Barbarian at the Gate

David Carr on Rupert Murdoch's imminent takeover of the Journal. He may say nice things, but Murdoch's not one to lay off something he owns.

Rupert Murdoch, the thrill-ride version of the modern media mogul, delivered a particularly head-snapping jolt last week when the News Corporation said it intended to buy The Wall Street Journal and the rest of Dow Jones & Company for $5 billion. Now that some of the commotion has eased, it might be worth a few minutes to examine the proposal bearing in mind Mr. Murdoch’s unique business DNA.

¶ First, the deal will be made at some point, regardless of what the Bancroft family said last week. Brute-force capital, like flood waters, always finds a way to break through.

¶ Despite his allaying words to the contrary, Mr. Murdoch would operate The Journal, including its editorial operations, as he sees fit. As Mr. Murdoch himself has said throughout his relentlessly acquisitive career, he buys things to run things.

¶ There is business synergy in the deal — between the News Corporation’s proposed Fox Business cable TV channel and The Journal, for example. But far more important is Mr. Murdoch’s own version of synergy, which puts business, media and government all in a single vertical. Owning The Journal would give him a powerful leverage in all three.

¶ The price that Mr. Murdoch is offering — $60 a share — is a multiple of ego, not earnings. He may have some other super-secret plan to squeeze more value out of the company, but the deal would give him something that, for all of his stellar business achievements, he’s never achieved in this country: a seat at the gentlemen’s table.

The rest is details, juicy ones to be sure. For the time being, Mr. Murdoch’s task is a retail one, persuading the family to meet with him in a kind of creeping tender offer. Until he can tell rather than ask, he will assure them that his reputation as a meddler in newspapers is vastly overstated. He went so far as to suggest that an independent editorial board might be just the thing to calm jangled nerves.

He’ll need to do some soothing of the newsroom, too. “Everyone here is trying to do their jobs from under the ton of bricks that just landed on them,” one reporter said on Friday.

Yes, there synergy here. He's launching a Fox business network and owning the Journal's talent makes a nice fit, But the outrageous share price he's offering for a newspaper that's been a laggard in a business in which few newspapers are showing a product makes it pretty clear that this is more than just a business deal for Murdoch. Certainly he wants the cache of owning such a distinguished masthead, but he also wants control of a newspaper that is on every business and political leader's desk. The New York Post doesn't give him that. And keep in mind, the Post is a money loser, too, but it makes him a king maker in New York City.

Certainly the Ottaways know that.

Two members of the Ottaway family, a minority partner in Dow Jones & Company, released scathing statements yesterday saying that a takeover by Rupert Murdoch’s News Corporation would ruin Dow Jones and its crown jewel, The Wall Street Journal.

The controlling Bancroft family said last week that family members representing 52 percent of shareholder votes opposed Mr. Murdoch’s $60-a-share bid, a steep premium for a stock that had recently traded around $36. But their statement was vague, leaving it unclear whether family members objected to the price, to Mr. Murdoch or to a sale on any terms.

The Ottaways’ statements left no such ambiguity, questioning the journalism and the ethics of Mr. Murdoch and of News Corporation properties like the Fox News Channel and The New York Post, known for their right-wing political bent and racy tone.

James H. Ottaway Jr., a trustee for most of the family shares and formerly a longtime Dow Jones executive and board member, said, “Dow Jones has no good reason to be sold to anyone.” And the reputation of The Journal and Dow Jones for serious, accurate and objective work, he said, “would be damaged if Rupert Murdoch and his News Corporation take over Dow Jones,” he said.

“He has for a long time expressed his personal, political and business biases through his newspapers and television channels,” Mr. Ottaway said. The Post “regularly runs biased news stories and headlines supporting his friends, political candidates and public policies, and attacks people he personally opposes,” while at Fox News, “one man’s political opinions have become the editorial and news policy.”

He accused Mr. Murdoch of caving in to political pressure to advance his business interests, contrasting the actions of a News Corporation property, Star TV, in bowing to Chinese government censorship, with The Journal’s editorial page censure of Chinese human rights abuses. “I doubt its freedom to criticize the Chinese government would continue under Murdoch ownership,” he said.

The right answer to the News Corporation bid, Mr. Ottaway added, is that “Dow Jones is not for sale, at any price, to Rupert Murdoch.”

Attempts to reach a News Corporation spokesman yesterday were unsuccessful.

Mr. Murdoch wants The Journal in part to bolster the new cable business channel he intends to start this year, in competition with CNBC. He said in an interview early this year with The Journal that CNBC was too eager to report on scandals, and that his channel would take a more positive view of business.

That approach is disturbing, said James W. Ottaway, a son of Mr. Ottaway, who released a statement of his own yesterday.

“As an investor, I would be very concerned to live in an era of making investment decisions based on the Murdoch-filtered business information,” he said. “As a citizen, I would be afraid to live in a world where news is solely entertainment, and there is an agenda behind every story I read, watch or hear.”

The Bancrofts and the Ottaways are the sole owners of Dow Jones’ Class B stock, each share of which has 10 times the voting power of a regular share, and they also hold large numbers of the regular ones.

The Bancrofts are by far the dominant faction, with more than 64 percent of the shareholder vote owned by the family and its trusts. But the Ottaways, with more than 5 percent of the votes, are among the largest shareholders. And James H. Ottaway Jr., in particular, is a respected figure within Dow Jones and with the Bancroft family.

Murdoch is going to buy the Journal. He rarely misses when he aims at something. And then the reporting side of the paper will be just as bad as the opinion-giving side.