Is it Time for a Wall Street Journal Rescue Buyout?

The Wall Street Journal is an historic and storied publication, known for top-quality journalism and meticulous reporting of facts relevant to financial markets and economic activity more broadly. It is a mainstay of American print media, and has long been known for honoring the bright line that must be drawn between editorial viewpoints and news reporting. Since 2007, however, it is owned by Rupert Murdoch’s News Corp., and not all of that legacy remains certain to everyone.

And Rupert Murdoch’s News Corp. is rapidly losing journalistic and commercial cachet, as the scandal over bribery and illegal phone hacking deepens. Now, at least three members of the Bancroft family, which sold the Wall Street Journal and other DowJones properties to Murdoch in 2007, say they would not have done so, were they aware of the corruption and illegal spying allegedly rampant at his UK-based tabloids.

According to ProPublica and the Guardian:

“If I had known what I know now, I would have pushed harder against” the Murdoch bid, said Christopher Bancroft, a member of the family which controlled Dow Jones & Company, publishers of The Wall Street Journal. Bancroft said the breadth of allegations now on the public record “would have been more problematic for me. I probably would have held out.” Bancroft had sole voting control of a trust that represented 13 percent of Dow Jones shares in 2007 and served on the Dow Jones Board.

Lisa Steele, another family member on the Board, said that “it would have been harder, if not impossible,” to have accepted Murdoch’s bid had the facts been known. “It’s complicated,” Steele said, and “there were so many factors” in weighing a sale. But she said “the ethics are clear to me — what’s been revealed, from what I’ve read in the Journal, is terrible; it may even be criminal.”

Elisabeth Goth, a Bancroft family member not on the Board who had long advocated change at Dow Jones, expressed similar sentiments. Asked if she would have favored a sale to Murdoch in 2007 knowing what she does today, she said, “my answer is no.”

The consensus position now emerging seems to be that the sale would have been unlikely, “if not impossible”, had such evidence come to light in 2007., among others, has raised questions about these “shocked! shocked!” proclamations, noting that “The phone-hacking scandal was first revealed, for the record, in 2006.

There were widespread concerns, however, that the tabloid culture of News International, in the UK, and the New York Post, and other News Corp. properties in the US, would seep into the Wall Street Journal’s pages. In August 2007, this publication reported:

One German director, Dieter von Holtzbrinck, resigned in protest over the Murdoch bid, saying he had serious concerns the paper would be able to maintain its journalistic integrity as part of the News Corporation media culture. The BBC reported at the time that “News Corporation has pledged to fully respect and maintain the Wall Street Journal’s independence and that of the firm’s other business news services.”

Mr. von Holtzbrinck referred to “past practices” known to have been part of the News Corp. culture, and by the summer of 2007, there were already serious criminal allegations and investigations into illegal hacking of precisely the kind now coming to light. The Wall Street Journal itself reported today that:

The [UK Parliament's Culture, Media and Sport] committee also has previously asked Ms. Brooks about payments to police. In 2003, when she was the editor of another News Corp. tabloid, the Sun, she told the committee: “We have paid the police for information in the past.”

It was known in 2003, then, that at least one News Corp. publication had paid illegal bribes to police in exchange for information. It was revealed last week that police first had evidence in 2003 of News Corp. reporters illegally spying on then Chancellor of the Exchecquer, later Prime Minster Gordon Brown and his family.

At the time the Murdoch takeover of DowJones was approved by the Bancroft family, the Project for Excellence in Journalism reported on Murdoch’s history of newspaper takeovers in the United States. He not only radically altered the editorial positions of the New York Post, and moved the editorial slant of the Chicago Sun Times “rightward”, but he allegedly sought to have at least one reporter at the Village Voice fired, “but backed off when the editor refused”.

When Les Hinton—publisher of the Wall Street Journal since the News Corp. takeover, 52 years in the employ of Rupert Murdoch, and a former editor of his UK tabloids—resigned last week, it was owing to allegations he had been aware of the criminal activity now under scrutiny. It was also reported that when he was given the position, a promotion after his testimony to Parliament regarding prior illegal News of the World hacking, he was tasked by Murdoch with changing the way the Journal was run and edited.

A 2010 Slate review of the WSJ Weekend edition included this telling analysis:

The redefinition of the Journal as more than a business newspaper has hastened under Rupert Murdoch, who purchased it in 2007. The Murdochized Journal has aggressively generalized its news and features in an effort to replace the New York Times as the nation’s dominant upmarket daily.

There is abundant evidence that the Bancroft family knew the great newspaper might be “Murdochized”, when it was sold to Murdoch’s News Corp.; in fact, several of them opposed the takeover specifically on those grounds, worrying openly about far more than just generalizing news content. And those who now say they might not have, had they known, spoke publicly about allegations relating to News Corp.’s methods, including the alleged interference with editorial practices, by corporate bosses.

