Sunday, May 13, 2007

Murdoch, like Hearst, yearns to tell the world how to think

Citizen Murdoch reaches out
Mogul wants to be man on the Street

Rupert Murdoch, a man who has a penchant for buying, is out there doing some selling. Specifically, he's selling the Bancroft family on the idea that he's not William Randolph Hearst.
The Bancrofts are the New England Brahmins who control Dow Jones & Co., and the Wall Street Journal, a media empire that Murdoch covets. He covets it to the tune of a lofty $5 billion bid.

Murdoch has always salivated for the Journal because it's rich, conservative and could be an elegant companion piece to his long-planned Fox Business Channel. But the Bancrofts, who control 64% of the company's voting shares, are resisting Murdoch's entreaties.

They don't explain why (Brahmins never do), but clearly they feel a certain responsibility -- noblesse oblige -- for the health and autonomy of their paper. At the same time, they distrust Murdoch, the media baron, as being, well Hearstian.

Which to some extent is understandable. Murdoch, as he gets older (he's just turned 76), increasingly displays some fascinating ambiguities. Unlike Hearst, his business acumen continues to sharpen with age. But like Hearst, he yearns to tell citizens of the world how to think and what to believe, and like Hearst, his views grow ever more polarizing. Witness his zealous support for a president with a 28% approval rating, according to the recent Newsweek poll.

There are other Hearstian reminders as well. Murdoch, like Hearst, feels drawn to Hollywood. Though he's never built a castle, Murdoch, like Hearst, entertains grandly at his various mansions (and yachts). Like Hearst, Murdoch also loves newspapers, not only for their economic heft but also for their ideological clout.

Hearst didn't hesitate advocating war when it served his purposes, and in his later years seemed drawn more to Hitler than to Roosevelt. He worshipped power for the sake of power.

Murdoch represents himself as a libertarian but is fiercely pro-Bush, pro-Iraq War and pro everything Republican. While many of his newspapers stay above the fray, the Murdochian world view is vividly on display at the New York Post and Fox News. At the recent Milken Conference in Los Angeles, Murdoch vented his opinions before an enclave of business CEOs, as though reminding fellow power players that he understands not only how to build a media empire but also how to run the world.

Given all this, Murdoch's appetite could stir problems on the political front. A cross-ownership waiver obtained by Murdoch will expire next year -- News Corp. needs the waiver because it owns two TV stations in New York as well as the Post. Democrats in Congress could also try to bar Murdoch's acquisition by redefining the Wall Street Journal as a local rather than national newspaper, thus making him more vulnerable to cross-ownership constraints.

To be sure, Murdoch has gone out of his way to stress that he will not impose ideology on the Wall Street Journal, a dubious commitment since the newspaper's editorial pages already proclaim that the Bush Era is golden. The news pages of the Journal, on the other hand, have remained remarkably "pure" -- that is, free of ideological taint. Some of its reporters, nonetheless, are nervous about whether things would stay that way.

Peter Kann, the paper's long-term executive editor and later chairman, dispatched a letter last week praising the Bancroft family for upholding the Journal's independence, while James H. Ottaway, Jr., a former Dow Jones executive and major shareholder, saw fit to remind his confreres that Murdoch's control would imperil the Journal's "news quality and integrity."

As a corporate leader, to be sure, Murdoch has some important achievements to "sell." Just about the entire business community applauds his dealmaking prowess -- witness MySpace. His senior management team at Fox also is vastly admired. Peter Chernin provides brilliant leadership and Tom Rothman and Jim Gianopulos have run the studio with a consistency that's the envy of the rest of Hollywood. Roger Ailes, too, has brought a pizzazz to network news that's left CNN in the dust. Only the Fox Network has failed to build a durable management.

As a result of all this, the media community seems a bit dazzled by the Rupe offensive. The Economist, while criticizing Murdoch for taking the Times of London "downmarket," nonetheless has instructed the Bancrofts to accept his offer. The Economist's parent, Pearson, might regret this recommendation -- Murdoch could emerge as a more important competitor of the Financial Times, which also is part of Pearson.

Writing in the New York Times, Andrew Ross Sorkin also recommends that the Bancrofts give the nod to Murdoch. Having been granted an exclusive and persuasive interview last week, Sorkin concluded the media baron would be "the perfect publisher for the Wall Street Journal."

