WSJ staff should thank Murdoch for saving what was becoming a stale publication.
Murdoch Wins His Bid for Dow Jones Bancroft Family Agrees To $5 Billion Offer After Deal on Fees
By SARAH ELLISON and MATTHEW KARNITSCHNIG - WSJ
August 1, 2007 12:13 p.m. A century of Bancroft-family ownership at Dow Jones & Co. is over.
Rupert Murdoch's News Corp. sealed a $5 billion agreement to purchase the publisher of The Wall Street Journal after three months of drama in the controlling family and public debate about journalistic values.
One of the oldest and best-known franchises in the newspaper industry, beset in recent years by business pressures, now enters a new era as part of a world-wide media conglomerate. The 76-year-old Mr. Murdoch, whose properties range from the Fox television network to the Times of London, negotiated hard to win the paper he long coveted. He has promised to invest more in Dow Jones journalism.
The Bancrofts worried about protecting the reputation of the Journal, the nation's second-largest newspaper. They feared Mr. Murdoch would meddle in the paper's editorial affairs and import the brand of sensationalist journalism found in some of his properties such as the New York Post. Some Bancrofts sought other buyers.
But ultimately, Mr. Murdoch's $60-a-share bid -- a 67% premium above Dow Jones's share price when it became public -- was the only serious offer on the table. Key family members, spurred by Dow Jones's board and advisers, decided they had no choice.
"On the one hand it is quite sad, but on the other it was the only reasonable thing to do," said Elisabeth Goth Chelberg, a Bancroft family member who unsuccessfully tried a decade ago to get the family more involved in management. "Now I look forward to a better Dow Jones. It's going to have more money and a world presence and all of the things that it could have and should have had but didn't."
Opponents of the deal called it a dark day for journalism. Leslie Hill, a family member who opposed the deal, resigned as a Dow Jones director late Tuesday afternoon. In a letter to the board, she conceded the deal was a good one in financial terms, but said it failed to outweigh "the loss of an independent global news organization with unmatched credibility and integrity."
In an increasingly pinched landscape for newspaper companies, the alternative to selling was a future fraught with risk -- in particular, that deep cost cuts would be needed to prop up the stock price and make up for dwindling advertising.
For every person who argued that the News Corp. takeover threatens Dow Jones's reputation for quality, someone else insisted that Mr. Murdoch's deep pockets and strategic know-how could turn around its prospects. Mr. Murdoch said Tuesday in an interview that he might add four pages of news a day to the Journal.
Family's Attention
"The money got [the family's] attention and enforced their consideration of reality," said Peter Kreisky, a media consultant. "It focused the minds of the family and the board on how difficult it would be to maintain the newspaper in the long term as an independent entity."
The company's offer received support from Bancroft family members holding about 37% of Dow Jones's voting power, more than half of the family's total voting stake of 64.2%. When added to the 29% of Dow Jones's voting stock held by public shareholders -- most of which is expected to go in News Corp.'s favor -- that support gives Mr. Murdoch enough to win a full shareholder vote comfortably. The vote is likely to be held later this year.
News Corp.'s board signed off on the deal at a brief late-afternoon meeting. After the approval, top executives and advisers broke out glasses for a toast. They were served an Australian Shiraz.
The Bancroft family has controlled Dow Jones since 1902. While Dow Jones accounts for less than half the family's fortune of roughly $2.5 billion, the company had long been the Bancrofts' source of pride and prestige. Dow Jones was also the main glue holding together the family, which today consists of nearly three dozen adult members scattered across the globe. Some deliberated on the offer from vacation destinations around the world, including China, Spain, the Austrian Alps and waters off the coast of Corsica.
Their bonds were tested during the debate over the deal. Cousins and siblings were pitted against one another. Parents fought their children.
In the days leading up to the deal, the stress was severe. Just hours before a Monday deadline for the family to vote on the transaction, William Cox Jr., the only living Bancroft who spent his entire career at the company, went into a diabetic shock. He was briefly admitted to a hospital in Massachusetts, where he summers on Nantucket, before returning home, according to relatives.
The final vote tally followed a last-minute scramble by Dow Jones's board and the family's advisers to win over holdouts. Most of the family's shares are held in a series of trusts. News Corp. had won support from shareholders owning only about 25% of voting power by Monday afternoon, shortly before a deadline for votes set by the family's adviser. That crept up to 28% by Monday evening and then topped 30% Tuesday morning, as a collection of small trusts threw their support behind the deal.
M. Peter McPherson, Dow Jones's nonexecutive chairman, personally called resistant family trustees in Boston and Denver to remind them of the risks they were taking in opposing the deal, according a person who was briefed on the calls.
The shareholder making a decisive swing was a group of Bancroft family trusts overseen by a Denver law firm holding 9.1% of Dow Jones's voting shares. The firm, Holme Roberts & Owen, had been holding out for a higher offer from News Corp. -- a request repeatedly rejected by Mr. Murdoch. The Denver trusts pushed other Bancroft family trusts to hold out for more money, at least for the holders of Class B supervoting shares. These shares, which have 10 times the voting power of Class A shares, are mostly held by the Bancrofts. But when some Boston-based trusts consented to a News Corp. deal late Monday, the Denver trustees lost much of their bargaining power.
Dow Jones's board had rejected the request for a higher price for Class B shareholders. Instead, what emerged from the talks was a deal under which Dow Jones agreed to pay the family's legal and banking bills. News Corp. will assume these liabilities when it buys Dow Jones. The family's fees, to be paid to firms including Merrill Lynch, Morgan Stanley and the law firms Hemenway & Barnes and Wachtell, Lipton, Rosen & Katz, could total at least $30 million, according to people familiar with the situation. That figure doesn't include fees incurred by the Dow Jones board, which had its own advisers.
The payment serves as a modest sweetener for the Bancrofts. When spread out over the family's 16.5 million Class B shares, the $30 million equals an additional $1.81 a share, a roughly 3% increase for the family. Family members would otherwise have had to bear these fees out of their own pockets, effectively bringing their take below $60 a share.
James H. Ottaway, whose family controls 7% of Dow Jones's voting power, called the fees "outrageous." In a statement, the outspoken opponent of a News Corp. deal said: "It is ironic indeed for the Bancroft family to have to pay 30 shekels of silver to their investment bankers, and 30 shekels of gold to their corporate lawyers, for scaring some of them into betraying their 105-year family loyalty to Dow Jones independence." (See full statement.)
Division of the spoils among the advisers promises to create another fight. Merrill Lynch is expecting to receive an $18.5 million fee, according to a person familiar with its plans. Wachtell Lipton's hoped-for fee is expected to be somewhere near $10 million, said one family member, with a host of other fees for a group of lawyers and bankers advising various Bancroft branches.
Christopher Bancroft, one of the most outspoken family opponents of a deal, said that his fiduciary responsibilities required him to vote against any deal not in the best interests of the family and the company. He has called the offer a bad deal for Dow Jones, arguing it undervalues the company's potential. "As a trustee, I could not roll over," he said. Mr. Bancroft, a Dow Jones board member, didn't attend the board meeting to approve the deal.