But their change of heart, the resignation of Mr. Hinton, and the rapidly expanding scandal regarding alleged criminal activity that may have been not only routine, but routinely condoned and approved, even promoted, by higher ups, raise the question as to whether it might be time for a media-sponsored rescue buyout of the Wall Street Journal.

What would such a transaction look like?

First of all, it could be carried out as a kind of rescue loan, like those given to the major banks in the US and Europe, in the midst of the financial crisis: a buyout of shares substantial enough to warrant control and reorganization, but without editorial interference. The rescue loan would then be repaid, over time, and the publication left independent of corporate ownership.

The rescue loan could come from potential stakeholders and competitors:

  • There could be public sector sponsorship of the deal, possibly involving New York and New Jersey, in furtherance of the interest in maintaining the independence of a major publication servicing the region’s high value financial sector—in such a case, there would be no government involvement aside from making funds available and taking repayment over time.
  • There could be a coalition of competitors who use their leverage and their funds, in part, to purchase part of the controlling interest required to give the Journal independence from News Corp.—in such a case, competitors would not be entitled to make any decisions that would roll back or interfere with the longevity of the paper; they would take repayment over time, however, in a non-invasive way.
  • There could be a coalition of public-interest groups and grassroots organizations, possibly including some entities in the financial sector, using an independent account, with no management control from industry, which would, again, limit its participation to making funds available and taking repayment over time.

A rescue buyout for the Wall Street Journal could help to prevent a coordinated degradation of its editorial content and the seepage of ideologically slanted propaganda into its news pages. There are already criticisms of the newspaper’s editorial selection habits for news items, including allegations that News Corp. agenda priorities have made their way onto the front page.

That “aggressively generalized” news content makes a lot of room for such changes, and Murdoch has a reputation for pressing down through the corporate structure to win the editorial slant he wants. It might be worthwhile for other interests, those with a stake in the validity of the news published through the Journal, and in its holding the line for top quality print media, against the ever-expanding influence of online-only media, to put together such a deal.

Or, it might be just a nice idea people who care about media bias and quality reporting might dream up. But if there ever were a time to talk about it, to brainstorm how it might play out, and to ask the potential partners to enter discussions, it would seem the scandal unfolding in the UK, and the recently announced FBI probe in the US, make this look very much like that time. Maybe there would be support for the Bancrofts getting involved as well.

UPDATE, Mon., July 18: Pro-Murdoch WSJ editorial raises eyebrows

In light of this analysis of whether the Wall Street Journal can be considered to be independent of interference by the narrow interests of the News Corp. owners and corporate directors, it is worth taking note of an editorial published today by the Wall Street Journal, which has raised eyebrows, and criticism, by making the strange claim that British police are responsible for the criminal acts planned and carried out by Murdoch’s tabloids.

In fairness, the main thrust of the editorial—that one cannot allow thousands of hard-working and honest people to be smeared by the crimes of a narrow group of people—is an important point. It is more important still in light of the principle that the accused are innocent until proven guilty in a democratic system of jurisprudence. But the complaints against Murdoch’s UK tabloids are founded on already proven crimes, and evidence has already been made public.

The only real question is: how narrow is that group of guilty parties and how high up in the organization are they?

The piece defends the legacy of Les Hinton, during his time at the Journal. And to be fair, if the bottom line and sales management are the measure of his work, it would seem he did a better than fair job. But the allegations against him result from what he was doing before he arrived at the Journal. He may be credited with trying to hold the waters back from the Journal’s principled reporters, by resigning in time to save them from being stained by his alleged past actions.

What is so shocking about this editorial, however, is the tone, which suggests that somehow the alleged illegal spying, the apparently generalized criminal activity, bribery of public officials, possible intimidation and manipulation of some in public office, were all the fault of others, that somehow they are justifiable because there was a climate in which the guilty could get away with it.

Wouldn’t that climate have begun in the corporate board room? Might not the British Parliament want to know tomorrow whether Messrs. Murdoch and Ms. Brooks knew about the illegal activity, whether they tried to stop it, whether they spawned it, whether they tolerated or encouraged it? Wouldn’t that be reasonable?

The WSJ editorial makes little sense, if we are to believe that the paper has retained its editorial independence and would make no excuses for hacks, criminals and liars, because it essentially appears to be attempting to explain away acts that diminished the quality of information available to an entire population, and which may have threatened the integrity of the system of electoral government itself?

How can the editorial board of a truly independent news source make such a spurious and unwarranted defense of such a shameful degradation of the public discourse?

This passage from the piece is telling:

The prize for righteous hindsight goes to the online publication ProPublica for recording the well-fed regrets of the Bancroft family that sold Dow Jones to News Corp. at a 67% market premium in 2007. The Bancrofts were admirable owners in many ways, but at the end of their ownership their appetite for dividends meant that little cash remained to invest in journalism. We shudder to think what the Journal would look like today without the sale to News Corp.

There may be a different pattern of financial management under News Corp., but this artfully venomous assessment of the climate at the time of the 2007 takeover seems more than a little biased toward the current bosses, and not necessarily justified by any massive improvement in the quality of journalism being done by the paper’s staff.

