War at the Wall Street Journal (24 page)

The meeting would turn Leslie Hill completely against Murdoch. She felt he had dodged her questions about China. She didn't trust him. She would spend the rest of the summer scouring the East Coast trying to find alternatives to Murdoch.

I
N THE ABSENCE OF
any real power over the deal proceedings, people started grasping at Murdoch's promise of editorial protections for the
Journal.
The morning after Murdoch's meeting with the Bancrofts, Marcus Brauchli picked up the
Journal
at 5:30 a.m. on his way to the gym, gazing with satisfaction at the four-thousand-word story stripped across the paper's front page, outlining the many ways in which Rupert Murdoch had interfered with his newspapers and editors throughout his career. This kind of story was, he thought, what it meant to work at an independent paper. He then read the
New York Timess
account and his own paper's account of the previous day's meeting, frustrated that the
Times
's was more complete. Especially with this story, he wanted his paper to beat the competition every day.

His frustration grew as he realized the Bancrofts had walked into the meeting with Murdoch without any representative from the newsroom, or even an executive who might have understood how the
Journal
operated. "There's such hypocrisy in talking about editorial independence and making it an issue," he thought, and then not worrying about how it is actually implemented. Eager to mine his own sources of information and exert some influence on the proceedings, he texted Robert Thomson. The two had a competitive but friendly rapport, each respectful of the other's intellect and talent. Brauchli wanted to tell Murdoch that whatever the Bancrofts had said in the meeting, they had done it without the support of the newsroom. In his text, Brauchli was almost painfully obscure: "What if Lord Macartney had visited the Qianlong Emperor without having the Parliament who make the laws and organize society behind him?" It was the typical kind of intellectual jousting Brauchli liked to engage in. He was referring to Britain's first envoy to China, who tried, and failed, to establish trade relations with the Chinese. His message: What if the representatives in the meeting yesterday didn't represent the
Wall Street Journal
journalists responsible for putting out the paper? Thomson, married to the daughter of a general in the Chinese army, kept up effortlessly: "The Emperor would assume that the King's emissary represents the King, and the parliament is His Majesty's." Thomson's response was clear: Murdoch would not see it as his problem if the Bancrofts agreed to a deal that the journalists didn't like. Brauchli attempted to extend the now tortured analogy by saying, "Of course the rifts of the Macartney mission doomed it and later produced the Opium Wars that weakened the Qing." Even as he typed it, he knew his attempt was too obscure. Brauchli knew, too, that Thomson had little sympathy for the
Journal
newsroom.

 

Leslie Hill wasn't going to let this slide. Fresh from the meeting with Murdoch, she felt disgusted by the man whose company she had just left and increasingly annoyed by her cousins. Lisa followed Mike Elefante blindly, she thought. Chris was impossible to read and seemed not to know his own mind. She didn't like Murdoch's response to her questions in the meeting, nor did she trust that he was even telling the truth when he spoke. She had asked him three different ways to explain how he would treat China once he owned the
Journal,
and he kept dodging the question, she thought. She didn't trust Marty Lipton, who seemed ready to sign a deal before they had even begun negotiating. Elefante was doing his best, but he himself admitted that doing deals wasn't his specialty; he was, in the Bancrofts' long tradition, leaving it to the "professionals." Meanwhile, her brothers were agitating to explore a sale. Her brother Tom said it most succinctly: the family had stopped benefiting from the company and the company had stopped benefiting from the family. It was time to part ways.

Leslie wasn't entirely convinced of that point, especially now that she had met Murdoch. Her first step was going to be to talk to Marcus Brauchli. She wanted to know more about the editorial agreement he had mentioned. An editorial agreement offered a tantalizing possibility for her family. It could allow them to extract themselves from the disastrous business of Dow Jones and newspaper publishing and still feel they had played a role in preserving the integrity of one of the nation's great papers. At best it would really protect the
Journal;
at worst it was a salve on a guilty conscience.