In an effort to sweeten his victory, Mr. Murdoch telephoned Mr. Bancroft, according to people familiar with the matter. During the call, Mr. Bancroft agreed to abstain from voting on the family's biggest trust -- the so-called Article 3 trust with 13.2% voting power -- in return for written assurance that News Corp. would pay for all family expenses, including personal attorney fees for Mr. Bancroft and other family members. But Dow Jones's board later refused to endorse the proposal, and it appeared that trust rules wouldn't allow him to abstain.
Delicate Situation
Mr. Bancroft's cousin, Jane Cox MacElree, who also opposed the deal, faced a delicate situation because she was a trustee of some trusts whose beneficiaries favored the deal. Ms. MacElree ended up resigning from some trusts -- deferring to her relatives and shielding herself against potential liability -- while voting the Class B shares she owned against the deal.
Some on Wall Street were surprised that the family wasn't able to squeeze out a higher bid from Mr. Murdoch. By the rituals of Wall Street deal making, a buyer's first offer is almost never the final price agreed to in a transaction -- although Mr. Murdoch's first offer in this case represented an unusually generous premium.
Mr. Murdoch was able to hold his ground because he faced no serious rival -- although some of the nation's largest corporations and wealthiest men took a look over the past three months. Billionaire investor Warren Buffett and Microsoft Corp. founder Bill Gates were approached by a family representative to gauge their interest. Both declined to bid.
Several big companies tried to join together to meet the $60 bid, including General Electric Co., which at various points attempted to form a group with Microsoft, IAC/InterActiveCorp's Barry Diller, and Pearson PLC, owner of the Financial Times. Pearson weighed a separate plan, under which it would have contributed the Financial Times to Dow Jones in exchange for stock, according to a person familiar with the situation. But none of these arrangements got off the ground.
Nor did efforts by the union that represents some of Dow Jones's employees to join forces with a California supermarket magnate get much traction. Internet entrepreneur Brad Greenspan tried to put together investors, but fell short of making an offer for the whole company.
WSJ's Dennis Berman comments on whether the Journal's credibility can be maintained, and how the Bancroft family got caught up in the Wall Street deal machine. Even some who had initially declared firm opposition to the bid softened over time. On the weekend of July 21-22, Bancroft family member Martha Robes hosted former Dow Jones chairman and CEO Peter R. Kann and his family at her house in Maine to celebrate Mr. Kann's retirement. At the gathering, Ms. Robes and her family gave Mr. Kann a handmade green wooden rowboat named "Joy" and a puzzle that depicts various aspects of his life, including a newspaper, a typewriter and a golf cart, according to people familiar with the matter. (Mr. Kann famously crashed a golf cart at a Dow Jones retreat years ago.)
At the gathering, these people say, Mr. Kann, who had been a long-time champion of Dow Jones's independence, told attendees that given the family's divisions, he could see the arguments for a deal with Mr. Murdoch. Some family members saw his comments as permission to vote for the deal, these people said.
Other family members exchanged impassioned views by email and phone about missed opportunities and the family's shortcomings. One supporter of a deal, Crawford Hill, told his relatives in a nearly 4,000-word email that it was time for "reality check."
In a statement early Wednesday, Dow Jones said it expects the deal to close in the fourth quarter, but didn't give a date for the shareholder vote. Mr. Murdoch's advisers suggest shareholder approval is a fait accompli. With family members contributing about 37% voting power to support the deal, News Corp. must still win over the remaining shareholders, who control 29% of Dow Jones's voting power.
News Corp. anticipates that about 80% of these shareholders will vote for the deal, meaning another 23% in support of the transaction -- or about 60% approval overall.
That leaves a slim opportunity for the remaining shareholders to threaten to withhold support with hopes of getting a higher price, as happened in recent takeover fights at Clear Channel Communications Inc. That could be why the company sought a greater margin of support from the family as the process entered its last days.
News Corp. will need to get regulatory approval for the deal, although Mr. Murdoch has said he doesn't expect that to be an issue. Assuming the deal is approved, closing could take place by the end of the year.
The deal raises questions about the future of some senior Dow Jones executives, including Chief Executive Richard Zannino. Once Dow Jones becomes a subsidiary of News Corp., Mr. Zannino may eventually move on.
Severance Packages
Some top executives may be eligible for big severance packages once the sale is completed. Dow Jones implemented change-in-control provisions for more than 100 top managers in early June, a month after the bid was made. Mr. Zannino stands to receive some $19 million if he loses his job or has his duties cut after a change in control.
Mr. Murdoch has argued that The Wall Street Journal will be able to take advantage of News Corp. synergies to gain ground in Europe and Asia, take on national rivals in political coverage.
While he has been vilified for years in the media over issues ranging from union-busting to sensationalist journalism, he has always showed a thick skin, secure in his belief that his critics are antibusiness elitists. Still, the drama preceding the sale of Dow Jones exposed him to unprecedented scrutiny and often harsh criticism.
Now Mr. Murdoch must persuade some factions of Dow Jones's newsrooms, and outside critics, that he will act responsibly as he weighs changes to the Journal and other Dow Jones publications.
In letter to readers, Journal Publisher L. Gordon Crovitz wrote, "The same standards of accuracy, fairness and authority will apply to this publication, regardless of ownership."
News Corp. agreed as part of the deal to invite one Bancroft family representative onto its board of directors and to create a committee to protect Dow Jones's journalistic independence. The committee members are slated to be Louis D. Boccardi, retired CEO of the Associated Press; Nicholas Negroponte, co-founder of Massachusetts Institute of Technology's Media Lab; Jack Fuller, former president of Tribune Publishing; Jennifer Blackburn Dunn, a former congresswoman from Washington state; and Thomas Bray, the former editorial-page editor of the Detroit News and a writer for OpinionJournal.com. Mr. Bray will be chairman.
--Dennis K. Berman, Susan Warren and Susan Pulliam contributed to this article.
You've got to admire Rupert Murdoch's flair for the deal. Just a day after the reported block by Chris Bancroft , he engineers a deal, or is at least close to it. It's up to the Bancroft's now.
Dow Jones, News Corp. Set Deal Tentative $5 Billion Pact Gets Board Vote Tonight; Family to Meet Thursday
By SARAH ELLISON - Wall Street Journal July 17, 2007; Page A3
News Corp. reached a tentative agreement for the purchase of Dow Jones & Co. at its original $5 billion offer price. The deal will be put to the full Dow Jones board this evening for its approval, said people familiar with the situation.
In what could be the final round of talks, yesterday negotiators from News Corp. and Dow Jones -- including Chief Executive Richard F. Zannino, company advisers and two independent directors -- reached an agreement in principle on a deal first proposed by News Corp. in mid-April. News Corp. Chairman Rupert Murdoch resisted pressure from Dow Jones to raise his initial $60-a-share offer, which represented a 67% premium to where the Dow Jones stock was trading before news of the offer became public. But Mr. Murdoch suggested the possibility of nominating former Journal Managing Editor Paul Steiger to the board of News Corp., according to a person who was there.
The deal still faces its biggest hurdle -- getting approval from the Bancroft family, which controls 64% of Dow Jones's voting power. Mr. Zannino has indicated to News Corp. that the family's position on the deal is too close to call, according to a person who spoke to him.
