundamentally changed. Fewer people were reading newspapers. Advertisers were buying fewer ads. Nobody had figured out the Internet. These could be Murdoch's problems in one fell swoop. Zannino told the two men that the best way to create the strongest possible structure was to act quickly to get some feedback to the family. He knew it would be corporate suicide if the Bancrofts turned the offer down, especially now that they had opened the door to a sale. Shareholders would sue the company in droves, and Zannino would be stuck at the helm of an embattled firm with no way out. "Life will be different and change will come" under Murdoch, he told Brauchli and Crovitz. But "it's a lot more fun to grow a business than to shrink it by a thousand cuts." With that, the men signed off, each to his particular set of strategies and objectives.

The following morning, Brauchli arrived back in the
Journal
newsroom and joined the news meeting in the small conference room next to his office to listen to the buzz of editors planning the day's big story: how the Bancroft family didn't know what it was unleashing with its announcement the previous day. Amid the chatter, an editor asked the group if there was a committee being formed to study how the editorial independence of the
Journal
might be protected. Brauchli was silent, realizing he had now entered a different sphere and wasn't really part of the newsroom anymore, at least not on this story. No one appeared to notice his silence and he quietly slipped out of the room. He didn't want to sit with his colleagues, withholding information they needed.

 

Over the course of the next several weeks, the number of people who became interested in the "editorial independence" of the
Journal
grew. Some were genuinely concerned with the independence of the
Journal,
but many others wanted a structure that would suit their own purpose. Zannino wanted the structure to work because he saw it as a means to getting a deal done; Brauchli wanted the structure to work because he wanted to protect his job and the paper he had inherited; Leslie Hill wanted the structure to work so she could stomach selling the company to Murdoch, even for a moment. Murdoch knew from experience that these structures were easy to establish and even easier to circumvent. As the inexorable progress of the deal machine moved forward, the editorial agreement became a useful distraction for the Bancrofts and the
Journal
newsroom. Crafting the agreement presented an illusion of control to those with little of it. They scarcely imagined how the
Journal
would evolve in the coming months, but for now, the Bancrofts appeared willing to believe anything Murdoch put on paper.

T
HE RAINY MONDAY
following the family's inadvertent statement, Murdoch got the meeting he requested. The gathering would bring him another step closer to his prize. Though Murdoch wasn't prone to much planning, he enjoyed musing about what he would do with various properties he didn't own. He had discussed the future of the
Journal
with his colleagues and fantasized about owning it for years. He had many changes he wanted to make in the paper, to make it more to his liking.

Those plans weren't what he would stress to the Bancrofts that rainy June 4 afternoon. He wanted to impress upon them that he, too, understood the importance of family. He asked James, the only one of his four grown children still employed at a News Corp. business, to join him. Murdoch's younger son quickly agreed. James was then the CEO of British Sky Broadcasting, a business that was 39 percent owned by News Corporation. He had gotten the job four years earlier when his father effectively appointed him to the post, a move that the British business establishment greeted unenthusiastically. The Brits, though ever loyal to the dictates of their classes, were not as friendly to the nepotism James's appointment represented.

Murdoch also asked two of his deputies, News Corp. general counsel Lon Jacobs and chief financial officer David DeVoe, to come with him to meet the Bancrofts. The two men were intimately involved in every step of Murdoch's negotiation of this deal. As much as Murdoch relied on Jimmy Lee to get the transaction done, his most trusted advisers were inside the News Corporation "family." Both men were part of the "Office of the Chairman" at News Corp., which meant they were in contact with Murdoch every day, many times a day. Particularly during a deal such as this one, where Murdoch's attention focused exclusively on his target, his underlings followed his gaze. On call at all hours, both DeVoe and Jacobs were fiercely loyal to Murdoch and were indispensable for meetings like this one. They were also there to make sure Murdoch didn't promise anything he would regret. While handlers were typically ineffective at reining in the "boss," as Murdoch was known inside the company, even Murdoch knew enough about himself to want these men to protect him from his own conversational meanderings.

On the Bancroft side was the legendary deal lawyer Martin Lipton. Three years earlier his firm had worked for News Corp.'s independent directors as part of a plan to move the media conglomerate's home base from Australia to the United States. He knew the players opposite him better than he knew the Bancrofts, who had hired him because they wanted "the best." He was hosting the proceedings that day. In his short professional biography posted on his firm's Web site, Lipton touted the fact that in 1982 he created the shareholder rights plan ("poison pill"), which was described by Professor Ronald Gilson of the Columbia and Stanford law schools as "the most important innovation in corporate law since Samuel Dodd invented the trust for John D. Rockefeller and Standard Oil in 1879." Lipton had done scores of deals and recognized a family in crisis. He foresaw that this particular deal was going to end with the family losing the company, and it was only a matter of how messy the process was going to be. He thought the sale to Murdoch could be an efficient exit for the Bancrofts, who were becoming unruly and too divided to be effective stewards of Dow Jones. But he was careful to keep his views from the family. Even though he was working for the Bancrofts, he had been talking to Murdoch, assuring him that the family would come around.