The family had little reason to believe any of Murdoch's promises to abide by the editorial agreement. Leslie knew what had happened to Harold Evans. Still, the Bancrofts wanted to believe. Leslie, tired of feeling as if she had been led around by the lawyers and executives surrounding her, was determined to take a leading role. "If we're going to protect these people, shouldn't we ask them how they want to be protected?" she asked herself. On June 7, the Thursday after she and her cousins had sat down with Murdoch, she spoke to Brauchli on the phone. Leslie had gotten a copy of the editorial agreement the Bancrofts were considering from Elefante and ran Brauchli through it. It didn't bear any resemblance to the agreement Elefante had given Rich Zannino, Brauchli told her. At that time, the flurry of potential agreements traveling among Elefante, Zannino, and others was almost comical. All of them felt they could come up with a structure that would keep Murdoch at bay. Leslie wanted to know if it was possible to give the editor of the
Journal
veto power over how the
Journal
brand would be used. She didn't trust Murdoch, she told Brauchli. He hadn't done much to win her over, and what charm he attempted, she found false. Brauchli told her Murdoch was like an escape artist. "We're all trying to put Murdoch in a straitjacket, wrap him in chains, put him inside a lead box, padlock it shut, and drop it into the East River," Brauchli said. "And five minutes later he will be standing on the bank, smiling."

 

While the Bancrofts worked and reworked the editorial agreement during the month of June, Murdoch waited. He became frustrated with the prolonged time frame. "The final approval is in the next two, three weeks' time or not at all," he told Reuters in late June during a trip to Warsaw. "Everything is done. We are just waiting for a final approval of the Bancroft family." He made the pronouncement just as due diligence was beginning on the deal, a sign of how little the business results of Dow Jones—good or bad—were likely to sway his resolve to own the company.

Almost daily, advisers for the Bancrofts and Dow Jones sent (hopeful) signals that the family was about to send their revised version of the editorial agreement to News Corporation. And every day, the agreement stayed mired in the back-and-forth among Leslie Hill, Elefante, Brauchli, Crovitz, Stuart Karle, the
Journal
's general counsel, and any number of consulting players who were brought in to weigh in. Dow Jones's chairman, Peter McPherson, had started looking for individuals who might people the editorial board. He was consulting Peter Kann. Elefante was busy acting as the intermediary between Zannino and the family board members. He was talking to Jimmy Lee, News Corporation's banker, who would call him daily to check on the family's progress.

Three weeks after they met with Murdoch that rainy June afternoon, the family just gave up. Exhausted from the to-ing and fro-ing over the structure of the editorial independence agreement, the Bancroft directors handed their negotiating power over to Dow Jones's board. While they had once been set on maintaining control over the discussions with Murdoch, their own internal weaknesses had only grown since they sat down with the aging mogul. After 105 years of ownership, the Bancroft stewardship of Dow Jones was over. All that remained was the signing of the papers.

It took just three days for the Dow Jones board, eager to see these proceedings come to a close, to send the agreement to News Corporation.

Marty Lipton, the Bancroft family's lawyer, had been telling the Murdoch camp for weeks that the proposal was forthcoming. Finally, at 3:00 p.m. on Friday, June 29, Rupert Murdoch received the call from Rich Zannino. "We're sending over the editorial independence proposal," he said, his voice relaxed and easy. "I think you're going to be happy with it." Murdoch alerted his entourage, who gathered for the momentous event. The day's proceedings were lent an air of siege, thanks to a burst pipe on the tenth floor that had flooded the three floors below. On Murdoch's eighth floor, dehumidifiers had been hum
ming and roaring for three weeks, and executives decamped to drier offices to escape the growing scent of damp and mold. The executives gathered around Murdoch—general counsel Lon Jacobs, corporate communications executive vice president Gary Ginsberg, and deputy CFO John Nallen—were drawn into the drama of the moment.