Michael B. Elefante, the Bancroft family's lead trustee, has scheduled a meeting for Thursday at which he would present the agreement to all Bancroft family members before asking for their final vote. Mr. Elefante is expected to give the family several days to make a decision, suggesting a final resolution could be achieved some time next week.
MORE
• Complete Coverage: A Deal for Dow Jones? • Graphic: Key Players in the Dow Jones Bid However, the Bancroft family remains sharply divided on a sale to News Corp. While some members are open to a deal, others have been looking hard for an alternative. Christopher Bancroft, 55 years old, a Dow Jones director who serves as a trustee overseeing shares that account for about 15% of the company's total shareholder votes, has spent the past several weeks approaching hedge funds, private-equity firms and others in an attempt to buy enough shares of Dow Jones to block a sale. Another family director, Leslie Hill, has pressed the company to meet with investors, such as supermarket mogul Ron Burkle, who have alternative proposals for Dow Jones. Ms. Hill's mother, Jane Cox MacElree, serves as a trustee for or owns shares that account for about 15% of the company's total shareholder vote.
News Corp.'s unwillingness to raise the price could also harden opposition from within the family. Some Dow Jones top executives and independent directors had hoped the Bancroft family's ambivalence about the Murdoch deal would help the company extract a few more dollars per share, according to people close to Dow Jones.
Dow Jones shares were down 54 cents to $56.95 in 4 p.m. New York Stock Exchange composite trading yesterday. The shares rose about 50 cents in after-hours trading.
The negotiations yesterday began with a lunch meeting attended by Messrs. Murdoch and Zannino.
In addition to The Wall Street Journal and its international and online editions, Dow Jones publishes Barron's, SmartMoney magazines and other periodicals; DowJones Newswires; Dow Jones Indexes; and the Ottaway group of community newspapers.
Wow. Well, apparently Murdoch's (pictured) is not liked by this Bancroft, who's not giving in, or perhaps he's just trying to drive up the share price?
From CNBC: A Dow Jones board member who is also part of the family that controls the company has launched a last-ditch effort to block a takeover by Rupert Murdoch's News Corp., the Wall Street Journal reported on Sunday.
Christopher Bancroft has recently approached hedge funds, private equity firms and General Electric, hoping to buy enough voting shares of Dow Jones to give him the power to thwart a sale, the paper reported on its Web site, citing people familiar with the matter.
The Dow Jones has just annouced that there's no deal for Rupert Murdock's News Corporation to buy Dow Jones and the Wall Street Journal. Stay tuned.
Here's the details from Reuters:
By Robert MacMillan
NEW YORK (Reuters) - Rupert Murdoch's News Corp. has not yet reached a deal to buy Dow Jones & Co. Inc. and discussions continue, representatives for Dow Jones and its controlling Bancroft family said on Friday.
Talks are continuing over such issues as price, two sources familiar with the matter also said on Friday.
Dow Jones shares gained 1.6 percent to $58.79 on the New York Stock Exchange.
The comments on Friday countered a report in London's The Business weekly magazine that said the two sides have completed talks and were expected to announce a deal next week, citing unnamed sources acting for the Dow Jones board.
The report also said Dow Jones had accepted Murdoch's original offer of $60 per share for the company. Investors and analysts have speculated Murdoch might have to raise his bid by a few dollars per share to clinch a deal.
A Dow Jones spokesman said the report was incorrect. A News Corp. spokesman was not immediately available.
Murdoch made an unsolicited $5 billion offer to buy the publisher of The Wall Street Journal newspaper. The offer valued Dow Jones at a 65 percent premium to its stock price before the bid was disclosed publicly in May.
"There is no change in the status of the discussions currently under way," a spokesman for the Bancrofts said. "News Corp. is continuing to conduct due diligence and the negotiations are not complete."
Some three dozen Bancroft family members control Dow Jones through a combined ownership of 64 percent of voting shares.
Murdoch and the Dow Jones board last week reached a tentative agreement on creating an independent board to oversee the editorial integrity of the Journal and other Dow Jones operations, an element key to securing the Bancrofts' approval.
The board's members would have the power to approve or veto editor candidates selected by News Corp., sources familiar with the matter told Reuters at the time.
It would comprise members chosen jointly by News Corp., Dow Jones and the Bancroft family.
Separately, Murdoch told Reuters in Warsaw last week that an agreement with the Bancrofts would come within two or three weeks, "or not at all," adding that he had no plans to boost his bid price.
A deal for Dow Jones and the Journal, viewed as one of the world's most reputable newspapers, would help anchor News Corp.'s soon to be launched Fox Business Channel, a cable news network rival to General Electric's CNBC.
News Corp., founded from a pair of newspapers in Australia, now owns close to 120 newspapers including the Times and The Sun in Britain, the Australian in Australia and the New York Post in the United States.
News Corp. shares fell 9 cents to $21.55.
(Additional reporting by Michele Gershberg and Kenneth Li)
In a move that's rocked the media world, Rupert Murdoch, chairman and chief executive of News Corp, which in turn is the holder of organizations like Fox, My Space, Direct TV, and of course a dizzying number of tabloids, has just purchased the Dow Jones Corporation, which in turn has the famous newspaper The Wall Street Journal.
Murdock has made no secret of his desire to have the Wall Street Journal in his basket of media companies. To better understand what Mudock intends to do, two Wall Street Journal reporters sat down to talk with the media mogul about the then-in-progress deal to by Dow Jones and by relation, the WSJ. But before I get to that, here's my take on what Murdock's purchase of the WSJ means.
Quite simply, I don't think he's going to try to mess with the journalistic integrity of the paper. But I do think the WSJ's Internet presence will improve dramatically, with (perhaps) blogs and social networks and perhaps video. It's at the very least a logical move. PBS Commentator Bill Moyers has a take as well, one more onminous than my own. Here it is on video:
Now, here's the WSJ interview, which I took from WSJ.com.
WSJ: We have a lot of things to ask you about in your whole career -- it would be a good opportunity for you to talk about your role as a newspaper proprietor and your philosophy and how that has evolved over time.
Mr. Murdoch: I've been a newspaper person since I was a baby, practically. I found it riveting. I just love newspapers, and that's not any exaggeration. And the frustration of my life has been as the company has grown bigger, and we've taken opportunities, I've had less time to pay any detailed attention to them.
We've just had two miserable weeks or three… doing budgets for every single division of the company.
But my father wrote in his will that… he had gone to the trouble to buy [the paper in Adelaide, Australia, the Adelaide News]… so that I would have the opportunity to do good. The quote is available. I've tried to bring up my children with that sense, too. And none of them, certainly the three middle ones, have never thought of a career other than somewhere in media, just because they saw the sort of the life I've led and the excitement of it. And they're all very hard workers, so I'm pleased about that.
How do I see newspapers? You have the opportunity to make a difference. But any difference we make today is providing more choice. We've kept papers alive for years or part of them… took the losses for 15 years or more to develop franchises to give people alternatives.
We've done it with the Australian, the Times in London -- and no one can say that they're not today very, very fine newspapers.