Sorkin also notes that Murdoch's longtime banker, Goldman Sachs, suddenly is representing Dow Jones, with which it has never had a relationship. John Thornton, a former Goldman president, also is a member of Rupert's board of directors.

In his declining years, William Randolph Hearst found the world to be increasingly disinterested in his power and distrustful of his world view. One senses that, whatever the surface similarities, Rupert Murdoch has no intention of replicating that scenario.

The big question: Will Rupert be defeated by his own appetites? And, more specifically, does the world want to be told what to think by a media mogul whose ideas, like Hearst's, grow ever more doctrinaire?

Tilting at a Digital Future

Tilting at a Digital Future

IN Rupert Murdoch’s world, two things are certain: the sun never sets on the kingdom, and a TV is always on in the background.

On the evening of April 26, several large television monitors adorned the terrace of Mr. Murdoch’s Beverly Hills mansion for a dinner celebrating a special edition of “American Idol” that raised more than $70 million to fight poverty. An Asian noodle station was set out by the pool; nearby, sushi chefs busily sliced tuna for “Idol” co-hosts Simon Cowell and Ryan Seacrest, and seven, hyperactive “Idol” finalists who, when they weren’t clamoring around megastar Tom Cruise, dreamily watched themselves on the big screens. Wendi Deng, Mr. Murdoch’s wife, wore a billowy, green dress and introduced their 5-year-old daughter, Grace, to guests before sending her to bed.

Mr. Murdoch casually sipped wine and chatted with his daughter, Elisabeth, and other guests. He had planned for the event to be an early dinner party, but he finally headed to bed at 1 a.m., leaving music impresario Quincy Jones and others chatting on a sofa. After all, he had work to do.

What partygoers didn’t know was that during the previous week, on April 17, Mr. Murdoch had offered to buy Dow Jones & Company, the venerable publisher of The Wall Street Journal, for $5 billion. So far, he had not heard back directly from the Bancrofts, the family that controls Dow Jones. Signals sent by the Bancrofts’ intermediaries were not encouraging, but he was prepared to fly cross-country and meet with the family on a moment’s notice.

As is so often the case with Mr. Murdoch, the Dow Jones bid is counterintuitive and seemingly quixotic. While investors and media giants have cooled on the newspaper industry, the News Corporation’s czar has patiently waited for the right moment to bid on a prize he has long coveted but felt was beyond his reach. Mr. Murdoch’s bid has also caused hand-wringing about his intentions for The Journal, a publication that has long led the pack in authoritative business coverage.

Perhaps the chief worry among those concerned about the journalistic future of Dow Jones is how much editorial independence the company would have under Mr. Murdoch’s rule. It also raised questions about how well the strait-laced Journal would fit within a conglomerate whose offerings include the online hangout MySpace, racy British tabloids, and table-thumpers like Bill O’Reilly.

WHATEVER the media mogul says he may do with such a powerful enterprise, a close look at what he’s actually done in the past — particularly how he has deployed his far larger Hollywood and television properties — is a telling indicator of what life may be like for Dow Jones in a Murdoch regime.

When Mr. Murdoch bought the struggling 20th Century Fox studio in 1985, Hollywood viewed him as just the latest arriviste, doomed to be suckered by the industry’s vagaries. Yet Mr. Murdoch restored the studio, let his staff there produce the films they wanted (for the most part), and used Fox as a springboard to start his Fox television network and a passel of cable channels and other ventures around the globe.

“Rupert Murdoch is utterly consistent,” says Barry Diller, who once ran Fox and now oversees the IAC/Interactive Corporation. “It’s not like he’s adding toys. This is oxygen to him.”

In almost every case, Mr. Murdoch endured years of losses to put new offerings like Sky Television in England the Fox News Channel in America on the map. There is scant evidence of Mr. Murdoch’s envelope-pushing imprimatur at the studio that is the center of it all, just as it is less in evidence at the large quality newspapers he owns, including The Times of London and The Australian.

Mr. Murdoch’s long-held desire to own The Journal fits into a similar grand plan: to revitalize if not save the original business — newspapers — on which he built his empire. Mr. Murdoch’s vision is to fold together the far-flung news businesses he owns into a seamless digital platform anchored by the Web-oriented Journal and, in the process, reinvent the newspaper industry that his company was built on. “We are a relatively old company deeply rooted in print journalism,” Mr. Murdoch told his top news executives in his Aussie drawl a few days after the “Idol” party. “Now, we have to make huge leap into a completely different world.”

