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Today Rupert Murdoch’s Dream Comes True

Philip M. Stone December 13, 2007

For many years Rupert Murdoch has often mused on how he would love to own the Wall Street Journal. Today his dream comes true and American newspaper journalism at the high quality end is going to benefit.

Shareholders are giving their final approval today. All that will be left after completing some paperwork is to hand over the money. Not that Murdoch hasn’t already got his corner office with a view and hasn’t already named the top senior executives he is putting in place to lead the charge to bring the Journal into the 21st Century.

The likelihood is that Murdoch, at least for the first year, is going to be a very hands-on owner.  Datelines on Murdoch stories this year seemed to have come from every corner of the world – the man does ensure the corporate jet gets plenty of use -- but next year the constant deadline will be New York.

By naming his son, James, located in London, as chairman for News Corp., in Europe and Asia, the elder Murdoch has freed himself up from a lot of his travel. James can now take care of what needs to be taken care of in Europe and Asia while the “old man” concentrates on his prize.

Murdoch has been quite public in what he wants to do – to replace the New York Times as America’s newspaper of record. To do that he has said he is willing to invest heavily in the journalism – beefing up the Journal’s Washington D.C. bureau, getting rid of deadweight in New York and adding the best journalists his money can buy. 

The Journal is going to be Murdoch’s legacy and he’s not about to mess-up how he goes down in history.

The deal to buy-out the Bancrocft family cost News Corp. somewhere between $5.2 billion and $5.6 billion, once Bancroft legal fees and other assorted costs are finally factored in. No one else made a competing bid and for good reason. On just the economics the deal doesn’t make much financial sense in the short-run – if it wasn’t for his commanding share ownership in News Corp perhaps some shareholders might have  questioned  how Dow Jones at the price paid  added shareholder value as opposed to Murdoch value. Even the private equity companies who would be the most likely bidders for  short-term gain were conspicuous by their absense.

Murdoch started his US newspaper business in 1973 buying the tabloid San Antonio Express, a paper that was as a good an example as any of why tabloid is often considered a dirty word. In those days Murdoch’s name was never mentioned in polite American journalistic circles, unless with a smirk. Thirty-five years later and all that is changed (Americans are very impressed by success and the power the money from that success brings). With the Journal he now owns one of the top three most prestigious newspapers in the US (the others being the New York Times and The Washington Post) and his goal is to move the WSJ to the top of that list.

Murdoch, an Australian who became a naturalized US citizen, seems to feel most at home when surrounding himself with Australians, or those who have had a lot of experience in Australia. Already Dow Jones’ CEO has been dismissed (politely, he resigned with some $30 million in severance) to be replaced by Les Hinton who had been running Murdoch’s News International UK newspapers (Times of London, Sunday Times, Sun, News of the World).  Hinton was born in Britain but started his journalistic career in Australia and for more than 40 years has worked only for News Corp in Australia, the US and Britain.

At the Journal itself Gordon Crovitz is gone as publisher (but he still gets to write a column) and he is replaced by Robert Thomson who was, until this week, editor of The Times of London. Thomson was said to have advised Murdoch almost daily during the bid process, flying often to New York to meet his boss. Thomson, an Australian, has good US experience, having headed up the Financial Times US operations from 1998 – 2002 in which he more than tripled its US circulation.

Also  important is that Thomson and Marcus Brauchli, managing editor of the Journal, go back a long way together. They are good friends. There must surely be a mutual respect between the two; if they have differences they will be able to work them out.

But the bottom line for Murdoch is that he has trusted people in place who will do his bidding. Sure, disagree over policy, have a frank decision, but when the decision is made he knows it will get acted on.

One of those first decisions may well be to open up wsj.com completely to the advertising model and dump the subscriptions that brings in some $50 million a year. Crovitz, the publisher until today, lobbied hard to keep the subscription system. Doubtful Thomson will. 

And while all of this invesrtment is good news for the Journal, American journalism will benefit, too, from a better WSJ. Are competitors going to take things sitting down? Highly unlikely.

Murdoch has said his target is the New York Times, which considers itself a national newspaper rather than a local paper, and there is little question the Times’ national and international news coverage is more complete than the Journal’s. The trick will be to maintain that superiority just as Editor Bill Keller says that in 2008 there will likely be more newsroom cost-cutting.

As strong as the Times’ national and international news, it is not competitive with its business product. . And that’s why the deal announced this week by the Times-owned International Herald Tribune and Reuters should not go unnoticed. The two will launch a co-branded daily world business report for the newspaper and provide enhanced financial news on the newspaper’s web site. The business sections of the IHT (print and web) will be renamed Business with Reuters and edited by the IHT in collaboration with dedicated Reuters editors.

Murdoch has said he wants to improve the WSJ’s international presence (the European and Asian editions) so having the IHT get a head-start with a better financial news product comes just about at the right time. Journalistically, if it works and really does enhance the financial news offering then the mother ship might well take notice. No one has more or better financial/business news than Reuters so the trick will be to make the best use of that available product.

But for today, at least, let Murdoch savor his new prize.  Tomorrow the jousting begins in fall earnest.

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