Felix Salmon

In October, the New Yorker ran a detailed

profile of Rupert Murdoch by John Cassidy.

It begins 30 years ago, in 1977, with Murdoch singlehandedly electing Ed Koch

as mayor of New York. It’s worth quoting some of the rest of the profile at

length:

In 1995, Blair travelled nine thousand miles to Hayman Island, on the Great

Barrier Reef, to deliver a keynote address at a News Corp. retreat. In the

speech, he described himself as a radical modernizer, and as the natural heir

to Margaret Thatcher…

On July 28th, Blair flew to San Francisco on a trip that was described as

an effort to promote British technology companies. Many of the British reporters

who accompanied him knew better. “The real reason he is here now is

because Rupert Murdoch invited him here to meet with all of his executives,”

Nick Robinson, the BBC’s political editor, told KCBS, a Bay Area radio

station, referring to the News Corp. retreat that Murdoch was hosting in Pebble

Beach that week….

Blair delivered the opening-night speech. “Rupert, it’s great

to be back at the News Corp. Conference after all these years,” he began.

“When I first met you, I wasn’t sure I liked you, but I feared

you. Now that my days of fighting elections are over, I don’t actually

fear you, but I do like you.”

On August 2nd, the second-to-last day of the conference, Bill Clinton arrived…

Hillary Clinton, who has been attacked by the left for her support of the

Iraq war, has been reluctant to talk about her relationship with Murdoch,

but her spokesman, Philippe Reines, said, “Senator Clinton respects

him and thinks he’s smart and effective.”…

“He’s savvier, and he has far better understanding of how to influence

government, than anybody else I’ve ever met in the media,” Reed

Hundt, a former chairman of the Federal Communications Commission, the body

that regulates the broadcasting industry, told me. “He’s just

smarter about that than everybody else.”…

Tony Blair was pro-Europe when he came to office, but many British commentators,

including some of his own former aides, believe that he modified his policies

to satisfy Murdoch. “Blair was very keen to join the European monetary

system,” Lance Price, a former media adviser at 10 Downing Street, said

to me. “But at every stage of the way he stepped back. And one of the

main reasons he pulled back was that Rupert Murdoch was vehemently opposed

to closer links with Europe.” Price recently published a book, “The

Spin Doctor’s Diary,” in which he writes about Murdoch’s

influence on the Blair government. “It was never discussed in black-and-white

terms,” Price told me. “Nobody ever said, ‘We have to do

this because Murdoch supports it.’ But his views were always heard.

And they were heard ahead of many Cabinet ministers’.”

Downing Street won’t say how many meetings Blair has had with Murdoch,

but Murdoch has spent more time with him and Gordon Brown than he did with

Margaret Thatcher. “She didn’t go out of her way to develop a

personal relationship with me,” Murdoch said. “But Tony Blair

and Gordon Brown, whenever I’m in town they say, ‘Can’t

you come over for a cup of tea?’ When you’re invited by the Prime

Minister to have a cup of tea, you have a cup of tea. It’s sometimes

very inconvenient—if you’re only there two days and you have a

month’s work to do.” Murdoch went on, “And you have to be

careful to have a cup of tea with them both, or they are very suspicious that

you are lining up with the other one.”

This is, without a doubt, a portrait of a global statesman. Murdoch might not

receive a lot of respect in the Wall Street Journal’s newsroom, but he has had

prime access to the most powerful people in the world for decades. Which is

why I’m puzzled that Brad DeLong can write

this:

Can Murdoch make the financials work to make the Journal a good way for News

Corp. to spend $6 billion? I doubt it. Can he find enough synergies to make

the financials not be a total disaster? I think so. And in the meantime will

it give him a platform on which he can play global statesman for a decade?

Yes.

This is the "return on ego" argument for why Murdoch wants to buy

the Wall Street Journal, and to some small degree it surely holds some truth.

But the fact remains that Murdoch is already a global statesman, and he has

been one for decades. In fact, he has been the most powerful press baron in

the world for many years now. Owning the Journal would, at the margin, increase

his influence. But Rupert is not some déclassé billionaire with

more money than clout.

As for the Journal’s newsroom, I think that Murdoch would certainly shake it

up – but he wouldn’t cut it back. I think he would significantly expand

the number of journalists that the Journal has overseas, and that he would turn

the Journal’s anachronistic front page into a must-read destination for breaking

news, rather than giving over vast amounts of hugely valuable real estate to

quirky magazine-style feature articles of no real import. Those are "the

long articles that bore Rupert Murdoch," in DeLong’s words, and frankly

the vast majority of them don’t belong on the front page of a daily newspaper,

if they belong in a daily newspaper at all. The front page of a newspaper should

be a home for news – and if that happens at the Journal, there’s a good

chance that Murdoch is going to need more journalists, not fewer.

It seems as though sentiment is turning

away from Rupert Murdoch in his attempt to buy Dow Jones.

DJ stock

is down $6.50 from the highs it hit immediately after Murdoch’s bid was announced,

and Murdoch is now reported to "regret"

the fact that he needed to make the bid public.

