Somewhere inside the News Corporation headquarters building at Rockefeller Center Plaza in New York, billionaire Rupert Murdoch is beaming. His months-long bid to acquire Dow Jones & Co. is finally a done deal.
Two hundred miles away in Boston, Massachusetts, Clarence Barron, the Wall Street Journal's founding editor, must be rolling in his grave.
Wednesday's $5.6 billion acquisition of Dow Jones by News Corporation was the outcome of eleven weeks of wrangling on the editorial floor as well as in the board room.
Murdoch, the son of Australian media mogul Keith Murdoch, no doubt eyed Dow Jones for its largest and oldest segment, the venerable Wall Street Journal. As the most successful daily financial newspaper in the United States, the Journal has the influence, reach, and reputation that none of News Corp.'s more than 100 newspapers have. Most of Murdoch's current portfolio—including the New York Post, Times of London, and the Daily Telegraph in Australia—print in tabloid.
The decision for the Dow Jones sale came down to the Bancroft family and its trustees, who have maintained majority control over the company for over 100 years. At the beginning, most of the older Bancroft shareholders opposed the deal, citing the Journal's history of editorial independence and journalistic excellence, which would be compromised by Murdoch's history of editorial meddling.
Opponents of the deal were bolstered by the support of many Journal editors and reporters who wrote letters urging a rejection of the News Corp. proposal. The same view was shared by former Dow Jones chairman James Ottaway, as well as former Journal president Peter Kann.
As the saga unraveled, the younger Bancrofts and certain other family trustees, notably those who did not share the same values regarding the importance of journalistic independence, were tempted by the offer price—a 65% premium over the Dow Jones share price at the time of the offer. Many shareholders stand to make a profit in the millions as News Corp. completes the merger.
Unfortunately, the bottom line and short term shareholder value ultimately ruled over reason and rhetoric in this deal.
Journalism and Business
However much value the shareholders will gain in the deal, the Journal may ultimately lose in its reputation as a part of Murdoch's empire.
Murdoch's history of being personally involved in News Corp.'s publications is well documented. As much as Murdoch gambled financially in acquiring newspapers across Australia and the U.K., the goal was consistent: he aimed to reach a larger audience and to influence more readers. Of course, big media is big business.
This was largely successfully achieved by printing stories with lurid headlines, subjective slants, and unconventional flash. It proved that the more sensational the story, the larger audience a media can garner.
According to National Public Radio (NPR), Ken Chandler, a longtime editor at News Corp., said that a daily photo of a topless model was the most viewed page in The Sun, a British tabloid owned by News Corp.
Mixing Murdoch's personal viewpoints on journalism was another characteristic of some News Corp.-owned media. A Dow Jones union of editorial staff claimed that Murdoch "has shown a willingness to crush quality and independence," according to a union press release.
Understanding Murdoch's journalistic beliefs should require looking no further than his business ventures in China. Few global media organizations have made as many attempts as News Corp. to establish a foothold in China. Profits and losses aside, Murdoch cooperates without objection with China's censorship and toes the Chinese Communist Party line with fervor. In interviews, Murdoch frequently supports Chinese communist leaders and their viewpoints, while denouncing their critics.
To protect his business interests in China, which include STAR TV and Phoenix Satellite TV, Murdoch has shown an unceasing aptitude to placate Beijing communist hardliners in changing News Corp.'s services to suit Chinese leaders' tastes. According to the New York Times, in 1994, STAR TV ended its carriage of U.K.'s BBC News in China as it showed footage of China's 1989 crackdown of democracy protestors—the Tiananmen Square Massacre—which cast China in a bad light.
At one point, Chandler was an editor at the New York Post when a rival publication, The New York Times, ran a story about the mistreatment of convicts in prisons.
"Murdoch called me up one morning and he said, 'Did you see this thing in the Times?' I said yeah. He said, 'You know, we should do our own series, but we should focus on the victims [of these convicts instead],'" Chandler told NPR.
Chandler, for his part, obliged without protest.
Devaluation of the Journal?
To increase the reach of its various media, News Corp. frequently undercuts competitors in cover price and advertising price, and in some cases incurring years of losses to gain market share. When it bought the New York Post in the 1990s, Murdoch dropped its cover price to attract a bigger market. Even today, the Post is the lowest priced daily newspaper (excluding free ones) in New York.
In 1996, Murdoch's Fox News Channel was a newcomer in the market of 24-hour television news. To compete with Time Warner's CNN and NBC Universal's MSNBC, News Corp. paid cable providers a fixed fee per subscriber to carry the channel on its systems. In normal practice, cable operators pay the stations a carriage fee for programming.
In the News Corp. agreement, Murdoch actually paid cable companies to carry the channel.
Will News Corp. continue in this tradition and slash the price of the Journal? It's still too early to tell, but one can be sure that Murdoch is parlaying to dethrone longtime competitors the New York Times and Pearson Plc's Financial Times, a rival to the Journal in the financial news market.
The Journal, in its history, has never been inexpensive relative to other daily newspapers. Its large subscriber base is mainly a result of timely and in-depth coverage of financial news and information, and its award-winning independent journalism—a foundation laid by its early president and chief editor, Clarence Barron, who is considered the father of modern financial journalism.
While seemingly improbable at this point, any price reduction for the Journal could decrease the perceived value of the paper. Its target market—the business, financial, and political fields—may not be swayed by price fluctuations. In an attempt to lure more consumers and mainstream readers, such a strategy could potentially backfire and alienate the Journal's current subscriber base.
Alex Jones of Harvard University's Kennedy School of Government correctly summed up the concern in a recent interview with NPR. "The real issue is not that he's going to turn the Journal into a shock newspaper, but that he's going to be taking one of the great independent voices of American journalism and (if there's any precedent at all that spans all of Murdoch's history) it's going to be put in the service of the greater good of News Corp. and Rupert Murdoch," said Jones.
While it may be premature to judge the outcome of this merger, history does not bode well for future of the Journal.
Some may hail the arrival of Murdoch as a way out of the Journal's current struggles to cope with competitors in print and online, in an ever-diminishing revenue market for print advertising.
The rest of us, however, see it as the beginning of the end of an era, an era of upholding the truth, of maintaining journalistic integrity, and an era during which the Wall Street Journal has represented the pinnacle of American journalism.