The meeting started haphazardly. Even though Dow Jones's chairman, Peter McPherson, had arranged to arrive early and meet for a few minutes with the Bancroft directors before going into the meet
ing with Murdoch, the driving rain disrupted the travel plans of most of the attendees. Because of the weather, people trickled in just a few minutes before the 1:00 p.m. start time. They filed upstairs to the main conference room Lipton had arranged for them and waited.

Leslie Hill arrived first. She had purposely come early to avoid any reporters who might be outside the building, taking a cab straight from Pennsylvania Station, where her Acela train from Washington, DC, had deposited her that morning. Her thoughts about the offer were complicated. While she wasn't particularly interested in selling, she initially thought the offer was exactly what the family needed. It might, she hoped, shake them out of practicing what she called "ancestor worship." She, like her brothers, had long been a critic of Dow Jones's management and Peter Kann. Murdoch knew this and initially believed she could be an important ally in convincing the family to sell.

Leslie had been interested in the meeting with Murdoch and felt the bid might wake up her cousins to realize they needed to focus on the company, demand more from management, and ask the kinds of questions Leslie liked to ask, the kind that were often followed with awkward silences and uncomfortable stares from family members and board members alike. She had grown so frustrated with Dow Jones's poor management under former CEO Peter Kann that she told people, "The only way to get rid of the guy is to sell the company!"

Lisa Steele, Leslie's cousin, and Michael Elefante arrived together at the Murdoch meeting from the airport. They had taken the shuttle from Boston. They sat down next to each other on the long side of a mammoth table in the main Wachtell, Lipton conference room. Steele had joined the Dow Jones board in 2001 and things had gone downhill ever since. The terrorist attacks of September 11 and the murder of Daniel Pearl were personal tragedies compounded by her growing sense of foreboding about the livelihood of many of Dow Jones's staff. The technology bubble that had buoyed the company's performance for so long had burst, and the firm suffered difficult layoffs and a dramatic curb in capital spending. Steele watched all the events with dismay and felt that while the company had been able to maintain high journalistic standards, it had less money to invest in important projects even as it increased its debt load. Steele saw the company shrink in what one of the Dow Jones executives told her was "a game of scale."

Steele had grown frustrated by the leaks within her family and on Dow Jones's board. What were meant to be private discussions turned up in the pages of the paper her family was supposed to protect. While she understood the reporters were doing their jobs, she grew angry at the breach of confidence, though she, seemingly unaware of the damage she could do to individual reporters' careers, told Rich Zannino about visits she received from
Journal
reporters lobbying her to oppose the deal.

She had been spending a lot of time with her sisters talking about the family business and was deeply affected by a day she had spent at the
Journal
's headquarters in mid-May, when she spoke to the gamut of
Journal
managers, both inside the newsroom and out. She met with CEO Zannino and
Journal
publisher Gordon Crovitz, retired
Journal
managing editor Paul Steiger, Marcus Brauchli, and Clare Hart. At the end of that day, she couldn't find a single person who would tell her that the company would be better off not selling to Murdoch. "If these people are not against the sale, and in fact harbor great concerns about the future of Dow Jones as an independent company, then how can we turn this offer down?" she thought. She was also convinced by Mike Elefante's evolving view that Dow Jones needed to combine with another firm. Two weeks before in Boston, she had, again with tears in her eyes, told her cousins that her family didn't have the appetite for risk that an independent Dow Jones would require. It was a wrenching decision for her and her sisters, who descended from the mild-mannered Jane Cook and were, for years, blindly loyal to the
Journal.

While they were still alone, Lipton passed out the family's draft of an editorial agreement they planned to present to Murdoch. This was the cage they planned to build around him if he took over the
Journal.
The agreement limited his ability to use the Dow Jones name. It protected the jobs of the existing publisher, managing editor, and editorial page editor at the
Journal.
It laid out how the family could sue News Corp. if Murdoch intervened in the operation of the paper. Each point reached far beyond what Murdoch had suggested in his initial letter to set up something "exactly along the lines" of what he offered the
Times
of London when he bought that paper twenty-five years previously.

Murdoch, Lon Jacobs, and David DeVoe walked into the meeting together and greeted the assembled crowd. The room dwarfed the attendees, and after exchanging pleasantries, Lipton invited them into an adjacent room to serve themselves lunch from the elaborate buffet the law firm had set.

As the group was filing into the other room, Christopher Bancroft arrived. The third member of the Bancroft family on the board, Chris was the most difficult to gauge—both for his relatives and for Murdoch. He had flown in from Denton, Texas, that morning. Leslie was furious with what she saw as his flakiness and inattention.

When the group sat down for lunch, the two sides faced each other. Murdoch opened the meeting with a welcome to the Bancrofts and praise for the
Wall Street Journal.
Because of the size of the room and the width of the table, at least ten feet across, his voice seemed faint to the Bancrofts on the other side. They leaned in closer to try to decipher what he was saying. He looked old, at least to Elefante, who was struck by how unassuming this giant of a businessman appeared in person.