In War at The Wall Street Journal: Inside the Struggle to Control an American Business Empire, Sarah Ellison has written a vivid and, by consensus, definitive account of how Rupert Murdoch came to buy the Dow Jones Company, controlled for more than 100 years by the Bancroft family, for a price nearly double the prevailing market value of the enterprise at the time of his deal in 2007—which also happened to be the start of the worst period in the newspaper business, well, ever. Within a year, Murdoch wrote down the $5.6 billion purchase price by half, but nonetheless he and his intensely committed team re-made The Wall Street Journal into an aggressive, general interest daily and digital platform with a local section for New York and a quarterly magazine designed to feature expensive advertising but virtually no content. In the heavy downdraft of newspaper circulation, the Journal has held its own.
By now, the Murdoch acquisition model is clear to anyone who follows the media landscape. He is a force of extraordinary will. Among his successes through News Corporation are the Fox channels, 20th Century Fox (think Avatar), and HarperCollins, his book publishing company, which is doing as well as any in the industry 15 years after he tried to sell it and couldn't. So what fascinated me about the Ellison book was less the predictable rhythms of the Murdoch takeover than the portrait of the Bancroft family, the sprawling group of cousins whose ownership of Dow Jones gave the "professionals" latitude to produce a great newspaper but an increasingly less formidable purveyor of business information compared to its competitors, Bloomberg and Thomson-Reuters. By the time Murdoch bought Dow Jones, it was clear that the Bancroft's stalwart (but passive) support of their enterprise left the company vulnerable to exactly what Murdoch did—overpay the shareholders, especially the family, and hurl this old-fashioned value driven business into the maelstrom of today's media mayhem.
MORE ON RUPERT MURDOCH:
Mark Bowden: Mr. Murdoch Goes to War
James Fallows: On Rupert Murdoch's 'Times' Paywall
Derek Thompson: What Is Rupert Murdoch Doing to Journalism?
As with all Murdoch's news ventures, The Wall Street Journal is increasingly a reflection of the proprietor's instincts and ideological bias; whatever his employees may contend, Murdoch's influence is their ultimate guiding spirit. Just last week, News Corporation contributed $1 million to the Republican Governors Association, making it the GOP's largest corporate donor.
Ellison has dug deeply into the dynamic of the Bancrofts. What emerges is symbolic of a broader phenomenon in today's transformation of media companies into corporate entities. After generations of family oversight, these enterprises are now being overwhelmed by the competitiveness of the digital age. The loss of family control over the generations is not really new. The Luces (Time, Inc.), the Paleys (CBS), and the Sarnoffs (NBC) long ago left the companies their patriarchs founded. But in recent years, virtually all the media families have grappled with the complexities of maintaining value and values in the changing business environment. A short list of these families whose fortunes were made in the print businesses makes the point:
The Chandlers built Times-Mirror and sold out to the Tribune Company, which made a disastrous deal with Sam Zell, sending the company into an especially nasty bankruptcy. The Knights and Ridders had a chain of excellent newspapers but were bullied by an aggressive shareholder into a sale and breakup. I recently wrote about my belief that the Graham family's stewardship of The Washington Post would succeed in maintaining the quality newspaper. But this has otherwise been a very rough summer for the Grahams. They unloaded Newsweek for $1 plus liabilities to a buyer who knows nothing about magazines and has already lost the magazine's top leadership. And more recently, Kaplan, the educational businesses that now provide the majority of Washington Post Company profits has come under scrutiny for operating practices that when corrected will probably make them much less the money spinners they have been.
The Newhouses, owners of Conde Nast and a newspaper chain, have had to make uncharacteristically deep cuts in all their divisions and over the summer revamped corporate leadership. But from all indications, the next generation of Newhouses has been carefully prepared to manage the businesses in the tradition of their forebears. By contrast, the Forbes family made millions for decades from their business magazine and related products, but their ownership and holdings have been inexorably diminished.
The financial pressures on the Sulzberger family's control of The New York Times Company have been enormous, and outsiders have repeatedly made the case for the vulnerability of their ownership. But it now looks like the family's solidarity has seen it through the worst of the cash-flow crises, and a strategic plan is in place to support the businesses. Arguably the most notable accomplishment of The New York Times in the past few years has been to maintain the extended family's dedication to—especially—the newspaper and confidence in its digital initiatives.
As for the Murdoch family, which is at the pinnacle of media power in more businesses than anyone else in our time, Rupert in his 80th year remains the absolute master. Various of his offspring have been positioned somewhat shakily as heirs when he finally steps back, but none of them display the fierceness of Rupert's ambition and vision. If history is a guide, the biggest challenge for Murdoch's News Corporation in the years ahead is not what Rupert Murdoch has been unable to accomplish, but how the shifting cast of family and business lieutenants will wrestle with what he leaves behind. For all his fortitude, even Rupert Murdoch is mortal and cannot determine that outcome.