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Murdoch’s Arrival Worries Journal Employees
On May 14, more than 100 reporters, editors and executives clustered in The Wall Street Journal’s main newsroom to mark the retirement of Peter R. Kann, the longtime leader of their corporate parent, Dow Jones & Company.
Mr. Kann, in rolled-up shirtsleeves, was typically self-effacing about his own contributions to the company. But the celebration of the past was muted by worry about The Journal’s future. A few weeks earlier, Rupert Murdoch’s News Corporation had offered $5 billion to buy Dow Jones. The Bancroft family, owners of a controlling stake in the company, rebuffed the offer at first, but there were signs that some of them were wavering.
Mr. Kann, who had been advising the family against selling, expressed hope that Mr. Murdoch would not prevail, using an image of The Journal as a citadel trying to repel an invasion by tabloid barbarians.
“The drawbridge is up,” Mr. Kann told the group. “So far, so good.”
For employees at Dow Jones, the 11 weeks since they learned of the Murdoch offer have been a wrenching time, raising the prospect of fundamental changes at an organization that had already had its fill of big changes in the last couple of years — with Mr. Kann being replaced by Richard F. Zannino as chief executive, with Marcus W. Brauchli taking over from Paul E. Steiger as top editor; and with a shift of its mission, by adding a Saturday paper and more lifestyle articles to appeal to new advertisers, and investing heavily in its digital properties.
So a possible takeover by the News Corporation — the deal is now in the hands of the Bancroft family after the offer received board approval — has placed an unusual strain on the company and its employees. Tensions have risen between The Journal’s newsroom and management, particularly Mr. Zannino, a nonjournalist who had spent much of his career in the garment industry.
Journalists are also facing two futures they never expected when they signed on to jobs they saw more as a mission, not a business — the uncertainty of what Mr. Murdoch would do as an owner, or the uncertainty of a suddenly harsh advertising climate that could lead to deep job cuts.
“There’s a real culture of passion for the truth, for shining lights in dark places and making the mysterious understood,” said a reporter, one of dozens of people interviewed at The Journal and Dow Jones, nearly all of whom asked for anonymity, fearing a backlash from the current regime or the next one. “The overwhelming view here is that under Murdoch, that gets compromised from Day One, and that idea is devastating, heartbreaking, to people.”
At times, that heartbreak has been expressed in gallows humor, as newsroom employees answered phones with “News Corporation” and mimicked Mr. Murdoch’s Australian accent.
In a conference call among editors and bureau chiefs, one said The Journal would follow the lead of The Sun, one of Mr. Murdoch’s British tabloids, which prints pictures of topless women on its third page.
“Rupert has confirmed to me that we will have Page 3 girls,” he said, according to another person on the call. “But in a concession, they will be dot drawings,” like The Journal’s traditional hand-drawn portraits.
As reporters and editors wait for the Bancroft family’s decision, some see Mr. Murdoch’s bid as a way out of Dow Jones’s long-term business difficulties as a part of a larger media empire run by an engaged, well-capitalized proprietor who loves newspapers.
To others, the proposed deal looks like the end of an ideal of a certain kind of journalism, which The Journal had long protected. It has prompted a labor union within the newsroom to hunt for another buyer.
In the weeks shortly after the bid was revealed on May 1, a number of reporters publicly denounced Mr. Murdoch as someone who molded journalism to serve his business and political interests. A group of seven who had just won a Pulitzer Prize for coverage of China sent an open letter to that effect to the Dow Jones board on May 14.
Even as Journal employees argued that Mr. Murdoch’s offer should be rebuffed, it produced a windfall for many of them, particularly editors and executives, as the share price jumped from about $36 to close to the $60 that he had bid.
Alix M. Freedman, the deputy managing editor in charge of ethical standards, and Stuart Karle, the Journal’s counsel, fielded many inquiries from people wanting to know if they could sell their shares.
The anti-Murdoch forces enjoyed one of their brief lifts on June 29 when The Journal reported that Leslie Hill, a Bancroft family member, had grave reservations about selling to Mr. Murdoch. Someone enlarged The Journal’s dot drawing of Ms. Hill, a retired airline pilot, adding the words “I Fly with Leslie” above her face. Copies of the makeshift poster appeared in Journal offices around the country.
Even before the Murdoch bid, the tension between the company’s aspirations and its bottom line was growing because of the transition in chief executives.
Unlike Mr. Kann, Mr. Zannino — the first nonjournalist in more than 70 years to head the company — is not prone to lofty statements about journalism, and he has not won fans among employees by calling on them to make health care concessions in still-unresolved contract talks.
Fairly or not, newsroom people widely dismiss him as someone who does not value what they do.