WSJ: Some have described that in the '60s, you were in the newsroom of the Australian and talking to reporters about a story and saying, "That was a great story today and why don't you look at this angle?" I talked to somebody who said to me you're like an enthusiastic news editor who sometimes would get an idea in his head, and it's sometimes hard to persuade him the story wasn't there.
Mr. Murdoch: [Laughter] That's probably true. A long time ago. That was 40 years ago when we started the Australian. And I managed to spend for a few months, about half my time there. Even there I spent half the time on the phone talking to people at other parts of the company. We made plenty of mistakes trying to find our way at the Australian. Plenty of mistakes.
WSJ: At the New York Post you were editor in chief. Wasn't that your title when you first bought it in '76 or so?
Mr. Murdoch: I was going to say it is now, but it's not. It has been at some stage.
WSJ: Is it a sign of how much more involved you were?
Mr. Murdoch: Look, when a paper starts to go bad and go down the drain, the buck stops with me. Shareholders don't ring the editor, they ring me. And that once or twice has led to very unhappy but necessary decisions. I made mistakes but had to change them. It's been very seldom.
WSJ: Can you specify which ones you mean? Do you mean Harold Evans, who you made editor of the Times of London when you purchased the paper in 1981?
Mr. Murdoch: Yes, specifically Harold. He'd made a great name for himself at the Sunday Times…. I was a big admirer of what he had done there, to put that sort of energy in the Times. And he has great expertise in many things -- a great editor of a story. I was warned by two of the national directors to have him not to do it. And it's too long a story, but it ended up A) costs out of control B) the paper changing its policy day by day -- atomic submarines and whatever they were talking about... and the issues were then we had which cabinet ministers had been at lunch which day. Harry is not a strong… I don't want to say libelous things. It ended up with a journalist coming to me and saying, "Look, this can't go on" and that "more than half of us are going to take a walk," and so we had to part company. And he decided to write a book with I would say a tremendous number of inventions. It's OK. People feel the need to justify themselves. Harry was and is remains a very gifted person in many ways … I don't want to defame Harry at all.
WSJ: I want to ask about the independent board in London. You said in your letter to the Bancrofts that you would set up a structure that was "exactly along the same lines" as you did at the Times and Sunday Times. You have now mentioned a couple of times Harry Evans and the independent national directorate. I want to ask you that because one of those rules that you set up was that you would not get involved in staffing decisions. That the board would have veto power over the hiring and firing of the top editor.
Mr. Murdoch: That's right.
WSJ: We talked to a guy named Fred Emery. Emery says that you called him into your office back in March of '82, said that you were considering firing Harold Evans. He said he was shocked and reminded you of this promise that was embedded in the bylaws of the paper, that the independent boards had to approve this. He says you told him that "God, you don't take all of that seriously, do you?" And he said "of course we do" and that you laughed and said, "Why wouldn't I give instructions to the Times, when I give instructions to editors all around the world." What is your response to that?
Mr. Murdoch: I don't remember. I do remember actually a conversation with Fred and it did not go that way at all, according to my memory. That he was extremely critical of Harry, and in fact, I did go to the national directors before I spoke to Harry.
WSJ: I want to ask you about the structure that existed there.
Mr. Murdoch: That still exists. I understand you've checked up with the directors themselves and checked up with the editors.
WSJ: Those who would speak to us. A number of people that we interviewed who were editors at the Times not just in the Harry Evans era, but even after, up to 10 years, describe the board as ineffective. They can't really think of anything it's ever done.
Mr. Murdoch: I guess they never had any complaints to take to the board.
WSJ: We know of at least one complaint that the board handled that I spoke with a director about.
Mr. Murdoch: Really? What was that?
WSJ: Jonathan Mirsky who was working in Hong Kong.
Mr. Murdoch: I wasn't at any board meeting about that. But I know who Mirsky is.
WSJ: He complained publicly that his stories were being spiked. He told us he didn't even know there was a board. I spoke with one of the board members who said because they learned about that, they decided to investigate. He said they called up the then editor of the Times, asked him if he received outside pressure to spike these stories. He said, "No, I did it on my own." And they said, "OK, that's it. That's the extent of our mandate. We're only responsible for protecting the editor."
Mr. Murdoch: The editors decide if stories aren't that good -- they decide that about a lot of stories they spike.
WSJ: Doesn't that suggest the board's power is quite limited?
Mr. Murdoch: Not at all.
WSJ: Since you pick the editor.
Mr. Murdoch: They have to approve. And they interview the editor before he's appointed.
WSJ: They didn't even interview Mirsky.
Mr. Murdoch: You talk to Robert Thomson [Editor of the Times of London] about Mirsky. He's got very strong opinions on the subject. You see what he has written about China in the last two or three months.
WSJ: Do you feel the board has been effective over the past 26 years?
Mr. Murdoch: They do what they're meant to do. They meet four times a year, maybe six times.
WSJ: Four times.
Mr. Murdoch: Four times. OK. You know more about it than I do…. It's quite a large board, but within it, there are six what we call national directors. They are people I haven't met before they've been on.… But basically people I don't know ... They have the right to say, 'No, we don't want that person appointed to the national directorate with us.' They pretty much pick themselves. That's my understanding. Maybe we submit names and they pick one of them or something. And they meet with the editors, the two editors, I believe, separately. There is a bigger board of which they are part of, and they get reports about circulation and trading balances and so on. That goes on for about an hour. Also on the board are two journalist directors that the editors choose, who report back to them what's been said.
WSJ: Are you on the board as well?
Mr. Murdoch: Yeah, but I don't often get there. I'm here.
WSJ: So there are two journalist directors picked by the editors?
Mr. Murdoch: Yes. And then there's a bunch who are senior executives in the company.
WSJ: Are you going to finish the thought in terms of their effectiveness?
Mr. Murdoch: Well, they're pretty limited in what they can do because it's a subsidiary board. We don't go to them to say we want to spend $200 million in putting in a new color plant in order to satisfy the color demands of Sunday Times. We'll tell them about it.… They don't get into business judgments.
WSJ: What is their role?
Mr. Murdoch: They're there to protect editors if the editors feel they need protection. From me or from anyone of the management.
WSJ: Lord Biffen approved…
Mr. Murdoch: He wasn't on the board.
WSJ: He was the British government official who approved the deal -- he was the one who decided not to refer your purchase of the London papers to the monopolies commission -- in exchange for this resolution…
Mr. Murdoch: No. Well, yes and no. All these things had been in existence, they were put in by Thomson [the Thomson Corp., the previous owner of the Times and Sunday Times of London]. What he did was he made actually part of the law of the land. He put it through Parliament.
WSJ: We talked to him and he described it as a political "fig leaf." And said the only reason that this was done was to shield the government from criticism that it was giving you too much power by giving you the two most prestigious papers in the country, given that you already owned two other papers. They didn't consider these very promises important. He said he was ordered to do it by a civil servant. It was really a political cover and that's why they did it.
Mr. Murdoch: I can't comment on that. I don't know.
WSJ: How would the Journal board work? Would it be exactly the same?
