War at the Wall Street Journal (23 page)

Murdoch knew the reputation he had with the family: a meddler in news coverage; someone who used his papers to further his business interests; an apologist for China's repressive regime. He knew that to get to Dow Jones, he needed to woo the family. To woo them he needed to rehabilitate his image. He gave a meandering introduction, praising the Bancroft family and everything they had protected over the years. His advisers had coached him in the importance of flattery. In an uncharacteristic moment of self-analysis, he ventured an acknowledgment of his past. "I've made some mistakes," he said quickly. After a brief pause, he recovered: "But it's worked out pretty well in the end."

With a boyish face and closely shorn dark hair, James arrived almost two hours late. He had delivered a speech that morning in London at a breakfast to benefit the charity Jewish Care. It was a commitment he couldn't cancel, so even though the meeting with the Bancrofts had come up at the last minute, he finished his speech in the morning in London and jumped on a private chartered plane right after breakfast to make his way to New York. A Harvard dropout, James had rebelled early (and smartly, his siblings thought) from the family business. He left Harvard, where he served on the editorial board of the satirical
Harvard Lampoon,
and then started up an independent hip-hop music label, Rawkus Records, with two high school friends. His father purchased the label in 1998, showing that for Murdochs, rebellions could end peacefully.

James was now firmly back in the fold. Prior to becoming CEO at BSkyB, James had been chairman and chief executive of News Corp.'s Asian satellite television business, Star TV. He had begun to think of how to make the family business last beyond his father, who had defined News Corp. through his opportunistic dealmaking and relentless personality. The senior Murdoch had lived through tougher days and reveled in provocation. James's business jargon made him seem un-Murdochian. "Pop," as he called his father, had never adopted such talk.

Once James arrived at the meeting, he walked the length of the mammoth conference room, past the Bancroft camp, to give his father a hug. To Leslie Hill, such overt expressions of affection, particularly in this kind of business meeting, smacked of showmanship. She knew the stories of the Murdoch family's rifts from years earlier when Murdoch's marriage to his much younger third wife, Wendi, divided his family. A skeptic by nature, she didn't quite believe the father and his son were as close as they were letting on.

The meeting continued, and halfway through what had been a polite gathering, Leslie began questioning Murdoch about China. Murdoch's reputation for sacrificing journalistic priorities to advance his business interests was exhibited nowhere better than in his dealings with China. Both the elder and younger Murdoch in the room that June afternoon had played a role in shaping that unfortunate reputation.

The elder Murdoch had spent considerable time in China since he visited Shanghai in 1997 and met his future wife, Wendi Deng, then a junior News Corporation employee based in Hong Kong. Wendi had served as his translator, and within two years, Murdoch had left his second wife, Anna Mann.

His initial business forays into China were less successful. Shortly after he bought a majority stake in the satellite broadcaster Star TV in Hong Kong for more than half a billion dollars in 1993, he made a speech in London that enraged the Chinese leadership. In it, he said Orwell was wrong. Mass communication would not subordinate the individual. On the contrary, he told his audience: "Advances in the technology of telecommunications have proved an unambiguous threat to totalitarian regimes everywhere." He was speaking, of course, of Star, which could beam programming to every corner of China. The remark (which Murdoch later said was written for him by Irwin Stelzer, the neoconservative U.S. economic and political columnist for Murdoch's
Sunday Times
of London) cost him dearly. Chinese premier Li Peng, enraged by Murdoch's comments, promptly outlawed private satellite dishes, which had once proliferated on China's rooftops. Murdoch rented a house in Hong Kong to get closer to his target and tried to make amends. His HarperCollins book publishing unit published a biography of Deng Xiaoping, the retired leader of China, written by his daughter, Deng Rong. To celebrate the book, which mainly recycled propaganda about Deng, Murdoch threw a lavish book party at Le Cirque. Star TV overhauled its programming to suit Chinese tastes. In 1994 it dropped BBC News, which had frequently angered Chinese officials with its reports on mainland affairs. (Murdoch insists that the decision was made for business, not political, reasons.) In a 1999 interview with
Vanity Fair,
Murdoch said of the Dalai Lama, whom the Chinese government considers a criminal, "I have heard cynics who say he is a very political old monk shuffling around in Gucci shoes."