That notion is false, said Mr. Steiger, the former managing editor, who said that Mr. Zannino “deeply understands the value and the nature of what we do,” and supported decisions like the introduction of a Saturday issue.
“He’s been pushing for growth, when lots of others in our industry have been cutting back,” Mr. Steiger said.
But Mr. Zannino’s reputation in the newsroom was not helped by the events leading up to the bid. Mr. Murdoch made his takeover offer verbally to Mr. Zannino on March 29, and in writing to the Dow Jones board on April 17. Since the deal was made public, Mr. Zannino has tried to undo the impression that he was in favor of the deal, publicly insisting that he was neutral. But it has been hard to find anyone inside or outside Dow Jones who believes him.
First, there was his compensation: if the company were sold, he stood to make more than $20 million. Directors said that in a presentation to the board on May 2, Mr. Zannino made it seem that the company’s prospects on its own were poor, and left the impression that he wanted to sell, according to people close to the board.
In recent days, he has led negotiations with the News Corporation that resulted in the offer being taken to the board yesterday. Mr. Zannino, who declined to be interviewed for this article, let the editors know that he objected to some of The Journal’s first articles on the bid, in part for suggesting that he favored selling.
The newspaper had also misstated the date of his first contact with Mr. Murdoch and, he believed, left the incorrect impression that he had not immediately informed the outgoing chairman, Mr. Kann, or his replacement as chairman, M. Peter McPherson.
The News Corporation offer worsened an already frosty relationship with his predecessor. Mr. Kann was forced aside as chief executive 18 months ago and replaced by Mr. Zannino, whose competition for the job had been Mr. Kann’s wife, Karen Elliott House, publisher of The Journal. She immediately left the company.
At another, more private going-away party for Mr. Kann, in a restaurant in Lower Manhattan, he and a Dow Jones director, Harvey Golub, spoke forcefully against selling to Mr. Murdoch. Conspicuously absent were L. Gordon Crovitz, publisher of The Journal, and Mr. Zannino, who were not invited.
The takeover bid created headaches for the leaders of The Journal’s newsroom, in addition to Dow Jones executives.
Mr. Murdoch had told also Mr. Steiger, the departing managing editor, of his offer in April before the bid was made public. But Mr. Steiger did not put the news in the newspaper. It was CNBC that later broke the story.
Dow Jones executives say that Mr. Steiger thought it his duty as a corporate officer not to disclose the information, a view that some reporters criticized. Executives and top editors have declined to be interviewed since Mr. Murdoch offered to buy Dow Jones and The Journal.
Mr. Brauchli, the new managing editor, became one of a handful of people advising the family on drafting a pact with the News Corporation that would limit Mr. Murdoch’s control of The Journal’s newsroom. He recused himself from The Journal’s coverage of the bid, much of it critical of Mr. Murdoch, which was handled by Mr. Steiger, who had stayed on as editor at large.
In June, Mr. Brauchli announced some high-level staff changes that were warmly received in the newsroom, but overshadowed by the news that the paper was considering job cuts if the Murdoch offer fell through. The most vehemently anti-Murdoch reporters saw such talk as scare-mongering by company executives who wanted to sell.
“There is a lot of manufactured panic,” one said.
Many others concluded that the warnings were on-target, and conceded grudgingly that acquisition by the News Corporation would have economic advantages because Mr. Murdoch planned to pump money into The Journal. Eventually, even Mr. Kann said so.
“It may ultimately prove this was the best of a mediocre set of options,” said a longtime reporter in The Journal’s Washington bureau.
Leslie Hill, a member of the Bancroft family who has opposed selling to Rupert Murdoch, is depicted in a poster found in Journal offices. Many people at Dow Jones continue to hold out hope for another bidder. So far, none has emerged. “I guess we’re back where we started, with our hopes in the Bancrofts,” said E. S. Browning, a reporter who covers the stock market and is the head of the union’s bargaining committee. “I think they understand that if Murdoch prevails, it’s the end of The Journal as we know it.”
As the chances of an alternative have appeared to wane, more reporters and editors have polished their résumés and approached rival publications about jobs. Some have even talked of starting their own business news Web site.
Many voiced disappointment in the Bancrofts, the family that has owned the company for more than a century and taken great pride in it, for not playing a leading role in running it for more than 70 years.
“We understand that for the Bancrofts this is a choice between getting much richer, and holding onto something because they believe in it,” a reporter said. “What they may not realize is that many of us in the newsroom have made the same choice. There are a lot of people here who could be traders or lawyers, people with M.B.A.’s, who could be making a lot more money. To us, this is not an abstract choice.”