Mr. Murdoch: That's what I'm suggesting. I'm told they'd come in with suggestions to me, so I don't know.
WSJ: Who would appoint the members?
Mr. Murdoch: I would have thought that it would be part of negotiations almost, who the first board would be, right? And then it would just roll on from there.
WSJ: What are you looking for?
Mr. Murdoch: People with absolutely no business connections to me nor the family. The family's selling out. They can't sell it and keep it. I have all the respect in the world for them, but you can't have it both ways. I can't put down $5 billion of my shareholders' money and not be able to run the business. That doesn't mean changing the editorial. We have no plans to change anything in the editorial.
WSJ: Do you mean the news side?
Mr. Murdoch: Both. I think the two-headed arrangement works fairly well. There are obviously -- sometimes when they're on different sides, but that's all right. It's part of the character of the paper.
WSJ: You wouldn't change the editor?
Mr. Murdoch: No. Or the news editor. I don't know [Managing Editor] Marcus [Brauchli], but I know he's a friend of Robert Thomson [editor of the Times of London]. And I've heard very high recommendations.
WSJ: What would you do with the paper? The New York Times quoted you as saying the stories on the front page are too long.
Mr. Murdoch: I didn't. Let me say this. I said I was frustrated by the fact that so much of the good stuff I just didn't get time to read, I found myself keeping, putting sections of the paper aside to read when I got home at night, and not getting around to it. That's my incapacity as a slow reader, perhaps.
WSJ: But you are spending $5 billion to buy the paper.
Mr. Murdoch: I think it's a big opportunity in the digital area…. We've never seen such an expansion globally around the world.
WSJ: Norman Pearlstine said you had said that if you succeeded, you would give up your job here for a year and spend the time at the Journal. It was in the Los Angeles Times.
Mr. Murdoch: I have said in the past, you know what I'd love to do is retire and be the full-time chairman of the Journal for a few years… but I've got too many responsibilities here and everywhere else.
WSJ: Tell us what you would do… Are there changes you would like to see at the Journal, improve it?
Mr. Murdoch: Not at all.
WSJ: Some people would say the front page might be boring.
Mr. Murdoch: The front page is not boring. Absolutely not.
WSJ: Then what's the opportunity for you? Digital?
Mr. Murdoch: I think it's in the digital area, digital and TV. And I think we've got to pour some money into digital. We've got to do a lot of things there… There's so much going on on the Internet. We've got to find new ways and new business models to get revenues. Or else the world is going to be owned by Google. I was asked at this investment thing I had to go to, what competitors I see I would have in five years time. Globally. I said I'm sure they'll be a lot of them. I know one is Google. It's just getting so strong, so powerful. And I know the guys, and like them. They're friends of mine. But it is a big fact of life. They sort of just hit the mother lode of search advertising and they're just destroying Microsoft search, hurting Yahoo's and making others irrelevant. I don't understand the technologies but whatever their technology is, it seems to be producing a much higher margin of profit. What are they going to do next? I saw in the New York Times today they're devising certain, a lot of computer applications which would directly challenge Microsoft, which they'll give away. So it's going to be very interesting. Four or five years ago we were all convinced Microsoft was going to take over the world. Now we're all convinced it's Google. But that's another subject.
The Internet is a great leveler. All newspapers count for less these days. So … as far as I'm concerned, I want to drive News Corp., as I've said, into being the greatest content company, whether it's in news, opinions, writing or whether it be film or television. I mean there are so many new pipes in how you deliver these things. And so on. We'll just have to use them all and see what's economical. I had a study done, and I think you've had many more studies done down there. What if they made The Wall Street Journal free instead of charging 80 bucks?
WSJ: You mean WSJ.com?
Mr. Murdoch: You'd have 10 times as many visitors and lets say five times as much advertising. But you'd lose the other, it works out at about a push…. So, the problem with a regular newspaper is how do they replace or hold their revenue models. It's not all been about the Internet. Change of lifestyle, people's time. Circulation really has been going down for 20 years before the Internet. And on top of this, in this country you have the impact of the discounters. The Targets and the Wal-Marts and what they've done to the department stores… So what's happened at papers like the LA Times. Used to see pages and pages of five different department stores. Now you get a couple of pages from one … We'll see how Mr. [Sam] Zell handles that.
WSJ: So no changing of editors then and you would leave existing management in place. Would you call them up and talk about the news of the day?
Mr. Murdoch: I'd love to wander around. I'm not going to have much time to do it. I find people quite like it if I show an interest in their work.
WSJ: How do you view the business side and the news side, and whether there's a separation or a wall between them so that when The Wall Street Journal covers News Corp., would that change?
Mr. Murdoch: There's an absolute wall. I just ask you to spell my name right Have a look at the reviews of Fox films in the Post. You can be sure that every one gets slammed ... Do they try to help our business interest or not? The answer is no.
WSJ: There seems to be other examples. The Daily Telegraph in Sydney a few weeks ago devoted most of its front page to your announcement that News Corp. would reduce its carbon emissions. The company logo was in the headline and there was an editorial that suggested you were a visionary.
Mr. Murdoch: [Laughter] I don't know anything about that. And we sure didn't do that in the Post, which I'm closest to, hardly got them to notice it. Actually, it's interesting. It caused huge excitement among our staff in Australia and in Hollywood. And a fair bit in London. New York was pretty cynical.
WSJ: Isn't this shilling for News Corp?
Mr. Murdoch: That is, absolutely. Shouldn't be. That's bad.
WSJ: The editor told us he was proud of it.
Mr. Murdoch: They're all crazy greenies over there … Don't say crazy. Extreme greenies. They're also coming out of a 10-year horrible drought.
WSJ: There was the famous 1996 New York Post headline: "Ted Turner: Is He Nuts?"
Mr. Murdoch: Page one? Well, we were in a war …. We're making up at the moment, heavily.
WSJ: Are these editors doing this to get on your good side?
Mr. Murdoch: I don't know who pulled which string, which made Gerald Levin go back on his word, on his promise that he was going to carry Fox News -- and when he walked out on us … We went to war with Time Warner. Why shouldn't Fox News be on? Why shouldn't any news be on? I even put Al Gore's news on DirecTV for which I suddenly became his world's best friend, I think. Because he bought this little thing and that was the only contract they had. He's made it and now he's got it going on Comcast. He's got it everywhere. I believe in a variety of opinions, we're not trying to push one side.
WSJ: You said you went to war with Time Warner. But is using your papers to campaign on your behalf appropriate?
Mr. Murdoch: Probably not. I think it's OK. You're talking about the daily New York Post in same breath as The Wall Street Journal. They're not the same.
WSJ: Do you agree that you were using them?
Mr. Murdoch: You seem to be reminding me of things. I didn't certainly write that headline or doing anything. I am guilty of making jokes that it was time for Ted to go back on his lithium … That's when he called me Hitler or something.
WSJ: You also went after New York Daily News owner Mortimer Zuckerman with the Post. He had that Coliseum dispute with the city. The coverage was a bit excessive and very negative. One headline called him "Suck-up Zuck." It did seem like a campaign against him.