The Wall Street Journal was a great paper at the time of the takeover, and there is much evidence that it has been changed by the News Corp. takeover. It may still be a great paper, certainly one of the most important in the country and in the world, but not by Rupert Murdoch’s management alone.

Then, there is this barb, substantially less artful and more venomous:

We also trust that readers can see through the commercial and ideological motives of our competitor-critics. The Schadenfreude is so thick you can’t cut it with a chainsaw. Especially redolent are lectures about journalistic standards from publications that give Julian Assange and WikiLeaks their moral imprimatur. They want their readers to believe, based on no evidence, that the tabloid excesses of one publication somehow tarnish thousands of other News Corp. journalists across the world.

The particular bent of this attack on news sources not accused of rampant habitual corruption and illegal activity is eerily similar to the pattern of rhetorical manipulation common to Murdoch’s near 100% opinion-oriented properties, like FOX News Channel and the New York Post. Specifically:

  • Ignoring News Corp.’s outsize privileging of self-interest in reporting, it attacks critics or those who disagree with preferred views as nothing more than self-interested competitors.
  • It accuses honest reporters of a Sadistic lust to revel in the pain of others: this is galling, if only because that is the very (and very conspicuous) quality this particular Murdoch property ignores in its imbalanced treatment of another Murdoch property.
  • It smears critics and dissenters by random associations of a kind meant to suggest low moral integrity.
  • It makes an entirely false accusation—in this case that the Guardian and other news sources “want their readers to believe, based on no evidence, that the tabloid excesses of one publication somehow tarnish thousands of other News Corp. journalists across the world”.
  • It does the very thing it accuses others of doing, then pretends not to be doing it—in this case accusing others of lumping all News Corp. journalists in with the tabloid debacle, then claiming the two cannot be separated.

This one editorial is not evidence enough to conclusively prove that Rupert Murdoch’s hold on the editorial management of the Wall Street Journal has been degrading to the quality of its reporting. But, it does indicate that there is a strong, and perhaps irrational, pro-Murdoch bias at the top of the paper’s management, and that the style of retaliatory critique mirrors some of the bad practices at work elsewhere in Murdoch’s ecosystem of influence.

The Columbia Journalism Review has been critical of the impact of News Corp.’s corporate culture on the Journal’s operations:

In December 2008, a year after* Rupert Murdoch’s News Corp. purchased The Wall Street Journal, the paper had a holiday “party.” Each news department was escorted separately, in turn, into a brightly lit conference room. A large horseshoe-shaped conference table took up most of the space, leaving little room to stand. Amenities were sparse. “They spent maybe $30 on the little plastic wineglasses,” recalls a reporter who, like nearly everyJournal employee interviewed for this article, requested anonymity. Everyone hovered awkwardly at the side of the horseshoe. Then Robert Thomson, the Australian editor hired by Murdoch to run the paper, made his entrance. He seemed—and Journal reporters often characterize him this way—unsure of what to say to his employees. “He said we were up seven percentage points. He said something about a focus group. He told us we weremoving the needle,” the reporter says. “After an hour, they flashed the lights and it was time for another group to come in. I thought, ‘Thanks, that’s really why we went into journalism. To move the needle.’”

CJR has done extensive research and reporting on Murdoch’s efforts to alter the focus and the product of the staff’s work:

Rupert Murdoch has de-emphasized business coverage in The Wall Street Journal since buying the paper in 2007, something that The Audit, focused as we are on the business press, has criticized quite a bit. The tell on Murdoch’s intentions came pretty early when he considered dropping “Wall Street” from the paper’s name, for crying out loud.

Regarding Murdoch’s impact on the reporting culture of the Wall Street Journal, CJR has cited “news pages that have noticeably moved rightward since he took over”, adding that “many of Murdoch’s moves have been to de-Journalize the Journalsexing up headlinescutting story lengthdiluting depth, adding more stock photos and commodity news, going to straight-news ledes, replacing much of the masthead with non-WSJers, and heading generally to the more slap-dash,once-over-lightly British model.”

So, we feel it right and necessary to reiterate: this might be the time for people who care about journalistic integrity to examine the question of whether the Wall Street Journal should be made entirely independent of News Corp.


One Comment

on “Is it Time for a Wall Street Journal Rescue Buyout?
One Comment on “Is it Time for a Wall Street Journal Rescue Buyout?
  1. In light of today’s nothing-to-see-here editorial, it may also be worth asking whether News Corp.’s crisis management PR firm may have something to do with its showing up on the WSJ editorial pages. Some have argued that “crisis management” and/or “damage control”, by way of a PR firm, and from within a media conglomerate, could lead to attempts to use media outlets to cover up or downplay the guilt of those implicated in the scandal. We hope the Wall Street Journal’s editors have not been subjected to that kind of interference, but it would help to explain this risky and unnecessary defense of the indefensible.

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