The digital future he envisions has information zipping across an expanding, ubiquitous array of screens — TVs, laptops and cellphones. In a world of proliferating broadband, Mr. Murdoch sees video as a bigger component of the news blur and he wants to meld his disparate video assets into his sprawling digital infrastructure: from Fox News in the United States, Sky News outlets around the world, and the business TV channel he is launching this fall in America and plans to take international (which, if his cards play out, he hopes to tie closely to The Journal).

As Mr. Murdoch tries to make the digital future a reality, skeptics wonder whether he will use his newfangled media platform to merely transmit news and analysis or whether he will package information according to his own needs — and even use it as a cudgel.

A couple of days embedded in the Murdoch camp yields a few clues about what makes Rupert run and why. At age 76, he appears to be in his strongest position in years — with his company’s share price up nearly 50 percent in the past two years and his grip over his company finally secure. He remains unblinkingly fixated on the advancement of the News Corporation as though it were a nation state and his relentless corporate march has imbued his company with a maverick culture less apparent at other media giants scrambling to adapt to the hurly-burly of the digital age.

Mr. Murdoch has also shown little hesitation to reverse course when his plans go awry. He says that China, for instance, is no longer the corporate imperative that it once was for him. Until recently, he was determined to build a global satellite-TV empire to delivery his programming, but the rapid emergence of the Internet cooled his ardor. DirecTV, was a company he pursued for years with as much fervor as he now shows for Dow Jones, but he recently agreed to sell it only three years after it was acquired. While the News Corporation’s involvement in the newspaper business could seem like nostalgic attachment to an industry that has seen better days, Mr. Murdoch is hardly known for being sentimental. Indeed, Mr. Murdoch is pretty much the same in public as he is in private, with little evidence of an inner Rupert — even to some who work closely with him.

“This is a man who’s been single-minded since he was 22 years old and he’s woken up every morning with the same agenda: which is to extend the reach and power and influence of his company,” said one person close to Mr. Murdoch who was given anonymity to speak openly about him. “I think tomorrow is the same as today in that respect.”

Mr. Murdoch has had an eventful personal life — including six children from three marriages — and his raw ambition dovetails with an endless curiosity about world affairs, a mischievous streak, and a self-image as the ultimate outsider. In fact, Mr. Murdoch says he is most energized when he is taking on “the elites” — words he practically sneers when he says them — in what he perceives as a career-long battle to offer consumers more media choices. (The Journal, of course, represents one of the quintessential elite media trophies).

Asked if even now he doesn’t consider himself an elite, Mr. Murdoch shakes his head. “No, I’m going to keep myself as much of an outsider as possible,” he says. “We just don’t join clubs.”

MR. MURDOCH’S many critics over the years have viewed him in a far less noble light, accusing him of a cynical worldview that appeals to the lowest common denominator. In sum, they say, he is willing to sacrifice principle for profit.

“His business is privatized, government propaganda; that’s all the company essentially does,” says Bruce Page, a journalist who worked at The Sunday Times of London before Mr. Murdoch owned it and is among his toughest critics. Mr. Page’s 2003 book, “The Murdoch Archipelago,” portrayed Mr. Murdoch as nothing less than a threat to democracy. “It isn’t that Murdoch’s particularly wicked. He’s not a fearsome, warriorlike figure. He’s Falstaff. He has absolutely no concept of honor.”

James H. Ottaway Jr., whose family owns 6 percent of Dow Jones, sounded a similar, if more measured, alarm in a statement on May 6 opposing the offer. “When Rupert Murdoch’s news interests conflict, his business interests usually prevail,” Mr. Ottaway wrote.

This is far from how Mr. Murdoch sees himself, although he has acknowledged that “it has been a long career, and I’m not going to say that it hasn’t been punctuated by mistakes.” He also argues that he has evolved as a newspaper owner and does not interfere in coverage or dictate editorial positions at his quality titles.

There are certainly well-worn stories about how he dropped BBC from his Chinese satellite service to appease the government, published the so-called Hitler Diaries in his Sunday Times, and pummeled foes in the pages of The New York Post. But his proponents say that there are the less-told stories about how he once owned The Village Voice and New York magazine and left their editorial operations largely alone.