James Murdoch, who ran Star TV from 2000 to 2003, joined in. He had a history of his own on these topics. In a speech in Los Angeles in 2001, James attacked the Falun Gong. That same year, the
Journal
won a Pulitzer Prize for its coverage of China's brutal suppression of the group.

Leslie knew about this history, and her mind focused on a letter written the previous month by the
Journal
's seven Pulitzer Prize–
winning reporters in China that urged her family not to sell the paper to Murdoch. It read:

 

We are correspondents who report from China for The Wall Street Journal, and we are writing to urge you to stand by the Bancroft family's courageous and principled decision to reject News Corp.'s offer to acquire Dow Jones & Co.

There are only a handful of news organizations anywhere with the resources and the integrity to pursue the truth in matters of national and even global importance. Thanks to your family's committed stewardship, the Journal is at the head of this dwindling group.

Our China team won the Pulitzer Prize for international reporting this year for a series of stories detailing the consequences of China's unbridled pursuit of capitalism—for China and for the rest of the world. Many of those stories shed an unflattering light on the government and business interests.

The prize is a reflection of the Journal's substantial investment in covering what is perhaps the biggest economic, business and political story of our time: how China's embrace of markets and its growing global role are reshaping the world we live in. It is an important example of the coverage that we fear would suffer if News Corp. takes control.

News Corp. Chairman Rupert Murdoch has a well-documented history of making editorial decisions in order to advance his business interests in China and, indeed, of sacrificing journalistic integrity to satisfy personal or political aims.

Mr. Murdoch's approach is completely at odds with that taken by your own family, whose unwavering support of ethical journalism has made the Journal the trusted news source it is. It is fair to ask how News Corp. would change the Journal's coverage.

In 2001, for example, our colleague Ian Johnson shared the Pulitzer for international reporting for his articles about the Chinese government's sometimes brutal suppression of the Falun Gong spiritual movement.

Under Mr. Murdoch, these articles might never have seen the light of day. That year, Mr. Murdoch's son, James, the CEO of Brit
ish Sky Broadcasting, delivered a speech in California echoing the line of the Chinese government in terming Falun Gong a "dangerous" and "apocalyptic cult," which "clearly does not have the success of China at heart."

Newspaper accounts of the speech say that James Murdoch criticized the Western media for negative coverage of human-rights issues in China, concluding that "these destabilizing forces today are very, very dangerous for the Chinese government."

We believe that it is important for all of us—from reporters and editors to you, the owners of the company—to keep constantly in mind the fact that the Journal is an institution that plays a critical role in civic life. We take pride in knowing that Journal readers trust us to uphold these principles, even in the face of risks.

Your family established and is now entrusted with a unique and important institution. Safeguarding it is a responsibility that you have fulfilled admirably for decades. Yours is the kind of stewardship journalists on the ground in China will require in the years to come if they are to accurately frame one of the world's most critical news stories. We have enormous respect for your continued willingness to defend the journalistic standards so important to all of us.

 

Leslie felt an obligation to grill the mogul and, typically, broached the topic directly. "How do you deal with coverage of China given your substantial business interests there?" she asked. She spoke glowingly of the
Journal
's coverage of China. In praising
Journal
reporters' dedication to their craft, she invoked the death of Daniel Pearl.

Murdoch gave a rambling response and pointed out that the
Times
of London had done several stories critical of the Chinese government. James looked at his father and grew defensive of the old man. He was at a loss at what he was hearing. Here, the Bancrofts were acting like an august group on the other side of the table. "He has more work experience in his pinky finger," James thought of his father.

