WHAT'S NEXT: INNOVATIONS IN NEWSPAPERS

Nat Ives in Advertsing Age asks Al Neuharth:

Will Rupert Murdoch succeed in buying Dow Jones?

And Neuharth responds:

I wrote a column when his offer was first announced in which I predicted that Murdoch will wind up owning Dow Jones, and that’s more and more clear as time goes by.

What happens in these situations is that traditionally blood runs thicker than money.

But the newspaper families — except for the Sulzbergers and the Grahams, which have kept smart, dedicated journalists from inside the family in charge — by the time they get to the third or fourth generation, they are not interested in newspapers as much as dividends.

He is right.

This is a recent picture of Rupert Murdoch and NY mayor Michael Bloomberg.

Murdoch hosted the 9th annual presentation of the Eric Breindel awards for opinion writing.

And it is an interesting one because Bloomberg could offer more than $5 billion for Dow Jones.

Bloomberg is a private company, but its value must be around $20 billion.

Bloomberg has all kinds of media: real-time computer financial news, radio, television, magazines… but not a newspaper.

Ten years ago, my wife, Deborah Withey, was asked to develop a prototype for a Bloomberg newspaper.

Very factual.

Very graphic.

Short stories.

A few pages.

Broadsheet.

She did a great prototype with the help of a Bloomberg journalist in Detroit, our friend Doran Levin, a former business columnist for the Detroit Free Press.

But the project didn’t go ahead.

So… perhaps now is the perfect time for a business newspaper.

Bloomberg needs to confront the threat of the new Thompson-Reuters.

Right now, nothing would add more value to Bloomberg than The Wall Street Journal.

And if not the WSJ, what about the Financial Times?

In big media consolidation times, Bloomberg needs to expand.

At the end of the day, for Murdoch… Bloomberg could become a more difficult dealmaker to handle than the poor Brancrofts.
(Photo by Getty Images)

Roy Greensland liked my last comment about Murdoch.

Well… here’s another cheap shot.

This one is from an art director (a very bad one if this is what he produces) from The New York Times.

Let me just add one thing:

The Bancroft family is the same one that, for decades, produced a very poor Wall Street Journal.

The credit for the most recent one belongs to Barney Kilgore, who, in the 50′s, changed this newspaper for ever.

He was a great editor.

Dow Jones earned more than $13 million in 1966, the last full year of Kilgore’s tenure, compared with some $211,000 in 1945, when he officially became chief executive.

So… the Bancrofts and the Wall Street Journal don’t need to be afraid of Rupert Murdoch.

They need to be worried about bad editors and bad publishers.

Rupert Murdoch is not an outsider.

He is us.

As good and as bad as all of us in this industry could be.

But he speaks our language.

Not the language of the financial or real state moguls who want to control Dow Jones now.

Last May 10, Charlie Ross had Warren Buffett on his PBS nightly show.

The owner of the Buffalo News and shareholder of The Washington Post talks about his love for newspapers.

He says that, of course, he would like to buy Dow Jones… and make it a 50 billion USD company.

In his opinion, the paper is good, but the management has failed: Dow Jones is today a 5 billion USD property when Bloomberg is worth more than 20 billion USD.

He is optimistic about the future of national newspapers in print and online.

The conversation about media covers only 11 minutes of the almost-one-hour interview, and his newspaper comments start at 8:56.

The New York Times reports about the face-to-face meeting.

Richard Perez-Peña’s lead:

Mr. Murdoch made clear that he would not accept the terms of the Bancroft family’s proposal, which would give a board of independent overseers the power to hire and fire top editors, according to people who were present or were briefed by participants, but, they said, Mr. Murdoch floated an alternate arrangement in the meeting, which lasted almost five hours.

“Both sides laid out the way they thought it should work, and neither side agreed with the other, but they’re eager to keep talking,” said someone who was briefed on the meeting but who was unauthorized to speak on behalf of the participants. “It was all very pleasant on both sides, but there’s still plenty of distance between the two.”

It will take time, but the deal is under way.

(Picture by David Karp/Associated Press)

The Bancroft family said today:

We will meet with Rupert Murdoch to discuss his $5 billion bid for Dow Jones.

We will consider other bidders and options for the company.

“After a detailed review of the business of Dow Jones and the evolving competitive environment in which it operates, the Family has reached consensus that the mission of Dow Jones may be better accomplished in combination or collaboration with another organization which may include News Corporation.”

Well, they want more money.

And they will get more money.

From Murdoch.

Or from The New York Times.

Be ready for the white knight.