Asked what he would tell the Bancrofts if they granted him a meeting, Mr. Murdoch says, “I want to tell them how much I appreciate them as a family and to impress on them that my family would be a worthy successor.”

Mr. Murdoch half-jokingly says that he is too busy to roll up his shirtsleeves and write headlines; after all, he has 47,000 employees. He has also offered to install an independent board at The Journal to ensure independence, something he did at The Times. But he has also made it clear that he is not offering a 67 percent premium over Dow Jones’ share price to stay away from the place — and that he vows to invest in the business. In the British market, for example, he has spent nearly $1 billion on new presses, converted the venerable Times to a tabloid format while expanding its foreign bureaus, and started a free daily — all in the past few years.

Although Mr. Murdoch is a huge fan of The Journal’s conservative editorial pages, which are routinely aligned with the political tenor of the Fox News Channel, he insists that most of his editors pick for themselves which candidates they support in elections. In England, it is not unusual for The Sunday Times and The Times of London to support different candidates; same for his big tabloids The Sun and News of the World. (In this political season, Mr. Murdoch says that personally, he is keeping his options open; among the American presidential candidates, “I’m not madly enthusiastic for anyone,” he says.)

Without his cherished newspapers, Mr. Murdoch would be just another billionaire spouting about politics and world affairs and occasionally chairing fund-raisers — not playing as defining a role in shaping public opinion and packaging information. But print isn’t, at first blush, where the action is in the Murdoch kingdom.

From the sprawling Fox studio lot in Century City and the twinkling lights of the Los Angeles splayed out beneath his terrace, newspapers seem like a quaint and distant quadrant of the empire, contributing just 15 percent of the company’s $21.3 billion in revenue in the nine months ended March 31, 2007, and 14 percent of its $3.2 billion in operating income. Like most newspaper companies, the newspaper group is facing slow revenue growth, and its operating margins are running at a solid, if unspectacular, 14 percent.

Over his usual lunch of whitefish and spinach at the Fox commissary three days before CNBC first reported his bid for Dow Jones, Mr. Murdoch boasted that the “underlying readership of newspapers is going through the roof.” Yet he had notably sat on the sidelines as two of America’s largest newspaper groups, Knight-Ridder and Tribune Company, went up for sale and failed to attract more than a single bidder. Had the industry become so impaired that he would never buy another newspaper again?

“It’s all possible,” he said, with an earnest smile. “Never say never.”

In the days after he submitted his bid for Dow Jones, Mr. Murdoch says that he had started to think his offer was going to be quietly rejected. But the Bancrofts authorized the family’s trustee to hire bankers and lawyers to represent them — an encouraging sign. Then, word leaked out through CNBC, to the chagrin of Mr. Murdoch and his advisers, who worried that if it became public the family may close ranks.

Mr. Murdoch was back in New York when the news broke and went on the Fox News Channel to talk about his offer. While he was in the studio, the Bancrofts issued a statement that family members representing 52 percent of the votes in Dow Jones opposed the offer. Mr. Murdoch said that he held out hope — which he says he still maintains — for a meeting with the family.

Three days after his Fox News appearance on May 3, Mr. Murdoch still had not received any direct word from the Bancrofts. He sat on a sofa in his office on the eighth floor of the News Corporation’s Manhattan headquarters, behind him a wall of TV screens showing his channels, set next to a luminescent blue and yellow map of the world. (There is also a rack for his newspapers, flown in daily).

He said that he believed some of the 35 Bancroft family members may be swayed to take his offer, and then did something he rarely does: talk about the past. He spoke of his father’s beginnings in Australian newspapers, and how he rescued papers that, he said, would have otherwise disappeared. “There’s a pattern that goes right up to today, of providing choice.”

Later that same day, he boarded the company jet for a flight to Monterey, Calif. For the third year in a row, he was gathering his top publishing and digital executives from here and abroad to brainstorm about how to go about conquering the Internet. By the time the jet was over Michigan, several News Corporation executives were playing poker in the back of the plane. Col Allan, the editor of The New York Post, watched the Republican debate on a big television screen and Robert Thomson, editor of The Times of London, phoned his newsroom to get the results of the French election.

Mr. Murdoch had planned to view some TV pilots, but never got around to it as he, Mr. Thomson and his executive vice president of corporate affairs, Gary Ginsberg, sat in his study and talked into the night about politics and world affairs. At one point, Mr. Murdoch, wearing a beige cardigan, glanced at a screen tuned to his news channel.

