MyDD :: Murdoch purchase of Wall Street Journal complete?

Murdoch purchase of Wall Street Journal complete?

by Shai Sachs, Sat Jul 07, 2007 at 09:09:45 AM EST

There are rumors swirling furiously in media land that Rupert Murdoch has successfully completed his purchase of the Wall Street Journal. The paper itself, as well as its union, deny the rumors.

Allegedly, the main point of contention in the negotiations between Murdoch and the current owners of Dow Jones (the super-old money Bancroft family) is editorial independence. The Bancrofts claim they want the paper to remain editorially independent. Murdoch is famous for reaching his tentacles directly into the newsroom, using his papers to settle personal vendettas, and worse. Apparently, a deal has been struck whereby Murdoch's News Corp. will have very limited influence over WSJ (the ability to hire and fire the editor and publisher, subject to approval of an independent board.)

The Journal's op-ed pages are already famously conservative, nearly to the point of lunacy. The paper's reporting, on the other hand, is considered top-notch. The Journal has the second-highest circulation in the country (second to USA Today, ahead of the New York Times) and is considered highly reputable and influential. How will this change if Murdoch takes over? What can progressives expect the new media landscape to look like?

In recent months, many have speculated about Murdoch's motivations for buying the Journal. Some argue that he wants to have a nationally respected paper under his wing, in order to boost his platform and gain respect; others suggest that he plans to use the WSJ to prop up the forthcoming Fox Business Channel (a competitor to CNBC); finally, some think that he thinks he can extract higher profits from the Journal than the Bancrofts can, or that he can do something interesting with the Journal's online news (which is currently subscribers-only). Given the enormous size of Murdoch's bid - $5 billion - I think the first two motivations are most likely on the mark. Murdoch wishes to boost his national profile, and at the same time, he wants to ensure the success of the new Fox Business News Channel.

I don't buy for a second the notion that Murdoch really will keep his word and stay out of WSJ's editorial decisions, and I don't think the Bancrofts do, either. I think they want to cash out, and they are quasi-publicly negotiating over editorial independence to save face. It seems fairly probable to me that the WSJ's much-ballyhooed reporting will soon be history. It's hard to see the Journal taking on the tabloid format and sensational focus of some of Murdoch's other properties (although News Hounds thinks otherwise), but I think it's safe to say that editorial decisions in the news sections will soon be driven by a right-wing bias.

The changes at WSJ will almost certainly be a loss for the public at large, but I'm not sure it'll be a loss for the progressive movement. As things currently stand, the WSJ is a source of excellent reporting - and a force of the conservative movement. The excellent reporting helps the paper's shrill and conservative op-ed page gain reputation and respect. If the Journal becomes just another Murdoch property, whose news is untrustowrthy and driven by personal and political considerations, what will happen to its reputation? I think the reputation will plummet, and the op-ed page will lose influence alongside it. At the end of the day, this sale could actually help progressives, by muting a reputable and highly biased conservative op-ed voice.

I'm also interested to see what influence the addition of the Wall Street Journal to the Murdoch family will have on other News Corp. holdings, in particular Fox Business News. I don't have much of a grasp on business news channels, and I can't say exactly what viewers are looking for. I'm sure CNBC is nervous about competition from Fox Business News, and I'm sure that more than a few people over there are losing a lot of sleep this weekend over the allegedly completed purchase.

Then again, I wonder just how much of the Fox brand the average business news consumer can take? Taking a look at Fox's current business news offerings, Cavuto & Your World, News Hounds consistently finds Cavuto's shows to be sensationalist, driven by sex appeal and, perhaps worst of all, deceptive about economic news. In a discovery that will shock almost no one, News Hounds also found Fox's business news analysts interpreting economic news through a political lens shortly after the Virginia Tech shootings.

Business news is a very different beast from political news. By all indications, News Corp. treats them as essentially the same - two avenues for getting out Murdoch's message. But is that really going to float? Don't business news consumers want news that will actually help them, you know, make money? Not get their conservative talking points? Fox Business News and the Wall Street Journal might be successful together for a little while, but I think most of that success will be driven by the Journal's reputation and Fox's existing audience share; I find it hard to believe that the actual news on the channel would be compelling enough to earn its own audience. In other words, the early success will not be self-sustaining. At a minimum, these developments leave an opening for CNBC or a new business news channel to exploit: compete with Fox Business on the merits. Give business news consumers a reason to switch the channel and get more reliable news elsewhere.

It's hard to predict the future, and most of this post has been nothing but unvarnished speculation. I'd like to believe that a News Corp. purchase of the Wall Street Journal would actually help progressives in a roundabout way, but who really knows? Regardless, media companies should look at this development with an eye towards competitive opportunity. If the WSJ becomes just another Murdoch property, and Fox Business News becomes yet another shrill cable news channel bleating patriotic jingoism, what opportunities are left open? How can other media companies fill the vacuum that Murdoch is creating?

Full disclosure: a friend of mine works at CNBC.