James quickly jumped in, speaking in his staccato tone. "Look, we were the only broadcaster in China to broadcast September 11 live," he said. "We were the only broadcaster to cover the Taiwanese election," he added. "We did it carefully, but we did it." News Corp. had journalists risking their lives all over the world, he thought to him
self. He felt that American journalism smacked of self-importance. He remembered the
New York Times's
Jayson Blair debacle in 2003, when the young reporter fabricated details and plagiarized others' work in his coverage of significant news events. When the
Times
assigned Blair to cover the story of the rescue of the prisoner of war Jessica Lynch, Blair co-wrote a story full of details from Lynch's home in Palestine, West Virginia. It turned out that Blair never went to Palestine, and his entire contribution to the story consisted of rearranged details from other wire services and papers. What James remembered from the incident was that nobody from the Lynch family did anything, even after they saw the story in the
Times
and knew neither of its authors had ever been to their home. To him that showed how far out of whack journalists' impressions of themselves were from those of the broader public. Leslie, he thought, was championing the same misguided self-importance. He didn't share the thought out loud. Instead, he went on to outline News Corp.'s business strategy and his personal view about opportunities. "If it doesn't make money, we don't do it," he said.

Then, perhaps to soothe fraying nerves across the table, the elder Murdoch reiterated his willingness to set up an editorial board as he had done with the
Times
of London twenty-five years earlier. He took a copy of the editorial agreement he had given the
Times
and pushed it across the table. In it, he proposed a board whose members were partly chosen by himself, a structure that had allowed him to force out the
Times's
editor, Harold Evans, shortly after Murdoch took over the paper.

Elefante then handed over a copy of the family's proposal. Murdoch perused the document as Elefante ran through its main points. The Bancroft proposal suggested that the initial members of Dow Jones's editorial board be chosen by the Bancroft family, who would choose their own successors in perpetuity. It was their way of cementing control.

Murdoch furrowed his brow. Clearly, he didn't like the agreement in front of him. Under the current configuration of the
Times's
board, he explained, he could appoint the paper's editor but the editor would need to be approved by the independent board. Similarly, he could not remove the editor without the concurrence of the board. There was a wide distance between the two sides, but they continued to look for areas where they could compromise. Encouraged by the progress, Lipton said, "Maybe we should get back together tonight and see if we can't get this done."

The comment surprised Dow Jones chairman Peter McPherson, who thought the meeting was set up as a way for the Bancrofts to get more comfortable with Murdoch, not for them to sign any agreements or commit to any portion of a deal. He thought this meeting would be the first of many. So did the Bancrofts. Here, Lipton, supposedly the Bancrofts' adviser, was trying to hijack the process, McPherson thought, and get the deal done that day.

McPherson quickly suggested the two sides take a break and meet again in an hour and a half at about 5:00 p.m. The two sides agreed to do so, and Murdoch, with his son and his associates, left the room. "I don't think we want to sign anything today," McPherson told the family once they were alone. "I agree," said Elefante. "We have time to figure this out." Without saying where he was going, Chris left the building while his cousins, McPherson, and Elefante stayed in the lawyer's office to continue to look over the editorial agreements. His cousins, paranoid about press leaks, feared Chris had left to go talk to reporters. In fact, he left to get a break from his family and make some business calls. He had started to think about how he could come up with enough money to buy out his family members and preserve Dow Jones's independence. The meeting reconvened, but only briefly, and the two sides left Lipton's office without committing to anything. The Bancrofts would take a look at the
Times
of London proposal and then spend some time coming up with a revised proposal of their own for News Corporation. When Murdoch left the building that day, photographers and television cameras greeted him. He told them blandly that after more than four hours in the conference room together, "we had a very long, constructive meeting, and we've both gone away to consider both sides." He and his cohorts went to a cigar bar around the corner afterward to celebrate.