Mr. Murdoch: It certainly wasn't me… there may have been a very worthwhile campaign, that he was taking the city for a ride. I don't know. I've completely forgotten the details. It was a genuine public issue.
WSJ: Another one was U.S. Sen. Ted Kennedy in Boston, when he tried to stick in that amendment to get you to unload the Boston Herald.
Mr. Murdoch: He didn't try, he did.
WSJ: They ran headlines calling Ted Kennedy "Fat Boy." I talked to Ken Chandler who said that this was basically your cause -- that he was the general in this campaign. He said you both share the same world view. He conceded it got personal. A Herald columnist still calls him "Fat Boy" to this day.
Mr. Murdoch: Don't blame me for that what they're doing today. Look, a knock-around tabloid calls a lot of people things. We don't harbor any hatred of Teddy Kennedy or any Democrats.
WSJ: One thing to address, you obviously have a great love of newspapers, but you're also a business man…
Mr. Murdoch: Had to be. I mean, if they're not viable, the papers die.
WSJ: Do you think there is a dividing line -- or ought to be -- between the business side of a news operation and editorial side?
Mr. Murdoch: You've got to try and keep politicians at arm's length as much as you possibly can. When I go to London I'm courted by the leader of the Conservatives and I'm courted by Blair and so on… It really gives you an insight into people. But you mustn't be drawn into a feeling of closeness on a personal basis because they have too much influence on you and your judgment. And that goes for an editor, as much or more for a publisher.
WSJ: Seems to me as a proprietor, you have every right to tell them who to endorse.
Mr. Murdoch: No. I don't think so. I don't do that in London, and I wouldn't do it with the Journal.
WSJ: You did it at the Post early on.
Mr. Murdoch: That's different. I wouldn't at the Journal and I do not do it at the Times. The Times [and Sunday Times], in the election two weeks ago in Scotland came out for opposing parties. The Sunday Times had gone crazy. I didn't know they were going to do it. I wouldn't have spoken to them.
WSJ: We get the sense there's not as strong a dividing line in this area as there is in other companies. Editors feel like they are part of the corporate group. One example in Australia, some of your papers guarantee space to the Australian Football League in exchange for certain advertising rights. Generally it helps them with their relationship with the AFL, and it was mentioned when Foxtel and News as a group bid for TV football rights and won in 2001. The idea of guaranteeing anybody editorial space in exchange for some sort of business relationship is something unusual.
Mr. Murdoch: I have no knowledge of that at all. We certainly would never do that. I didn't do it. If you're saying it happened, I'll take your word for it.
WSJ: We want to talk about how you've changed your role -- in 1972 you helped design ads for the Labor Party in Australia that during the campaign ran in the Daily Telegraph.
Mr. Murdoch: I never got too close to [former Australian Prime Minster Gough] Whitlam, and they would have made a terrific difference, we really poured it on. One of my lessons in life not to get too close to politicians.
WSJ: You don't recall writing the ads?
Mr. Murdoch: I'm not denying it, I just have no memory of that. I might have written an editorial, but I don't think an ad.
WSJ: Why was that a lesson in your life?
Mr. Murdoch: Oh, I think we went a bit overboard [in supporting him].
WSJ: What about in '75 during the very contentious election.
Mr. Murdoch: I think we did a good job of covering it … The whole thing was falling apart… The government and everything was just getting terribly out of control. Gough was always going on extended trips to Crete to look at ruins.
WSJ: The 1975 campaign got a lot of attention. There was a strike.
Mr. Murdoch: …There was a lot of emotion from all sides.
WSJ: Some people have made allegations that you directed people to write certain anti-Whitlam things.…
Mr. Murdoch: No, but there was a very strong editor at the paper, Bruce Rothwell, who was anti-Whitlam. He certainly spiked a lot of people's copy… Reporters, everyone got so emotional they had reporters writing "Whitlam bestriding the nation like a giant" and so on. And he was down to about 30% in the polls and Bruce tried to bring balance into it…
WSJ: Paul Kelly told me he was replaced as political correspondent during the campaign because he had gone public opposing the company's point of view. You had rehired him in '85 to be the chief political correspondent at the Australian and that he went on to edit the paper.
Mr. Murdoch: I didn't personally replace him. I was living here. I remember he did leave and then I remember him coming back.
WSJ: The fact he had to be replaced...
Mr. Murdoch: I don't bear grudges. Not at all.
WSJ: Do you think Rothwell went too far?
Mr. Murdoch: I think he may have been too inflexible. He really was trying to bring balance. High emotion on all sides.
WSJ: The Australian wrote that the campaign set back the readership by 15 years.
Mr. Murdoch: Not true … What set back the readership was that I wrote a story that was a terrific scoop….
WSJ: The Iraqi loans affair?
Mr. Murdoch: Yeah. Absolutely true word for word… My source disappeared when it came to court. But my secondary source lied and later became prime minister, I won't name any names. [Laughter]
WSJ: How many times did you write stories yourself?
Mr. Murdoch: Very seldom. But that caused such an uproar that there was actually an organized boycott and all the schoolteachers, Labor Party members canceled the paper. We lost 10-12,000 circulation and that did take a long time to get back.
WSJ: The controversy was over the story, not that you wrote it?
Mr. Murdoch: It was daring to suggest that Gough had any blemishes.
WSJ: This is before the elections?
Mr. Murdoch: It was way after the election. Because there was a crisis, he'd been promised, he was given cash, which they'd spent, and was promised that they'd get another quarter of a million and they spent that too. Then the ad agency was going to go broke because they couldn't settle with the newspapers which they were under a legal contract to do. That caused a panic, and the guy who organized the meeting, decided to tell me about it. I hardly knew him. I didn't know how to check it out… and I found a secondary source on the story. He was visiting Israel, and he said it's exactly true. I've got to fly home now and get a loan from the bank.
WSJ: Did you put your name on the story? Was it "By Rupert Murdoch?"
Mr. Murdoch: The byline was special correspondent but everybody knew.
WSJ: But that wasn't the only time you wrote a story, or was it?
Mr. Murdoch: Yeah, [the only time] that I can remember.
WSJ: I want to ask about this Birmingham Gazette incident in England. Apparently, you wrote a letter after your internship to the paper's owner.
Mr. Murdoch: All at the age of 19, yeah.
WSJ: Denouncing the Gazette's editor, Charles Fenby, as incompetent, urging that he be fired. His son told us this. He said Fenby kept his job and laughed off the episode. Do you remember writing it?
Mr. Murdoch: Absolutely… I wrote sort of an around-town gossip column type thing… it was very respectable… and the last of my three months there or six months there … but no one ever saw Fenby or anything. I should never have wrote that letter. It was 57 years ago, give me a break. [Laughing] It was correct mind you, what I wrote. I won't take it back.
WSJ: We want to ask you about an episode about Frank Giles, the former Sunday Times editor. This has been recounted many times in books. Even before the deal was closed on buying the Times and Sunday Times, there's this episode where you go in the composing room and you see the editorial being written up and it fails to mention one of the papers that Express newspapers owned. And you pencil it in, and they take great offense. Evans wrote that he scolded you and you apologized profusely.