Tags: News Corp., Rupert Murdoch, Wall Street Journal, Fox Business News (all tags)

Permalink :: 18 Comments :: Post a Comment

Maybe it will help politically... (none / 0)

But as someone who is (and probably will be) working in the financial services industry, it's hard to come by the excellent economic reporting done by WSJ during the week and Barron's on the weekend. Simply put, there's going to be a gaping hole in solid business reporting if the WSJ goes the way of the London Times. Perhaps it will be an opportunity for the New York Times to beef up its business section? Hard to say.

Nevertheless, the deal's going to get done one way or another. From a shareholder's perspective, it's hard for Dow Jones to turn down a 67% premium to a share price that didn't have any real upside. At the same time, it'd be nice if the folks at WSJ considered a stakeholder's perspective and thought about the Journal's unique place within the industry - and what is likely to be lost as a result of selling out.

by PsiFighter37 on Sat Jul 07, 2007 at 09:51:28 AM EST

Re: Maybe it will help politically... (none / 0)

I'm interested in what degree the Bancrofts' apparent willingness to sell is a matter of personal self-interest, and what degree it's a matter of "responsibility" to the shareholders. I don't know much about corporate governance, but my approximate understanding is that the board is responsible for making sure that corporate officers are competent, law-abiding, doing a good job and turning a profit if possible, etc. They may face some peer pressure, but they wouldn't actually be required by law to sell their shares, would they? After all, at the end of the day, they're still just private shareholders. Please correct me if I'm wrong - I have only the faintest idea about most of this stuff.

Strengthening the progressive movement through liberal entrepreneurship http://www.plantingliberally.org

by Shai Sachs on Sat Jul 07, 2007 at 12:00:41 PM EST
[ Parent ]

Re: Maybe it will help politically... (none / 0)

You are right, but since the premium is so high, they'd probably get sued for not accepting it. So it is better to sell.

John McCain: Bush right to veto kids health insurance expansion

by Calvin Jones and the 13th Apostle on Sat Jul 07, 2007 at 12:20:48 PM EST
[ Parent ]

Re: Maybe it will help politically... (none / 0)

No, they couldn't be sued. If they were on the board of directors, then they would have a fiduciary responsibility to the other shareholders, so then they could be sued if they did not take an obvious opportunity to maximize shareholder value. But AFAIK the Bancrofts are mostly not on the board, so they are free to sell or not sell as they see fit. It's their property.

by taliesin on Sat Jul 07, 2007 at 01:26:39 PM EST
[ Parent ]

Re: Maybe it will help politically... (none / 0)

I thought she was talking about the directors, not the Bancrofts.

John McCain: Bush right to veto kids health insurance expansion

by Calvin Jones and the 13th Apostle on Sat Jul 07, 2007 at 03:12:32 PM EST
[ Parent ]

Re: Maybe it will help politically... (none / 0)

I thought the Bancrofts were on the board, but I guess I'm wrong. So I was referring to both, although it sounds like they're different people.

Also - I'm a he, not a she. :)

Strengthening the progressive movement through liberal entrepreneurship http://www.plantingliberally.org

by Shai Sachs on Sat Jul 07, 2007 at 05:59:33 PM EST
[ Parent ]

Re: Maybe it will help politically... (none / 0)

The Bancrofts are not on the board of directors, although they control a majority of the voting shares. They can effectively block the sale if they wanted to. The problem is some Bancrofts want to sell(mainly the younger ones), while the older ones don't want to sell.

John McCain: Bush right to veto kids health insurance expansion

by Calvin Jones and the 13th Apostle on Sun Jul 08, 2007 at 01:11:25 AM EST
[ Parent ]

Re: Murdoch purchase of Wall Street Journal comple (none / 0)

The WSJ is, by a wide, wide margin, the best newspaper in the United States. It will be interesting to see how it changes under Murdoch's management.

by Double B on Sat Jul 07, 2007 at 10:24:53 AM EST

Murdoch: a non starter at WSJ (none / 0)

I will cancel my subscription to the WSJ. The day I let Murdoch control any information that I use in deciding my clients financial future will be a cold one down under. Fact free business news is not how I earn my living. His promise of objectivity is a joke.

by Awfergu on Sat Jul 07, 2007 at 11:09:42 AM EST

Re: Murdoch: a non starter at WSJ (none / 0)

Where would you go? Just out of curiosity, how would you replace WSJ? I'm not in financial services, and I get my news from a combination of blogs and online news sites - so I'm mostly looking at this story as an interested but outside speculator. I'd be curious to hear what someone whose career requires good financial news would do about this.