And if you have shares of Dow Jones, keep them.

You will make more money than you expected.

At the end of the day, this is Wall Street.

This is business.

Not charity.

Money talks.

Journalists listen.

Following a special meeting of the Board of Directors of Dow Jones & Company held at the request of the Bancroft Family directors, the Family today issued this statement:

“As we have been since 1902, the Bancroft Family remains resolute in its commitment to preserve and protect the editorial independence and integrity of The Wall Street Journal, as well as the leadership, strength and vitality of The Journal and all of the other publications and services of Dow Jones.

“Since first receiving the News Corporation proposal, the Family has carefully considered and discussed among ourselves and with our advisors how best to achieve that overarching objective, while serving the best interests of the Company’s various constituencies.

“After a detailed review of the business of Dow Jones and the evolving competitive environment in which it operates, the Family has reached consensus that the mission of Dow Jones may be better accomplished in combination or collaboration with another organization, which may include News Corporation.

“Accordingly, the Family has advised the Company’s Board that it intends to meet with News Corporation to determine whether, in the context of the current or any modified News Corporation proposal, it will be possible to ensure the level of commitment to editorial independence, integrity and journalistic freedom that is the hallmark of Dow Jones.

“The Family also indicated its receptivity to other options that might achieve the same overarching objective.”

Joseph (Joe) Nocera is a first-class columnist for The New York Times business section.

A former editorial director of Fortune magazine, Nocera writes some of the best analysis about the media industry.

Last weekend Joe Nocera did so, explaining why the Bancroft family has been manipulated for many years by the news management of Dow Jones.

Some key paragraphs of this brilliant and controversial analysis:

I have a theory as to why Dow Jones management has been so inept over the years. It is a company that has long prided itself on being run by journalists.

That was also part of preserving the integrity of The Wall Street Journal. Journalists, after all, would be less likely to damage the paper or cater to advertisers.

But journalists tend to be terrible businessmen; they lack the risk-taking mindset that marks a good chief executive.

Making the kind of big, bold bets that C.E.O.’s have to make all the time in industries undergoing wrenching change, like the newspaper business, just does not play to their strengths, which are observing, critiquing and finding out things.

[…]The one thing Mr. Phillips and Mr. Kann were good at — indeed, great at — was placating the Bancroft family.

They did so, in part, by paying an enormous dividend — more than the company could really afford.

But they also did so by telling the family, again and again, what a great thing they were doing in protecting the independence of The Wall Street Journal.

Indeed, it was Mr. Phillips who came up with the idea of two classes of stock, which would allow the family to sell some shares and still retain control.

An inept chief executive couldn’t hope for a better deal.

No matter what move Mr. Phillips made, neither the family nor the trustees were ever going to question him. It just wasn’t their style.

[…]To the Bancroft family, Rupert Murdoch has always been the devil — the epitome of the meddling down-market mogul who would wreck the paper if given half a chance.

Or at least that’s what they’ve been taught to believe all these years by Mr. Phillips and Mr. Kann.

And no matter how many promises Mr. Murdoch makes, their opinion is not likely to change.

If they do wind up selling to him, they will do so holding their noses.

There was a time, not so many years ago, when they could have sold to Bloomberg or the Washington Post Company or possibly even The New York Times Company.

But Mr. Kann wouldn’t pursue those deals, and now those buyers are on record as saying they are no longer interested. It’s Rupert or nothing.

Even now, Mr. Kann and Mr. Phillips are trying to persuade the family, one last time, that it’s all about The Journal’s independence — and not their own incompetence or the family’s unwillingness to act as a true steward over its asset.

Last week, Mr. Kann, who did not respond to my phone call, was quoted in The Wall Street Journal as saying how much he admired the family “for taking the position of maintaining Dow Jones as an independent public company.”

On Thursday, I did get Mr. Phillips on the phone. “If they are as determined in their support of The Journal’s independence as they have been in the past, then I think the paper is in good hands,” he said.

Would that it were so.

But it’s not.

“We had to destroy the village in order to save it,” was the famous phrase that came out of the Vietnam War.

With the path they’ve been on, the Bancroft family seems intent on destroying Dow Jones in order to save it.”

The Wall Street Journal has a great story this weekend about the owners of Dow Jones, the Bancrofts, including some old pictures of this low-profile family.

With their roots in Boston, the Bancrofts have lived in a world of show horses, sailing and mountainside estates.

They have done so while being fiercely protective of Dow Jones and its independence from suitors, memorialized in a family maxim: “Never sell Grandpa’s paper.”

Please click on the graphic to see it bigger.