Mr. Murdoch: It was so ridiculous. We're in a hot metal room… I could see this factual error and I gave it to Harry and said, "Look, there's a mistake in here." This thing that I was seen putting a pencil on a proof. Come on, I was trying to improve it.
WSJ: He also says that despite one of the promises that you would not have anything to do with staffing decisions, that you ordered him to sack the magazine editor.
Mr. Murdoch: No. Frank's gone nuts. He really is losing it. I saw him over the summer. He was very nice. Never. I don't even think we had a magazine at News of the World at the time, that long ago. But certainly, I never did that. A color magazine was sort of the big winning thing that Thomson [Corp., the previous owner of the paper] did. He thought they have them in America, let's have one here. It crippled us financially a little bit … It jumped the circulation of the Sunday Times a couple of hundred thousand. I never did that. Never, never, never.
WSJ: Frank Devine says Ken Cowley, when he ran News Ltd. in Australia, tried to pressure them to not run stories that would hurt News Corp.'s other businesses and Ansett, the airline, is the example that several people bring up. Devine said he thinks he was fired because he wouldn't agree to what Cowley wanted of the coverage of the pilots' strike in '89.
Mr. Murdoch: I don't know about that. At all. I know why Frank Devine was moved, but that's another matter. Frank was a mistake of mine. I love Frank.… I got to know Frank here, Frank had been one of six editors at the Readers Digest… And to put him right into a daily paper. You've got to adjust to the pace…
WSJ: Then why did you also make him editor of the New York Post and the Australian?
Mr. Murdoch: I don't know. I really forget that time. Whether Frank asked to go back to Australia or I thought it was a good move that he was a more cerebral sort of person … I've honestly forgotten.
WSJ: Do you think maybe there was too much of a culture where some of these executives thought they could pressure editors about things that related to other parts of the company?
Mr. Murdoch: No, certainly it wasn't set by me. No and I'm not sure that's true about Cowley. I'm not sure at all. I wouldn't defend the practice.
WSJ: Andrew Neil of the Sunday Times told us when he was the editor, they had a story about British officials preparing to bribe to win a construction contract in Malaysia and this offended the Malaysian prime minister. At the time he said you were trying to sell satellite dishes for Star TV in Malaysia. He says you called him up and told him the coverage was boring.
Mr. Murdoch: I never tried to sell any satellite dishes in Malaysia. I remember the story which they tried to run and run and run. I said, "Are you sure of your facts? Have you gotten a smoking gun here?" I might have asked him that. But I never tried to stop it or anything else. I was surprised at Andrew…. He certainly came out against Thatcher and tried to kill her without a word to me.
WSJ: Do you think that was that a mistake on his part? Should he have asked you first?
Mr. Murdoch: No.
WSJ: Why were you questioning those stories? Why would you care about those stories?
Mr. Murdoch: I want everything to be accurate. I want to produce good newspapers.
WSJ: So there was no business interest for Star in Malaysia?
Mr. Murdoch: No.
WSJ: He says he left his job over this.
Mr. Murdoch: Bull----. Who? Andrew? Bull----. Andrew left years after that … And then he wanted to come to America and do TV here… We made pilots of shows … and showed it to focus … I said to Andrew, "Listen, I'll support you as to the quality of your stories … but you can't be the star and the director. You can be behind the camera or you can be in front of the camera, but you can't have both. And he said, "If that's the case I'll have to go back to England or my public will forget me."
WSJ: Your criticism was over accuracy? Did the Malaysian prime minister complain to you?
Mr. Murdoch: No.
WSJ: We want to ask you about the South China Morning Post. We talked to Seth Faison. When the paper first started the Beijing bureau, he and another reporter say you never interfered, but they say Clarence Chang, who was on the business side of the paper -- in 1988 he was the managing director -- did. They say he was going to Beijing for a business meeting and while there he met with the reporters and complained to them about a column they wrote that was critical of a spring festival covered on Chinese television. And Faison says Chang told them they should write more upbeat stories about China. He said to them, it's "good for me, for you and it's good for Rupert." The reporters said they ignored the appeal.
Mr. Murdoch: Good.
WSJ: You don't approve of telling reporters to write positive stories?
Mr. Murdoch: No.
WSJ: Why did you sell the paper?
Mr. Murdoch: Because I saw what was coming… There would be pressure from Beijing every day. And I think it's just about driven the poor guy who bought it mad although he's got big interests in China… they've now got someone from Xinhua sitting outside their office…. It was a very profitable paper.
WSJ: Was that a problem in terms of expanding in China?
Mr. Murdoch: That was never part of the plan … The decision to sell it was to get out ahead before any pressures came from anywhere. We never had any policy pressures on us there at all.
WSJ: So you saw it coming. But was your ultimate concern down the road that to do battle with Beijing might be bad for your expansion plans in China and you wanted to avoid that?
Mr. Murdoch: No. We don't really have any expansion plans. We have a little channel in China … in Shanghai which is officially allowed onto two or three cable systems. I think we've managed to get the losses down..
WSJ: Things haven't gone great for anybody?
Mr. Murdoch: For anybody. Ask Google.
WSJ: Tell us about why you dropped the BBC in China on Star TV.
Mr. Murdoch: Totally separate issue, two different things. The BBC was very simple. We bought in a battle with Pearson, actually, because we were partners in Sky and not getting on at all. They turned up trying to buy Star and I went in fairly blindly … and it was losing $100 million a year, and they were putting out these channels over Asia all in English … So was MTV, and so was Prime Sports. And so on. I mean how are you going to get an audience in English? It's ridiculous. I said how are we going to pay BBC ten million dollars if they get billions of dollars in taxpayers' money? They're trying to kill us in England. Let them pay their own way. The service goes on uninterrupted as far as I know. But at their cost …
WSJ: We spoke with Gary Davey who was then head of Star TV in Hong Kong. He said one issue was that the BBC station identifier showed the Tiananmen Square episode and it was a constant reminder. He said you were emphatic about dropping the BBC.
Mr. Murdoch: Primarily a financial consideration. But it might have occurred to me, this might have not hurt relations with Beijing. At that stage, I had not been received by a single minister or anyone. They had a report from Xinhua that when I had the South China Morning Post that I was a member of MI6 or MI5 [British intelligence agencies]. So no one was allowed to see me. We just had a total blackout for five years.
WSJ: And the book by Chris Patten, the former Hong Kong governor?
Mr. Murdoch: Look, we reject books all the time, publish too many, not politically, don't get me wrong. Everyone's publishing too many books to get any space in Barnes & Noble or anywhere. The Chris Patten book, when I was asked about it, I said … "I just think that he was a terrible governor down there… And he was going back on everything that Thatcher had said … he was trying to change the status quo ... But the editor fell in love with it and the manager never had the guts …. It was just finding another publisher. We weren't suppressing it, in any sense. On the other hand, in retrospect, it would have made a whole lot less fuss if we just let it go on. A mistake.
WSJ: Your personal representative in Beijing said you thought the book would set you back and to "kill the f------ book." Did you think it would set you back?
Mr. Murdoch: No. No one in China ever spoke to me about it. I was never put under any pressure.
WSJ: We'd like to come back to an important point. What's the difference between the Post and the Journal?