The fax, sent from Goldman Sachs, arrived in Lon Jacobs's office; it boded ill from the beginning. That it was marked for the attention of "Rupert Murdock" was the start of a series of absurdities Murdoch perceived in the document. He had offered the protections as a sop to the Bancroft family but never expected them to be so earnestly attached to the details. Such niggling was absurd, especially for a piece of paper he had little intention of taking very seriously. He knew the agreement could offer some protection for the
Journal
's reputation among the self-appointed media police, but he intended to change the paper and had said as much in an interview with the
New York Times
just two days after his offer became public. Unlike in an interview with the
Journal
a month later, he had been unscripted: "I'm sometimes frustrated by the long stories," he told the
Times,
adding that he rarely managed to finish some of the paper's longer stories. "I might put more emphasis on Washington," he said, and later confided that he was not a fan of the Saturday edition of the paper, which had been launched in 2005. Murdoch said that if it was legally possible, he would rechristen his planned Fox Business channel with the
Journal
name in it. His intentions were clear from the beginning, and what the Bancrofts were asking went far beyond what he was willing to offer.

As written, the proposal suggested that the Bancrofts would maintain a connection with the company through two board seats that would stay under Bancroft family control forever. Murdoch thought he had signaled his displeasure with that attempted power grab when they met weeks before. Furthermore, News Corp. would have to clear its nominations to the editorial independence board through the Bancrofts. News Corp. executives would have to check in with the managing editor of the paper and the publisher if News Corp. affiliates wanted to use the
Journal
name. The document suggested that the
Journal
's publisher retain authority—including budgets—over the news and editorial pages and be responsible for ensuring "that business operations do not interfere with journalistic and editorial integrity and independence."

Rarely did Murdoch allow himself to feel truly slighted. But this, if nothing else, tried his patience. He had been waiting for weeks and had begun to think that the deal, which seemed so certain at the outset, might not happen. He had taken hits in the U.S. media over the past two months at a level he hadn't seen since his take-over of
New York
magazine thirty years before. That Friday afternoon his underlings, the vaunted members of the "Office of the Chairman," which operated inside News Corp. like a cool-kids clique, gathered around to craft a response. Gary Ginsberg called
Time
magazine's Eric Pooley, who had been working on a story about the takeover effort. "You might want to come over here. This is going to be the moment of reckoning," Ginsberg said. As with all things Murdoch, there was an appreciation for the media's take.

Then Murdoch got on the phone and called Zannino back. He called Marty Lipton, the family's lawyer at Wachtell, Lipton, and Greg Lee, the banker handling Dow Jones at Goldman Sachs. He called his son James on a yacht in Valencia. He called Dave DeVoe, his chief operating officer, on his way to Albany. "Dave, you can put the $5 billion away."

Jacobs and Ginsberg hovered around Murdoch as he worked the phones, and Pooley sat by, noting the events. James, on an eighty-foot yacht waiting to watch the America's Cup, had to walk to the opposite end of the boat to field his father's calls and avoid being heard by his fellow revelers. He had been growing weary of what he saw as the constant barrage of negative press for his father and the company. A child of his generation, James was perhaps more sensitive to the barbs of the media than his father. In that moment, hearing the run-down of the Bancrofts' requests, he wanted his father to publicly take his toys and go home, leaving the Bancrofts to wallow in regret after the bid was withdrawn and Dow Jones's stock price plummeted.

His father almost listened. "If we clean this up to our satisfaction, the family will reject it," Murdoch mused aloud to his cohorts. "So why don't we just reject them?" His phone buzzed. It was Zannino. "Hello, Rich. I've read it," Murdoch said. "I don't know what you were thinking. Why would we be happy with this?" He told Zannino that the proposal was outrageous because it attempted to keep the Bancrofts in control of key aspects of the business and allow not only the managing editor, but the existing publisher, too, to call the shots on editorial independence under News Corp. The proposal was reasonable to anyone but someone who had an idea of the changes he wanted to make. "Oh, yes, we reject this," he said to Zannino.

Almost immediately, Ginsberg sat down to work on a withdrawal letter, previous versions of which had been drafted by Jacobs and James Murdoch. It was something he doubted Murdoch would use, but something that might serve to vent some of the frustration in the musty room. Ginsberg mustered his best posture of the aggrieved, one he had perfected during years in politics and a position he found quite effective. Though able to twist the truth when necessary, Ginsberg had managed over the years to perfect high-minded indignation if someone questioned his or his boss's honor. It could only have been mock fury, then, that fueled his creative energy.