A dance between Faust, devil
THE Bancroft family, which controls Dow Jones & Co. -- publisher of the Wall Street Journal -- on Thursday rejected a plan designed to preserve the paper’s independence and integrity if the company is sold to Rupert Murdoch.
The Australian-born head of News Corp. has long coveted the Journal and recently offered $60 a share for its publicly traded parent company, which the sprawling Bancroft clan has controlled for more than a century. The paper is this country’s -- and the world’s -- most credible source of business and economic news. Murdoch, who owns Fox News, the New York Post, the Times of London and an array of other publishing and broadcast properties, has a demonstrated history of using his journalistic possessions to further his commercial and political interests. If guarantees of independence and integrity were traded on an open market, Murdoch’s word would be valued somewhere south of Albanian treasury notes.
The Bancrofts’ rejection of the plan first was reported in Friday’s New York Times, which pointed out that the proposal came not from Murdoch but from the family’s own lawyers -- the Wall Street firm of Wachtell, Lipton, Rosen & Katz, and the Boston-based Hemenway & Barnes, longtime Bancroft advisors. The New York Times report also quoted sources who had read the lawyers’ plan. As the paper pointed out, “the proposal offers a look into the thinking of the family and its advisors and suggests a baseline set of demands behind which the Bancrofts do not want to retreat.”
So it does.
The Los Angeles Times has obtained a copy of the lawyers’ four-page proposal. It bears the initials of Wachtell, Lipton, Rosen & Katz, is marked “Privileged & Confidential” and is dated Tuesday, June 12. It’s an extraordinary document -- unusual in the severity of its prescriptions; stunning in its unspoken assumption of Murdoch’s reflexive bad faith; revealing in that, all that notwithstanding, the Bancrofts correctly saw that the guarantees proposed still were insufficient.
There is a kind of preamble that flatly states: “the Family is only willing to pursue negotiations of a transaction if and when the Family is satisfied that a structure can be developed and implemented that ensures the level of commitment to editorial independence and integrity and journalistic freedom that is the hallmark” of Dow Jones.
Further on is a demand that, under Murdoch, the company formally “adopt a set of principles to guide it in the future and aimed at ensuring the preservation of the integrity, editorial independence and freedom from bias of the publications and news gathering services. These principles would include:
"-- the commitment to forthright and honest news gathering and publication;
"-- the freedom to report the news free from fear or favor and to express opinions critical of governmental agencies, interest groups, management, customers and others with a stake in the success of the company;
"-- the clear separation of news and opinion; and
"-- the maintenance of the trustworthiness of the publications and news gathering services.”
It is inconceivable that any American newspaper proprietor would demand what amounts to a professional loyalty oath from a colleague as the price of doing business ... unless, of course, you’re proposing to do business with Rupert Murdoch.
In that case, whatever you do, you’re bound to come off a bit like Faust -- “Naw, don’t worry, I can handle the devil.” Who can forget that this is the guy who stood next to Dorothy Schiff and promised that the editorial page of the New York Post would remain an organ of liberal opinion?
The lawyers’ proposal would have charged a “Special Committee” with “preserving and promoting” the principles enumerated above. That committee would loom rather large in the Journal’s governance. It would be drawn from a new 12-member Dow Jones board of directors, seven of whose members would be named by Murdoch, two of whom would be chosen by the Bancrofts and three of whom would be “individuals who are independent and are recognized for their expertise in journalism or other relevant expertise.” These so-called independents would be selected jointly by Murdoch and the Bancrofts.
The three independents and the two family-selected directors would comprise a “Special Committee on Editorial and Journalistic Independence and Integrity.” What other American newspaper ever has had such a thing?
The proposal goes on to enumerate what it calls “essential journalistic officers” -- basically the editors who run the Wall Street Journal and its editorial page -- and says that the special committee will have “approval rights” over their appointment and any changes in their duties or compensation, their ability to hire and fire and over their respective budgets. “In the case of the managing editors,” the proposal specifies, the protected activities would include “authority over all news decisions (including decisions on subjects of news coverage, length, placement and accompanying art or other media).”
The lawyers proposed that the Wall Street Journal create an internal “ombudsman” who would be “appointed by the Special Committee. Editors or other employees could approach the ombudsman with concerns or issues relating to editorial and journalistic independence and integrity issues. The ombudsman would communicate such issues that he/she believes are appropriate to the Special Committee,” whose decisions in this and all enumerated matters would be “final and binding.”
The proposal also would have committed Murdoch not to “decrease the number of (Dow Jones) employees ... or their compensation or benefits for a period of two years following closing of a transaction.”
Stringent though they may seem to be, it’s easy to see how easily Murdoch could -- and, surely, would -- have danced around them. It’s also easy to see how a roomful of Wall Street lawyers whose fees are contingent on “getting the deal done” would bargain away the soul of a great American newspaper for a mess of Antipodean porridge.
No need to belabor that or to congratulate the Bancrofts too fulsomely, so long as they go on believing that they can play Faust to Murdoch’s Satan and still walk away with their souls, as well as a tidy profit.
Meanwhile, the parent company of Britain’s Financial Times is seeking partners for a competing bid, and the Wall Street Journal’s unions are all but begging Los Angeles billionaire Ron Burkle to make an offer.
At the end of the day, the Bancrofts may have to come to grips with the real problem that impedes their ability to do business with Rupert Murdoch: They want his money, but they want him to be somebody else. They want, in other words, to do business with Murdoch and come away a lot richer and with their self-respect intact. They want as much of Murdoch’s money as they can get but want no one to think the less of them for taking it.
You can’t hire enough high-priced Wall Street lawyers to square that intractable circle.