Mr. Murdoch: I feel more restraint at the [London] Times than I would at the [New York] Post and so on. Let me give you another parallel: London. I walk around the Sun office a lot more than I walk around the Times office. And talk to the editor a lot more, I don't say do this and do that. But she'll come into me and say Gordon Brown called me today about such and such and what do you think? And I'm probably therefore a little bit more involved.
WSJ: Why is that?
Mr. Murdoch: Because they don't have any restraints on me. That's all I'm saying. That would make this more of a parallel, you know. And I'm quite unashamed, I enjoy popular journalism. I must say I enjoy it more than what you would call quality journalism. I used to bait my friends in London by calling it the unpopular papers. That's before we got the Times.
WSJ: You personally like The Journal, don't you?
Mr. Murdoch: It's absolutely my first paper, the Post is my second…. What worries me is people not reading newspapers, they have like My Yahoo… I couldn't live with that -- at least scanning three or four newspapers in a day. And my head's full of useless info, but some of it turns out useful occasionally.
WSJ: The Guardian's Sunday newspaper, the Observer, in London reported that you would appoint Robert Thomson as publisher of The Wall Street Journal. Is that true?
Mr. Murdoch: No. I haven't thought about it. New idea to me. All I've heard about [Wall Street Journal Publisher] Gordon Crovitz is that he's this brilliant man.
WSJ: So does that mean you wouldn't appoint Thomson as publisher?
Mr. Murdoch: I've never thought about it. And I would imagine that Gordon Crovitz would stay there, I don't know. I understand that they've all been given golden parachutes or something. Or change-of-control bonuses of several millions. But I don't know what it adds up to.
WSJ: DJ stock is trading at around $61. That's above your $60 offer. Are you prepared to offer more?
Mr. Murdoch: No, no. Everyone thinks that $60 is a terrific offer. Most people think I'm stone crazy….
WSJ: So you're not willing to raise it, under any circumstances?
Mr. Murdoch: No. Right. Look let's go into a negotiation and let's see. I'm not willing to negotiate it. I'm not willing to discuss it any further. I don't have any secret plans to pay more.
WSJ: But you could easily afford to pay more, no?
Mr. Murdoch: I'm not holding a charity, I could afford to give more money to charity. But are the Bancrofts the best charity in the world, I don't know.
WSJ: We heard that you've been having ongoing contact with different members of the family since some time last year.
Mr. Murdoch: I haven't personally.
WSJ: Through representatives?
Mr. Murdoch: Various people, yeah.
WSJ: You told people last year you couldn't do a deal right then because of Liberty Media Corp. But you were trying to gauge the interest.
Mr. Murdoch: If I'd said that at the time that would have been true. I just don't remember…. I've never spoken directly but someone might have been. You won't get a denial from me.
WSJ: On behalf of our colleagues, you say that retaining the team of journalists, editors, management would be a key priority for News Corp. What would you do to retain the team?
Mr. Murdoch: Huge raises for everybody. [Laughter] I'd have to see when I get in there. But I would have thought that the editors who are there in the different areas from what I've heard have the support of their staffs and I will try and build that up. You've got to have really strong leadership and excitement and things going. That's also got to go on the business side because they've got to get some more advertising. I mean the profit of The Journal is very small if you look at the reports. Those silly little Ottaway papers make more than the Journal does.
WSJ: So you would focus on generating more ad revenue?
Mr. Murdoch: Yeah, or and electronic everything, circulation, anything. The Journal has had no money spent on marketing that I'm aware of for years. I imagine whatever we do would take the profit down in the short term… I mean of the Journal… It's got to have money put back into it, particularly on the digital side.
WSJ: If you want to raise circulation immediately some people would assume you would try to liven up the Journal.
Mr. Murdoch: No, no, no. I want to do some due diligence. I don't even know exactly how many printing plants you have. Or how many you own… or anything.
WSJ: An important issue: If The Journal were to do stories about your other interests -- and they were stories that you didn't like -- how would you deal with that? Would you expect to be informed about what we're writing?
Mr. Murdoch: No. I'd complain like hell if they were incorrect. I would imagine I'd know because you would have been questioning me like you are now. But you'd have to run what you like. The only thing I complained about is when they attacked my wife. And as Paul (E. Steiger, former managing editor of The Wall Street Journal ) said in a public statement, nothing unusual about it [my call to the paper], and nothing inappropriate, was said.
WSJ: Would you take any action against the people who wrote that story?
Mr. Murdoch: No. They're gone.
WSJ: But some aren't.
Mr. Murdoch: Well, then don't tell me what their names are. I know what motivated the story … I'm sensitive.
WSJ: Some people have said that if you buy The Journal, there would be a perception if we did a story about Viacom or Time Warner that you would be behind it. Even if we would have run a story anyway.
Mr. Murdoch: I tell you if you do a story about Viacom, I'll have … [chairman Sumner Redstone] on the phone for two days running. But I won't even tell you about it… What if you do a story on Fortune Magazine or Time Inc. or whether you do a story about the New York Times, you do it all the time, people can say the same things about you, right now.
WSJ: No one would dispute that in the history of journalism, you're a major, major figure. But there's quite a few people who feel you're not a positive figure. Does that bother you?
Mr. Murdoch: No… I've been around a long time. I've got a thick skin.
WSJ: When Fox News launched there was a double-page spread in the Post talking about this great new channel. Would that have been something that you asked them to do? Or would that have been something they would have done on their own?
Mr. Murdoch: I think they would have done it on their own. We're all in it together. We're a pretty close company. They didn't do it to say, "Let's suck up to Murdoch or this or whatever." They'd like to see it succeed probably. I don't remember.
WSJ: You wouldn't use The Journal in any such way to promote the launch?
Mr. Murdoch: No. Now I would imagine that the launching of a major news channel would get noted.
WSJ: Do you think you'll face any competition for Dow Jones?
Mr. Murdoch: Not from anybody that I've seen mentioned yet. I mean, if someone like Google comes in and starts throwing around their funny money, who knows But I don't think. Look, the country's been combed…
WSJ: So are you confident at this point that it's yours?
Mr. Murdoch: No. I'll see what demands they make at this first meeting. If they're reasonable, then they should be OK. And Then we'll see what they go into… There has been so much publicity, I don't think it's necessary to put an investment bank on this for two months looking for other bids, and I think that would create an uncertainty about the whole company which would be bad for the company. But you know, they'll do what they will do.
WSJ: The Tribune company was shopped around for quite a while.
Mr. Murdoch: Yeah, but there weren't any buyers.
WSJ: There was one in the end.
Mr. Murdoch: For $90 million. Risk. That's in the figures …
WSJ: Why didn't you do it?
Mr. Murdoch: Don't want to spend the rest of my life going through that, getting rid of people, ugly. I think they're in decline, they can fire a few hundred people everywhere, save a couple of hundred million dollars ... I guess they will have a billion a year to pay down the debt, that's what it sounds like. No, a bit less … I would have thought that, although the decline in readership … will probably go on…
WSJ: They're all going to MySpace.
Mr. Murdoch: I wish they were. They're all going to Facebook at the moment.