Strengthening the progressive movement through liberal entrepreneurship http://www.plantingliberally.org

by Shai Sachs on Sat Jul 07, 2007 at 12:02:59 PM EST
[ Parent ]

Re: Murdoch: a non starter at WSJ (none / 0)

I think the replacement is already there, but they are in the form of more costly information services, industry specific versions of Lexus/Nexis with news being a prominent part of those services. I think with Murdoch's hands involed at the WSJ industry professionals will continue to rely more heavily on more focused and extensive information sources. Reuters comes to mind as one of these replacements, although even Reuters is much more broad based, but there are options.

by bjschmid on Sat Jul 07, 2007 at 05:48:25 PM EST
[ Parent ]

Re: Murdoch: a non starter at WSJ (none / 0)

Reuters just got acquired by Thomson, IIRC (or at least an offer).

I would imagine that actual news reporting will come from financial news sources - Bloomberg, Thomson/Reuters, etc., along with in-house research (which is already a big source).

by PsiFighter37 on Sat Jul 07, 2007 at 11:19:00 PM EST
[ Parent ]

Re: Murdoch: a non starter at WSJ (none / 0)

Did you read the linked articles? Whatever London paper Murdoch promised independence to, it didn't last long. Even if he promises independence to the WSJ, that won't last long either. The people quoted in the article make no bones about it. Sad day indeed(except for Paul Gigot and Co.)

John McCain: Bush right to veto kids health insurance expansion

by Calvin Jones and the 13th Apostle on Sat Jul 07, 2007 at 12:22:53 PM EST
[ Parent ]

Re: Murdoch purchase of Wall Street Journal comple (none / 0)

Ugh. The Journal is going to read like the NY Post now. "Poll: Nerdy, pasty libs hate our President!"

by OfficeOfLife on Sat Jul 07, 2007 at 11:18:18 AM EST

Re: Murdoch purchase of Wall Street Journal comple (none / 0)

It will benefit the Financial Times, Barrons, & the NYT. The Asian WSJ would fit well with Murdoch's other holdings and tends to be pretty lackluster as a source of real news--it's probably what the new WSJ will look like. In general, I suspect we'll see the decline of the sorts of long-term, investigative reporting which provided a major reason for non trogs to read the WSJ. Much as the general lunacy of Forbes (esp. under Steve Forbes) creates a niche for the much better Business Week, a Murdoch WSJ may lead to something to fill a more "independent" niche--perhaps a daily Barron's, a NYT spinoff or something new launched by investors.

My understanding is that the print WSJ is in decline because of the success of the online version, meaning that advertising is not growing and the print version has run into a wall. As a result the overall WSJ franchise is not growing. It may be that Murdoch wants to develop the online property, although he may be stuck with a paper that has limited growth potential.

by rich on Sat Jul 07, 2007 at 12:17:24 PM EST

Re: Murdoch purchase of Wall Street Journal comple (none / 0)

The editorial section is not conservative "almost to the point of lunacy." They actually are crazy. A couple of months ago Bret Stephens opined that the US should state publicly that if there is a nuclear terrorist attack on our soil, we would destroy Mecca and Medina. Just this week they ran a piece by Ted F-ing Nugent raging against the dirty hippies of the Summer of Love.

That said, the news sections of the paper really are excellent, as others have already noted. It's probably the best US paper; IMO only the LA Times is in the same league, and that paper has slipped some since the merger with the Tribune.

It's unfortunate, but I think it's inevitable that Murdoch will eventually destroy the news sections -- except for the business news section, of course, since if the reporting in that part of the paper is not good no one will buy it. Still, this certainly represents an opportunity for FT to expand their US presence, and other US news organizations should benefit from the talented reporters who are going to become available once the resignations start.

by taliesin on Sat Jul 07, 2007 at 01:21:33 PM EST

Re: Murdoch purchase of Wall Street Journal comple (none / 0)

I am no fan of Murdoch, nor of his papers: but I think that the changes he wreaks on the WSJ are far more likely to be similar to the changes he made in the Times (of London) when he took that over, rather than similar to the changes he made in the NY Post (or for that matter, the Sun in London).
The Times was the UK's most respected paper, with a conservative yet slightly independent bent. After it became a still respected paper, with a strong conservative bent. Its reporting is still regarded highly, I believe.
The big change he made at the Times was in breaking the unions: don't be surprised if the unions and their members who have slowed the WSJ deal down are soon out of jobs....

by calkin on Sun Jul 08, 2007 at 01:13:44 AM EST

Re: Murdoch purchase of Wall Street Journal comple (none / 0)

The Journal itself says the deal is not yet done, though they seem to say that consummation is indeed close: http://online.wsj.com/article/SB11839298 9354660261.html?mod=us_business_whats_ne ws

As a full-time daytrader, I will still read the Journal, and Barron's (also a DowJones property) unless they go downhill like Forbes did (I used to love Forbes until it became a rightwing rag as noted above). Already, though, I also read things like Bloomberg's free site, theStreet.com, as well as financial blogs like The Big Picture. Eventually I will likely pony up for a Bloomberg terminal to get their proprietary feeds in addition to the free site.

by sunlight7 on Sun Jul 08, 2007 at 06:30:19 PM EST

You are not logged in.

In order to post a comment, you must be logged in. If you have a member account, please log in to comment.

If not, you can make an account right here. It's quick and free.