On the journalistic front, defenses of Murdoch are vastly outnumbered by the

attacks on him. The Journal’s letters

page today is wholly one-sided: it has William Cattey saying that he’ll

cancel his subscription if Murdoch buys the paper; Aaron Booker "appalled"

by the attempted takeover; Joe Goldman saying he’d hate to see the Journal’s

"independence and excellence" "significantly undermined";

Chuck Clevenger saying that the Journal has a "sacred, moral obligation";

Charlie Phelps encouraging the Bancrofts "to reject Mr. Murdoch’s bid";

and Judith Press saying that "to think that a publisher of Mr. Murdoch’s

bent could begin to understand the non-monetary value of Dow Jones’s enterprises

is to engage in self-delusion". Only a vaguely cryptic one-line letter

from Tom Sciance ("If Rupert Murdoch gets you, maybe you’ll change your

open-borders policy, and I’ll continue to subscribe") comes close to defending

the barbarian at the gate.

Meanwhile, over at Salon, Gary Weiss has an anti-Murdoch

screed which seems borderline unhinged, but is worth reading to try and

understand what Rupert is up against. His main problem seems to be with cutbacks:

If and when Murdoch gets Dow Jones he is going to make money on it, and that

will require drastic cutbacks — entire "inefficient" divisions

shuttered, employees thrown into the streets. Employee union negotiators,

who had thought current management was hardheaded, are likely to look back

on the pre-Murdoch days with nostalgia. "He’s paying 40 to 50 times earnings,

and he is going to get a return on that. He is going to crank down on costs,"

said one longtime Dow Jones journo who knows his way around a balance sheet.

This simply doesn’t make sense. No one has ever paid 45 times earnings for

a company and then got a healthy return by cutting costs. That kind of multiple

can be justified only by future growth – and Murdoch has made it very

clear that he wants to invest in the Wall Street Journal and turn it into a

strong international brand. Cutting back is what current management

has tried, with zero success. Weiss sees Murdoch not as the lifelong newspaperman

he is, but rather as someone who sees the Journal as a wasting asset:

[James] Cramer nailed down the shareholder value view of the newspaper biz

a few weeks ago, when he said, "These are diminishing assets. They don’t

need to exist. Younger people rarely read them."…

Remember that newspapers don’t need to exist from an investor standpoint…

My Dow Jones journo friend recognizes the inevitable: Newspapers, he says,

are in a "contracting industry, and in a contracting industry you want

a rat bastard who will restructure the costs." That is likely to mean

integrating the company’s far-flung operations with the rest of the News Corp.

empire. Or it could mean "restructuring" in the traditional Rust

Belt slash-and-burn sense of the word.

Have Dow Jones journalists really been so beaten down by mismanagement and

underinvestment that they can’t recognize an optimist when they see one? Murdoch

understands that in a world with an increasing appetite for financial information,

the Wall Street Journal could be one of the strongest brands in the media universe,

and hugely valuable for it. But Dow Jones management – and, it would seem,

some of its employees, too – are so caught up in diminishing profitability

that they can’t even understand that vision when it’s spelled out to them.

There’s a good rule of thumb in any takeover battle, when looking at the target

company: if the company’s competitors oppose the deal, it’s probably a good

deal. Let me add another: if the company’s present owners start falling back

onto soaring rhetoric in defense of the status quo, it’s probably a good deal.

Exhibit A: Peter

Kann’s letter to the Bancroft family, which uses the term "public trust"

no fewer than three times. (No, I’m not entirely sure what that means either,

but you might start here

in order to get an idea.) Here’s my favorite passage:

I clearly can understand that in rejecting a takeover offer you are foregoing

some financial benefit. To that I can only say that you are not alone in seeing

other and even higher priorities. There are many people in our larger society

who make career and other decisions that do not always maximize financial

benefit. And that also is true of many of the people of Dow Jones. Just consider,

for example, the many talented reporters and editors who have worked for the

Journal over so many years and how many of them could have made so much more

money working in law or banking or public relations. Rather, they devoted

their careers, and they still do, to something more important — to pursuing

a form of public service in a company that has seen itself as a public trust

and that has been protected by a family that shares that commitment.

Some financial benefit is right – he’s talking over half a billion dollars.

(How did I get that number? The Bancrofts own 24.7% of the company, which is

worth $60 per share, or $5 billion, to Rupert Murdoch. I’m

assuming it’s worth $35 a share if they keep it, which is probably overoptimistic.

The difference comes to $515 million: a lot of money to walk away from.)

As for the noble selflessness of Journal reporters and editors – well,

let’s just say that I’ve known a few of them in my time, and I don’t think that

most of them would have lasted very long at a bank or a law firm. It’s true

that journalism doesn’t pay very well, and that those of us who practice it

don’t do it primarily for the money. But that doesn’t make us particularly noble.

In any event, exactly the same argument can be made about journalists on the

New York Post or the Sunday Times: I somehow don’t see a mass exodus of WSJ

journalists to Cleary Gottlieb and Goldman Sachs in the event that the paper

is bought by News Corp.

And I’m sure that all the talk of public trusts being protected is ringing

a bit hollow right now to the former employees of the Far Eastern Economic Review,

who were fired

en masse in 2004 because Dow Jones couldn’t work out how to make one

of the world’s most respected newsweeklies profitable. Rupert Murdoch would

not have made that decision: he would be more likely to invest in the property,

I think, than to essentially shut it down.

John Heilemann,

this week, says that Rupert Murdoch is a "white knight". I think he’s

closer to the truth than Kann is.