“Fair and balanced,” he declared, repeating the Fox News motto, which he meant as a playful jab at Mr. Ginsberg, who worked in the Clinton administration.

THE next morning, Mr. Murdoch was joined by Peter A. Chernin, the News Corporation president, to kick off the “Digital News Initiative” conference at the Monterey Plaza Hotel. The 60 or so attendees ran the gamut of his company’s news operations, including teams from not only his British and Australian papers and The Post, but also from Sky Television in London, the Fox television group and MySpace.

There was urgency in the room, because the company’s online media outlets do not have the same kind of dominance they enjoy in TV and in print. For instance, both and saw the number of unique users to their sites rise around 30 percent in April versus a year earlier, but they still ranked only 9th and 26th among the most visited general news sites, according to ComScore Networks.

Guest speakers included Mark Zuckerberg, the 22-year-old founder of Facebook, Meg Whitman, the chief executive of eBay, and Kjell Aamot, the chief executive of Schibsted, the Norwegian publisher that generates a majority of its earnings from its online operations. Mr. Murdoch was staying at his ranch in nearby Carmel, where he had a dinner for the group.

Critical to reinventing the newspaper business, Mr. Murdoch told the audience, is getting the 175 newspapers the company owns to share resources and move quickly in unison. “We need to take advantage of our global scale everywhere,” he said.

Although Mr. Murdoch had not expected to discuss his offer for Dow Jones at the meeting, he offered a brief explanation. “We had hoped to keep it private and secret for a lot longer while they were having proper time to consider it,” he said. “I think it’s an incredible franchise with outstanding people.”

The challenges facing Dow Jones are somewhat different then those facing Mr. Murdoch’s papers because financial news is one of the few forms of information that consumers will pay for online. Still, The Journal, like other newspapers, has struggled to find ways to grow as print advertising and readership has come under pressure.

Jeremy Philips, a 34-year-old former Internet executive who joined the company last year to oversee strategy and acquisitions, followed Mr. Murdoch with a presentation that brought the challenges and opportunities facing the newspaper industry into sharp focus.

Online news is typically free, and advertising rates for it are comparatively low. Mr. Philips calculated that for every print reader a newspaper loses, it currently needs 100 online readers to generate the same amount of revenue. The more encouraging news is the costs of reaching those readers are less expensive through the Internet than through print — indeed, The Times of London, which recently revamped its Web site, is regularly visited by more users outside of England than within.

Another slide posited that of the millions of readers who come to various newspaper sites in a given month, a huge majority come only once, a consequence of all those referrals from search engines and aggregators. Mr. Philips said he sees that traffic, despite how fleeting it may be, as an incredible opportunity if all those one-time visitors can be compelled to come back a few times more.

Mr. Murdoch perked up when discussing the online potential of The New York Post, which has consistently lost money since he acquired it for a second time in 1993. At a break in the conference, Mr. Murdoch sought out Rebecca Wade, the editor of The Sun, to discuss the results of that day’s Scottish election. For a while, he sat at the back of the ballroom chatting with Mr. Zuckerberg of Facebook, who sat next to him again at dinner. Mr. Murdoch listened closely.

If one thing was clear over the weekend, it was that Mr. Murdoch’s determination to revitalize the news will depend as much on mastering geeky technology as storytelling and layout. Winning The Journal will require other masterful feats like convincing the Bancrofts that the sometimes fractious Murdoch clan will be worthy stewards.

Mr. Murdoch says that if the Bancrofts grant him a meeting, he would like to introduce them to his grown children so they can see the passion they all share for the news business.

Of course, Mr. Murdoch does not exactly see himself as a wizened septuagenarian preparing to hand off his media assets. His wife, Wendi, is 38 years his junior, and they have socialized with the Google co-founder Sergey Brin and his fiancée, Anne Wojcicki. The Murdochs are planning to move into a $44 million penthouse on Fifth Avenue next year. It is the most expensive apartment in New York and was once owned by Laurence Rockefeller; it is another prize that Mr. Murdoch has said he has long coveted.

By every measure, he appears to believe he has plenty of time to get exactly what he wants. As he wrapped up the conference in Monterey last Sunday, he looked out at his employees and said: “You all think I’m too old.” Pausing for a beat, he added: “I think you’re too old.”